AT&T (T - Free AT&T Stock Report), the nation's largest telecommunications carrier, has posted in-line results for the third quarter, but still leaving this Dow component modestly lower in today's trading. Share net for the period of $0.66 actually matched our estimate, and was 5% higher than the year-earlier tally. The upside was primarily supported by the addition of 363,000 postpaid wireless subscribers (those that sign long-term service contracts), up from the 151,000 customers that were brought into the fold a year earlier. Also, heightened penetration of U-verse, the company's successful broadband, video, and IP telephone service, is bolstering results across the traditional wireline operations. U-verse, notably, is now generating $12 billion in annualized revenues.

Looking ahead, we see bottom-line growth accelerating in the coming quarters. Competitive pressures from Verizon Wireless (a joint venture between Verizon Communications and Vodafone Group), heavy investment spending on the multiyear Project Velocity IP plan (it mainly aims to expand AT&T's 4G LTE network), and lingering weakness in the enterprise market will probably weigh on profits a bit as we head into 2014. The wireless business should continue to expand at a healthy clip, however, particularly as the company endeavors to improve its smartphone positioning and attract more value-oriented consumers. Further traction by U-verse should also be a major plus, and enable AT&T to achieve greater operating leverage.

Given the in-line third-quarter financials, we are leaving our 2013 and 2014 share-net estimates at $2.48 and $2.70, respectively, intact. We continue to like the stock as a long-term defensive play, and believe that it would make a fine addition to most diversified portfolios. AT&T remains a very well-managed carrier, with a stable, subscription-based business. It also maintains an excellent balance sheet (Financial Strength: A++), which, along with strong free cash flow, enables the company to reward shareholders with a generous and well-assured dividend.

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 39.3 million. In 2012, about 56% of its sales came from wireless, 18% from wireline voice operations, 25% 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.