AT&T earnings top expectations - thanks to the iPhone?

First-quarter results are in for communications giant AT&T (T), so let's take a look at the numbers. AT&T reported first-quarter earnings of 53 cents per share compared to 57 cents per share a year ago. The company saw its earnings lowered a nickel by non-cash pension and retiree benefit costs, which was in line with the firm's full-year outlook. Excluding this charge, the company matched the consensus estimate for earnings of 48 cents per share. With quarterly net income dropping, revenue slipped 0.6 percent compared to a year ago. The $30.6 billion in revenue that AT&T logged was slightly lower than the $31.12 billion the Street expected.

While the first-quarter results dropped nine percent, AT&T added 1.2 million wireless customers thanks to 1.6 million iPhones activated in the first quarter. Mobile sales increased 9.8 percent to $11.7 billion, which was excellent news for the communications firm, as it offset the company's drop in traditional phone business. AT&T also saw 284,000 new customers for its U-Verse video service, which lifted its total service customers to 1.3 million.

Will investors be impressed with AT&T's report? Earnings matched expectations, U-Verse increased, and iPhone activations increased -- what's not to like? I have a major reservation, though. AT&T's results were stronger than the Street expected, but was it AT&T's doing or was it Apple's (AAPL)? Even with the massive number of iPhone subscribers, AT&T's earnings still fell 9.7 percent, which was partially caused by spending on iPhone subsidies (I'll deal with that in a moment). Without the iPhone, what would have happened to the company's mobile subscribers? I feel rather confident in guessing that AT&T wouldn't have managed to activate as many of its "regular" mobile phones during the quarter, which would probably have led to lower results. This is all theory, but I definitely wonder of mobile phone sales would have increased nearly 10 percent without the iPhone.

Now, on to the double-edged part of iPhone exclusivity. AT&T actually blamed some of its first-quarter percentage drop on spending on iPhone subsidies. Remember, AT&T and Apple made a deal where AT&T will pay the upfront cost for the iPhone and will then subsidize the total cost by making customers agree to a two-year service contract. Well, it turns out that those upfront payments by AT&T ended up hurting results, since Apple isn't going to give a price break to AT&T. Perhaps thinking more about its customers hurt AT&T more than it should have, as the company made a sacrifice to make sure the wildly popular iPhone would be available. Of course, was it thinking about the customer, or was it seeing dollar signs thanks to Apple's technology? Either way, the iPhone both helped and hurt the company. What will be interesting is how the iPhone helped or hurt Apple, which reports earnings this afternoon. Was Jobs's company helped by this subsidy? We will soon find out.

I'm not sure that these results are going to help shares of the telecom giant push through resistance at the $26.50 level. This region has been a bit of a bugaboo for AT&T lately, as it has capped recent attempts at a run higher. Furthermore, AT&T's 20-week and 10-month moving averages are descending through this region -- potentially adding another layer of resistance.

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