Is AT&T Upgrade Policy a Problem for Apple?

AT&T

Is AT&T upgrade policy a problem for Apple?

OK, you're all obsessed with Apple. Look at AT&T today — iPhone activations were 4.3 million. Walter Piecyk, analyst at BTIG who recently downgraded Apple, had 4.5 million. He also estimates this means about 4 million iPhones were sold, also below his estimates of 4.15 million. AT&T does not put out the number of phones sold, only activations.

Also, the upgrade rate slowed. Seven percent of the postpaid customer base upgraded their phone in the first quarter. In the prior quarter, 11.9 percent upgraded. Piecyk's estimate was 9 percent.

What does this mean? It's unlikely to mean that Apple users are less interested in new phones: it's about AT&T's upgrade policy. AT&T changed its upgrade policy in January 2011, but it gave everyone one more year to upgrade. So it did not apply to the iPhone 4s, at the time.

That policy appears to be affecting sales. You can't upgrade your phone with a subsidy every year. Now it's 18 months, or more likely two years. Not a statement on the state of the economy.

You want a new phone, you have to pay $600. Want a subsidized, $200 iPhone? See you in two years.

Elsewhere, this is the big week for earnings.

1) Of 16 large companies reporting since the close yesterday, 14 have beat. (You can see CNBC.com's complete earnings coverage here.)

Lots of generally good earnings from my favorite companies: big, global industrials and materials.

Illinois Tool Works, 3M, U.S. Steel, United Technologies, Paccar, and Parker Hannifin all beat. Illinois Tool Works and Parker Hannifin raised 2012 estimates, 3M raised the low end of the guidance range, and that range is above consensus. United Technologies affirmed its 2012 sales and earnings per share outlook.

There is a pattern here: Ingersoll Rand, Eaton, and Honeywell have all reported strong numbers. Europe is a problem, but earnings are still strong.

2) Most important news out of Europe this morning: Moody's affirmed the Aaa rating of the Netherlands, though it did note that the fall of the Dutch government was "credit-negative." After a failed budget deal yesterday and the collapse of the Dutch government, there were considerable fears that rating might be in jeopardy. Just to keep the pressure up, Moody's noted that a failure to maintain fiscal discipline could cause downward pressure on the rating.

3) Auctions in the Netherlands, Italy, and Spain went off without hiccups.

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