Bull Appears on Sprint (S); Says iPhone Numbers Unbelievable
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Rating Summary:
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Today's Overall Ratings:
Up: 13 | Down: 21 | New: 7
Rating Summary:
24 Buy, 13 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 21 | New: 7
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Sprint (NYSE: S) shares are getting crushed Tuesday following reports that it will spend $20 billion or more in a new commitment to buy 30.5 million Apple (Nasdaq: AAPL) iPhones through 2015.
However, a bull is coming to the rescue. Barron's Tech Trader blog notes that J.P. Morgan analyst Philip Cusick, which has an Overweight rating on Sprint, says the numbers are blown up. At $20 billion, that means Sprint it subsidizing $500 for each iPhone sold. Cusick said Sprint "subsidizes each postpaid handset by $200 and high-end phones like the Evo by $260. While we could imagine a subsidy for high-end iPhones as high as $450 for Sprint, to get to the volumes discussed would require a lower spec’d device as well, and we cannot see how $500 would make sense across all price points."
Cusick said Sprint could just give away better HTC, Motorola (NYSE: MMI), and other phones for less cost.
Further, the commitment would represent about 37 percent of Sprint's sales, a number Cusick finds hard to believe. AT&T (NYSE: T) was close to that number, but rival Verizon (NYSE: VZ) said iPhone sales accounted for just 20 percent of all handsets at last checks.
Cusick thinks Sprint shares are driven more by emotion than anything else.
Apple is expected to announce it's new iPhone Tuesday morning, with Sprint holding a press conference on Friday.
Shares of Sprint are 12 percent lower in early trading.
However, a bull is coming to the rescue. Barron's Tech Trader blog notes that J.P. Morgan analyst Philip Cusick, which has an Overweight rating on Sprint, says the numbers are blown up. At $20 billion, that means Sprint it subsidizing $500 for each iPhone sold. Cusick said Sprint "subsidizes each postpaid handset by $200 and high-end phones like the Evo by $260. While we could imagine a subsidy for high-end iPhones as high as $450 for Sprint, to get to the volumes discussed would require a lower spec’d device as well, and we cannot see how $500 would make sense across all price points."
Cusick said Sprint could just give away better HTC, Motorola (NYSE: MMI), and other phones for less cost.
Further, the commitment would represent about 37 percent of Sprint's sales, a number Cusick finds hard to believe. AT&T (NYSE: T) was close to that number, but rival Verizon (NYSE: VZ) said iPhone sales accounted for just 20 percent of all handsets at last checks.
Cusick thinks Sprint shares are driven more by emotion than anything else.
Apple is expected to announce it's new iPhone Tuesday morning, with Sprint holding a press conference on Friday.
Shares of Sprint are 12 percent lower in early trading.
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