Coming a few days after a mixed earnings report from rival Verizon Communications, AT's (NYSE: T) second-quarter report suffered from a similar problem. Wireless customers have been slow to upgrade their smartphones, leading to lower equipment revenue for the wireless leaders.

AT saw equipment revenue drop 5.8% year over year in the second quarter, enough to cause the company to miss analyst expectations. But unlike Verizon, which saw its stock drop in the wake of its earnings report, AT stock had one of its best days in months on Wednesday.

The sluggishness of customers upgrading their phones does reduce AT's revenue, but it doesn't turn a profit on equipment sales. Discounted and subsidized smartphones are a component of the company's customer acquisition strategy.

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Source Fool.com