Two buys for smartphone gains

Article Excerpt

AT&T will probably lose its exclusive right to carry Apple’s popular iPhone when the contract expires in 2011. However, in countries where there is more than one iPhone carrier, the original carrier usually hangs on to most of its customers. We feel that rising demand for smartphones, including the iPhone, will continue to benefit both AT&T and Verizon. AT&T INC. $29 (New York symbol T; Income Portfolio, Utilities sector; Shares outstanding: 5.9 billion; Market cap: $171.1 billion; Price-to-sales ratio: 1.4; Dividend yield: 5.8%; TSINetwork Rating: Average; www.att.com) gets 48% of its revenue from its wireless division, which has 92.8 million customers nationwide. The company’s traditional telephone operations, which serve 43.7 million consumers and businesses in 22 states, account for 47% of its revenue and earnings. The remaining 5% comes from other operations, such as selling ads in telephone directories. AT&T sold a record 5.2 million iPhones in the third quarter of 2010. That’s up 61.6% from the second quarter. About 24% of…