Apple 2.0

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AT&T activated 3.2 million iPhones in Q2

July 22, 2010: 9:40 AM ET

Also 400,000 to 500,000 iPads. Added 1.6 million new wireless accounts to top 90 million

Source: Company reports

AT&T (T) announced Thursday that it had activated 3.2 million iPhones and 400,000 to 500,000 iPads in the quarter that ended in June. The company called the iPhone number a record, although it also claimed to have activated 3.2 million iPhones in Q3 2009.

During the same three-month period, Apple (AAPL) sold nearly 8.4 million iPhones -- 1.7 million of them iPhone 4s purchased in the last three days of the quarter.

International sales presumably accounted for most of the difference between the 8.4 million Apple sold and 3.2 million AT&T activated. iPhones purchased in the U.S. for use with other carriers may account for the rest.

Apple sells the iPhone in 88 countries around the world, but AT&T is its sole U.S. carrier -- at least for now.

AT&T added 1.6 million wireless subscribers in the quarter, up from the 1.4 million added a year earlier. The subscriber base now sits at 90.1 million, up 13% from a year earlier. Verizon (VZ) remains the largest U.S. wireless carrier, with 92.8 million subscribers.

During a 10 a.m. conference call, CFO Rick Lindner told analysts that data usage patterns for iPad were "about what we've expected -- above our typical iPhone customer but less than our typical laptop connect customer."

He also claimed that 3G dropped calls were down 23% in Manhattan and 3G download speeds up 31% in the past six months thanks to improvements in its wireless network. The company's efforts in San Francisco, he said, are running about 90 days behind.

Below the fold: Key data points from AT&T's press release:

  • $0.68 diluted EPS compares with $0.54 diluted EPS in the second quarter of 2009, up 25.9 percent; up 13.0 percent excluding a $0.07 one-time gain from a Telmex Internacional stock transaction
  • $30.8 billion second-quarter consolidated revenues from continuing operations, up $194 million, or 0.6 percent, versus the year-earlier period and up $278 million, or 0.9 percent, sequentially
  • Consolidated operating margin expansion to 19.8 percent, up from 18.0 percent in the year-earlier quarter
  • 1.6 million organic net adds in total wireless subscribers, best-ever second quarter, to reach 90.1 million in service
  • 3.2 million iPhone activations in second quarter, a company record
  • Best-ever wireless churn levels, with 1.01 percent postpaid churn and 1.29 percent total churn
  • 10.3 percent increase in wireless service revenues, with postpaid subscriber ARPU (average monthly revenues per subscriber) up 3.4 percent; sixth consecutive quarter with a year-over-year increase in postpaid ARPU
  • 27.2 percent growth in wireless data revenues, up $936 million versus the year-earlier quarter
  • 2.9 million net increase in 3G postpaid integrated devices on AT&T's wireless network to reach 29.7 million
  • 32.0 percent growth in wireline consumer IP data revenues driven by AT&T U-verse® expansion; first-ever billion-dollar revenue quarter for AT&T U-verse services
  • 209,000 net gain in AT&T U-verse TV subscribers to reach 2.5 million in service, with continued high broadband and voice attach rates
  • 15.8 percent growth in revenues from strategic business services such as Ethernet, Virtual Private Networks (VPNs), hosting and application services

[Follow Philip Elmer-DeWitt on Twitter @philiped]

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Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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