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Analyst: AT&T defies economic slump thanks to Apple iPhone, tempts people to spend

Thursday, December 04, 2008 - 05:23 PM EDT

"AT&T Inc. may defy the recession, posting faster subscriber growth this holiday season by tempting shoppers to unclench their wallets for luxury brands like the iPhone even as consumers scrimp elsewhere," Amy Thomson reports for Bloomberg.

"AT&T probably will be the lone carrier to show accelerating growth this quarter, gaining 1.5 million contract customers, said Will Power, an analyst at Robert W. Baird & Co. That compares with 1.2 million a year earlier. Growth at Verizon Wireless, which debuted the BlackBerry Storm last month, may be little changed from 2007, adding 1.5 million subscribers," Thomson reports. "'People still want those iconic devices and are willing to pay up for them,' said Dallas-based Power. 'Look at wireless and consumer behavior generally, this also applies to the lower- income demographics.'"

Thomson reports, "AT&T said today that it will cut 12,000 jobs, or 4 percent of its workforce, because of economic pressures and a changing mix of businesses. The carrier plans to keep adding workers to its mobile-phone division to meet demand, shifting resources as more customers abandon home-phone lines."

"Users of smart phones like the iPhone spend more on surfing the Web and downloading music, making them more profitable customers. IPhone users at AT&T, the biggest U.S. phone company by subscribers, spend 1.6 times as much as the average person," Thomson reports. "'Even in this economy, amazingly enough, people are still spending on what we’d call high-end phones,' said Jennifer Fritzsche, a Chicago-based analyst with Wachovia Securities Inc. 'People are not backing away from this.'"

"Apple sold a record 6.9 million iPhones 3Gs last quarter, compared with 6.1 million BlackBerry devices over the same period. The company, which had pledged to sell 10 million iPhones in 2008, has already surpassed that goal, according to Chief Executive Officer Steve Jobs," Thomson reports. "The iPhone 3G surpassed Motorola Inc.’s Razr as the most popular handset for adults in the U.S. last quarter, according to researcher NPD Group Inc."

Full article here.