iPhone Margin Munch

1/28/2009

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10:00 AM -- Apple Inc. (Nasdaq: AAPL)'s 3G iPhone hit AT&T Inc. (NYSE: T)'s margins again in the fourth quarter. (See AT&T Cuts Capex by up to $3B and iPhone Hits AT&T Margins.)

AT&T's net income for the fourth quarter was down 23.3 percent to $2.4 billion compared with the same period last year, and earnings per share was $0.41 in the fourth quarter compared with $0.51 last year.

The margin drop is in part thanks to the 3G iPhone, which AT&T heavily subsidizes. While there was sequential improvement in wireless operating income before depreciation and amortization (OIBDA) in the fourth quarter -- OIBDA was 35.8, up from 33.5 percent in the third quarter -- AT&T said there was about $450 million of margin pressure associated with the 3G iPhone in the fourth quarter.

— Michelle Donegan, European Editor, Unstrung