iPhone Boosts AT&T Q4 Business, Hurts Profits

Posted by: Stephen Wildstrom on January 28, 2009

The iPhone continues to be a good news-bad news story for AT&T. In its fourth-quarter financial results released today, AT&T said it activated 1.9 million iPhones in the three months ended Dec. 31, down from 2.4 million in the third quarter. The average revenue per iPhone customer was 160% that of other AT&T subscribers and churn is “signficiantly lower” than for other handsets, and 40% of iPhone buyers came from other carriers.

The bad news is that the iPhone continues to take a hefty bite out of AT&T earnings, presumeably because of the up-front subsidy AT&T pays Apple fore each phone. In the fourth quarter, the iPhone reduced the carrier’s earnings by 5 cents per share, or $293 million. That means that net earnings of $2.4 billion were more than 12% lower than they would have been without the iPhone.

Reader Comments

Bryan

January 29, 2009 8:41 AM

Prediction: Apple buys AT&T, sells the landline business and moves into wireless. They become the next Google.

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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