Synchronoss shares collapse as unlocked Apple iPhones takes toll

“Snychronoss Technologies (SNCR) shares have dropped nearly in half in after hours trading on a disappointing outlook for 2008,” Eric Savitz reports for Barron’s. “For Q1, the company posted revenue of $29.1 million, below Street expectations of $31.2 million. Non-GAAP profits of 16 cents were in line with the consensus.”

Savitz reports, “In a statement, CEO Stephen Waldis says the company has ‘materially lowered’ its growth expectations for 2008 ‘due in part to reduced revenues associated with the iPhone, which masks the underlying growth and momentum of the rest of our business.’ The company provides AT&T with transaction management services, including the registration of new Apple iPhone users.”

“As Silicon Alley Investor notes, the company on its post-earnings conference call said it is seeing lower-than-expected activations of iPhones as more of them are being unlocked and used on non-AT&T networks,” Savitz reports.

Full article here.

14 Comments

  1. @Scott in Japan,
    They are involved (somehow) in the activation process through AT&T;. If more phones are off AT&T;’s network, less revenue for them. I bet Apple going with other carriers in other countries is a big part of it, too.

  2. Scott, didn’t you see the line that said “The company provides AT&T;with transaction management services, including the registration of new Apple iPhone users.”

    Unlocked phones don’t need registration via AT&T;, thus less business for Snychronoss.

  3. @jcw3rd

    “Unlocked phones don’t need registration via AT&T;, thus less business for Snychronoss.”

    Yes but, most wouldn’t be potential AT&T;customers anyway. Especially the ones going abroad.

  4. Since AT&T;wireless only seems to be US based with exception to San Juan, and does not seem to expect to sell in Canada, Mexico, and other countries, what does it matter who has unlocked phones or is selling them in other countries?

    They would have never expected to do registrations for other iPhones sold in countries where AT&T;is not a local wireless provider

  5. I’m with Scott … I’m missing something. If this company has “lost business” based on the fact that so many iPhones are not being activated in the expected manner, where was it’s stock before it took on that business? OK, sure, I could look it up. Were I that curious. These guys run a sweat shop, yes? Where a bunch of minimum-wage peons who a) claim they can speak English and b) claim they can read a ‘menu’ walk middle-class native-speakers through activating their iPhones. My sympathies for the peons, to h3ll with the company.
    Or.
    Did I miss something?

  6. Here’s my take. These guys have built their (and Wall Street’s) expectations for their profits on Apple’s estimates regarding the total number of iPhones sold. They essentially took that number (10 million) and equated it with total activations. Apparently, their service gets commission on each iPhone activation. For Apple, unlockers are “a good problem to have” (to quote Phil Schiller). For these guys, much like for AT&T;, they are seen as lost business. Apple’s projections (10 million) did include some unlocking, although they didn’t expect as many. In a way, Apple’s projections for legitimate, AT&T;-activated devices were higher than expected. This didn’t make significant difference for Apple’s bottom line, but obviously did so for this company.

    I suppose next time, they’ll have to look much more carefully into Apple’s projections and figure out realistically how many will be activated by AT&T;.

  7. Apples projections probably also didn’t include a consumptive USD that allowed people from Europe to come abroad with nothing but their clothes on and return a couple of days later with all the free-lugage maxed out…

  8. Of course, they could be looking ahead and know that the next gen iPhone won’t be exclusive AT&T;here in the US, so the outlook for future earnings is not as good as they had hoped…

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