AT&T beats forecast on strong iPhone
The telecom giant posts a smaller-than-expected quarterly loss thanks to strong demand for Apple's wireless device.
NEW YORK (Reuters) -- AT&T Inc. Thursday posted a smaller-than-expected drop in quarterly profit as strong sales of Apple Inc's iPhone helped boost wireless subscriber growth.
The news sent AT&T shares up 2.5% in premarket trading, even as some analysts worried that the company's dependence on the iPhone for much of its growth raised concerns about what would happen if it lost its exclusive rights to sell the phone in the U.S.
AT&T added 1.4 million net subscribers in the second quarter including 1.2 million retail monthly bill-paying customers. Six analysts surveyed by Reuters had, on average, expected 1.08 million subscriber additions.
The company activated more than 2.4 million iPhones in the quarter and more than a third of these were new customers.
Commresearch analyst Gregory Lundberg estimated that excluding iPhone, 25% fewer people signed up for AT&T's service in the second quarter compared with the first quarter.
"Some of that's seasonal, some of it is the market, but it really puts a magnifying glass on the risk of using the iPhone exclusivity," Lundberg said.
Profit was $3.2 billion, or 54 cents per share, compared with $3.77 billion, or 63 cents per share, in the same quarter a year ago. This beat the average analyst estimate for earnings of 51 cents per share, according to Reuters Estimates.
Revenue fell 0.45% to $30.73 billion, and compared with the average analyst expectation for $30.64 billion.
AT&T said the June 19 launch date of the latest iPhone 3GS was the best sales day ever for AT&T retail stores and its online store.
It said that increased operating expenses reflected costs related to the success of the launch of iPhone 3GS, which AT&T heavily subsidizes.
AT&T (ATT) shares were up 19 cents at $26.09 in active trading. 
