'Twas the Season for iPhone Mayhem
Verizon Wireless (NYSE: VZ) may be able to commiserate with Charles Dickens ever popular adage, “it was the best of times, it was the worst of times.” The company sold a record-breaking 4.2 million iPhone's in its fourth quarter, not to mention the plethora of other “i” products it moved throughout the holiday months. But while consumers shelled out the dough to bring home the touchscreen marvels, Verizon paid a steep price as well.
In order to do business with Apple Inc. (NASDAQ: AAPL), a company must be willing to pay a pretty penny, and Verizon Communications did just that. According to cnn.com, Verizon's chief financial officer, Fran Shammo, said that the high costs are just the price tag of doing business with Apple during the holiday season.
And Apple scored big. Charging fairly high rates for its unbeatable product, Apple Inc. brought in $46 billion for its last quarter, (Sept. 25, 2011 – Dec. 31, 2011), setting a new technology sales record. Altogether, cnn.com says that Apple sold 37 million iPhones in just the last quarter. Ah, the power of Siri.
For both companies, it is safe to say that neither is hurting financially. 2012 promises to be successful as well, as Verizon expects to move a large amount of 3G customers into the 4G era, while Apple will continue to hawk its world-dominating products full-steam ahead.
In a research report published by Bank of America today, Verizon Communications Jan. '11 guidance range for '12 are correlating nicely.
“VZ's Jan. '11 guidance, referenced today, targets a $2.40 to $2.61 range for '12. We are comfortable with our $2.60 sitting at the high end of the range premised on 1) continued wireless market share gains, 2) rising ARPU from smartphone upgrades and diminishing internet device dilution leading to wireless margin expansion and 3) improved wireline revenue trends and margins,” Bank of America stated in the report. “The biggest swing factor for '12 will likely be the timing and impact of a potential LTE iPhone launch where we would expect VZ to take material share and absorb commensurate expense that would push EPS back to the lower end of the range.”
And with very few negatives to report, Oppenheimer commented in a research report on Apple's expected success.
“Apple delivered record sales of $46.3B, up 63.9% QoQ, and EPS of $13.87, up 96.8% QoQ. Both easily topped Street expectations. Results were strong across all segments, driving impressive margin expansion of +4.4% pts. to 44.7% (gross) and +6.6% pts. to 37.4% (operating). Guidance is above consensus and looks conservative to us,” Oppenheimer said.
Overall, it looks like Santa was very good to Apple and Verizon, and will continue to be whether they're naughty or nice.
Verizon Communications is down 6.56% YTD and currently trading at $37.48. Apple Inc. is up 10.94% YTD and is currently trading at $449.32.
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