AT&T's Wireless Gains Offset Core Woes

Ma Bell added 1.9 million wireless subscribers thanks to strong Apple iPhone demand.
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NEW YORK, (

TheStreet

) --

AT&T's

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strong wireless performance more than offsets the continued erosion of its core landline business

Ma Bell posted adjusted earnings of $3.5 billion or 59 cents a share, up from the $3.1 billion or 53 cent profit of the year-ago period and above the 55 cent target analysts had, according to Yahoo Finance.

First quarter sales were in line with expectations at $30.6 billion, and nearly flat with the $30.57 billion revenue level a year ago.

"We're off to a great start to the year, and our fundamental outlook for the business continues to be quite positive," CEO Randall Stephenson said in a press release.

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Wireless sales helped boost the overall performance with 1.9 million new subscribers adding service in the quarter. AT&T says it activated 2.7 million

Apple

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iPhones in the quarter and that the monthly customer defection rate fell to 1.3% from 1.56% for the same period last year.

The Dallas phone giant saw more shrinkage in its consumer phone business, with access lines falling 11% from year-ago levels, and total access line slipping 3.8%. But AT&T has been cutting costs. The company cut 18,320 employees from the payroll in the past year, a 6% headcount reduction.

AT&T also managed to trim its capital expenditures, by .5% to $3.15 billion from $3.17 a year ago, despite extra efforts to upgrade its wireless network.

AT&T shares were up 15 cents to $26.81 in trading Wednesday.