AT&T CEO: Loss of iPhone will cause 'rocky' time

Editor’s Note: This story is excerpted from Computerworld. For more Mac coverage, visit Computerworld’s Macintosh Knowledge Center.

AT&T’s loss of its exclusive hold on Apple’s iPhone will make early 2011 “rocky, volatile and hard to predict” for the carrier, CEO Randall Stephenson said in a conference call with analysts on Thursday.

Verizon Wireless will start selling the iPhone on Feb. 10.

However, Stephenson said the AT&T is “fairly confident we will grow through the disruption.” He pointed to AT&T’s activations of 4.1 million iPhones in the fourth quarter of 2010 as a sign of that strength.

“iPhone is still strong and we had one of the best quarters ever,” he noted, even during a quarter when it was clear the iPhone exclusive would soon end. “We sold [more than] 4 million.”

Stephenson twice articulated his uncertainty over the coming months for AT&T. “It may be rocky, volatile and hard to predict, but as the market stabilizes, we will work through it,” he said the second time.

AT&T also had its biggest increase ever in subscribers in the fourth quarter and for all of 2010, Stephenson noted. The carrier now has 95.5 million wireless customers , compared with 94.1 million for Verizon Wireless.

Some analysts have predicted that AT&T could lose 10 percent or more of its iPhone subscribers to Verizon . However, Stephenson indicated that iPhone sales could grow for AT&T. “We feel with a little volatility, we can grow… contract subscribers this year,” he added.

Going into 2011, Stephenson said AT&T expects to increase sales of its Windows Phone 7 BlackBerry and Android devices. “We have not been very aggressive with the Android portion [of the sales mix],” he said. “We will be a heavy participant in the Android market this year.”

Also, AT&T is activating an LTE network in mid-year atop of HSPA+ network capabilities, with speeds of 6 Mbit/sec, Stephenson noted. “We feel good about the network situation,” he added.

AT&T Chief Financial Officer Rick Lindner tempered Stephenson’s remarks over the loss of the iPhone exclusive. “There is probably a little more volatility this year and certainly in the first half,” he said. “We are seeing continued strong iPhone sales, despite the anticipation [of Verizon selling it].”

With the 4.1 million sold in the fourth quarter, AT&T sold 9 million iPhones in the last two quarters of 2010, Lindner said. “That’s a pretty phenomenal number if you think about it.”

Lindner said AT&T presumes there will be strong sales of all smartphones in 2011. “We’ll have a tremendous device portfolio for customers,” he said. AT&T even expects success by selling iPhone 3G devices at $49, he said.

Lindner added that AT&T also had its second-highest level of smartphone contract upgrades by customers in the fourth quarter, totaling more than 9% . Combined with sales of other smartphones at AT&T, Lindner said that upgrade performance “bodes well for the business where iPhone is not exclusive.”

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