Verizon ( VZ) said Thursday that it activated 4 million iPhones from Apple ( AAPL) in its first quarter. The good news is that's a 25% increase compared to the same period a year ago. The bad news is that people are still flocking to older phones. Verizon iPhone Sales Rise 25% Though Apple Concerns Remain "It would not surprise me to see another revenue miss from Apple, given the lower average selling price (ASP) associated with the older iPhones," said TheStreet's Chris Ciaccia. "Should the ASP come down on iPhones, that could be another reason for the telecoms to think about playing hardball on subsidies," Ciaccia added. Ciaccia noted that Verizon, AT&T ( T), et al. pay a large subsidy to Apple on the iPhone, as much as $400, initially easing the cost for consumers. "That could force a reworking of the deal, though I suspect that's probably something for 2014 or 2015, if at all. I'd put the likelihood of a subsidy cut anytime in the next 12 months at 10% or less." He notes that it'll be interesting to see what AT&T has to say when it reports earnings next week. The telecom giant reports on the same day as Apple.
In deals news this week, the battle for Dell ( DELL ) will continue without private equity giant Blackstone Group ( BX). Blackstone Group said Friday it is withdrawing a $14.25 a share proposal for Dell because of recent sharp declines in the personal computer market, which undercut the prospect of a turnaround. Earlier this month, technology research firm International Data Corporation said PC shipments in the U.S. fell 13.9% year-over-year to 76.3 million units in the first quarter, sharply worse than the 7.7% the firm had forecast. Blackstone's withdrawal leaves a $13.65 a share bid for Dell by Silver Lake Partners and founder Michael Dell, as well as a $15 a share proposal for a controlling stake in Dell floated by activist investor Carl Icahn, with both offers running a close contest. Blackstone Ditches $25 Billion Dell Deal Amid PC Declines
First-quarter results from Google ( GOOG) beat estimates, as earnings came in well above expectations. Earnings were aided by an 8% tax rate during the quarter. On the conference call, CFO Patrick Pichette noted this was helped by an R&D tax credit from 2012 that was only retroactively applied in 2013, as well as a mix in earnings. TheStreet's Antoine Gara reported that Google's falling income tax rate appears to be a driver of the company's overall earnings quality, adding that the tech giant's falling tax rate amid rising profits may be explained by tax shelters. Bloomberg has reported extensively on how Google finds tax benefits from its international subsidiaries. In Ireland, for instance, one appears to shelter the company from U.S. taxes. In a move known as a "Double Irish," a company shifts income from a higher-tax country to those that have lower-tax rates.
IBM ( IBM) missed Wall Street's top- and bottom-line estimates in its first-quarter results as a weak Japanese Yen weighed down profits. The company reiterated its fiscal 2013 earnings forecast. IBM noted that a deterioration in the Yen since mid-January reduced the company's earnings by 7 cents a share. The company's software revenue was flat year-over-year, or up 1% adjusted for the effects of currency, at $5.6 billion. IBM's Global Technology Services revenue decreased 4%, or 2% adjusted for currency, to $9.6 billion. The firm's hardware business experienced an even sharper decline, with revenue from its Systems and Technology segment falling 17%, or 16% adjusted for currency, to $3.1 billion.
E-commerce giant eBay ( EBAY) posted first-quarter results that missed expectations handily and softer-than-expected current-quarter guidance. The company's PayPal business saw strong revenue growth, up 18% year over year to $1.5 billion. PayPal added another 5 million registered accounts to end the quarter with 128 million, as net total payment volume (TPV) grew 21% to $41 billion.
Yahoo!'s ( YHOO ) first-quarter earnings beat Wall Street estimates, but some of the shine is off CEO Marissa Mayer as the core of the business continues to take a long time to turn around. Marissa Mayer's Star Is Dimming Yahoo! reported first-quarter non-GAAP earnings of 38 cents per share on $1.14 billion in revenue, excluding traffic acquisition costs. Including TAC, sales were $1.07 billion, missing estimates. Analysts polled by Thomson Reuters expected Yahoo! to earn 24 cents per share on $1.099 billion in revenue for the first quarter. The company noted display revenue ex-TAC was $409 million for the first quarter of 2013, down 11% year over year. Search revenue ex-TAC was up 6% year-over-ear to $402 million, but price-per-click (PPC) fell 7% annually, as mobile ads continue to monetize at a weaker rate than desktop. Mayer noted that Yahoo! is really positioned well to take advantage of the growth in mobile, particularly tablets. Poor monetization from mobile, however, isn't demonstrating Yahoo!'s strengths right now. As such, investors remain in a wait-and-see mode, says UBS analyst Eric Sheridan. "We remain skeptical that investors will see an inflection in the core business (especially pricing of Display & Search products) in the medium term," Sheridan wrote in his note. He rates shares "buy" with a $27 price target.
Facebook ( FB) is bringing some of the best features from Facebook Home to Apple's ( AAPL) iOS in an updated version of its app as the company attempts to solve the problem of slowing engagement with Facebook Home. One popular feature the social network is incorporating from its recently released Facebook Home app is Chat heads. Chat heads allows the user to chat with friends while checking newsfeeds, the company announced. Follow @atwtse Written by Andrea Tse in New York >To contact the writer of this article, click here: Andrea Tse.