UPDATE 3-Wireless lifts AT&T profit, economy worries linger

(Adds analyst and CFO comment, updates share move)

By Ritsuko Ando

NEW YORK, April 22 (Reuters) - AT&T Inc (T.N: Quote, Profile, Research) on Tuesday posted a higher profit on wireless growth, but a fall in traditional phone users accelerated and some analysts said the top U.S. phone company may yet be hurt by a weaker economy.

Analysts said they were impressed by gains in first-quarter revenue, which rose 6.1 percent from a year earlier to $30.7 billion and came in above an average Wall Street forecast of $30.6 billion, according to Reuters Estimates.

AT&T said quarterly profit rose 21.5 percent to $3.46 billion, or 57 cents per share, from $2.85 billion, or 45 cents a share, in the same quarter a year earlier.

Profit before items, such as merger-related costs and severance charges for recently announced job cuts, totaled 74 cents a share and matched analyst expectations.

"It's pretty impressive to see their revenue growth continue at an increasing rate," said Edward Jones analyst Rick Franklin. "For a very large company it still has growth opportunities."

But Franklin added that while AT&T managed to grow corporate service revenues and that the popularity of wireless and Internet use was sheltering the company from a U.S. economic downturn, it may be growing more vulnerable.

"They are more defensive than most industries. But then again, while 10 to 15 years ago you had one relationship with the telephone company and that was sacrosanct even in an economic downturn, today you have more than one relationship and it's easier to reduce your relationship," he said.