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AT&T Sees Wireless Profit Boost

Story updated with additional wireless information from AT&T's second-quarter conference call.

DALLAS ( TheStreet) -- AT&T (T - Get Report) grew its second-quarter profit by almost 26%, boosted by demand for wireless devices like Apple's (AAPL - Get Report) iPhone, e-readers and global positioning systems.

Despite concerns that the new iPhone 4 would not significantly impact AT&T's quarter, the telco still managed to activate 3.2 million iPhones -- a company record.

AT&T earned 68 cents a share, up from 54 cents in the prior year's quarter. Excluding a 7 cent gain from an international stock transaction, AT&T earned 61 cents a share, which came in above analysts' estimates of 57 cents a share.

The telco brought in revenue of $30.8 billion during the quarter, a slight increase on the same period last year, when AT&T's sales were $30.7 billion. Analysts surveyed by Thomson Reuters, however, had predicted revenue of $30.9 billion.

Investors were nonetheless warming to AT&T's stock on Thursday morning. The company's shares were rising 53 cents, or 2.11%, to $25.44 shortly after market open.

AT&T faces stiff competition from rival Verizon (VZ - Get Report), and has also struggled in an uncertain economy, although the telco is now adopting a much more bullish tone.

In a statement released before market open, Randall Stephenson, AT&T's CEO, said that there are "positive signs of growth" in almost every segment of the company's business, especially wireless. "These results add to our confidence going into the second half of the year," he said.

AT&T made 1.6 million net adds in total wireless subscribers, its best-ever second quarter, taking its total to 90.1 million subscribers. This was boosted by smartphones, increases in prepaid subscribers and growth in devices such as e-readers, GPS and alarm monitoring systems, according to AT&T.

During a conference call to discuss its second-quarter results, AT&T explained that the company's wireless prepaid net adds also increased by 300,000 thanks to the launch of Apple's iPad 3G.

The telco added that, even with record iPhone activations during the quarter, AT&T's wireless service margin was up more than 43%.

The company also raised its 2010 outlook. Previously, the company had predicted "stable-to-improved" earnings in line with its 2008 results, but now expects "strong" earnings per share growth for 2010.

Analysts surveyed by Thomson Reuters expect AT&T to earn $2.26 a share this fiscal year and bring in revenue of $124.16 billion.

In its statement, AT&T confirmed that preorder sales of the new iPhone 4 were 10 times higher than the first day of preordering for the iPhone 3GS last year.

-- Reported by James Rogers in New York

Follow James Rogers on Twitter.

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