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AT&T remains dependent on iPhone to stay afloat

By Catholic Online (NEWS CONSORTIUM)
January 26th, 2012
Catholic Online (www.catholic.org)

AT&T Inc. activated 7.6 million of them in the latest quarter, or one out of every five iPhones sold globally. AT&T remains deeply indebted to the iPhone to gain and keep customers. A promise by CEO Randall Stephenson a year ago to "very aggressively" market competing Smartphone in 2011 came in the wake of AT&T's loss of an exclusive right to sell the iPhone in the U.S.
 

LOS ANGELES, CA (Catholic Online) - In fact, the iPhone accounted for 80 percent of the Smartphone AT&T activated in the fourth quarter of 2011, which is up from 70 percent just before Stephenson made his vow.

These figures tell a tale of the fourth quarter: The fourth quarter of 2011 saw the launch of a new iPhone model, the iPhone 4S, whereas the fourth quarter of 2010 didn't. There's a decline in the iPhone's percentage of AT&T smartphones - to 69 percent last year, from 79 percent in 2010, judging from last year's sales figures.

AT&T has also retained its position as the premier U.S. iPhone carrier, beating Verizon Wireless' 4.3 million iPhone activations handily.

The company's iPhone dependency comes at a heavy cost. The phone is more expensive than many other smartphones, and AT&T needs to subsidize each iPhone with hundreds of dollars to put it in customers' hands for as little as $1.

Coupled with extensive charges for adjustments in the value of the company's pension plans, the breakup of a deal to buy T-Mobile USA and a write down of the value of its phone-directory business, all made AT&T report a massive loss on Thursday of $6.68 billion, or $1.12 per share for the fourth quarter.

The first quarterly loss for AT&T in three years, an adjustment of pension-plan obligations was also the main culprit behind the previous loss, in the fourth quarter of 2008.

AT&T took a charge of $4.2 billion for the compensation it's paying T-Mobile USA. When AT&T made the $39 billion bid in March, it promised T-Mobile cash and wireless licenses if the deal fell through. The deal was squelched by federal regulators, who saw reason to believe that the No. 2 wireless carrier buying No. 4 would reduce competition.

Stephenson said the company's secondary plan will be trying to buy more wireless spectrum in smaller deals, selling low-performing units and instituting a share-buyback program.

AT&T said it has board authorization to buy back 300 million shares, worth about $9 billion, and will start doing so immediately.

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