“Verizon managed a rare feat in the third quarter: juggling a spike in iPhone sales with double-digit earnings growth,” Roger Cheng reports for CNET. “The two rarely go hand in hand, as the more iPhones a carrier sells, the higher the subsidy it has to pay to Apple (without that subsidy, your iPhone 5 would cost a minimum of $650), and the larger the hit it takes to its bottom line.”
“Through a combination of cost cuts and an effort to squeeze as much profit out of the rest of the business, Verizon managed to avoid that fate,” Cheng reports. “Today, it posted a third-quarter profit of $1.59 billion, or 56 cents a share, compared with a year-earlier profit of $3.54 billion, or 49 cents a share. Excluding one-time costs, the company earned 64 cents a share. Revenue, meanwhile, rose 3.9 percent to $29 billion.”
Cheng reports, “Growth was likely driven by the iPhone 5, which launched toward the end of the quarter… Verizon sold 6.8 million smartphones in the period, and they made up 53 percent of its base, although it didn’t provide any details on iPhone or Android sales figures. It added that 4.5 million devices sold in the period were running on its 4G LTE network.”
Read more in the full article here.
Related article:
Verizon sold 3.1 million iPhones in Q312, including 650K iPhone 5 units – October 18, 2012
Makes the whining about iPhone subsidies sound a little insincere.
Not to mention the fact that Android handsets are subsidized, too. An unlocked Samsung G3 runs $750 and an unlocked Note II runs $700 (although I just saw them discounted to $550 and $650, respectively).
CNET also makes it sound like the subsidy is free. You pay the subsidy back and more (particularly if you don’t jump to a new model handset just as soon as your contract expires).
I don’t even know what it is called a “carrier subsidy.” It would be more accurate to call it a deferred customer payment plan.
Apple loses out in UK tablet design case against Samsung
😉
Yep, they said that Samsungs were too shitty to ever be mistaken for Apple products. 😀
Is it still true that the Verizon iPhone is an unlocked phone capable of GSM world-wide?
Yes, correct.
iPhone sales are all the more impressive at Verizon considering the sales doofuses are incentivized to push less-subsidized Android.
It will be interesting to see how the fourth-quarter earnings report turns out for Apple next week. Obviously people were waiting for the iPhone five so iPhone sales will be down from the previous quarter. The street has dropped its estimates on iPhone sales so I can’t wait to see what happens. But as an investor you’d better be prepared for any sort of a surprise in either direction. Not sure if I’m going to ride through earnings or not. Too close to call. Scary!