AT&T income growth spurred by iPhone, mobile revenue

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

AT&T on Wednesday reported net income of US $3.8 billion for the second quarter, up 31 percent from the $2.9 billion it reported in the second quarter of 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 percent from the second quarter of 2007 or up 3.6 percent using adjusted numbers. Adjusted earnings per share was $0.76, 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 on AT&T's second-quarter numbers, as the quarter 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 percent of iPhone 3G buyers are new subscribers to AT&T’s mobile network services, Lindner said.

Even without the iPhone 3G to boost the quarter's numbers, AT&T reported that mobile revenue increased by 15.8 percent to $12 billion, with mobile service revenue up 14.8 percent.

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

Wireline voice revenue was down 8.3 percent to $9.5 billion, but wireline data revenue was up 5.4 percent 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. AT&T now has 549,000 U-verse TV subscribers, the company said.

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.

Updated at 9:45 a.m. PT to add details from AT&T’s conference call.

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