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AT&T (T - Free Analyst Report), one of the world's largest telecom service providers, posted strong results in the second quarter, sending its stock higher. Indeed, share net of $0.61 for the period (excluding a $0.07 one-time gain from a stock transaction) came in a nickel ahead of our estimate and a solid 13% above the year-earlier tally. The upside was driven by another impressive showing from the wireless division, which benefited from margin expansion, improved customer churn, solid data growth, the launch of Apple’s (AAPL) iPad tablet PC, and a record number of iPhone activations. (AT&T is the exclusive U.S. carrier for Apple's iPhone and iPad.) Additionally, cost-cutting initiatives and increased market penetration of U-verse, the company's new TV service, buoyed the bottom line.

Looking ahead, we expect the wireless unit (second only to Verizon’s (VZ - Free Analyst Report) counterpart in number of U.S. subscribers) to remain a major growth engine through the balance of this year and into 2011, as new handheld devices continue to hit the market, and as demand for mobile broadband services continues to surge. Consequently, even with the uncertain economic outlook, we are raising our 2010 and 2011 share-net calls by a dime each, to $2.40 and $2.55, respectively.

About The Company: AT&T, formerly SBC Communications, is one of the world’s largest telecom holding companies and is the largest in the U.S. 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 2009, about 26% of its sales came from voice operations and 21% were from the data segment.