AT&T Activates 4.1 Million iPhones in Q4 as Motorola and Nokia Slump

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A number of companies either connected to or competing with Apple's iPhone have reported earnings yesterday and today, helping to paint a picture of the current status of the smartphone market.

AT&T, Apple's longtime exclusive iPhone partner in the United States, reported that it had activated 4.1 million iPhones during the fourth quarter of 2010, a figure that has historically included both sales of new devices and re-activations of previously-sold devices either handed down or resold by their owners. The new activations are down from the previous quarter that saw 5.2 million activations on the carrier.

Looking at its broader wireless business, AT&T added 2.8 million wireless subscribers during the quarter to reach a record 95.5 million customers, although only 400,000 of those net additions were of the more profitable postpaid contract variety. A full 61% of the company's 68 million postpaid subscribers are now on "integrated devices" offering virtual or physical QWERTY keyboards, up from 46.8% a year ago.

AT&T also announced that it added a total of 442,000 iPad and Android-based tablets to its network during the quarter, noting that the segment marks a substantial new growth market for the carrier but declining to break out the mix between iPad and Android devices.

Overall, AT&T's earnings were down substantially from the year-ago quarter, although the difference is primarily due to one-time accounting charges for pension and restructuring obligations. But analysts have expressed concern about AT&T going forward, citing lower-than-expected performance in its landline phone business and concerns over the effect of loss of exclusivity for the iPhone.

AT&T's results come as a pair of smartphone manufacturers reported their own earnings, taking the opportunity to express concern over the iPhone's debut on Verizon next month. Motorola Mobility announced results essentially in line with analyst expectations, but offered guidance for the current quarter of a net loss of between 9 and 21 cents, below the break-even expectations of analysts. Motorola Mobility CEO Sanjay Jha noted during a conference call discussing the earnings that the carrier has already seen a slowdown in sales as customers wait for the iPhone to come available on Verizon.

"I think that we have seen some slowdown as a result of the announcement at Verizon," CEO Sanjay Jha told analysts on a conference call.

Meanwhile, Nokia posted another earnings drop and acknowledged its continuing losses in smartphone market share that has seen the company's portion of the market sink to 31% from 40% in the year-ago quarter. Looking ahead, Nokia is also guiding toward a weak first quarter of 2011 as the company seeks to develop competitive strategies under new CEO Stephen Elop to both bolster its sagging traditional mobile phone sales and face off against the iPhone and Android devices in the smartphone segment. According to Elop:

"In Q4 we delivered solid performance across all three of our businesses, and generated outstanding cash flow. Additionally, growth trends in the mobile devices market continue to be encouraging. Yet, Nokia faces some significant challenges in our competitiveness and our execution. In short, the industry changed, and now it's time for Nokia to change faster."

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