AT&T Hits Profit Target, but Revenue Light

Updated from 10:49 a.m. EDT

AT&T (T Quote) reported strong second-quarter growth in its wireless division, but overall revenue came up short of expectations following a weak showing by the company's wireline segment.

The U.S. phone giant said net income rose to $3.8 billion, or 63 cents a share, in the quarter, up from $2.9 billion, or 47 cents a share, in the year-ago period. Excluding noncash merger-related amortization expenses, AT&T said it had adjusted earnings of 76 cents a share, matching the Thomson Reuters average estimate of polled analysts.

Second-quarter revenue came in at $30.9 billion, up 4.7% from the year-ago quarter but shy of Wall Street's prediction of $31.1 billion.

AT&T said it had a net gain of 1.3 million wireless subscribers in the quarter, taking its total customer count to 72.9 million. That compares with 1.4 million wireless subscriber additions in the year-ago quarter. AT&T picked up 894,000 retail net postpaid customers in the second quarter, a 2% decline over last year's levels. Postpaid churn fell to 1.1%, the lowest in the company's history.

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"Our results demonstrate the great strength of AT&T's assets and our ability to execute with focus and discipline," said CEO Randall Stephenson said in a release. "Earnings growth continues to be solid, our wireless momentum is strong, our major growth and cost-reduction initiatives are on track, and we continue to return substantial value to shareowners."

"In short, AT&T has very likely cleared a relatively low bar," writes Craig Moffett, analyst with Sanford Bernstein, in an email. "Importantly, all wireless metrics were solid."