Tuesday, 17 May 2011

Vodafone to count cost of iPhone

The cost of selling Apple’s iPhone may outweigh the benefits as the world’s largest cellphone company reports full earnings
Published: 2011/05/17 07:17:25 AM
VODAFONE Group will today give investors a sign of whether the cost of selling Apple’s iPhone is outweighing the benefits when the world’s largest cellphone company reports full-year earnings.
Verizon Wireless, the US venture in which Vodafone owns a 45% stake, may have paid as much as $880m in upfront subsidies from selling 2,2-million iPhones in February and March, based on UBS analyst John Hodulik’s estimate for a subsidy of $400 per device. That would be more than $15m a day.
The cost of marketing the iPhone, which Vodafone will quantify, shows the balance phone companies have to strike when selling the latest smartphone to drive up data sales. Vodafone, based at Newbury in the UK, said in February its full-year operating profit forecast excludes the iPhone effect.
"To my mind the jury is out on whether these things create extra value for the operators," said Steve Malcolm, an analyst at Evolution Securities in London who has a "reduce" rating on Vodafone shares. "There is no question they create extra value for Apple."
Vodafone shares dropped 0,2% to 167,2p in London yesterday.
It may also report slowing growth in service revenue for the fourth quarter . Bloomberg

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