July 24th, 2007
Before you read too much into AT&T's iPhone activations...
AT&T reported its second quarter earnings on Tuesday and the headline grabber appears to be the fact that Ma Bell activated 146,000 iPhone subscribers in two days.
But there are a few caveats before the “iPhone is disappointing” chorus gets going.
For starters, AT&T’s activations account for only two days before the June 30 end of the quarter. Also consider that AT&T only reported activations–not sales of iPhones. Meanwhile, if you recall AT&T had a bear of a time getting iPhones activated. Folks bought their iPhones and waited–or had to wait–days to activate. Those days matter when you have two days to go before the end of a quarter.
It’s unclear how many activations missed the second quarter cut. For its part, AT&T noted “sales of the iPhone continue to be strong in July with store traffic above historical levels.”
Bottom line: Before calling the iPhone (blog focus) a bomb it makes sense to reserve judgment until Apple reports its earnings tomorrow. Another consideration: Depending on Apple’s revenue sharing deal with Ma Bell Steve Jobs & Co. is making out just fine. The AT&T consternation may look silly when Apple reports to-date iPhone sales figures.
But let’s not obsess with the iPhone. AT&T is much larger than that. A few observations:
- Aided by the BellSouth acquisition, AT&T reported second quarter revenue of $29.5 billion, up from $15.8 billion a year ago. Net income was $2.9 billion. Wall Street estimates are a bit of a wash given the new, bulked up AT&T.
- AT&T reported “substantially improved trends in enterprise services.” Enterprise revenue was $4.8 billion, up 2 percent from the first quarter, but down 2.1 percent a year ago. So how do you get “improved trends” out of those sales? Enterprise revenue didn’t decline.
- Wireless subscribers came in at 64.7 million. Wireless revenue was up 12.7 percent to $10.4 billion. Wireless data revenue was up 67 percent to $1.7 billion. Churn in the wireless business was 1.2 percent, down from 1.5 percent a year earlier.
- Ma Bell said that its U-verse initiative–think FiOS rival–are in line with expectations. AT&T had 51,000 U-verse video subscribers, up from 13,000 three months ago.
- The company said the AT&T-BellSouth integration plans are on track and it saved $1.9 billion in the first half of 2007.
Larry Dignan is Editor in Chief of ZDNet and Editorial Director of ZDNet sister site TechRepublic. See his full profile and disclosure of his industry affiliations.
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