Top telecom carrier AT&T
The bright side, of course, is that AT&T activated a ton of iPhones -- approximately 2.4 million since July 11th. The reported "pressure" on its profits equates to roughly $375 in subsidies per iPhone. The justification is in the long-term value of these users -- not only do 40% of them come from competing carriers like Verizon
In terms of net wireless subscriber additions overall, AT&T basically matched last year's third quarter performance by bringing in two million new subscribers. Rounding out its major offerings, AT&T also added 148,000 new wireline broadband customers and 232,000 U-verse TV subscribers. The ramp up in U-verse TV subscribers also gives AT&T a total of 781,000 users now, well on its way to its target of at least a million by the end of 2008. Overall, this performance gave AT&T a solid quarter, with $31.3 billion in revenue and $3.23 in net income.
What stands out from AT&T's results is the huge impact of the iPhone. While some have pointed out this heavy dependence means the rest of the wireless business is weak, this is a faulty argument. AT&T is purposely chasing high-end customers at the expense of the lower end. The company is putting more resources into top-tier devices, such as Research In Motion's
Even though I'm not a current AT&T investor, I would welcome the carrier's focus on the more profitable high-end. Even though I'd expect the growth in numbers to slow, each subscriber is more valuable and dependable. Though not a guarantee, this gives me more confidence in the continued cash-generation capability and the generous 6.6% dividend yield.
For more Foolishness:
Sprint Nextel is one of dozens of stocks recommended by the Motley Fool Inside Value team to beat the market going forward. To see what other stocks are trading below intrinsic value, check out a free 30-day trial of the newsletter service today.
Fool contributor Dave Mock has switched from checking coin returns on paper machines to scanning abandoned lottery tickets. He owns no shares of companies mentioned here. Sprint Nextel and Nokia are Inside Value picks. Apple is a Stock Advisor recommendation. The Fool's disclosure policy doesn't need a secret decoder ring and won't lead to a shamelessly-plugged advertisement.