AT&T net income up on smartphone additions

IDG News Service - AT&T reported net income of $4 billion for the second quarter of 2010, up nearly 26% from the second quarter of 2009, driven largely by increasing demand for Apple's iPhone and other smartphones, the company said Thursday.

AT&T's wireless division reported a net gain of 1.6 million customers during the quarter, including smartphone and e-reader customers. AT&T now has 90.1 million wireless customers, the company said in a press release.

The company earned $30.8 billion in revenue for the quarter, up 0.6% from a year earlier. Wireless revenue rose from just under $12 billion in the second quarter of 2009 to $13.2 billion in the second quarter of this year.

The company reported 3.2 million iPhone activations during the quarter, a quarterly high for iPhone activations at AT&T, with 27% of the activations from customers new to the telecom provider. AT&T has an exclusive agreement in the U.S. with iPhone maker Apple, which released its new iPhone 4 on June 24, days before the end of AT&T's second quarter.

"We again delivered a very strong set of financial results," said Rick Lindner, AT&T's senior executive vice president and CFO. "We've got terrific momentum in wireless."

AT&T also chopped operating expenses by nearly 2%, compared to the second quarter of 2009.

Earnings per share for the quarter was $0.68, significantly higher than analyst expectations of $0.57, as polled by polled by Thomson Reuters. Not including a one-time gain for a stock deal, earnings per share was $0.61.

"These results add to our confidence going into the second half of the year," Randall Stephenson, AT&T chairman and CEO, said in a statement. "We continue to see positive signs of growth in almost every customer segment of our business, especially wireless, which speaks to the quality of our execution and our leadership in the industry's most powerful growth driver -- mobile broadband."

AT&T's wireless data revenue, including messaging and Internet access, increased by $936 million, more than 27%, from a year earlier, the company said. Wireless data revenue was $4.4 billion this past quarter.

AT&T's mobile services carried 154 billion text messages during the quarter, up nearly 42% from the second quarter of 2009.

AT&T also reported a 1.1% increase in wireline consumer revenue, the second consecutive quarter of growth. AT&T added 209,000 U-verse television customers during the quarter, with customers not totalling 2.5 million. The company's Internet Protocol revenue, including U-verse TV, broadband and voice, now represent 40.4% of consumer wireline revenue, up from 30.6% in the second quarter of 2009.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantusG. Grant's e-mail address is grant_gross@idg.com.