Apple slips on more talk of subsidy declines

“Monday saw two more brokers raise the possibility of a decline in wireless-carrier subsidies for Apple Inc.’s iPhone on Monday – though neither believes the problem is near-term,” Dan Gallagher reports for MarketWatch.

“But Monday’s trades came after a rough ride for Apple, which has now lost more than 12% since topping out at $644 on April 10, as concerns have risen in the market both from the technical side as well as some dynamics for the company’s lucrative iPhone business,” Gallagher reports. “One factor weighing on the stock is some worry that wireless carriers will start pushing to lower the subsidies they pay to Apple to sell the iPhone, which some analysts estimate at more than $400 per device (on top of the $200 that a customer pays with a two-year contract).”

Gallagher reports, “In a note on Monday, BMO Capital Markets analyst Keith Bachman told clients that a $100 drop on the iPhone subsidy would hurt Apple’s earnings-per-share figure for fiscal 2013 by $7.50… The telecommunications team at Macquarie also address the question, saying the iPhone subsidies will not likely change in 2012, given that the carriers do not have a lot of viable alternatives and would risk losing share to their rivals – unless all three acted in some sort of collusion to change the subsidy.”

Read more in the full article here.

MacDailyNews Take: In other words, unless the U.S. carriers act illegally, then “concerns” about Apple “subsidy declines” are baseless.

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    1. Anal-cyst are full of shit or worse. They bash a stock to drive it down a bit so they can buy more. I would love too see who is benefitting from this type of bs. If you read the doom and bloomers apple went out of business 6 years ago. That Jobs wash washed upand out of ideas. These guys a basically bottom feeders and hell bent of screwing with investors to make money on yet another needless trade. My buddy bought Apple stock to his credit after hearing me tell him too since the early 1990’s. When I get extra cash it goes into Apple. Have their been some dips ? Hell yes but not since the iPhone, iPad etc at least none that are worry some.
      Listen if you listen to these morons you deserve to lose your money, profits, sense of pride, perhaps the ability to walk upright. “They know not what they do” a good man once said in this it’s that and they know not what they say. In addition to the ones that know not what they say the rest are boderline stock manipulators.

  1. It is absolutely stupid to say subsidy declines can affect apple. No carrier is brave enough to talk with apple to reduce subsidy . What carrier should fear is what they will be without iPhone sold on their network. Ok, it is obvious to me that such excuse means I should buy more AAPL coz someone wants me to sell it cheap.

  2. MDN Take-” In other words, unless the U.S. carriers act illegally, then “concerns” about Apple “subsidy declines” are baseless.”

    Kind of like when all the telcos excepting Qwest handed over private data to the Bush Administration without a FISA court order? Kinda like AT&T effectively capping unlimited data plans by putting heavy users in the slow lane?

        1. Drug dealers and murderers behave unethically too. Has nothing to do with this article. Brush up on that reading comprehension and those writing skills.

          Were you born a scumbag or did you set out to become one?

  3. You saw that too.

    Hopes, dreams, “collusion”, if only, maybe, “I see iKillers”, … Really, and someone prints that load of crap? Is that really all you have to tear down this stock and the Apple company. Isn’t this getting very sad? If only you had a very sick visionary CEO to throw in to the hype. Ah, the good old days. Now, just to much reality to work with.

    What to do with the real quarterly numbers Tuesday night. Only 1 trading day to screw with and then thud! Real quarterly numbers!

  4. Look, it’s either going up or down in the next few days. I’m putting my money on up. Only thing I’m concerned with is Mac sales. There’s going to be some bitchin about sales being down even though it’s obvious that some buyers are waiting for a refresh and iPads have taken away some sales. The street always looks for some negativity. No fanboys it’s not just AAPL that gets this treatment, all companies are subject to this treatment. Otherwise numbers should be good to very good. I’ve been cherry picking at recent lows. I hope we rocket up tomorrow and Wednesday.

  5. Any chance that production cost averaged over the next two years for the new model could be lower, lessening the affect of lower subsidies if they do occur?

    Naw, I didn’t think so either…..

  6. Please “Br’er Bear”, don’t throw poor little Apple into that there briar patch. Point being, make life tough for Apple by colluding to lower the purchase price of iPhones and Apple can use a few of its billions of dollars to become one of you, leaving you without the iPhone to sell at all. One can only hope that the cell phone gougers are that clueless.

  7. Groundless rumors will be the death of some Apple investors. I’d really like to meet these investors that hear something like that and dump their stock. It really doesn’t make any sense to do something like that on the spur of the moment since loss of all carrier subsidies wouldn’t happen overnight.

  8. All of a sudden the sheep at WS worry about long term prospects (= anything exceeding one week) in this case maybe far above 6 months! That’s rich.

  9. I don’t get all the commotion on any changes to subsidy. In the end, it is Apple’s own choice to move to a new sales model.

    As Apple includes more carriers, there is no further need for exclusivity, and switching between carriers WILL become easier because of this, either directly or indirectly.

    Beside, in other countries subsidizing new phones is not so common as in the US. Where I live package deals have been illegal for many years. Several countries have done the same.
    Now they are relaxing the rule somewhat: a subsidized phone may be offered on condition that it can also be bought without a contract (hence without subsidy).

  10. unless all three acted in some sort of collusion to change the subsidy.”


    There’d be no benefit if they did that – it would only push people towards cheaper less internet centric phones, which means less data usage which means lower monthly bills for the carriers. They are making a killing on the iPhone data plans.

    Not gonna happen.

    1. I’d like to know which major carrier is going to be the first to say no to iPhone subsidies? The only way it could happen if every carrier at once said no more iPhone subsidies. The first carrier to say no would probably suffer defections of millions of customers and be left swinging out in the breeze. I may be narrow-minded, but for carriers to stop subsidizing iPhones makes no sense at all. It’s the consumers that are running the show now and not the carriers. As long as consumers are demanding the iPhone any carrier would be foolish to make such a brash move of discontinuing subsidies.

      I wonder why the iPhone was singled out. Is a couple of hundred dollars more in subsidy for the iPhone really that big a deal over the life of a two-year contract? If a carrier merely raised its data usage charges $8 a month, they’d easily make that subsidy cost back in two years. Think of poor Sprint and how they readily over-extended themselves to get the iPhone and yet this guy thinks other carriers are just going to give the iPhone up. Unlikely.

    2. Agree. All the metrics show that iOS has significantly more web traffic. My suspicion is that the “free” smartphone buyers take the cheapest data plan and use their phone mostly as a phone. Thus, in fact revnue and profits would likely decline and churn would increase if there is a meaningful push back by the carriers.

      Alternatively, could buy T-Mobile, upgrade the network and compete against VZ and T. That would seiously hurt VZ and T as under the right conditions they would lose 2/3 of thier smart phone subscribers over a 3 year period.

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