• by Mark Walsh  @markfwal, April 22, 2009

The iPhone once again helped power AT&T's earnings. While the telecom giant's first-quarter net income fell 9%, the company managed to beat analysts' expectations on the strength of its wireless business and the Apple device in particular. 

AT&T activated 1.6 million new iPhone accounts during the quarter and added 1.2 net new wireless subscribers overall, with 75% signing long-term contracts. The influx of new customers amid the economic downturn helped AT&T report net income of $3.2 billion, or 53 cents a share -- down from $3.52 billion, or 57 cents a share, a year ago. Revenue fell slightly to $30.6 billion.

The company's wireless division had a 13% profit increase and a 9% gain in revenue. The key for AT&T with the iPhone, and other smartphone, is boosting revenue from services other than phone calls like messaging and Web access. To that end, AT&T increased mobile data revenue in the quarter 38.6% to $3.2 billion. And nearly one-third of its 61 million contract customers now own "integrated" devices.

The continued slide in AT&T's wireline business, with revenue dropping 5.4%, was offset by gains in its high-speed Internet and television services. It added 359,000 Internet connections -- up from the fourth quarter -- and 284,000 subscribers to its U-Verse TV offering.