Problem:
If you pull the numbers on AT&T for Q4 2011 you'll see that they're even worse. In Q4 the company had a net loss of $6B (ouch!). As you pointed out, this is largely a result of increased Operating Expenses. But the company definitely posted a loss.
On a side note, here's a 10-yr chart of Net Income showing how AT&T earnings have become more volatile in the past few years - I'm guessing due to increased competition and rapid changes in communications technology.
Did you have any thoughts on AT&T's long term debt position?