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?
DDoS Protection Powered By Verisign
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
Salesforce.com is the market and technology leader in Software-as-a-Service. Its award-winning CRM solution helps 82,400 customers worldwide manage and share business information over the Internet. Experience CRM success. Click here for a FREE 30-day trial.
MORE IN APPLE/MAC
Product Information and Resources for Technology You Can Use To Boost Your Business

Network Security Spotlight
Dairy Queen Latest Retailer To Report Hack
Known for its hot fries and soft-serve ice cream, Dairy Queen just made cyber history as the latest victim of a hack attack. The fast food chain said that customer data at some stores may be at risk.
 
Lessons from the JPMorgan Chase Cyberattack
JPMorgan Chase is investigating a likely cyberattack. The banking giant is cooperating with law enforcement, including the FBI, to understand what data hackers may have obtained.
 
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.
 

Enterprise Hardware Spotlight
AMD's New FX Series CPU Breaks Processing Speed Record
The new FX-8370 processor from Advanced Micro Devices has set a record for silicon processor speed, the company announced. Overclocked, the eight-core chip was measured at 8722.78 MHz.
 
Intel Intros Lightning-Fast PC Processors
Call it extreme. Intel just took the covers off its first-ever eight-core desktop processor, which is aimed at hardcore power users who expect more than the status quo from their computers.
 
HP Previews ProLiant Gen9 Data Center Servers
Because traditional data center and server architectures are “constraints” on businesses, HP is releasing new servers aimed at faster, simpler and more cost-effective delivery of computing services.
 

Mobile Technology Spotlight
Rumor Mill Puts Mobile Wallet in iPhone 6
Apple is moving toward the mobile wallet world with its next iPhone. The tech giant has partnered with retailers, banks and major payment networks to make it happen, according to Bloomberg.
 
Will iPhone Finally Catch Up with NFC Mobile Payment Ability?
Apple's latest version of the iPhone may have a mobile wallet to pay for purchases with a tap of the phone. The iPhone 6 reportedly is equipped with near-field communication (NFC) technology.
 
Visual Search To Shop: Gimmick or Game Changing?
Imagine using your phone to snap a photo of the cool pair of sunglasses your friend is wearing and instantly receiving a slew of information about the shades along with a link to order them.
 

Navigation
NewsFactor Network
Home/Top News | Enterprise I.T. | Cloud Computing | Applications | Hardware | Mobile Tech | Big Data | Communications
World Wide Web | Network Security | 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.