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Apple Skids After Verizon Says iPhone Activations Plunge

Thursday, 19 Apr 2012 | 3:27 PM ET
A customer at an Apple store at Southpark Mall in Charlotte, N.C., examines the new Apple iPhone during the first day of sales for the device, Friday, June 29, 2007. (AP Photo/Jason E. Miczek).
Jason E. Miczek
A customer at an Apple store at Southpark Mall in Charlotte, N.C., examines the new Apple iPhone during the first day of sales for the device, Friday, June 29, 2007. (AP Photo/Jason E. Miczek).

Apple shares fell more than three percent to below $585 after Verizon said it activated 25 percent fewer iPhones last quarter than it did during the last three months of 2011.

Verizon sold 3.2 million iPhones last quarter, according to the company’s chief financial officer Francis Shammo. That’s down 26 percent from the 4.3 million iPhones activated during the fourth quarter of last year.

“If Verizon's percent of iPhone sales remains stable from Q4, then this could suggest that Apple will sell 28.2 million iPhones during the past quarter,” wrote StreetInsider.com, a widely-followed provider of market insight, in a post that seemed to add to Apple selling pressure after its release.

Apple Nears Correction Territory
Shares of Apple fall over 3 percent. A significant drop in Q1 Verizon activations and concerns Apple may miss its Q2 iPhone targets weighs heavily on the stock, which is down 9 percent since its April 10th high.

“If this is the case, then Apple would miss the consensus of 30 million iPhone units during the quarter.”

Shares of Apple, which reports earnings next Tuesday, are off 9 percent from an all-time high reached earlier this month. An analyst atBTIG ten days ago raised concerns about Verizon and AT&T activations, saying in a note that the wireless carriers would soon stop offering as generous subsidies to Apple that allow the iPhone to retail well under its true price of $600.

“We manage it handset-by-handset and manage our subsidy and again, that's just one aspect of our P&L,” said CFO Shammo during today’s conference call, in response to a question on the iPhone subsidies.

“And this is just a nature of this business that's grown from the beginning of the industry that we subsidize handsets. I do think though it is important that there is a third ecosystem that's brought into the mix here.

And we are fully supportive of that with Microsoft , and as we said that we created the Android platform from beginning.”

To be sure, last quarter including the big holiday spending period. What’s more, some analysts countered the Verizon extrapolation analysis by noting international sales would be stronger this time around.

“We remain comfortable in our 33m unit estimate based on faster international growth fueled by the January launch of iPhone 4S in China,” wrote Piper Jaffray analyst Gene Munster in a note Thursday afternoon amid the Apple sell-off.

For the best market insight, catch 'Fast Money' each night at 5pm ET, and the ‘Halftime Report’ each afternoon at 12:00 ET on CNBC. Follow @CNBCMelloy on Twitter.




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