AT&T Vague on iPhone Growth; Apple Shares Slump

Now that AT&T (T) and Apple (AAPL) are tied at hip with the iPhone, Apple watchers look to AT&T for details on the health of iPhone sales. This morning, AT&T announced a decent first quarter, with profits up 22 percent, driven by gains in its wireless business. The jewel of that business is the iPhone, which commands nearly double the average monthly revenue per subscriber that AT&T gets from other wireless customers, and is helping to reduce its churn rate. Yet during AT&T’s earnings call this morning, Apple’s shares slumped nearly 4 percent in morning trading after rising over the past two trading days. (See today's chart.)

Investors were hoping for some indication that AT&T blew the doors off its iPhone sales, and some assurance that Apple would hit its goal of selling 10 million iPhones by the end of the year. Anything over one million new iPhone subscribers would have been well received. It doesn’t look like Apple delivered anywhere near that number, since AT&T added 1.3 million net new subscribers across all phones. (It added 5 million gross new subscribers before accounting for churn).

AT&T didn’t break out the numbers of iPhone additions as it has in the past. (When iPhone sales beat expectations, they are not shy about sharing it). By the end of last year, AT&T had activated two million iPhones. But during today’s call, here are the iPhone details AT&T provided (per Silicon Alley Insider):

iPhone continues to be very popular with customers, feedback is very good. ARPUs are in the mid to upper 90s across the base. We continue to see customers adopting iPhone. Over 40% are new to us. Nothing really new in trends there. Continued, solid growth. Through Q1 stable.

We’ll have to wait for Apple’s earnings tomorrow to find out how many new iPhones were sold in the quarter. The number could still be around 1.5 million because other carriers besides AT&T are selling it internationally, and about 30 percent are unlocked. But AT&T still makes up the vast majority of iPhone sales and usage. The big bump in iPhone sales, especially in Europe, won’t come until the 3G version comes out this summer.

But handing over the keys to its network to Steve Jobs was the smartest thing AT&T ever did. That mid-$90 average revenue per user (ARPU) compares to about $50 for all phones. Higher ARPUs and lower churn is what drives profits in the mobile business.

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Comments

[seeksome]

Hoping iPhone sale are huge have alot off money in AAPL and want to retire in the next ten years and AAPL will have alot to do with it.For iPhone and accessories visit:seeksomething.com

[karpodiem]

phone sales could have been way over 1 million despite T only reporting 1.3 million new subs. Two words:

unlocked iphone.

[AppleFool]

The last time AT&T annouced iPhone subscriber numbers one day before Apple's analyst meeting, the street was disappointed. Then when Apple disclosed substantially higher sales numbers the next day, the media jumped all over the discrepancy. Although the numbers tomorrow may disappoint, I'm not reading too much into the lack of information coming out of AT&T. I suspect that AT&T and Apple have coordinated their message so only one number is presented to the street.

[NetworkEffect]

Apple will blow away numbers on iPhone - International unlocked phones is off the charts. Huge arbitrage going on where wholesalers are buying them in bulk as soon as they become available in the US, unlocking them, and selling them all over the world. The opportunities with the iPhone are huge and endless. But ideas are a dime a dozen - it's all about the execution. And Apple continues to deliver at an accelerating pace - Jobs is like the Michael Jordan of business - you don't know how he does it, but you just know that somehow he always pulls it off. And it's not like they're going to stop at the iPhone. This thing is a tsunami - wave after wave after wave of innovation and expanding the network and ecosystem ... there's video games, home entertainment, digital media delivery, peer-to-peer social networking ... etc. This snowball has just started to roll down the hill here. Until Jobs leaves, Apple will continue to exceed the expectations of the street. Short term, market is fickle so who knows. But long term, this is a slam dunk.

[stephenrosenman]

today's downgrade allowed me to buy more shares at a better price (168 to 159) before earnings come out tomorrow.
remember guys that the iPhone sales are all revenue deferred - pay attention to mac sales instead! iPhone sales don't move the earnings, the notebooks do.

[Duff]

applefool is right.....Jobs probably laid down the law...
Don't step on my toes next time....

[fatcat]

unlocked phones are a loss to apple..they need the continuing revenue to make the sales price work.