News & Information for Technology Purchasers NewsFactor Sites:       NewsFactor.com     Enterprise Security Today     CRM Daily     Business Report     Sci-Tech Today  
   
Home Enterprise I.T. Cloud Computing Applications Hardware More Topics...
GET RECOGNIZED
Let an ISACA® certification elevate your career.
Register today and save
You are here: Home / Apple/Mac / Does Verizon Owe Apple $14 Billion?
Is your endpoint data protected?
Does Verizon Owe Apple $14 Billion?
Does Verizon Owe Apple $14 Billion?
By Jennifer LeClaire / NewsFactor Network Like this on Facebook Tweet this Link thison Linkedin Link this on Google Plus
PUBLISHED:
JULY
13
2013


Verizon didn't sell nearly enough iPhones in its Apple deal -- and it could be costly. In fact, it could cost the wireless carrier $14 billion, according to Moffett Research.

Carriers that work with Apple agree to buy a certain number of iPhones in order to land the iconic device on their network. It's unclear how many AT&T agreed to buy, but news reports suggest Sprint agreed to spend $15.5 billion on iPhones over a four-year period.

Although Moffett expects Sprint to meet its iPhone quota, the research firm is not as bullish on Verizon based on what is in the carrier's SEC reports. Vodafone, Verizon's parent company, reported that the carrier had $45 billion in purchase commitments during a three-year time frame at the end of 2010.

Negotiations Possible

T-Mobile and Sprint are putting sales pressure on Verizon on the iPhone front. Verizon had the phone before them, but the smaller carriers are offering attractive pricing and plans that have caused many consumers to defect or upgrade from feature phones to smartphones with Verizon competitors.

"It is likely that Apple would be reluctant to simply ignore these commitments, since many other carriers around the world are probably in a similar situation, and a simple amnesty would set an unwanted precedent. It is therefore unrealistic to think that Apple won't extract some consideration for renegotiating these shortfalls," Moffett said.

According to Moffett, few if any other handset suppliers require purchase commitments of this kind. And again, the research firm said, it is noteworthy that the total commitment was almost zero until Verizon contracted with Apple for the iPhone for the first time.

"We certainly don't expect that Verizon will have to write a check to Apple for $12 billion or so to make good on its seemingly inevitable shortfall," Moffett said. "However, it seems likely that Apple will extract at least some consideration for a contract shortfall of this apparent magnitude."

Are the Numbers Off?

Stuart Jeffrey, an analyst at Nomura Securities, published a note on the Apple iPhone suggesting that sales are slowing and Verizon could take a hit. In fact, Jeffrey predicted Verizon could owe Apple as much as $23.5 billion in 2013. But most observers don't expect Verizon to sell enough iPhones to cover the costs.

In Jeffrey's estimate, Verizon sold about 7.2 million iPhones in the first six months of 2013. He predicted the company will sell another 10.8 million in the last six months of 2013. If he's right, that would put Verizon 19 million units short, or $12 billion in the hole on the year.

Some industry watchers are arguing that Jeffrey's numbers are off. Verizon could not immediately be reached for comment.

Read more on: Apple, Verizon, iPhone
Tell Us What You Think
Comment:

Name:

Like Us on FacebookFollow Us on Twitter
TOP STORIES NOW
MAY BE OF INTEREST
Protect 100% of your Data The prevalence of laptops and mobile devices in the enterprise makes corporate data increasingly vulnerable to loss and breach. And yet, workforce productivity is now inextricably linked to mobility. Click here to access the white paper "Top 10 Endpoint Backup Mistakes" to learn more about how to confidently protect data across platforms and devices while also providing features designed to enhance the end user experience.
MORE IN APPLE/MAC
Product Information and Resources for Technology You Can Use To Boost Your Business

Network Security Spotlight
Who Is the Hacker Group Lizard Squad?
Are they dangerous or just obnoxious? That’s what many are wondering about the hacker group Lizard Squad, which tweeted out a bomb threat that grounded a flight with a Sony exec aboard.
 
Are Government Spies Tipping Off Tor?
Less than a month ago, tech news headlines heralded a Tor Project breach. Now, some are saying that government spies are sharing information with Tor to help it prevent future breaches.
 
Backoff Malware Hits 1,000+ Businesses, Likely More
More than 1,000 businesses across the U.S. might have been affected by Backoff, a new kind of point-of-sale (PoS) malware, according to the Department of Homeland Security.
 

Enterprise Hardware Spotlight
Apple Set To Release Largest iPad Ever
Tech giant Apple seems to have adopted the mantra “go big or go home.” The company is planning to introduce its largest iPad ever: a 12.9-inch behemoth that will dwarf its largest existing models.
 
Alert: HP Recalls 5 Million Notebook AC Power Cords
HP is recalling about 5.6 million notebook computer AC power cords in the U.S. and another 446,700 in Canada because of possible overheating, which can pose a fire and burn hazard.
 
Acer's New Desktop Box Rides the Chrome OS Wave
Filling out its Chrome OS line, Acer is following the introduction of a larger Chromebook line earlier this month with a new tiny $180 desktop Chromebox and also a smaller Chromebook.
 

Mobile Technology Spotlight
Apple Set To Release Largest iPad Ever
Tech giant Apple seems to have adopted the mantra “go big or go home.” The company is planning to introduce its largest iPad ever: a 12.9-inch behemoth that will dwarf its largest existing models.
 
Verizon Hops on the Voice-Over-LTE Bandwagon
Wireless provider Verizon is gearing up for a nationwide launch of its Voice-over-LTE service over the next several weeks, promising clearer and crisper phone calls and a Skype-like video service.
 
Smartphone 'Kill Switch' Law in California; Will Other States Follow?
California’s new law -- signed by Gov. Jerry Brown on Monday -- aimed at deterring cellphone theft could mean most mobile phones sold in the U.S. will soon include similar “kill-switch” tech.
 

Navigation
NewsFactor Network
Home/Top News | Enterprise I.T. | Cloud Computing | Applications | Hardware | Mobile Tech | Big Data | Communications
World Wide Web | Network Security | Data Storage | CRM Systems | Microsoft/Windows | Apple/Mac | Linux/Open Source | Personal Tech
Press Releases
NewsFactor Network Enterprise I.T. Sites
NewsFactor Technology News | Enterprise Security Today | CRM Daily

NewsFactor Business and Innovation Sites
Sci-Tech Today | NewsFactor Business Report

NewsFactor Services
FreeNewsFeed | Free Newsletters

About NewsFactor Network | How To Contact Us | Article Reprints | Careers @ NewsFactor | Services for PR Pros | Top Tech Wire | How To Advertise

Privacy Policy | Terms of Service
© Copyright 2000-2014 NewsFactor Network. All rights reserved. Article rating technology by Blogowogo. Member of Accuserve Ad Network.