AT&T profits rise, reports record number of smartphone sales

Oct 24, 2012, 10:46 AM EDT
Getty/Andrew Burton

By Juliana Kenny
Citing explosive sales of smartphones operating on Android, Windows, and iOS platforms, AT&T reported a net income of $3.64 billion for the third quarter, up slightly from $3.62 billion in the same quarter last year.
Yet the mobile giant's revenue fell short of Wall Street's expectations, reporting $31.46 billion where analysts had predicted $31.59 billion. Earnings were 63 cents per diluted share, up from 61 cents in Q3 of 2011.
"Smartphones make up more than 80% of post-paid sales," said Ralph de la Vega, president and CEO of AT&T Mobility on his company’s earnings call. He noted that AT&T sold 6.1 million smartphones in Q3, compared to 4.8 million sold in the same quarter last year. AT&T had 4.7 million iPhone 5 activations this quarter, 18% of those from new subscribers.
The number of new subscribers pales in comparison to the 1.5 million Verizon added in Q3. De la Vega blamed the lag in subscriber growth on the shortage of actual devices. "We have the largest base of iPhone customers," he said. "We faced significant supply constraints…given the limited supply, the majority of iPhones went to existing customers." 
AT&T plans to accelerate growth over the next quarter with new Mobile Share data plans and a portfolio of 14 LTE devices. The company will be the exclusive carrier of Amazon's Kindle Fire HD and the Windows 8 tablets from Asus and Samsung, which will lead to a successful Q4, de la Vega said.