Top or Flop: AT&T's Midyear Update

Here it is halfway through 2007 -- basketball and hockey seasons are behind us, and the sleepy summer heat is settling in. That means it's time for a mid-year stock review. Up this time is telecommunications icon AT&T (NYSE:T). With the S&P 500 up 7% over the past six short months, we'll review how Ma Bell has stacked up and what may be on the horizon for the balance of 2007.

First-half review
Investors in AT&T have seen their shares gain 12% since the start of the year -- not too shabby. The recent, major acquisitions and consolidations of the Bellsouth and SBC Communications businesses under the AT&T umbrella have been delivering positive benefits -- or "synergy," as CEOs like to call it. Focus on the core wireless business during this M&A turbulence has kept growth in new wireless subscribers steady, though competitor Verizon Wireless -- a joint venture between Verizon Communications (NYSE:VZ) and Vodafone (NYSE:VOD) -- is quickly catching up to the number one U.S. wireless carrier.

While AT&T's "Project Lightspeed" was highly anticipated last year, the new video service via fiber optics is off to a slow start. At the end of the first quarter, AT&T only covered 15 markets with this new high-speed network, lagging behind Verizon's deployment.

But the biggest story in the first half for AT&T is, of course, the eagerly awaited launch of the Apple (NASDAQ:AAPL) iPhone. With AT&T locked in as the exclusive provider for the iPhone, investors are waiting with baited breath to see how much business the Apple stigma drives to AT&T.

Second-half prospects
To get a peek at what top investors think of AT&T's prospects going forward, we can tap the Motley Fool CAPS database of investor opinions and ratings on the stock. CAPS players currently give the company a four-star rating, which is up from the two-star rating it started with in 2007.

While investors are collectively focusing on the iPhone's potential to pull prized wireless subscribers away from competitors Sprint Nextel (NYSE:S), Alltel (NYSE:AT), and T-Mobile (a subsidiary of Deutsche Telekom (NYSE:DT)), income-loving investors are loving AT&T's 3.6% dividend yield. It will take a quarter or two to get a clear beat on the gains from the iPhone effect, but investors will be paid handsomely to wait in the meantime.

Dial more delightfully Foolish insight:

• The iPhone's Poaching Potential
• The Dividend Triple Play
• 5 Stocks With an Urge to Merge

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Fool contributor Dave Mock looks forward to the days of travel at light speed. He owns no shares of companies mentioned here. He is the author of The Qualcomm Equation. The Fool's disclosure policy would like a pet monkey, too.