That’s according to Reuters’ chief financial officer, Fran Shammo, who admitted that a new iPhone would hurt quarterly margins whenever it arrives.
Unfortunately Verizon knows that one is coming and will have to relace its unlimited mobile data plans with usage-based pricing around the middle of summer.
Verizon’s Fran Shammo said that whenever there is a new phone that quarter is pants.
His problem is that Apple has historically launched iPhone models during the summer, which also messes up Verizon Wireless’ timeline on its new data plans.
Verizon was opening the champers after it’s February iPhone launch ended AT&T’s three years of exclusive US rights to flog the gizmo.
Last week its Chief Executive Dan Mead said that sales of the first iPhone were strong. This means that Verizon is in the difficult position of knowing that it is about shaft its early adopters in a few months.
It means that Verizon might have to be in a position to offer a trade-in which will also harm the outfit’s profits.
Verizon Wireless, which pays a big subsidy for customers who sign up for two-year contracts, would still manage to report profit margins.
However an unsubsidised Verizon iPhone costs $649.99 which means that it is having to subsidise Apple users by $449.99. Normally it would only have to underwrite the sale by $300.
It could be that the iPhone could prove to be Verizon’s albatross and will not generate the hoped for profits.