AT&T's Q4: 7.6 million iPhones activated, 9.4 million smartphones sold

AT&T's Q4: 7.6 million iPhones activated, 9.4 million smartphones sold

Summary: AT&T is upbeat on 2012 following a strong fourth quarter in smartphone sales. AT&T, however, reported a big net loss.

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AT&T reported strong sales of the iPhone 4S and Android devices, but the company's fourth quarter earnings fell short of expectations. CEO Randall Stephenson, however, said AT&T started 2012 "with the best visibility we've had in some time."

The telecom giant reported a fourth quarter net loss of $6.7 billion, or $1.12 a share, on revenue of $32.5 billion, up 3.6 percent from a year ago. That sum includes a $4 billion break-up fee due to the failed T-Mobile acquisition as well as losses on AT&T's directory business. Pension valuations also hurt AT&T much like they did Verizon.

Excluding those items, AT&T's earnings would have been 42 cents a share. Wall Street was expecting earnings of 43 cents a share on revenue of $31.97 billion.

The quarter was bittersweet for AT&T. The company had to take a big hit from the T-Mobile merger and iPhone sales crimped margins due to higher subsidy costs. AT&T's operating margins for its wireless business were 15.2 percent in the fourth quarter, down from 22.9 percent a year ago. Verizon had the same issue.

For 2011, AT&T reported earnings of $3.9 billion on revenue of $126.7 billion. Sales were up 2 percent for 2011, but earnings fell dramatically from the $19.9 billion profit reported in 2010.

As for the outlook AT&T said it will deliver "solid revenue and earnings growth" with better margins. AT&T expects "mid-single-digit or better" earnings growth assuming the economy keeps its current course. Capital spending will be $20 billion on par with 2011.

On a conference call with analysts, Stephenson hit on many key themes. First, he ripped the Federal Communications Commission. There's no surprise there given that the FCC scuttled the T-Mobile acquisition, but Stephenson had a nice rant. He said:

The number one issue for us as we move forward into the industry continues to be spectrum. This industry continues to see just explosive mobile broadband growth and is one of the few bright spots in the U.S. economy, but I think we all understand this growth cannot continue without more spectrum being cleared and brought to market. Despite all the speeches from the FCC, we are all still waiting. The last significant spectrum auction was nearly five years ago now and this FCC has made it abundantly clear that they will not free up new spectrum, so in the absence of auctions are company in the industry have taken a logical step of entering into smaller transactions to acquire the spectrum we need. But even here we need the FCC's action and leadership and unfortunately even the smallest and most routine spectrum deals are receiving intense scrutiny. Now I hope I am wrong, but it appears the FCC is intent on picking winners and losers rather than letting these markets work.

Stephenson also acknowledged that the iPhone delivers a hit to profit margins, but the situation isn't all that bad when you consider the long-term effects. These customers stick with their carriers and consume data. Stephenson said:

To think that we are getting to 57% penetration of our base with smartphones and keeping margins in that 40% range I actually think it's better than I might've hoped for.

On the wireless front, AT&T's quarter broke down like this:

  • 717,000 wireless postpaid net ads;
  • Wireless revenue was up 10 percent from a year ago;
  • 2.5 million total wireless subscribers;
  • 56.8 percent of AT&T's 69.3 million postpaid subscribers had smartphones;
  • Postpaid churn was 1.21 percent in the fourth quarter, up from 1.15 percent a year ago;
  • 87 percent of smartphone subscribers are on family plans;
  • 571,000 computing devices such as tablets and aircards sold;
  • And 82 percent of postpaid additions bought smartphones.

In the wireline business, AT&T's fourth quarter went like this:

  • Business revenue was $9.3 billion, down 1.4 percent from a year ago. IP data and business service revenue showed growth;
  • U-Verse TV net adds were 208,000;
  • There are 3.8 million U-Verse TV accounts in service;
  • AT&T added 587,000 net U-verse broadband subscribers in the quarter;
  • And overall wireline revenue was $14.9 billion, down 1.4 percent from a year ago. Operating income was $1.8 billion.

Topics: Banking, Enterprise Software, iPhone, Mobility, Networking, Smartphones, AT&T, Wi-Fi

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14 comments
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  • RE: AT&T's Q4: 7.6 million iPhones activated, 9.4 million smartphones sold

    Wow this site is horrible! I added the horrible statement and it finally took! <br><br>What I find funny, are the number of iPhone 4 and 4s that litter the craigs list boards! It seems like a bunch of people were hoping to cash in or a bunch had buyers remorse! Either way, they are the single most listed phones on that board. <br><br>Of course, I contributed to the board as I found myself getting increasingly more angry every day I used that phone!
    slickjim
    • RE: AT&T's Q4: 7.6 million iPhones activated, 9.4 million smartphones sold

      @Peter Perry seriously? that's all you got lol... the iPhone has a great resale value that's why you see it on there... a used iPhone will also fetch way more money than any droid. The iPhone sells better than all droids combine... give it up already.
      Hasam1991
    • I can relate (sort of)

      @Peter Perry
      <i>"as I found myself getting increasingly more angry every day I used that phone!"</i>

      That's exactly how I feel about my Android pone.
      use_what_works_4_U
    • RE: AT&T's Q4: 7.6 million iPhones activated, 9.4 million smartphones sold

      @Peter Perry [b]Of course, I contributed to the board as I found myself getting increasingly more angry every day I used that phone![/b]

      You hit the nail on the head - only in my case it's over that piece of junk Samsung Fascinate I bought... I'm not sure if it's the OS or the hardware - I'm thinking hardware as I enjoy the Android experience on my Nook - but either way this Samsung phone sucks out loud.

      [b]Wow this site is horrible! I added the horrible statement and it finally took! [/b]

      Yeah it is - the way these talkbacks work is insane. Whoever is responsible for this system needs to stop drinking on the job... no one can be this incompetent without some help.
      athynz
  • RE: AT&T's Q4: 7.6 million iPhones activated, 9.4 million smartphones sold

    How about reporting Nokias loss and the fact Microsoft PAID them $250 million to produce a WP7 phone.

    Pathetic Ballmer has to bribe. No wonder he's a failure.
    SamWilkinson
    • RE: AT&T's Q4: 7.6 million iPhones activated, 9.4 million smartphones sold

      @SamWilkinson [i]How about reporting Nokias loss...[/i]

      That story was posted already. On this site. Do a search for "Nokia reports big loss despite strong Windows Phone sales"

      I'd link it, but they don't allow that anymore.
      Badgered
  • RE: AT&T's Q4: 7.6 million iPhones activated, 9.4 million smartphones sold

    Am I interpreting the headline correctly?

    "7.6 million iPhones activated, 9.4 million smartphones sold"

    Does that really mean that AT&T only activated 1.8 million Androids, Windows Phones and Blackberries COMBINED, when at the same time they moved 7.6 million iPhones?
    TroyMcClure
    • RE: AT&T's Q4: 7.6 million iPhones activated, 9.4 million smartphones sold

      @piousmonk

      That's what AT&T is reporting. And to think that most tech writers called the iPhone 4S a "fail".
      gribittmep
      • I called this - iPhone is leaping towards 100% marketshare

        @gribittmep
        Everyone told me I was wrong. Everyone told me that Android had more than 50% marketshare. I stood firm. I was right. They were wrong.

        iPhone has leapt up to 80% marketshare. Next year, they will have 90%, well into monopoly territory.

        It is a sick market. We all lose.
        toddybottom_z
    • RE: AT&T's Q4: 7.6 million iPhones activated, 9.4 million smartphones sold

      @piousmonk

      What really surprised me is that nowhere in the article is a mentioned of the 7.6 million Iphones vs 9.4 million amount :)
      picot
    • RE: AT&T's Q4: 7.6 million iPhones activated, 9.4 million smartphones sold

      @piousmonk
      That was the 4S launch.
      kirovs@...
      • RE: AT&T's Q4: 7.6 million iPhones activated, 9.4 million smartphones sold

        @kirovs@...

        I fully understand that the 4S would inflate Apple's numbers upon it's release, but 80% of activations on a given carrier is impressive, even considering a new model launch. (especially when the consensus from most fans of other platforms was that it was a rather uninspiring update)
        TroyMcClure
  • RE: AT&T's Q4: 7.6 million iPhones activated, 9.4 million smartphones sold

    Let me start by saying I love at&t's products and services. I even sell these products. At&t needs to stop fragmenting their products. Ever wonder why the reps in authorized retail locations continue to try to get you to buy android? Here is the answer... They do not get paid to sell iPhone!!! The margins are so bad at&t does not reimburse their retailers who in turn do not compensate their reps. Verizon on the other hand does! Come on at&t, get with the program. Reps should be able to be equally excited no matter which outstanding at&t smart phone they are talking about. Even though this is the wrong way for reps to act, it is simply human nature. In real estate terms, this is called steering and is illegal. How many calls have been fielded by customer service by unhappy customers who have been steered into a device they did not want? Please pay retailers to sell these phones for you. Does it cost more to maintain an iPhone on the network than is does another smart phone? Aren't the data plans the same price for customers? I am so very tired of being forced to steer customers to another phone simply because I am commission and have bills I need to pay. Please understand how frustrating it is to ring up a phone which takes the same amount of time as any other smart phone to ring up and not be compensated for that time. While the whole time being expected to have a smile on my face and providing an outstanding customer experience. Please pay your dealer partners for peddling your products so our families do not have to suffer the iPhone curse anymore.
    Benny_H
  • you're reading that wrong if you look at the numbers in the posting

    7.6 million iphones, 9.4 million smartphones(blackberry/android/wp7) sold.

    So it's not 9.4 million total with 7.6 of them being iphones, it's 17 million smartphones total, with the breakdown of 7 and 9.

    So before all you fanboys get all giddy(or upset), re-read the article.
    REDPINXC