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Shares sold short in AT&T Inc. (NYSE: T) rose 8.7 million to 158.2 million for the period that ended July 14. It is the second most shorted stock on the New York Stock Exchange. AT&T has struggled with competition in a wireless market where price cuts have become ruthless.

AT&T shares trade near a 52-week low at $36. This is despite the fact that it posted better-than-expected earnings for the second quarter.

According to the AP:

The Dallas-based company said it had profit of 63 cents per share. Earnings, adjusted for one-time gains and costs, were 79 cents per share.

The results topped Wall Street expectations. The average estimate of 20 analysts surveyed by Zacks Investment Research was for earnings of 74 cents per share.

The telecommunications company posted revenue of $39.84 billion in the period, also exceeding Street forecasts. Nineteen analysts surveyed by Zacks expected $39.8 billion.

This has not offset concern that the three other wireless companies — Verizon Communications Inc. (NYSE: VZ), Sprint Corp. (NYSE: S) and T-Mobile US Inc. (NASDAQ: TMUS) — have been in a price war to gain subscribers. The total number of wireless customers in the United States is fairly flat at 300 million. That means the companies are left to battle for market share. T-Mobile, in particular, has done well with low prices offers and offers that include features that have cost customers money in the past — for free.

AT&T’s land line business continues to shrink as people cut the cords to their traditional phone lines and move to VoIP products and cell phones. AT&T is also in a struggle for broadband and television connections to the home. Both cable companies and satellite companies offer similar products. AT&T recently bought DirecTV to combat this. AT&T is also about to take over Time Warner Inc. (NYSE: TWX) so that it has its own huge library of premium video content.

On balance, despite AT&T’s efforts to reinvent the company, Wall Street is not convinced.