Apple’s iPhone has been exclusively with AT&T until recently and so a recent research note from an analyst that called for a fall in iPhone sales for Verizon in Q2 2011 raises a few questions. One would expect sales among Verizon customers to continue climbing with the end of AT&T’s exclusive contract. So what is happening? Is it that Android is taking share, could it be seasonality or just that the iPhone was hyped up too much? Below we take a quick look.
Our price estimate for Verizon’s stock stands at $34.50 which is about 10% below the market price.
Doesn’t Look Like Seasonality
If we look at previous total iPhone sales, there is no clear seasonal trend. While sales declined significantly in Q2 2008 compared to Q1 of same year, they increased by significant amount for corresponding periods in 2009. However in 2010, there was a slight decline in Q2 compared to Q1. Thus the limited amount of data does not establish clear seasonality in iPhone sales.
[trefischart ticker=VZ width=350 driver=0208]
If Not Seasonality, then What?
The decline could be due to 1) the growing popularity of Android phones, 2) Verizon customers are not as interested in iPhone sales as previously expected, or 3) an alternative idea is that they are waiting for Apple to release the next version.
While this could be worrisome for Apple, it doesn’t really look like bad news for AT&T & Verizon.
This could be viewed as slightly good news for AT&T indicating that defections have been minimal in the past and that existing customers are choosing other smartphones over the iPhone. As long as Verizon keeps its subscribers happy by given them smartphones they want, they should be happy.
Special Offer: Editor Marc Gerstein made 150% in Sirius XM Radio for his subscribers. Is he still holding it or is it time to take profits? Click here for updated recommendations on 50 stocks trading under $3 per share in Forbes Low-Priced Stock Report.
Both AT&T & Verizon are expected to report their earnings soon, and by comparing number of iPhone activations, we’ll have clear idea whether the issue is specific to Verizon or not.
Like our charts? Embed them in your own posts using the Trefis Wordpress Plugin.
- quick look