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AT&T Reports iPhone, E-Reader Joy

Stocks in this article: T AAPL

DALLAS ( TheStreet -- Sales of e-readers and Apple's (AAPL) iPhone 4 helped drive AT&T's (T) third-quarter revenue. The telco activated a record 5.2 million iPhones.

AT&T, which posted its quarterly results before market open, brought in total revenue of $31.6 billion, up 2.8% on the same period last year, and just above Wall Street's estimate of $31.25 billion.


Excluding items, AT&T earned 55 cents a share, in line with analysts' forecasts, and up from 53 cents a share in the prior year's quarter.

Investors, however, were largely unmoved by the numbers, and the telco's shares dipped 36 cents, or 1.26%, to $28.25 in early morning trading.

AT&T enjoyed wireless revenue growth of 11.4% during the quarter, which the telecom giant largely attributed to sales of integrated devices such as e-readers and global positioning systems. The company also grew its wireless services revenue by 10.5% and posted a net gain of 2.6 million wireless subscribers, taking its total wireless subscribers to 92.8 million.

Within AT&T's wireless business, postpaid net adds were 745,000 and prepaid net adds were 321,000.

Inevitably, though, investors will be focusing attention on AT&T's iPhone business as arch-rival Verizon (VZ) looms on the horizon. AT&T has had an exclusive U.S. relationship with Apple to sell the iPhone since the smartphone's launch in 2007, although talk of a Verizon iPhone continues to swirl.

AT&T's 5.2 million iPhone activations was nonetheless a significant hike on the 3.2 million iPhones activated during the second quarter. Approximately 24% of the new third-quarter activations were for customers new to AT&T, said the telco.

"This was a terrific mobile broadband quarter," said Randall Stephenson, AT&T's CEO, in a statement released before market open. "A record number of customers signed new two-year contracts and integrated device sales outpaced our previous best by a wide margin."

In addition to growing wireless revenue, Stephenson also said that AT&T's churn is at a record low, and added that the company's postpaid ARPU increased for the seventh straight quarter.

AT&T's wireline business, however, was less dynamic, with revenue coming in at $15.3 billion compared to $15.7 billion in the prior year's quarter. AT&T noted that this was the smallest year-over-year decline in six quarters.

--Written by James Rogers in New York.

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