AT&T's second quarter earnings beat Wall Street estimates, but still fell 15 percent year over year, as the highly successful launch of Apple's iPhone 3GS -- a phone subsidized by AT&T -- affected the company's bottom line.
With $0.54 earnings per share reported, AT&T stock fell from $0.63 earnings a year prior. The company's overall revenue fell less than a percent to $30.7 billion.
More than 2.4 million iPhones were activated in the quarter, with more than a third of those new customers.
In all, AT&T gained 1.4 million wireless subscribers. Its total number of customers sits at 79.6 million, which is 6.7 million higher than last year.
The iPhone helped AT&T reach a 3.5 million user increase in devices with 3G capabilities. That resulted in the carrier seeing a 37.2 percent increase in wireless data revenues, including Internet access and text messaging, totaling $3.4 billion. That's more than double the total for 2Q 2007.
"Our wireless momentum is excellent, operational execution and cost management continue to be strong, and in a challenging economy we delivered solid results," said Randall Stephenson, AT&T chairman and chief executive officer.
Net income was $3.2 billion, down from the $3.8 billion a year prior, due partially to the increased operating expenses associated with subsidizing the sale of the iPhone.
"Increased operating expenses in the second quarter of 2009, in part, reflect volume-based acquisition costs associated with the success of the iPhone 3GS launch, which started June 19," a statement from the company reads. "AT&€™s iPhone customer characteristics are attractive, with (average revenue per user) significantly higher than and churn rates well below the company’s postpaid averages; as a result, robust iPhone demand drives strong recurring revenues and substantial long-term value."
When the iPhone 3GS launched on June 19, it was the for the company's retail locations and Web site.
Despite the initial investment on the part of AT&T in iPhone customers, the company said it remains confident that those consumers will bolster the company in the future.
"AT&T iPhone subscribers, both new customers and upgrades, take two-year contracts with data packages," the company said. "As a result, robust iPhone demand drives strong recurring revenues and substantial long-term value."