Apple Takes A Bite Out Of AT&T

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Apple Takes A Bite Out Of AT&T

By Zacks Investment Research on October 21, 2008 | More Posts By Zacks Investment Research | Author's Website

iPhone’s smashing success has dented AT&T’s (T) profit. The company reported a third-quarter earnings growth of 5.5% that lagged analysts’ estimates thanks to the subsidies AT&T had to pay to Apple (AAPL) for the unexpectedly high number of iPhones sold.

AT&T paid Apple $900 million in subsidies for the 2.4 million units of the iPhone to keep the gadget’s price pegged at $199. This hurt the telecom company’s earnings by 10 cents a share, which led AT&T to miss the 71-cent figure arrived at by analysts. The company’s earnings stood at 67 cents a share. The carrier’s stock is down 5.29% in the morning to trade at $24.39.

Apple, however, is riding high on the iPhone buzz. The morning after reporting a 26% rise in fiscal fourth-quarter profit, the stock is up 6.41%.

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