AT&T earnings fall, but 2.4 million iPhones are activated

A good news, bad news Q2 earnings report for AT&T (T). The bad news? AT&T's reported a 15 percent decline in Q2 earnings, due to a decline in wireless revenue, to 54 cents per share against a 51 cent First Call EPS estimate. AT&T had earned 63 cents per share in Q2 2009.

However, AT&T did activate 2.4 million Apple (AAPL) iPhones, the best-selling smart phone on the market, and the one with the most apps.

Meanwhile, Q2 revenue dipped 0.4 percent to $30.70 billion, in-line with a $30.66 billion First Call revenue estimate. Ma Bell (sort of) had posted revenue of $30.87 billion in Q2 2009. Shares of AT&T were up 71 cents to $25.55 in pre-market trading.

Also, AT&T added 1.4 million in net wireless subscribers in Q2 to reach 79.6 million subscribers, up 9.1 percent.

Further, wireless average monthly revenue per subscriber rose 2.3 percent to $60.21, its sixth straight year-over-year quarterly increase.

Stock Analysis: I issued a Buy rating for AT&T, a low-risk stock, on February 11, 2009 at a price of $24.56 and have since Reiterated that Buy rating. In general, it was a decent Q2 for AT&T, with the company posting adequate revenue results despite subsidies for various mobile phones, and strong economic headwinds stemming from the recession.

Technically, AT&T's shares held support at $20 and although the market has been peppered with renewed concern about a 'late' U.S. economic recovery (and a 'later' global recovery), AT&T shares have held their own. And...this was after T's shares were essentially unmoved by the greatest financial market and stock market tumult since the 1930s.

Hence, if you already own AT&T shares, consider adding to your position by 25%. For new investors, consider buying a 50% position in AT&T now; then buy another 25% in three months, if U.S. economic conditions don't worsen substantially. Under any circumstance, don't buy more than 75% of your AT&T position before October 2009. Sell/Stop Loss if you were to buy shares in this company: $18.

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Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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