Verizon iPhone Sales Surge in Q4

LR Mobile News Analysis Dan Jones, Mobile Editor 1/5/2012

Verizon Wireless doubled its iPhone 4S sales in the fourth quarter of 2011, setting the operator up for growth in 2012.

Fran Shammo, CFO of part-owner Verizon Communications Inc. (NYSE: VZ), revealed the sales numbers at a Citigroup investor conference this week. The operator sold 4.2 million iPhones in the final quarter of 2011. This was more than double the number of iPhones Verizon Wireless switched on in the previous quarter.

Why this matters
The news is good for Verizon, overall, but could herald a hit in wireless margins in the short-term because of the subsidy costs of the iPhone 4S. "We believe the strong high-end device sales indicate the company increased postpaid market share during the quarter and should lead to favorable operating and financial performance in future quarters," writes Mizuho Securities USA Inc. analyst Michael Nelson in a research note.

"However, upfront costs will dilute 4Q11 results, leading to a reduction in our wireless EBITDA margin estimate to 42.3% from 46.6% and our normalized EPS estimate to $0.50 from $0.56," the analyst continues.

Investors don't appear to be wild about taking the short-term hit. Verizon Communications shares continue to trade nearly one percent -- or $0.36 -- down this Thursday morning.

Verizon is due to report its fourth-quarter results on Jan. 24.

For more
See more on Verizon's iPhone activities:

— Dan Jones, Site Editor, Light Reading Mobile