Tech Rumor of the Day: AT&T iPhone
Updated from 11:16 a.m. EDT
Adding to reports last week that Apple was exploring future device plans with Verizon (VZ), Citi analysts wrote in a note Wednesday that Apple "will open its doors to multiple carriers in the U.S. as soon as late-2010."
As TheStreet reported last week, AT&T's exclusivity deal for the iPhone ends a year from now, in the second quarter of 2010. Verizon's leading chunk of the market is mostly a bargaining chip for Apple to extract even more out of AT&T, according to a source close to Verizon.But Apple has pressures of its own. The pricey Macs didn't fare so well amid a recession. Apple's Mac sales growth stopped last quarter for the first time in five years, and the Mac's steady march toward marketshare gains actually reversed during that period. Apple needs to tap growth elsewhere to offset its slumping computer sales segment. And while Apple and AT&T made iPhone magic for two years, Citi analysts point out, the rest of the U.S. wireless "market is too large to ignore." This would be a potentially crushing development for AT&T's wireless juggernaut. Apple's iPhone is only one of AT&T's many devices, but Citi estimates that iPhone customers would generate 23% of AT&T's service revenue next year. AT&T already pays Apple an estimated $350 in subsidies toward of the total cost of each iPhone. This initial outlay brings the price of the iPhone down to $199 and secures a two-year service contract worth $1,656 to AT&T. AT&T has made the iPhone an anchor to its mobile data franchise with plans to link it with its U-Verse TV programming at some unspecific point down the road. But AT&T may need to change that roadmap a bit. "This issue is still 12-24 months away from impacting AT&T's operating results," Citi analysts wrote. "We believe the looming expiration of the exclusivity raises the urgency for AT&T to market successful smartphone alternatives to the iPhone." Obviously, Ma Bell can always reach out and touch some smartphone partners like Research In Motion (RIMM), Palm (PALM) and Nokia (NOK). AT&T shares rose 0.7% to $26.69.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV