AT&T profits slip on iPhone investments
Landlines = buggy whips
Regcast training : Hyper-V 3.0, VM high availability and disaster recovery
AT&T announced its second quarter financial results today, revealing numbers that make it increasingly clear that Big Phone is betting the farm on the Apple iPhone.
And considering how quickly its landline business is deteriorating, moving fast and hard into the expanding smartphone market looks like a good business decision - albeit one that requires investment today for revenues tomorrow.
Overall, AT&T's net income for the quarter that ended on June 30th dropped 14.8 per cent from the same quarter in 2009, from $3.84bn to $3.28bn. Landline-income weakness was the main contributor to that dive, having sunk 36 per cent during the same period, from $3.14bn to $2.01bn.
Wireless income, however, pointed in the opposite direction, posting a 2.7 per cent increase from $3.07bn to $3.28bn - and that's where things get interesting.
The increase in overall wireless revenue was far greater than the rise in income: 10.1 per cent, from $12.03bn to $13.25bn. The reason for the disparity was the success of the iPhone.
While success being a depressant to income may seem counterintuitive, remember that AT&T is subsidizing each and every one of the 2.4 million iPhones it activated during the quarter. As the company said in a statement, "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."
However, those "volume-based acquisition costs" are an investment that will enrich AT&T's voice and data service fees for the duration of those new iPhone owners' two-year contracts.
And those data revenues are up - way up. Wireless data revenue grew by 37.2 per cent during the quarter to $3.4 billion, which was more than twice that of the same quarter two years ago.
Plus, the amusing-to-pronounce but all-important ARPU (average monthly revenue per user - or, in AT&T parlance, subscriber) also rose, up 2.3 per cent to $60.21. AT&T's statement also proudly pointed out that the second quarter of 2009 was the company's sixth consecutive quarter that saw a year-on-year ARPU increase - not surprising, but welcome to AT&T investors.
Investors should also be pleased that more than a third of those 2.4 million new iPhones were purchased by customers new to AT&T - and they're now locked into AT&T services for two years.
It's no surprise, then, that AT&T is reportedly in negotiations with Apple to extend their iPhone-exclusivity deal. And it's equally unsurprising that Big Phone is fighting a US Congressional investigation into whether such deals are good for consumers. ®
Requirements Checklist for Choosing a Cloud Backup and Recovery Service Provider
COMMENTS
Good enough
The congressional investigation is grandstanding; none of these morons would care if the iPhone was on Verizon, and it worked in the DC Metro. And if Verizon hadn't been in the disable-every-little-feature mindset when Apple approached them first, it wouldn't be a story at all. When I tried to switch to Verizon two years ago (just before the first iPhone release), I was amazed at how much on my Winmob phone that worked on T-Mobile didn't work on Verizon. (I cancelled before the 30 day trial ran out, because their vaunted "network" had a colossal deadzone right over my neighborhood -- dropping calls even standing outside)
FWIW, I'm one of the new iPhone subscribers (two of 'em -- one for me, one for the better half), and so far very happy with my service. As is my brother, and my nearing-retirement parents who got iPhones before either of their nerd kids...?
huh ?
something seems screwy with the figures
AT&T is the 8th largest American company June 2008-June 2009 with 124 billion in revenue, up from 10th largest for 2008 year
They own satelites .. a ton of network capacity .. love my AT&T/Yahoo DSL service ( and landline too !)
Apple is like .. hmm .. about 100th largest American company
just for perspecive mind you .. sure the iPhone is helping AT&T's bottom line .. but the AT&T is huge and iPhone business is a relatively small part of it's overall revenue picture
for MacRat
VOIP solutions need not apply. We are without power for probably on the order of 3 or 4 days a year, and the instant the power goes out, so does the internet, even when I use a generator to power up our in-house equipment.
Even my neighbors who buy their VOIP services from the cable company, who have supposedly battery backed routers and VOIP boxes, report that they lose dial tone the instant the power drops.
If the cable companies ever come to understand what the phrase "life critical service" means, I'll think about it.
IT infrastructure monitoring strategies
Agentless Backup is Not a Myth
Top 10 SIEM implementer’s checklist
Steps to Take Before Choosing a Business Continuity Partner
Enabling efficient data center monitoring
