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AT&T (T Free AT&T Stock Report), the largest telephone company in the United States and a Dow-30 component, has reported mixed third-quarter results. Share net for the period of $0.63 came in $0.03 ahead of Wall Street's consensus view and $0.02 above the year-earlier tally, mainly due to a more favorable tax rate (about 32%) and lower-than-anticipated handset subsidies (Apple's (AAPL) iPhone 5 supply constraints appeared to help here). But the earnings tally still fell short of our $0.69-a-share estimate. And the carrier added just 151,000 monthly mobile contract customers, far fewer than our projection and less than the 319,000 signed up the year before. This hampered the top line a bit and offset healthy advances on the pricing/data usage front (more people have been buying data plans of late).

Revenues across the traditional wireline division, meanwhile, were a little light during the September interim, as business customers reined in their spending against a still-uneven macroeconomic backdrop. U-verse, AT&T's new video and broadband offering, continued to gain traction in the marketplace, however. This offset headwinds from traditional access-line erosion, which has been a persistent problem throughout the telecommunications space.

Looking ahead, we expect results to improve through the balance of 2012 and into next year, as iPhone 5 inventories become more plentiful, the non-iPhone smartphone business continues to expand, and the U-verse service wins further market share. This should ensure that AT&T remains a cash cow, and that it continues to pay a generous dividend and be an aggressive buyer of its own stock.

In light of the mixed third-quarter performance, we are reducing our share-net calls for 2012 and 2013 by a dime each, to $2.40 and $2.55, respectively. Even so, we still like this high-quality stock as a defensive play for longer-term investors. Indeed, we think that the issue would make a fine addition to most equity portfolios, given the company's stable business, veteran management team, and rock-solid balance sheet.

About The Company: AT&T, formerly SBC Communications, is one of the world’s largest telecom holding companies and is the largest in the United States. Its traditional (SBC only) wireline subsidiaries provide services in 13 states, including California, Texas, Illinois, Michigan, Ohio, Missouri, Connecticut, Indiana, Wisconsin, Oklahoma, Kansas, Arkansas, and Nevada. The company also owns Cingular (now AT&T Wireless). It has made a number of acquisitions, including PacTel (April 1997), SNET (October 1998), Ameritech (October 1999), AT&T (November 2005), and BellSouth (December 2006). It operates a total number of consumer revenue connections of 45 million. In 2011, about 52% of its sales came from wireless, 23% from wireline voice operations, 22% were from the data segment, and the remainder from advertising.

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.