What's Wrong With Verizon and AT&T Today?

The Dow Jones Industrial Average  is trading sideways today. A couple of technology giants are leading the index this afternoon, but the Dow's two telecoms have slammed on the brakes. AT&T and Verizon are the Dow's worst performers today by a long shot, down 1.5% apiece.

So what's going on in the cellphone stores on Wall Street?

Neither AT&T nor Verizon did much to deserve a drubbing today. Or rather, they already unveiled the facts behind today's drop when they reported earnings over the last couple of weeks. The final catalyst comes from much smaller competitor T-Mobile US , which reported third-quarter results this morning -- and managed to outshine its larger American rivals for once.

Would you buy a smartphone from Catherine Zeta-Jones? You wouldn't be alone. Image source: T-Mobile.

T-Mobile added 1 million subscribers in the third quarter, including 650,000 of the high-margin postpaid variety. By comparison, Verizon added 927,000 postpaid customers but only 481,000 postpaid phone contracts, and AT&T signed up just 363,000 new postpaid subscribers overall.

Moreover, T-Mobile seems to be stealing some of the juiciest customers available: 88% of T-Mobile's phone sales were smartphones, compared to 67% for Verizon. AT&T is holding its own with an 89% smartphone sell-through penetration.

So T-Mobile isn't exactly kicking butt and taking names indiscriminately. The ex-German operator is beating Verizon in customer quality but not quantity, and it's the other way around versus AT&T. But it's clear that the small fry is getting some traction against the Verizon-AT&T de facto duopoly, and telecom investors are getting nervous.

How can I pick a winner in this crazy smartphone market?
Want to get in on the smartphone phenomenon? Truth be told, one company sits at the crossroads of smartphone technology as we know it -- and you don't even have to pick a winner in the smartphone wars. It's not your typical household name, either -- in fact, you've probably never even heard of it! But it stands to reap massive profits no matter who ultimately wins the smartphone war. To find out what it is, click here to access the "One Stock You Must Buy Before the iPhone-Android War Escalates Any Further..."

The article What's Wrong With Verizon and AT&T Today? originally appeared on Fool.com.

Fool contributor Anders Bylund holds no position in any company mentioned. Check out Anders' bio and holdings or follow him on Twitter and Google+. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story