Can AT&T Inc. sign up enough cellphone customers to offset the loss of traditional telephone lines?

The experts think so.

On the eve of AT&T's second-quarter earnings announcement – which comes out before the bell Wednesday – 18 analysts surveyed by Thomson Reuters rate AT&T a buy or outperform. Only one rates it an "underperform," and none rates it a "sell."

"They've kept revenues growing, albeit slowly, even with a very sharp drop in their core business, and they've kept profits growing faster," said William Power, an analyst at Robert W. Baird & Co.

Despite his admiration for AT&T's ability to replace lost revenue, Mr. Power is one of seven analysts to put a "hold" rating on the Dallas-based company.

"We downgraded AT&T earlier because of concerns about two factors – the weakening economy and the increasing competition in the wireless business," Mr. Power said.

Other observers have similar worries. They remain optimistic about AT&T, but not as much as they once were.

At the beginning of the second quarter, analysts polled by Thomson Financial on average expected second-quarter earnings of 80 cents a share. Today, they expect earnings, excluding items, of 76 cents per share on $31.2 billion in revenue.

The weak economy, they said, may encourage people to save money by dropping their home phones and relying exclusively on their cellphones.

Indeed, AT&T saw some evidence of this in the first quarter, when land-line connections fell more than 7 percent.

Analysts say the second-quarter land-line losses will probably top 8 percent.

Other AT&T businesses are faring much better.

The company added 1.3 million wireless customers to its roughly 70 million total during the year's first quarter, and most observers expect well over 1 million more second-quarter additions.

Better still, the third-quarter launch of the iPhone 3G may substantially accelerate customer growth.

Another growth area is U-verse, AT&T's next-generation Internet and television service.

The 2-year-old service remains a tiny cog in the AT&T machine, but it's growing quickly. The company added 148,000 customers in the first quarter, bringing the total to 379,000.

That number will exceed 1 million by year's end, AT&T projects.

The company's stock fell 1 cent to $31.82 Tuesday.