IPhone, mobile revenue spur AT&T income growth

IDG News Service - AT&T Inc. reported growth in both its net income and revenue for the second quarter of 2008, with interest in Apple Inc.'s iPhone spurring strong mobile and mobile data numbers.

AT&T on Wednesday reported net income of $3.8 billion for the second quarter, up 31% from the $2.9 billion the company reported in the same quarter in 2007. Adjusted net income was up slightly, from $4.3 billion to $4.5 billion, with the adjusted numbers excluding expenses related to AT&T's recent mergers.

Revenue for the second quarter was $30.9 billion, up 4.7% from the second quarter of 2007 or up 3.6% using adjusted numbers. Adjusted earnings per share was 76 cents, meeting expectations of analysts polled by Thomson Financial.

The struggling U.S. economy may have contributed to shrinking revenue in AT&T's traditional voice business, but the company posted gains in most other areas, said Richard Lindner, AT&T's executive vice president and chief financial officer.

"Our business is more resilient than most," Lindner said during a conference call. "We're running the business with focus and discipline."

AT&T has an exclusive agreement to provide mobile service for the iPhone in the U.S., and company officials said their deal with Apple has helped drive the growth. Apple released a new version of the iPhone, called iPhone 3G, on July 11, but strong sales of the new device didn't count in AT&T's numbers for its second quarter, which ended June 30.

"AT&T is all about deploying and enhancing premier networks and products to deliver this world to both business and consumers," Randall Stephenson, AT&T chairman and CEO, said in a statement. "The Apple iPhone 3G is a dramatic example of this transformation."

Sales of the iPhone 3G have been "everything we had anticipated and more," he added.

About 40% of iPhone 3G buyers are new subscribers to AT&T's mobile network services, Lindner said.

Even without the iPhone to boost the quarter's numbers, AT&T reported that mobile revenue increased by 15.8% to $12 billion, with mobile service revenue up 14.8%.

Wireless data revenue was up 52% to $2.5 billion, AT&T said. Text messaging volumes on AT&T's mobile network tripled from the second quarter of 2007.

Wire-line voice revenue was down 8.3% to $9.5 billion, but wire-line data revenue was up 5.4% to $6.1 billion.

AT&T also reported that 170,000 new customers signed up for its U-verse TV service, which delivers television service over Internet Protocol networks. The company said it now has 549,000 U-verse TV subscribers.

AT&T also cut some costs as a way to improve its net income. Operating expenses were down by $200 million, to $24.3 billion, in the second quarter. AT&T, with about 310,000 employees worldwide, has cut about 8,000 jobs since the end of 2007, Lindner said.