AT&T ( T) fell short of Wall Street's earnings target for the third quarter, due to a too-strong performance from Apple's ( AAPL) iPhone 3G and its own weak wireline results. The Dallas phone giant said net income rose to $3.23 billion, or 55 cents a share, in the quarter, up from $3.06 billion, or 50 cents a share, in the year-ago period. Excluding noncash merger-related amortization expenses, AT&T said it had adjusted earnings of 67 cents a share. Analysts expected the company to notch a profit of 71 cents a share, according to Thomson Reuters. The company's earnings took a hit from the July 11 introduction of Apple's new iPhone 3G, a product for which AT&T is the exclusive authorized U.S. service provider. As part of the iPhone subsidy agreement between the two companies, AT&T's profit was cut by about $900 million, or 10 cents a share. AT&T also saw a 2-cents-a-share loss because of hurricane damage. Third-quarter activations of the iPhone 3G totaled 2.4 million, 2.4 times results for the original iPhone through the end of the third quarter in 2007. Roughly 40% of iPhone 3G activations in the third quarter were for wireless customers who were new to AT&T. As AT&T expects strong iPhone 3G activations to continue, its dilution associated with the iPhone 3G will run above its previous expectation. AT&T said it now expects its full-year 2008 wireless service operating income before depreciation and amortization, or OIBDA, margin to be better than 37% vs. its previous outlook of 39% to 40%. AT&T also expects its full-year adjusted consolidated operating income margin to be about 23%, compared with its previous outlook of about 24%.