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Apple Inc. (AAPL)’s iPhone Stays Strong at Verizon Communications Inc. (VZ)

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With Apple Inc. (NASDAQ:AAPL) facing a tough seasonal Q2, any bit of good news helps. Shares enjoyed early morning gains as No. 1 domestic carrier Verizon Communications Inc. (NYSE:VZ) Wireless reported strong iPhone activations. Big Red activated 3.9 million iPhones during the quarter, ahead of BTIG analyst Walter Piecyk’s estimate of 3.5 million.

That figure represented over half of the 7.5 million total smartphones that the carrier activated, down modestly from the 56% share of smartphones that the iPhone grabbed last quarter. Verizon Communications Inc. (NYSE:VZ) activated 4 million iPhones last quarter.

Source: Verizon conference calls.

That’s particularly impressive when considering that this was Samsung’s Galaxy S4 launch quarter. HTC’s One isn’t expected to launch on Verizon Communications Inc. (NYSE:VZ) until this quarter, and the Taiwanese OEM will face stiff competition within Verizon’s lineup.

Verizon Communications Inc. (NYSE:VZ)The iPhone activations were up 41% from the 2.7 million that Verizon Communications Inc. (NYSE:VZ) Wireless activated a year ago, reiterating the fact that Apple’s position in the U.S. market is rock solid. Apple’s underperformance in growth relative to the global smartphone market is now very clearly due to exploding sales in emerging markets that Apple is missing out on.

This time around, Verizon Communications Inc. (NYSE:VZ) didn’t disclose the mix of LTE iPhones (i.e. iPhone 5 units) like it has done previously. Last quarter, half of the 4 million were iPhone 5 units, and the other half were older devices, like the iPhone 4 and iPhone 4S, which were still selling well at lower price points.

A numbers game
Now we conduct the typical exercise that investors like to do after carriers release figures ahead of Apple earnings: extrapolate to get a feel for Apple’s total iPhone sales. Keep in mind that the result is always a wide range, and there are some drawbacks, but the activation figures do provide some clues.

Verizon Communications Inc. (NYSE:VZ)’s contribution to total iPhone sales tends to fluctuate around 11% to 12% most of the time. (This figure has been as low as 9% and as high as 13%.) Including every quarter that Verizon has sold iPhones, the overall average is 11%. Extrapolating based on that average implies that Apple may have sold around 34.5 million iPhones — well above the Street consensus of around 26.7 million.

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