Verizon Sold 4.2M iPhones Last Quarter, But They Come At A Steep Cost

Verizon Sold 4.2M iPhones Last Quarter, But They Come At A Steep Cost

Just how important is the iPhone to U.S. carriers? Verizon’s financial chief provided some insight Wednesday, announcing the provider sold 4.2 million Apple smartphones during the holiday fourth quarter. While the October launch of the iPhone 4S likely spurred many of those purchases, the cost is a smaller profit in exchange for hefty data contracts and a piece of the Apple halo.

Verizon Chief Financial Officer Fran Shammo told a conference that the figure is more than twice the number of iPhones sold in the previous quarter, which observers chalked up to increased demand for Apple’s fifth-generation handset offering the popular Siri voice-recognition system.

Offering the iPhone is a doubled-edged sword for carriers, however. Because of the huge number of iPhones sold, Verizon’s profit margin is cut in order to subsidize both the iPhone 4S and the iPhone 4, which Apple marked down to $99. The belief is that carriers can recoup some of their losses through the dataplans and other services sold to smartphone owners. Shammo suggested Verizon will recover some of its iPhone profits, however provided no time period, according to reports.

Analysts predict around 30 million iPhones will have sold during the holiday period. UBS analyst Maynard Um told investors Wednesday night he expects AT&T will sell 8 million Apple handsets with Sprint providing 1.2 million in sales. Altogether, U.S. sales will account for around 45 percent of iPhone purchases during the fourth quarter.

“The strength from Verizon mirrors similar strength seen from AT&T last month in which the company said it had already sold around 6 million smartphones through the first two months of the fourth quarter,” Um wrote. The analyst expects Apple on Jan. 24 to announce “its best holiday quarter in history” helped by the iPhone 4S, as well as faster international rollouts and strong MacBook Air demand.

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  • ddevito

    Trouble in paradise it seems? But what is verizon complaining about? They wanted the darn thing on their network. I’m sure lots of people either switched or stayed with Verizon because of the iPhone. This is just Verizon bitching that they can’t have their precious bloatware on the iPhone.

    Verizon needs to zip it and worry about their heavily branded and advertised Motorolas and HTCs that they can hardly sell.

  • macgizmo

    I’m losing all kinds of sleep over the slimmer than desired profit margins of Verizon.

  • djrobsd

    Going to cry a river of tears here for Verizon.   Duh… They knew these suckers would cost them a lot of money…. Why are they crying?  Are they shocked that there wasn’t a mass exodus of AT&T customers?  Shouldn’t be shocked.   Probably 90% of iPhone users are locked into a contract.  I’m sure they will see more subscribers switch to their network from AT&T once the iPhone 5 comes out and those of us who bought iPhone 4 see our contracts with AT&T expire.  I know I will be.

About the author

Ed SutherlandEd Sutherland is a veteran technology journalist who first heard of Apple when they grew on trees, Yahoo was run out of a Stanford dorm and Google was an unknown upstart. Since then, Sutherland has covered the whole technology landscape, concentrating on tracking the trends and figuring out the finances of large (and small) technology companies.

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