At the first blush you could look at the SBC second quarter numbers and say, hmmmm!! they have finally played a winning hand, thanks largely in part to regulators showing them the hand. SBC upped its guidance on its traditional wireline revenue due to recent changes in the regulatory environment and cut the line loss as well. Even video reselling is off to a nice start as an addition to the communications bundle.

The highlight of their quarter, in my opinion was the continuing strength of their DSL business. SBC’s net gain in DSL lines totaled 315,000 in the second quarter. At the end of the quarter, SBC had 4.3 million DSL lines in service, up 54 percent over the past year.

But the real stinker is that the company’s Cingular division is in a bit of a tailspin. Year-over-year, the average revenue per user is down, and the total revenue growth is not increasing quickly enough, up around seven percent. Rest of the industry is growing at a double digit rate. The GSM migration may be cost exhaustive and the risks involved with AT&T merger are quite high as well.