AT&T Raises 2012 Smartphone Goal

Experiencing robust sales so far in the quarter and foreseeing strong demand in the coming days, AT&T ( T - Analyst Report ) expects its 2012 smartphone sales to reach 26 million. Earlier, the company expected smartphone sales of 25 million.

For the first two months of the fourth quarter, AT&T sold almost 6.4 million smartphones compared to 9.4 million for the whole of fourth quarter 2011. During third quarter 2012, the company recorded smartphone sales of 6.1 million.

Strong sales of Apple Inc’s ( AAPL - Analyst Report ) iPhone 5 and Google Inc’s ( GOOG - Analyst Report ) Android-operated handsets including LG Optimus G and HTC One X buoyed the October-November sales figure. With the ongoing holiday season, AT&T is optimistic about impressive sales of Microsoft Corporation’s ( MSFT - Analyst Report ) Windows Phone8 based smartphone such as Nokia Lumia 920 and HTC 8X.

San Antonio, Texas based AT&T also confirmed that nearly 5 million customers have signed up for the shared data plan called Mobile Share – that enables subscribers to attach several devices to a single data connection – in less than 4 months. About 25% of these people have opted for the allowance that gives 10 GB or more data each month.

According to IDG (International Data Group), smartphone sales during the festive period will be about 224.5 million, 39.5% higher than the last quarter of 2011. The group also predicts worldwide smartphone shipment to grow 45% year over year to 717 million in 2012.

We maintain our long-term Neutral recommendation on AT&T. The company, currently, retains a Zacks #3 Rank, implying a short-term Hold rating on the stock.

We believe that AT&T’s growth prospects are strong driven by subscriber accretion, higher smartphones adoption, Long-term Evolution mobile broadband network, iPhone sales and U-verse expansion. However, persistent access line losses, competitive pressures and heavy iPhone subsidies might drag near-term margins and earnings.