Apple Inc. (NASDAQ:AAPL) has been languishing for almost a year now on doubts of growth and shrinking margins. In particular, their most important product, the iPhone, has faced increased competition and this has fed the fear of investors. But new information from one of its partners counters these claims, and indicates that these fears are likely unfounded.
Verizon Communications Inc. (NYSE:VZ) did well this quarter beating estimates with a 16% increase in net income, $5.2 billion or $0.78 per share. Its total revenue was almost $30 billion.
Yet the stock was down more than 2% at midday Thursday, finally closing down $0.77 (1.52%) at $49.97. While this is still in the trading range it has lived in since peaking at $54 on April 30, after a run-up from the $44 range of late last year, it is a strange reaction to good news. It is possible that yesterday’s drop is just the old “buy then rumor, sell the news” phenomenon.[Source: Yahoo Finance]
Importantly, they added 941,000 wireless subscribers
The company did well with their FiOS fiber optic cable/internet/VOIP service, increasing revenue 14.7%. In wireless, They noted:
Our smartphone penetration continued to improve and we ended the quarter at over 64%.
Among other phones, they took on the new Lumia 928. This is a follow up to the popular Lumia 920, and likewise runs Microsoft Corporation (NASDAQ:MSFT)’s Windows Phone 8 mobile operating system. The Finnish phone maker just reported that it has sold 7.4 million phones in the Lumia series.
The iPhone – big news
Perhaps the biggest news from the Verizon Communications Inc. (NYSE:VZ) release, is the figures for the iPhone. Apple Inc. (NASDAQ:AAPL) has been languishing since last September when it hit $700. Since then it has tumbled to just below $400 and has not been able to stay above $450 since February.
The news here is that in the conference call, Fran Shammo (EVP and CFO) stated (page 5):
Smartphone activations totaled 7.5 million and 72% of them were 4G LTE. The smartphone mix was fairly balanced; roughly 51% of the activations were iPhones.
This totals over 3.8 million iPhones. CNN Money notes that this is a 44% increase over a year ago, 32% increase over last quarter.
This bodes well for Apple Inc. (NASDAQ:AAPL) as the electronics maker received about 53% of revenue from the iPhone last quarter, and there has been speculation that sales would be flat this time around. Philip Elmer-Dewitt, Editor for Apple Inc. (NASDAQ:AAPL) 2.0 at Fortune, has provided one of his always excellent summaries of estimates for the iPhone from 45 analysts (both pro and “amateur”). They range from 23 – 32 million units, with an average of 27.15, barely 1 million (4.3%) over last year’s Fiscal Q3.
With almost 4 million units by Verizon Communications Inc. (NYSE:VZ) alone, perhaps it will be closer to the higher end of the analysts’ range.