AT&T has released fourth quarter and 2008 results and it's not all roses for the telecommunications giant. Wireline telephone subscribers were down significantly, and AT&T has spent a bundle (US $453 million) upgrading the 3G network to serve the iPhone and their other Smartphone offerings. The bright spot for AT&T is the iPhone itself, which contributed to very positive gains in subscribers and revenue. Even with the boost from our favorite phone, AT&T profits fell to 64 cents a share in the fourth quarter compared to 71 cents one year ago.

Here are the interesting iPhone stats:

• AT&T activated 4.3 million iPhone 3Gs since it came on the market including 1.9 million in the fourth quarter alone. Those activations are more than double the number from a year before with the 2G iPhone
• iPhone owners provide about 60% higher revenue than other AT&T customers
• About 40% of fourth quarter activations of iPhones were customers that were new to AT&T. Most came from other carriers like Sprint, Verizon, etc.
• Customers who drop AT&T aren't usually those with iPhones (although many iPhone users would like to because of bad coverage or service).

For just about anyone selling anything, the fourth quarter of last year was dreadful. The iPhone was not exempt from this trend. Activations were down 21% comparing the fourth quarter to the third quarter of 2008, but the iPhone still clobbered the Blackberry Storm.

Stories about cell phone unlocking and resales have hit the news recently. TracFone sued numerous resellers who (legally) bought inexpensive subsidized units, unlocked them and sold them overseas. In the iPhone world, the story differs. Rather than leveraging subsidized prices, the way the TracFone defendants did, iPhone resellers added value on top of the unsubsidized units. They bought the phones, unlocked them and sold them for a profit.

The story gets more interesting with the current generation "no commitment" iPhones. The latest 3G "no commitment" iPhone pricing appears to include an extra $200 profit margin on top of the $200 subsidy.

TUAW reader Adam Jenkins offers proof. In Massachusetts, purchasers pay tax on the full unsubsidized phone price, regardless of carrier subsidies. The 5% sales tax for his new 16GB 3G iPhone came to $24.95. Clearly, Apple and the State of Massachusetts believe the unsubsidized 16GB price is $499, not the $699 "no commitment" price. That extra $200 offers a nice cushion on top of the unsubsidized sale, providing pure profit.

What's the opposite story of resellers taking advantage of cell phone subsidies? Seems to be the 3G iPhone.

How much is an iTunes download worth? About 70 cents, if conventional wisdom is correct. That's the commonly quoted number for the iTunes money that gets passed back to the record labels. And according to the New York Times today, the record labels are angling for more. They argue that broadband music sales through the mobile iTunes store somehow should bring them a greater profit than sales through the standard iTS, pointing to industry practice for ringtone and ringback sales.

I don't quite understand their reasoning. I think most phone-based ringtone sales are outrageously overpriced. Increased sales volumes will benefit the labels even at the current wholesale prices. Ah well, another example of Underwear Gnome economics in action.

Insanely Great Mac has the breakdown on a meeting between O2 (purveyors of the iPhone in Britain) and Mr. Jobs from the UK's Financial Times, and it seems iPhone users across the pond can't get enough data. Over 60% of iPhone users use over 25mb/month of data, while only 1.8% of non-iPhone users on O2 go over that mark. That's a lot of data downloading.

It's probably not a surprise, then, that about 60% of iPhone buyers are also new to O2, which, in my estimation, means that people who switched for the iPhone also switched from a non-data cellphone, and are making up for the difference. We talked on the Talkcast a little while ago about how the iPhone isn't necessarily stealing the "business smartphone" audience away from brands like Blackberry-- it's actually attracting new smartphone users completely. And there are a lot of them-- O2 is looking to sell 200,000 iPhones in Britain by the end of January, and they say that despite Apple's cut of the profits, they're making money on every one.

Finally, we get almost-but-not-quite-final confirmation that the 3G iPhone is due next year, and that O2 will very likely carry it. Which isn't really a surprise-- seems like things are going pretty well for O2 and Apple in GB, and so it's hard to see either one of them breaking up a good thing.

[Via Macbytes.com]

The MacBooks are selling well. Really well. According to an article at Apple Insider, shipments of the spiffy little laptops are currently 200,000 units ahead of the initial estimate (580,000) made by Robert Semple of Credit Suisse equity research. Semple identifies the education market and back-to-school shopping (as well as the attractive $1099US price tag) as being largely responsible for the impressive sales. This has caused both Apple's fourth quarter earnings estimate and fiscal year 2007 estimates to climb.

I can tell you that we ordered a couple here at my day job, as well as a single MacBook Pro from a third party vendor, and they're all back ordered. We'll see what effect tomorrow's announcement has on Apple's projected bottom line soon enough (I'm guessing it won't be bad).