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Shares of telecom giant Verizon Communications (NYSE: VZ ) have jumped 2.8% since the company reported earnings on Wednesday. AT&T (NYSE: T ) investors looked at Verizon's Street-beating results, shrugged, and decided that it meant nothing for them. Ma Bell's shares have barely outperformed the Dow Jones Industrial Average over the same period with a modest 0.4% gain.
But AT&T's own first-quarter report is on tap for Tuesday morning, just hours ahead of smartphone king Apple (Nasdaq: AAPL ) . The telecom's report will be your last chance to gather clues to Apple's performance. Verizon backed away from the iPhone after the holidays. Will AT&T sing a different tune?
Wall Street analysts believe that AT&T will report flat earnings year over year on a modest 1.9% revenue increase. Management didn't provide any forecasts for the quarter, but the team does feel bullish about 2012 in general. "I directly expect revenue to grow for the entire year, for the overall," CFO John Joseph Stephens said on the last earnings call. "Whether it occurs fully in the first quarter or it occurs later, it will occur for the full year. We expect revenues to grow."
Maybe that's a sly acknowledgment of how important Nokia (NYSE: NOK ) and its new range of Microsoft Windows Phone handsets really are to Ma Bell. Nokia's Lumia 900 launched to great fanfare across AT&T's store network after the first quarter closed, and Nokia's management was very happy with early sales.
I can't blame the carriers for exploring new smartphone platforms, ones that come with smaller upfront subsidies than the iPhone. The Lumia 900 comes with a $350 rebate if ordered with a two-year service plan, but the iPhone 4S gets a $450 discount. That's $100 of pain applied directly to AT&T's gross margins with every time a customer chooses an iPhone over a Lumia.
So don't expect any fireworks around AT&T's first-quarter figures, but do look for a discussion on the company's commitment to iPhones and Lumias. That discussion will speak volumes about AT&T's future margins -- and give you a taste of what's coming for Apple as well. Mobile computing is a trillion-dollar market and the carriers want a bigger slice of that enormous pie.