ATandT Posts Strong Quarter Despite Upcoming Verizon iPhone

AT&T posted a strong quarter and customer additions that put it ahead of Verizon despite, it said, there being "no secret" that Verizon was getting an iPhone.

AT&T's pending loss of exclusive rights to the Apple iPhone cast a shadow over its fourth quarter 2010 earnings call on Jan. 27, despite AT&T's strong showing on the wireless front; the carrier announced nearly 10 percent growth in wireless revenue and the addition of 2.8 million wireless subscribers, which, at 95.5 million, put it ahead of Verizon Wireless.

Verizon, during its own fourth-quarter 2010 earnings call two days earlier, shared that it had added 872,000 wireless customers, bringing its total to 94.1 million. AT&T's lead, however, may not last long, with the Verizon iPhone 4 poised to go on sale Feb. 10.

"If you just look at the fourth quarter, it was no secret that the iPhone was going to become available on a competitors' network," AT&T CEO Randall Stephenson said during a conference call with analysts and media-though Verizon didn't confirm such widespread suspicions until Jan. 11.

"In spite of that, we had our second-best integrated-sales quarter ever," he continued. "iPhone sales continued to be very strong in the fourth quarter. In fact, it was among the best quarters we've ever done. We sold [4.1 million] iPhones."

AT&T announced fourth-quarter net income of $1.1 billion on revenues of $124.3 billion. It also enjoyed its best-ever wireless churn rate of 1.32 percent and its first-ever quarter during which wireless revenues exceed wireline revenues.

Stephenson admitted that the beginning of 2011 "may be rocky ... kind of volatile, hard to predict," but said AT&T "will be able to work through it."

Part of that work will be accomplished via a large and diverse portfolio of smartphones, including a variety of Windows Phone 7 and Research In Motion devices. The heaviest lifting, however, will be hefted onto the shoulders of Android-an OS that, Stephenson admitted, AT&T hasn't until now given much attention.

"There's going to be a lot of activity around Android. Because it's such a broad-based platform, it's going to be utilized in a number of different areas, and it's going to be a high priority for us as we move into 2011," he said. "You're going to see a lot of activity from us in Android."

Stephenson gave a product plug to the Motorola Atrix 4G-a "really exciting device" that will be exclusive to AT&T-but emphasized that a number of Android-running tablets are in the works, and that the tablet market is only just getting started. During the quarter, AT&T added 442,000 iPads and Android-running tablets to its network.

"We think [the tablet market] has a ways to run. You're going to see a lot of Android tablets come online, so we think we have a lot of opportunity in tablets," he said. He added that connected devices are proving to be "very powerful" additions to the carrier's device lineup, and that they're only expected to accelerate as AT&T begins rolling out its 4G network. The carrier plans to add 20 4G devices to its lineup this year.