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iPhone 5 Shortage Impacts AT&T's 'Alarmingly Weak' Subscriber Growth

By Craig Galbraith
October 24, 2012 - News

**Editor's Note: Click here for a look back at how some of the industry's biggest players fared in Q2.**

AT&T only signed up 151,000 new customers for postpaid service contracts last quarter – a low number, especially when compared to the 1.5 million subscription additions that Verizon reported last week in its quarterly numbers.

The company's profit was up slightly – 0.3 percent, or $3.64 billion compared to a year ago – and a shortage of available iPhone 5s late last month was part of the reason it failed to impress investors Wednesday.

The iPhone 5, which debuted nine days before the end of the third quarter, sold well across all carriers, but inventory issues limited the number of the devices that were available, meaning existing customers got the bulk of the new phones, AT&T said.

Jennifer Fritzsche, an analyst with Wells Fargo, called AT&T's small number of customer adds "alarmingly weak," according to MarketWatch. "It is surprising how Verizon has pulled ahead," she added.

To put into perspective just how much AT&T really relies on the iPhone, the carrier said 77 percent of its 6.1 million smartphone activations in the third quarter were Apple's iconic device.

Company revenue fell slightly, to $31.46 billion; analysts were expecting $31.59 billion. Strategic business services revenues were up 11.4 percent. Wireline revenue declined 1.6 percent, which was a little better than Verizon's reported decline in the quarter. The companies are growing their TV and Internet businesses in this category to offset the number of people who are dumping their landlines.

AT&T stock was off just slightly – down 13 cents, or 0.37% – as of 1:37 p.m. ET on Wednesday.

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