Foolish Forecast: AT&T's iPhone Payday

American telecommunications mainstay AT&T (NYSE: T) hopes to deliver the world with its second-quarter 2007 results on Tuesday. Come a little closer and you can hear what's on the line.

What analysts say:

• Buy, sell, or hold the line? Out of 28 analysts putting forth an opinion on the company, 23 give it a buy. A total of four say "hold the phone," while one currently has the "sell" sign hung out for shares. AT&T also ranks as a four-star stock in our Motley Fool CAPS system, where more than 2,000 players have given input on the company.
• Revenue. The average expectation for revenue this quarter is $29.6 billion, up 38.7% from a year ago.
• Earnings. Profits are expected to climb 16% to $0.67 per share.

What management says:
Having gone through a major acquisition binge in the last few years, AT&T is now plugging away at integrating a myriad of wireless and wireline businesses across the U.S. The process has so far gone well, with past CEO Ed Whitacre citing "great work by our wireless team over the past two years to integrate networks and streamline systems."

The company now feels poised to reap the benefits of an expanded wireless customer base -- now 62.2 million strong -- to further its lead on competitors Verizon Wireless (joint venture between Verizon Communications (NYSE: VZ) and Vodafone (NYSE: VOD)), Sprint Nextel (NYSE: S), and Deutsche Telekom's (NYSE: DT) T-Mobile. Bolstered by another acquisition -- that of regional carrier Dobson Communications (Nasdaq: DCEL) -- AT&T feels it has a "very promising future in wireless."

What management does:
Net customer additions to AT&T's wireless business was a little "soft" in the past quarter, and some analysts were voicing concern. Although sales of the Apple (Nasdaq: AAPL) iPhone released at the end of June and associated customer activations should help improve AT&T's subscriber metrics, the bulk of the improvements won't come until the next few quarters. The carrier has done well, though, maintaining ARPU (average revenue per user) and churn levels in a very competitive market.

	09/05	12/05	03/06	06/06	09/06	12/06	3/07
Net Additions (millions)	0.9	1.8	1.7	1.5	1.4	2.4	1.2
Churn	2.3	2.1	1.9	1.7	1.8	1.8	1.7
ARPU	$49.65	$48.86	$48.48	$48.84	$49.76	$49.29	$49.21

Source: AT&T.

One Fool says:
AT&T is riding high right now and appears to have the Midas touch in M&A and killer products. But merger integration can go sour whenever focus is lost, and the costs associated with being the exclusive provider of the iPhone are not yet clear. The overall success of the venture with Apple won't be known for some time, when actual financials show the net benefit. While analysts and investors will be ardent in attempts to extract every detail of benefit the iPhone brings to AT&T, it would be unwise to overlook organic growth metrics in other areas of the business that deserve scrutiny as well, such as growth in the U-verse service offering.

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Fool contributor Dave Mock can spot a Twix candy bar in a jar of mixed candy from amazing distances. He owns no shares of companies mentioned here. Dave is the author of The Qualcomm Equation. The Fool's disclosure policy stayed on the sideline and -- though tempted -- never gave in and contributed to iPhone hype.