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Despite the boost brought by the iPhone, AT&T earned $3.20 billion in the past three months ended on June 30, which was down from $3.77 billion during the same quarter in 2008. Revenue also went down to $30.73 billion from $30.87 billion. Like AT&T, Verizon showed a similar slump, with its profit decreased from $1.88 billion last year to $1.48 billion this year, despite there is 11% rise in revenue from $24.1 billion to $26.86 billion.

Meanwhile, the smartphone warfare continues to intensify, as the two companies reported substantial gains in subscribers in the last quarter. AT&T enjoyed net additions of 1.37 million wireless subscribers, which was pushed by the release of the latest version of Apple’s iPhone – iPhone 3GS in June. Verizon was behind AT&T in terms of the net additions, as it only activated 1.1 million subscribers. However, Verizon ended the quarter with 87.7 million customers, surpassing AT&T’s 79.6 million in the total customers in the second quarter.

Nevertheless, the strong growth in smartphone business was not enough to support their profits. For AT&T, even though sales of iPhone provided a boost, the high subsidies paid for smartphones have also affected the company’s revenue and profit; Verizon’s cost-cutting strategies in its wired business failed to keep pace with its falling revenues. In addition, more consumers are cutting landlines and relying solely on cell phones to save money under the tough economy, which continue to sap the landline business of the two carriers.

To win back the profits and stay ahead, AT&T and Verizon have different growth plans. Verizon decided to take active measures, which mainly involve release of a series of new devices. Following the new BlackBerry Tour from Research In Motion unveiled on July 12, the company plans to upgrade the touchscreen BlackBerry Storm and to launch a phone using Google’s mobile operating system, Android. However, to keep costs in line, Verizon will also be cutting more than 8,000 employees and contractor jobs by the end of 2009.

On the contrary, AT&T plans to follow a relatively conservative approach. It is expecting an eventual return on investments in its wireless business through Apple’s iPhone, as well as in upgrades to offer new services with its landline phone network.

In the meanwhile, let us wait and see whether they can improve their performance in the next quarter with these strategies.