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TheStreet Open House

Verizon: The Key to the iPhone, iPad (Update 2)

Stocks in this article: VZ AAPL

Updated from 9: 31 a.m. to include note about tablet activations.

NEW YORK (TheStreet) -- If earnings results from Verizon (VZ - Get Report) are any indication, it may have been a monster quarter for Apple (AAPL - Get Report) as it relates to iPhone sales, as the company activated 8.8 million smartphones during the holiday season.

BTIG analyst Walt Piecyk noted Verizon is no longer reporting quarterly iPhone activations, though the number of smartphone activations may wind up being a hint. "At year-end 2013, smartphones accounted for 70 percent of the Verizon Wireless retail postpaid customer phone base, up from 67 percent at the end of third-quarter 2013," Verizon said in its press release.

During the third-quarter of 2013, Verizon activated 3.89 million iPhones.

The iPhone continues as Verizon's most popular smartphone, and with the addition of the iPhone 5s and iPhone 5s during the quarter, it stands to reason the iPhone may continue that trend for some time to come.

According to Hudson Square Research analyst Dan Ernst, the iPhone accounted for about 63% of Verizon iPhone sales in the fourth quarter of 2012.


Verizon held its conference call at 8:30 a.m, and did not hint at what percentage of smartphone activations the iPhone was this quarter. Investors will be left up to their own guesses and estimates of how many iPhones were sold ahead of Apple's earnings, later this month.

Shares of Verizon were off 2.3% to $47.22 in mid-Tuesday trading, while Apple shares were up 1.56% to $549.10.

During the fourth-quarter, Verizon added 1.7 million net retail connections, including 1.6 million retail postpaid net additions. Verizon continues to have a low postpaid churn of just 0.96%.

For the fourth-quarter, Verizon saw an 8% year-over-year increase in service revenues in its wireless division, generating $21.1 billion in revenue.

We'll get full iPhone results for the quarter when Apple reports earnings on Jan. 27. Analysts surveyed by Thomson Reuters are expecting $14.08 per share on $57.42 billion in revenue.

Aside from the iPhone, Verizon did note that tablet activations during the quarter were stellar, noting it was "our best quarter of tablet activations since they were first introduced in late 2010."

Verizon activated approximately 790,000 post-paid tablets in the fourth-quarter, which Cantor Fitzgerald analyst Brian White notes may benefit Apple. "Given Apple's leading market share in the tablet category and strong new iPad portfolio, we believe this could indicate potential upside to our iPad forecast for the December quarter," White penned in his note.

Apple CEO Timothy D. Cook has previously said he was expecting this to be an "iPad Christmas." Judging by Verizon's comments, Cook may indeed get his wish for an iPad-centric quarter.

-- Written by Chris Ciaccia in New York

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