Through The Fly's Eyes: AT&T and Apple
From Kevin Shult of Theflyonthewall.com
Apple hit hard on AT&T’s iPhone numbers
Shares of Apple (AAPL) sank in late-day trading Tuesday after AT&T (T) said the early surge of iPhone buying wasn’t as big as projected. AT&T reported that 146,000 iPhone owners activated its service in the first 36 hours of the phone’s debut. While that would be a huge success for any other consumer-electronic product, it was considered a flop by some. Besides, the much-touted iPhone isn’t “any other consumer-electronic product.” A number of analysts expected AT&T to report activating as much as 500,000-700,000 iPhones for the quarter. “It was a disappointment,” a Piper Jaffray analyst told USA Today.
The news sent shares of Apple down nearly $9, to $134 yesterday, while AT&T dropped 35c to $39.68. Both companies are up notably today.
Richard Linder, AT&T’s Chief Financial Officer told the New York Times that demand for the iPhone at AT&T stores had outstripped supply in two days and that the launch “couldn’t have gone better.” Richard Doherty, an analyst at Envisoneering Group, considered the iPhone sales a success. He told USA Today that no consumer electronic product.
So how could analysts say that Apple had 500,000-700,000 iPhones sold over the weekend when AT&T reported such a miniscule number in comparison? The Wall Street Journal highlighted an important fact this morning: Apple recognizes revenue when the product is shipped, while AT&T’s figures only acknowledged an activated phone.
Linder noted that some people purchased the iPhone to re-sell, some were given as presents and a number of customers had trouble activating their phones the first few days. Keep in mind AT&T’s activation number was only for the first 36 hours of iPhone sales – which would put the cut-off time around 2 a.m. Sunday.
Before anyone calls the iPhone a flop, investors should wait another quarter and listen for updated sales numbers from AT&T and Apple. Let the first 90 days of iPhone sales be your guide, not the first 36 hours.