AT&T wireline picture gets bleaker

When AT&T announced its third-quarter earnings, most of the attention went to 3G iPhone sales, which were higher than normal and the cause of AT&T's missed earnings mark, given the high cost of customer subsidies. Secondarily, AT&T touted its U-verse success, pointing to a net subscriber gain of 232,000 to reach 781,000 in service and remain on track to exceed 1 million subscribers in service by the end of 2008. But analysts, taking a harder look at the numbers, pointed to a more rapid decline in wireline subscribers as a major cause for concern. AT&T lost 990,000 primary phone lines in the third quarter, cutting total revenue for its wireline business down 2.2% to $17.6 billion. With economic hard times at hand, consumers may be cutting back by cutting the wires to their wireline phone, and U-verse subscribers aren't guaranteed to continue at the third-quarter pace, said Bernstein Research Senior Analyst Craig Moffett.