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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Spekulatius who wrote (49373)	9/12/2012 9:46:27 AM
From: Sergio H	Read Replies (1) \| Respond to of 78471

VZ is the largest cellular provider in the U.S. Most smartphones currently in use cannot take advantage of 4G. The new I phone will be the first Apple device to be 4G LT capable. Apple is forecasting 10 million sales in the first month. Using current metrics, VZ is expensive. Using analyst forecasts, VZ is a value play.

To: Spekulatius who wrote (49373)	9/14/2012 1:56:57 PM
From: Sergio H	Respond to of 78471

At least two analysts downgraded VZ and T based on pretty much your anti I phone thesis. Good call. DJ AT&T CFO Sees Quick Sales of iPhone, 3Q Financial Impact By Thomas Gryta AT&T Inc. (T) expects a rush of initial sales of Apple Inc.'s (AAPL) iPhone 5, noting that the previous generation of the phone sold 1 million units for use on AT&T's network in the first five days. The telecom giant, once the exclusive provider of the popular smartphone, has held the lead in quarterly iPhone unit sales despite Verizon Wireless and Sprint Nextel Corp. (S) entering the market. Wireless carriers subsidize smartphones like the iPhone by hundreds of dollars for contract customers, bringing a short-term hit to profits when new customers sign up or upgrade. "It will impact everybody's results. It will impact ours because of our embedded base," Chief Financial Officer John Stephens said at a Bank of America Merrill Lynch conference Thursday. He noted that initial sales of the iPhone 4S last year "can give you a sense of what it could be." That contrasts with Verizon Communications Inc.'s (VZ) Chief Financial Officer Fran Shammo playing down the third-quarter impact on margins because the iPhone's Sept. 21 launch is so close to the quarter's end. Mr. Stephens said there is pent-up demand and repeated AT&T's expectation of selling 25 million smartphones for the year. Based on the 10.6 million sold in the first half, sales should accelerate before year-end. In the fourth quarter of last year, the company sold 9.4 million smartphones and 73% of all smartphone sales in the last quarter were iPhones. The company has made it harder for customers to upgrade phones--extending the time until eligibility for a new subsidized phone and increasing its upgrade fee--but Mr. Stephens expects the company to benefit over the long term from new phones using its next-generation LTE network. The iPhone 5 adds the capability to work on LTE networks and is expected to help accelerate the use of networks. LTE is more profitable for the carriers and the faster connection speeds are expected to increase data consumption. This comes as AT&T and Verizon Wireless have been phasing out unlimited-data offerings and focusing on plans to better benefit from the customer shift toward data consumption and away from voice calls and text messaging. "With these great networks coming on, that usage is going to go up. Revenues will go up," Mr. Stephens said. UBS analyst John Hodulik projects next-generation devices to drive a fivefold increase in U.S. data traffic over the next five years. "Given usage-based pricing and shared data plans, we believe the carriers will be able to monetize this opportunity to the tune of $50 billion, most of which should accrue to Verizon and AT&T," he wrote in a note to customers Thursday. Robert Baird analyst William Power cuts his third-quarter earnings estimates Thursday on AT&T, Sprint and Verizon to reflect higher subsidy costs from the new iPhone.