Verizon Could End Up Owing Apple As Much As $14 Billion For iPhone Sales

A report from Moffett Research LLC is claiming that Verizon Wireless may end up owing Apple as much as $14 billion for iPhone sales (via Bloomberg). The wireless carrier will apparently owe the money to Apple due to its purchase commitments over time, failing to sell an agreed number of handsets during a given period. According to telecommunications analyst Craig Moffett, Verizon is obligated to buy $23.5 billion worth of iPhones in 2013 alone.

Verizon

The analyst notes that Verizon signed a multiyear sales deal with Apple back in 2010. With Verizon’s purchase commitment being more than twice than what it sold during 2012, the company may have a shortfall of $12 billion to $14 billion. Moffett says that Apple won’t simply ignore these commitments, and will most likely “extract some consideration for renegotiating these shortfalls”. He further said that these contractual obligations with Apple may be the reason why some carriers are holding out on partnering with the Cupertino company.

“The report suggests sluggish demand for the iPhone, which accounts for about half of Apple’s sales. Other wireless providers around the world may be experiencing iPhone sales deficits as well, Moffett said. The sales shortfall bolsters analysts’ projectionfor Apple to report a 22 percent decline in net income to $6.87 billion in the third fiscal quarter, according to the average of estimates compiled by Bloomberg”.

Spokespersons for both Verizon and Apple declined to comment on iPhone purchase commitments.

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  • m Arch Tom’s on Bar N Ass

    despite we are still investigating how verizon got involved with datagate (then i am not particularly disappointed reading this article ) and having said in the past , iphone 5 is mostly designed based on the TELCO co’s. suggestions and requests, i can sort of “hint” verizon to start a “supermarket” ad campaign on the line of “1+1” or “3×2”, buy 2 and get 3. 😉 . take care, marc
    NOTE: eventually if even this approach won’t work, try achieving a good deal with the public administration for desks of the P.A employees. two phones for each desk , a white version to hold paper for new tasks and a grey/black version for pending/on-hold tasks. (knowing that almost all documents are in e-format , it may as well work ok with the little paper some people still have to print and “sit” firmly on the desk).