AT&T announced its second quarter earnings today and had some news that caught many by surprise. Earnings were up about 61 percent (thanks in part to its BellSouth Corporation acquisition) and it grew its subscriber base by about 1.5 million. But only 146,000 thousand of those were due to Apple iPhone activations that took place over the last two days of the quarter. Many had predicted that Apple had sold some 500,000 iPhones that first weekend so that number is much lower than had been expected.
Investors reacted to the news by dumping Apple stock today causing it to drop as much as 4 percent at one point (and erasing about US$7 billion from Apple’s market value).
While the numbers are not what people expected, it must be kept in mind that these 146,000 activations were done in about 36 hours. It’s quite likely that not all iPhones purchased that weekend were immediately activated. AT&T also reports that sales of the iPhone continue to be strong in July with store traffic above historical levels, suggesting it may take another quarter for the story to completely unfold.
Apple is set to announces its own third quarter earnings tomorrow and people will be watching that announcement closely. In particular, we should find out just how many iPhones were sold that weekend (rather than just activated).