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Unlikely scenario: Analyst Peter Misek says Apple wants to raise iPhone 6 prices by as much as $100


Analyst Peter Misek, via StreetInsider, is saying that Apple is looking to raise iPhone 6 prices by as much as $100. Misek claims that Apple has been actively negotiating the increase with carrier partners.

Misek says that Apple can leverage the iPhone 6′s market power to force carrier’s hands. He says that carriers believe the iPhone 6 will be the only headline-worthy phone this year and that carriers need the iPhone to retain subscribers.

But we think this general lack of differentiation could be the reason why Apple may be able to get a price increase. Carriers realize that the iPhone 6 will likely be the only headline-worthy high-end phone launched this year and that they will lose subs if they do not offer it.”

Misek says that a $50 increase in average selling prices for the next-generation iPhone could increase Apple’s EPS by 11%.

An ASP increase could offset iPhone 6 gross margin headwind, according to Misek. “Our prelim iPhone 6 BOM est indicates GM could be up to 450bp lower than the 5s (pricier display/AP partially offset by general 5%-10% price concessions),” he notes. “Our current estimates assume a 430bp decline, which we feel is conservative unless some of the components run into yield issues. We estimate a $50 ASP increase on the iPhone 6 would raise GM by 375bp and $100 by 700bp so a $50 ASP increase would offset most of the iPhone 6 COGS pressure.”

Misek said a $50 iPhone 6 ASP increase would raise revenues EPS by 2%/11% and a $100 increase by 6%/24%.

Whilst it is true that the iPhone has staggering market power, it is hard to believe that Apple will up prices away from the norms they have established over the past seven years. In fact, the trend recently has been that Apple needs to lower prices for iPhones, not raise them, as demonstrated by Apple’s introduction of the iPhone 5c last year.

As StreetInsider notes, raising prices will likely hurt sales of unlocked iPhones — a purchase method that is steadily increasing in popularity.

Misek’s track record with Apple predictions is also not great by any measure. The analyst has claimed multiple times that the iTV is on the horizon. More recently, he said that the iPhone 5s will come in eight different colours, feature NFC and launch in June.

With the possible introduction of two iPhone 6 models (both 4.7inch and a 5.5inch variants) it is possible that the larger iPhone may come with a higher price point to match. However, at this point it is really hard to believe that Apple will budge from the base $99/$199 price points it has instated for the last several years.

Filed under: AAPL Company, iOS, iOS Devices Tagged: analyst, EPS, iPhone 6, iPhone prices, iTV, NFC, Peter Misek, StreetInsider

For more information about AAPL Company, iOS Devices, and iOS continue reading at 9to5Mac.

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Benjamin Mayo

April 14th



Apple expected to report record revenues — but falling earnings

Fortune reported that Apple is likely to achieve record revenues in Q2—but the first fall in its earnings in a decade.

Apple’s revenues are expected to grow from $41 billion to $43 billion, another record for Q2, but margins are expected to have fallen substantially from a peak of just over 47 percent last year to ‘between 37.5 and 38.5 percent’ this year.


Margins tend to fall with new products, due to high initial investments and reduced yields when pushing the limits of what can be achieved (as with the new iMacs), and it’s this falling margin that has impacted Apple’s earnings per share…

EPS in Q2 last year was $12.30; the average of analyst predictions for the same quarter this year is $9.85.

The bad news is that every analyst we’ve surveyed — even the most bullish — believes that for the first time in a decade Apple (AAPL) will report that its income this quarter was lower than the same quarter the year before.

The good news for Apple is that these predictions have already been factored into the current share price.

Judging from the performance of Apple’s shares since early March, the smart money has been pouring back into the company for the past three weeks … Wall Street seems to be betting that in the next six to 12 months, those numbers have nowhere to go but up.

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Ben Lovejoy

March 25th



Apple crushes estimates in Q2, reports profit of $11.6 billion on $39.2 billion in revenue

After a rough month that saw Apple’s stock tumble nearly $90 from a high of $644 earlier this month to as low as $555.18 on Tuesday, Apple reported its earnings for the second fiscal quarter on Tuesday after the market closed. Following a last-minute round of panic that swept Wall Street, Apple posted a net profit of $11.6 billion, or$12.30 per share — up 94% year-over-year — on revenue of $39.2 billion, crushing the Street’s consensus. Analysts were expecting earnings of $10.06 per share on $36.81 billion in sales. Read on for more.

IPhone channel sales were the focus of the Street’s worries earlier on Tuesday, as a number of analysts lowered expectations following AT&T’s first-quarter earnings report. Wall Street was looking for Apple to move 30.5 million smartphones during the second fiscal quarter and the company beat expectations, selling 35.1 million iPhones into channels last quarter, up 88% from 18.65 million units in the second quarter a year earlier.

Outside of the iPhone, which has quickly become Apple’s biggest money-maker by a substantial margin, analysts were expecting Apple to sell between 12 million and 13 million iPads along with 4.4 million Macs. Actual iPad sales came in at 11.8 million units, and Apple sold 4 million Mac computers in the second fiscal quarter. Apple sold 4.69 million iPads and 3.6 million Macs in the same quarter in 2011.

Shares of Apple stock are up more than 6% in after-hours trading, and the company’s full press release follows below.

Apple Reports Second Quarter Results

Record March Quarter Sales of iPhones, iPads and Macs

Net Profit Increases 94% Year-over-Year

CUPERTINO, Calif.–(BUSINESS WIRE)–Apple® today announced financial results for its fiscal 2012 second quarter ended March 31, 2012. The Company posted quarterly revenue of $39.2 billion and quarterly net profit of $11.6 billion, or $12.30 per diluted share. These results compare to revenue of $24.7 billion and net profit of $6.0 billion, or $6.40 per diluted share, in the year-ago quarter. Gross margin was 47.4 percent compared to 41.4 percent in the year-ago quarter. International sales accounted for 64 percent of the quarter’s revenue.

“Looking ahead to the third fiscal quarter, we expect revenue of about $34 billion and diluted earnings per share of about $8.68.”

The Company sold 35.1 million iPhones in the quarter, representing 88 percent unit growth over the year-ago quarter. Apple sold 11.8 million iPads during the quarter, a 151 percent unit increase over the year-ago quarter. The Company sold 4 million Macs during the quarter, a 7 percent unit increase over the year-ago quarter. Apple sold 7.7 million iPods, a 15 percent unit decline from the year-ago quarter.

“We’re thrilled with sales of over 35 million iPhones and almost 12 million iPads in the March quarter,” said Tim Cook, Apple’s CEO. “The new iPad is off to a great start, and across the year you’re going to see a lot more of the kind of innovation that only Apple can deliver.”

“Our record March quarter results drove $14 billion in cash flow from operations,” said Peter Oppenheimer, Apple’s CFO. “Looking ahead to the third fiscal quarter, we expect revenue of about $34 billion and diluted earnings per share of about $8.68.”

Apple will provide live streaming of its Q2 2012 financial results conference call beginning at 2:00 p.m. PDT on April 24, 2012 at www.apple.com/quicktime/qtv/earningsq212. This webcast will also be available for replay for approximately two weeks thereafter.

This press release contains forward-looking statements including without limitation those about the Company’s estimated revenue and diluted earnings per share. These statements involve risks and uncertainties, and actual results may differ. Risks and uncertainties include without limitation the effect of competitive and economic factors, and the Company’s reaction to those factors, on consumer and business buying decisions with respect to the Company’s products; continued competitive pressures in the marketplace; the ability of the Company to deliver to the marketplace and stimulate customer demand for new programs, products, and technological innovations on a timely basis; the effect that product introductions and transitions, changes in product pricing or mix, and/or increases in component costs could have on the Company’s gross margin; the inventory risk associated with the Company’s need to order or commit to order product components in advance of customer orders; the continued availability on acceptable terms, or at all, of certain components and services essential to the Company’s business currently obtained by the Company from sole or limited sources; the effect that the Company’s dependency on manufacturing and logistics services provided by third parties may have on the quality, quantity or cost of products manufactured or services rendered; risks associated with the Company’s international operations; the Company’s reliance on third-party intellectual property and digital content; the potential impact of a finding that the Company has infringed on the intellectual property rights of others; the Company’s dependency on the performance of distributors, carriers and other resellers of the Company’s products; the effect that product and service quality problems could have on the Company’s sales and operating profits; the continued service and availability of key executives and employees; war, terrorism, public health issues, natural disasters, and other circumstances that could disrupt supply, delivery, or demand of products; and unfavorable results of other legal proceedings. More information on potential factors that could affect the Company’s financial results is included from time to time in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s public reports filed with the SEC, including the Company’s Form 10-K for the fiscal year ended September 24, 2011, its Form 10-Q for the fiscal quarter ended December 31, 2011, and its Form 10-Q for the fiscal quarter ended March 31, 2012 to be filed with the SEC. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.

Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple has reinvented the mobile phone with its revolutionary iPhone and App Store, and is defining the future of mobile media and computing devices with iPad.

NOTE TO EDITORS: For additional information visit Apple’s PR website (www.apple.com/pr), or call Apple’s Media Helpline at (408) 974-2042.

© 2012 Apple Inc. All rights reserved. Apple, the Apple logo, Mac, Mac OS and Macintosh are trademarks of Apple. Other company and product names may be trademarks of their respective owners.

Apple Inc.UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In millions, except number of shares which are reflected in thousands and per share amounts)
Three Months Ended Six Months Ended
March 31,2012 March 26,2011 March 31,2012 March 26,2011
Net sales $ 39,186 $ 24,667 $ 85,519 $ 51,408
Cost of sales (1) 20,622 14,449 46,252 30,892
Gross margin 18,564 10,218 39,267 20,516
Operating expenses:
Research and development (1) 841 581 1,599 1,156
Selling, general and administrative (1) 2,339 1,763 4,944 3,659
Total operating expenses 3,180 2,344 6,543 4,815
Operating income 15,384 7,874 32,724 15,701
Other income and expense 148 26 285 162
Income before provision for income taxes 15,532 7,900 33,009 15,863
Provision for income taxes 3,910 1,913 8,323 3,872
Net income $ 11,622 $ 5,987 $ 24,686 $ 11,991
Earnings per common share:
Basic $ 12.45 $ 6.49 $ 26.48 $ 13.02
Diluted $ 12.30 $ 6.40 $ 26.17 $ 12.83
Shares used in computing earnings per share:
Basic 933,582 923,196 932,265 921,245
Diluted 944,893 935,944 943,185 934,549
(1) Includes stock-based compensation expense as follows:
Cost of sales $ 63 $ 51 $ 126 $ 103
Research and development $ 168 $ 104 $ 328 $ 217
Selling, general and administrative $ 193 $ 132 $ 390 $ 266
Apple Inc.UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS(In millions, except number of shares which are reflected in thousands)
March 31, 2012 September 24, 2011
Current assets:
Cash and cash equivalents $ 10,121 $ 9,815
Short-term marketable securities 18,417 16,137
Accounts receivable, less allowances of $83 and $53, respectively 7,042 5,369
Inventories 1,102 776
Deferred tax assets 2,253 2,014
Vendor non-trade receivables 6,727 6,348
Other current assets 5,050 4,529
Total current assets 50,712 44,988
Long-term marketable securities 81,638 55,618
Property, plant and equipment, net 8,847 7,777
Goodwill 1,141 896
Acquired intangible assets, net 3,604 3,536
Other assets 4,992 3,556
Total assets $ 150,934 $ 116,371
Current liabilities:
Accounts payable $ 17,011 $ 14,632
Accrued expenses 9,778 9,247
Deferred revenue 5,247 4,091
Total current liabilities 32,036 27,970
Deferred revenue – non-current 2,446 1,686
Other non-current liabilities 13,954 10,100
Total liabilities 48,436 39,756
Commitments and contingencies
Shareholders’ equity:
Common stock, no par value; 1,800,000 shares authorized; 934,982 and 929,277 shares issued and outstanding, respectively 14,850 13,331
Retained earnings 87,124 62,841
Accumulated other comprehensive income 524 443
Total shareholders’ equity 102,498 76,615
Total liabilities and shareholders’ equity $ 150,934 $ 116,371
Six Months Ended
March 31, 2012 March 26, 2011
Cash and cash equivalents, beginning of the period $ 9,815 $ 11,261
Operating activities:
Net income 24,686 11,991
Adjustments to reconcile net income to cash generated by operating activities:
Depreciation, amortization and accretion 1,461 790
Share-based compensation expense 844 586
Deferred income tax expense 2,915 1,563
Changes in operating assets and liabilities:
Accounts receivable, net (1,663 ) (288 )
Inventories (326 ) 121
Vendor non-trade receivables (379 ) (883 )
Other current and non-current assets (1,510 ) (1,886 )
Accounts payable 2,809 1,626
Deferred revenue 1,916 698
Other current and non-current liabilities 778 1,674
Cash generated by operating activities 31,531 15,992
Investing activities:
Purchases of marketable securities (85,022 ) (42,260 )
Proceeds from maturities of marketable securities 7,702 10,211
Proceeds from sales of marketable securities 49,052 21,705
Payments made in connection with business acquisitions, net of cash acquired (350 ) 0
Payments for acquisition of property, plant and equipment (2,778 ) (1,838 )
Payments for acquisition of intangible assets (160 ) (81 )
Other (48 ) 12
Cash used in investing activities (31,604 ) (12,251 )
Financing activities:
Proceeds from issuance of common stock 377 494
Excess tax benefits from equity awards 636 740
Taxes paid related to net share settlement of equity awards (634 ) (258 )
Cash generated by financing activities 379 976
Increase in cash and cash equivalents 306 4,717
Cash and cash equivalents, end of the period $ 10,121 $ 15,978
Supplemental cash flow disclosure:
Cash paid for income taxes, net $ 4,835 $ 1,913
Apple Inc.
Q2 2012 Unaudited Summary Data
(Units in thousands, Revenue in millions)
Q1 2012 Q2 2011 Q2 2012
Sequential Change Year/Year Change
Operating Segments Mac Units Revenue Mac Units Revenue Mac Units Revenue Mac Units Revenue Mac Units Revenue
Americas 1,612 $ 17,714 1,217 $ 9,323 1,214 $ 13,182 - 25 % - 26 % 0 % 41 %
Europe 1,482 11,256 995 6,027 1,048 8,807 - 29 % - 22 % 5 % 46 %
Japan 184 3,550 155 1,383 158 2,645 - 14 % - 25 % 2 % 91 %
Asia Pacific 814 7,697 596 4,743 771 10,153 - 5 % 32 % 29 % 114 %
Retail 1,106 6,116 797 3,191 826 4,399 - 25 % - 28 % 4 % 38 %
Total Operating Segments 5,198 $ 46,333 3,760 $ 24,667 4,017 $ 39,186 - 23 % - 15 % 7 % 59 %
Sequential Change Year/Year Change
Product Summary Units Revenue Units Revenue Units Revenue Units Revenue Units Revenue
Mac Desktops (1)(9) 1,479 $ 1,936 1,009 $ 1,441 1,199 $ 1,563 - 19 % - 19 % 19 % 8 %
Mac Portables (2)(9) 3,719 4,662 2,751 3,535 2,818 3,510 - 24 % - 25 % 2 % - 1 %
Subtotal Mac 5,198 6,598 3,760 4,976 4,017 5,073 - 23 % - 23 % 7 % 2 %
iPod (3)(9) 15,397 2,528 9,017 1,600 7,673 1,207 - 50 % - 52 % - 15 % - 25 %
Other Music Related Products and Services (4) 2,027 1,634 2,151 6 % 32 %
iPhone and Related Products and Services (5)(9) 37,044 24,417 18,647 12,298 35,064 22,690 - 5 % - 7 % 88 % 85 %
iPad and Related Products and Services (6)(9) 15,434 9,153 4,694 2,836 11,798 6,590 - 24 % - 28 % 151 % 132 %
Peripherals and Other Hardware (7) 766 580 643 - 16 % 11 %
Software, Service and Other Sales (8) 844 743 832 - 1 % 12 %
Total Apple $ 46,333 $ 24,667 $ 39,186 - 15 % 59 %
(1) Includes revenue from iMac, Mac mini, and Mac Pro sales.
(2) Includes revenue from MacBook, MacBook Air, and MacBook Pro sales.
(3) Includes revenue from iPod sales.
(4) Includes revenue from sales from the iTunes Store, App Store, and iBookstore in addition to sales of iPod services and Apple-branded and third-party iPod accessories.
(5) Includes revenue from sales of iPhone, iPhone services, and Apple-branded and third-party iPhone accessories.
(6) Includes revenue from sales of iPad, iPad services, and Apple-branded and third-party iPad accessories.
(7) Includes revenue from sales of displays, networking product, and other hardware.
(8) Includes revenue from sales of Apple-branded and third-party Mac software, and services.
(9) Includes amortization of related revenue deferred for non-software services and embedded software upgrade rights.

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Zach Epstein

April 24th


Verizon reports record revenue growth in Q4, misses EPS estimates by a penny

Verizon on Tuesday reported its fourth quarter 2011 results. The company noted record revenue growth during the quarter, which it said was fueled by strong demand for wireless service. Revenue for the year totaled $110.9 billion, up 4% from 2010. Its quarterly revenue of $28.4 billion was up 7.7% from the same time period last year. Verizon Wireless, a joint venture between Verizon Communications and Vodafone, reported the highest number of retail net additions in three years driven by smartphone sales. Revenues tipped at $18.3 billion during the quarter, up 13% from the same period last year. Data revenues was up even higher year over year, at $6.3 billion, up 19.2% ($1 billion) from the same period one year prior. ARPU grew 2.6% to $53.14. Verizon also reported $0.85 EPS, down from $0.90 EPS in 2010. The carrier added a total of 1 million total net connections during the fourth quarter and 1.5 million retail customers, including 1.2 million retail postpaid customers. Postpaid churn was 0.94% for the quarter. Verizon’s full press release follows after the break.

Verizon Reports Record Revenue Growth in 4Q, Fueled by Strong Demand for Wireless, FiOS and Strategic Services

Verizon Generates Strong Cash Flows, 18.2 Percent Shareholder Returns in 2011; 4Q Earnings Impacted by Non-Cash Pension Items



·         7.7 percent year-over-year quarterly revenue growth in 4Q, a company record.

·         A loss of 71 cents in diluted earnings per share (EPS), impacted by non-cash pension items, compared with earnings of 93 cents per share in 4Q 2010.

·         52 cents per share in adjusted EPS (non-GAAP), which excludes $1.23 per share in non-operational items, compared with 54 cents in adjusted EPS in 4Q 2010.



·         $18.3 billion in total 4Q revenues, up 13.0 percent year over year; data revenues of $6.3 billion, up 19.2 percent, representing 41.6 percent of service revenues; $15.1 billion in service revenues, up 6.4 percent.

·         1.5 million retail net additions (excluding acquisitions and adjustments), largest increase in three years, includes 1.2 million retail postpaid net customer additions; 108.7 million total connections, includes 92.2 million retail customers.

·         2.6 percent growth in retail service ARPU over 4Q 2010; retail postpaid data ARPU up 14.3 percent.

·         23.7 percent operating income margin; 42.2 percent Segment EBITDA margin on service revenues (non-GAAP).



·         201,000 FiOS Internet and 194,000 FiOS Video net additions, with increased sales penetration for both products; net increase of 98,000 broadband connections from 3Q 2011.

·         8.5 percent year-over-year increase in consumer ARPU; FiOS ARPU was more than $148 per month.

·         14.7 percent increase in strategic services revenues, representing 51 percent of global enterprise revenues.

·         3.0 percent operating income margin; 23.8 percent Segment EBITDA margin (non-GAAP), compared with 23.5 percent in 4Q 2010 and 21.4 percent in 3Q 2011.


NEW YORK – Verizon Communications Inc. (NYSE, Nasdaq: VZ) posted the highest year-over-year quarterly revenue growth in the company’s 11-year history in fourth-quarter 2011, fueled by continued strong demand for Verizon Wireless services and handsets, FiOS fiber-optic services, and strategic business products and services.


‘Great Momentum for 2012’


“Verizon finished 2011 very strong, both in terms of revenue growth and by delivering an 18.2 percent total return to our shareholders for the full year, and the company has great momentum for 2012,” said Lowell McAdam, Verizon chairman, president and chief executive officer.  “Verizon Wireless produced particularly strong growth in the fourth quarter.  While that diluted wireless margins in the short term, it is good news for revenue and margin growth over the long term, particularly given our leadership in the rapidly developing 4G LTE ecosystem.”


McAdam added: “Wireline margins recovered from third-quarter pressures, and we expect wireline margin expansion in 2012.  With recent strategic moves and our investments in FiOS, LTE, and global IP and cloud-based strategic services, Verizon has set the stage for accelerated growth across our business units, and we look to continue to build significant value for shareholders in 2012.”


Verizon’s total shareholder return is a combination of stock-price appreciation and dividend payments.  Regarding recent strategic moves, Verizon last month strengthened its ability to provide fully integrated solutions by creating Verizon Enterprise Solutions, a sales and marketing organization, to harness all of Verizon’s solutions for business and government customers globally.  In addition, Verizon Wireless announced agreements to purchase AWS (Advanced Wireless Spectrum) licenses, an important step toward meeting customers’ needs for wireless data and broadband services.


4Q and Full-Year Earnings Results


Due primarily to the impact of previously announced non-cash pension items, Verizon reported a loss of 71 cents in EPS in fourth-quarter 2011, compared with earnings of 93 cents per share in fourth-quarter 2010.


Adjusted fourth-quarter 2011 earnings (non-GAAP) of 52 cents per share exclude $1.20 per share, or $3.4 billion after-tax, due to the actuarial valuation of Verizon’s benefit plans, and 3 cents per share for the early extinguishment of debt.  This annual valuation adjustment, resulting from changes in actuarial assumptions, is in accordance with a Verizon accounting policy adopted last year.  Comparable adjusted fourth-quarter 2010 earnings were 54 cents per share, excluding the impact of non-operational items, the largest of which was a gain from benefit-plan valuation of 44 cents per share.


On an annual basis, Verizon reported 85 cents in 2011 EPS, compared with 90 cents per share in 2010.  Adjusted annual EPS (non-GAAP) was $2.15 in 2011, compared with $2.08 on a comparable basis (non-GAAP, excluding results from divested businesses) in 2010.


Consolidated Revenue Growth, Strong Cash Flows


In fourth-quarter 2011, Verizon’s total operating revenues were $28.4 billion on a consolidated basis, an increase of 7.7 percent compared with fourth-quarter 2010.  For full-year 2011, revenues totaled $110.9 billion, a 4.0 percent increase compared with 2010, when results included revenues from operations that have since been divested.  On a comparable basis (non-GAAP), Verizon’s 2011 full-year revenues increased 6.2 percent compared with 2010.


Consolidated EBITDA (earnings before interest, taxes, depreciation and amortization) totaled $29.4 billion in 2011.  On an adjusted basis (non-GAAP), EBITDA increased by more than $950 million in 2011 compared with 2010.


Cash flow from operating activities totaled $29.8 billion in 2011, and capital expenditures totaled $16.2 billion.  Free cash flow (non-GAAP, cash flow from operations less capex) was more than $13.5 billion in 2011.  From this total, Verizon returned $5.6 billion in quarterly dividends to shareholders in 2011, as the company’s Board of Directors approved a fifth consecutive year of dividend increases.


Verizon Wireless Delivers Strong Customer and Revenue Growth


In fourth-quarter 2011, Verizon Wireless delivered the highest number of retail net additions in three years and strong growth in revenues, driven by increased smartphone penetration and increased retail postpaid ARPU (average monthly service revenue per user).


Wireless Financial Highlights

·         Total revenues were $18.3 billion in fourth-quarter 2011, up 13.0 percent year over year.  Data revenues were $6.3 billion, up more than $1.0 billion or 19.2 percent year over year, and represented 41.6 percent of all service revenues.  Service revenues were $15.1 billion, up 6.4 percent year over year.  For full-year 2011, total revenues were $70.2 billion, up 10.6 percent over full-year 2010, and service revenues were $59.2 billion in 2011, up 6.3 percent year over year.

·         Retail service ARPU grew 2.6 percent over fourth-quarter 2010, to $53.14.  Retail postpaid ARPU grew 2.5 percent, to $54.80.  Retail postpaid data ARPU increased to $22.76, up 14.3 percent year over year.

·         In fourth-quarter 2011, wireless operating income margin was 23.7 percent, and wireless generated $6.4 billion of EBITDA.  Segment EBITDA margin on service revenues (non-GAAP) was 42.2 percent, down 530 basis points from fourth-quarter 2010.  For full-year 2011, operating income margin was 26.4 percent, down 310 basis points from full-year 2010; Segment EBITDA margin was 44.8 percent, down 210 basis points.


Wireless Operational Highlights

·         Verizon Wireless added 1.0 million total net connections in fourth-quarter 2011.  The company added 1.5 million retail customers, including 1.2 million retail postpaid customers.  While the wholesale channel grew during the fourth quarter, a loss of telematics customers resulted in a net decrease of 490,000 wholesale and other connections in the quarter.  These totals exclude acquisitions and adjustments.

·         At year-end 2011, the company had 108.7 million total connections, a 6.3 percent increase year over year, consisting of 92.2 million retail connections and 16.5 million wholesale and other connections.

·         At year-end 2011, smartphones accounted for 44 percent of the Verizon Wireless retail postpaid customer phone base, up from 39 percent at the end of third-quarter 2011.

·         Retail postpaid churn was 0.94 percent in fourth-quarter 2011, an improvement of 7 basis points year over year.  Total retail churn was 1.23 percent, an improvement of 14 basis points year over year.

·         Verizon Wireless continued to roll out its 4G LTE mobile broadband network, the largest 4G LTE network in the U.S.  As of Monday (Jan. 23), Verizon Wireless 4G LTE service was available to more than 200 million people in 195 markets across the U.S.

·         Verizon Wireless introduced six new 4G LTE devices in fourth-quarter 2011: the Droid Razr by Motorola; the Samsung Stratosphere; the HTC Rezound; the Galaxy Nexus by Samsung; and Droid Xyboard tablets in 10.1-inch and 8-inch form factors.  Earlier this month, the company announced that six additional 4G LTE devices would be available in the coming weeks, including two mobile hotspots, now called Jetpacks, from ZTE and Novatel; three smartphones – the Droid 4 and Droid Razr Maxx from Motorola, and the Spectrum from LG, which launched last week; and the Samsung Galaxy Tab 7.7.

·         In December, Verizon Wireless announced agreements to purchase AWS licenses from SpectrumCo – a joint venture of Comcast, Time Warner and Bright House Networks – and from Cox TMI Wireless.  The spectrum licenses under the two agreements cover 93 percent of the U.S. population, and the purchases are subject to regulatory approval.

·         Verizon Wireless’ 4G LTE network was ranked No. 1 on PC World’s 100 Best Products of 2011 list.  In October, RootMetrics ranked Verizon Wireless tops for network performance in Boston and 21 other cities nationwide; in November, Verizon Wireless won the RootMetrics RootScore award for data performance in 36 markets.


FiOS, Strategic Services Contribute to Revenue Growth


In fourth-quarter 2011, revenues and customers continued to increase for FiOS services, and sales of strategic services to business customers remained strong.  Segment EBITDA margins (non-GAAP) also increased both sequentially and year over year.


Wireline Financial Highlights

·         Fourth-quarter 2011 operating revenues were $10.1 billion, a decline of 1.5 percent compared with fourth-quarter 2010.  Consumer revenues grew 1.3 percent compared with fourth-quarter 2010.

·         In fourth-quarter 2011, wireline operating income was $300 million, up 18.6 percent from fourth-quarter 2010.  Segment EBITDA (non-GAAP) was $2.4 billion in fourth-quarter 2011, flat compared with fourth-quarter 2010 and an increase of $243 million from third-quarter 2011, when the Segment EBITDA was impacted by storm-related repair costs and a two-week strike.  Operating income margin was 3.0 percent in fourth-quarter 2011.  Segment EBITDA margin (non-GAAP) was 23.8 percent, compared with 23.5 percent in fourth-quarter 2010 and 21.4 percent in third-quarter 2011.

·         Consumer ARPU for wireline services was $96.43 in fourth-quarter 2011, up 8.5 percent compared with fourth-quarter 2010.  ARPU for FiOS customers totaled more than $148 in fourth-quarter 2011, rising approximately $2 year over year.  FiOS services to consumer retail customers represented 61 percent of consumer wireline revenues in fourth-quarter 2011.

·         Global enterprise revenues totaled $3.9 billion in the quarter, up 1.3 percent compared with fourth-quarter 2010.  Sales of strategic services – including Terremark cloud services, security and IT solutions, and strategic networking – increased 14.7 percent compared with fourth-quarter 2010 and represented 51 percent of global enterprise revenues in fourth-quarter 2011.


Wireline Operational Highlights

·         Verizon added 201,000 net new FiOS Internet connections and 194,000 net new FiOS Video connections in fourth-quarter 2011.  Verizon had a total of 4.8 million FiOS Internet and 4.2 million FiOS Video connections at year-end.

·         FiOS penetration (subscribers as a percentage of potential subscribers) continued to increase.  FiOS Internet penetration was 35.5 percent at year-end 2011, compared with 31.9 percent at year-end 2010.  In the same periods, FiOS Video penetration was 31.5 percent, compared with 28.0 percent, respectively.  The FiOS network passed 16.5 million premises at year-end 2011, up more than 900,000 from year-end 2010.

·         Broadband connections totaled 8.7 million at year-end 2011, a 3.3 percent year-over-year increase.  FiOS Internet connections more than offset a decrease in DSL-based HSI connections, resulting in a net increase of 98,000 broadband connections from third-quarter 2011.  Total voice connections, which measures FiOS Digital Voice connections in addition to traditional switched access lines, declined 7.2 percent to 24.1 million – the smallest year-over-year decline since first-quarter 2006.

·         Verizon continued to enhance its global portfolio of secure IT and advanced communications platforms and industry-focused solutions.  In fourth-quarter 2011, this included an expansion of the company’s Voice-over-IP service within the Asia-Pacific region and the rollout of an automated healthcare fraud-detection platform for private health insurers and government agencies.

·         Multinational corporations, leading businesses and government agencies – including Accenture plc; Chrysler Group LLC; the Commonwealth of Pennsylvania; GXS Inc.; MagnaCare Holdings Inc.; Tyson Foods Inc.; Consolidated Edison Company of New York Inc.; and Orange and Rockland Utilities Inc., a Con Edison subsidiary – completed new agreements or expanded their relationships with Verizon for a range of advanced communications and information technology solutions.  Verizon also announced that it had been named a prime contractor under the U.S. General Services Administration’s CONNECTIONS II contract to provide professional and managed services and custom networking solutions at federal facilities.

·         Verizon continued to broaden the scope and capabilities of its network infrastructure.  In fourth-quarter 2011, the company completed deployment of its next-generation 100 gigabit-per-second network route between New York City and Chicago and kicked off seven additional routes in the U.S.; expanded the Ethernet footprint to an additional 80 nodes supporting 23 areas in the Eastern part of the U.S.; expanded the global Private IP network into six additional countries in Africa and two more countries in the Middle East; and activated the first phase of the Europe India Gateway (EIG) submarine cable connecting Europe to the Middle East and Africa with 40G high-speed connections.

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Todd Haselton

January 24th


Microsoft reports record revenue in Q2, beats EPS estimates; Windows division declines

Microsoft reported its earnings for the quarter ended December 31st, 2011 Thursday and noted record revenue for its second fiscal quarter. Revenue of $20.89 billion was up 5% from the same period last year. “We delivered solid financial results, even as we prepare for a launch year that will accelerate many of our key products and services,” said Steve Ballmer, chief executive officer at Microsoft. “Coming out of the Consumer Electronics Show, we’re seeing very positive reviews for our new phones and PCs, and a strong response to our new Metro style design that will unify consumer experiences across our phones, PCs, tablets, and television in 2012.” Microsoft’s business division reported $6.28 billion in revenue for the quarter, up 3% from the same period last year. Its Server & Tools business recorded $4.77 billion in revenue, up 11% from the same period last year. The Windows and Windows Live Division, however, reported revenue of $4.74 billion, which was down 6% from the same period last year. The company’s profits were recorded at $0.78 per share, beating analyst expectations of $0.76 per share. Microsoft’s full press release follows after the break.

Microsoft Reports Record Revenue of $20.9 Billion in Second Quarter

Strong business demand and holiday sales drive record revenue and EPS.

REDMOND, Wash. — Jan. 19, 2012 — Microsoft Corp. today announced quarterly revenue of $20.89 billion for the quarter ended Dec. 31, 2011, a 5% increase from the prior year period. Operating income, net income, and diluted earnings per share for the quarter were $7.99 billion, $6.62 billion, and $0.78 per share, compared with $8.17 billion, $6.63 billion and $0.77 per share, respectively, in the prior year period. Prior year results include recognition of $224 million of deferred revenue related to the Office 2010 technology guarantee program.

“We delivered solid financial results, even as we prepare for a launch year that will accelerate many of our key products and services,” said Steve Ballmer, chief executive officer at Microsoft. “Coming out of the Consumer Electronics Show, we’re seeing very positive reviews for our new phones and PCs, and a strong response to our new Metro style design that will unify consumer experiences across our phones, PCs, tablets, and television in 2012.”

The Microsoft Business Division reported $6.28 billion in second quarter revenue, a 3% increase from the prior year period, and a 7% increase excluding the prior year recognition of deferred revenue for the Office 2010 technology guarantee program. Nearly 200 million licenses of Office 2010 have been sold in the 18 months since launch. Revenue from Exchange and SharePoint grew by 10% or more over the prior year period, and revenue from Lync and Dynamics CRM grew by more than 30%.

The Server & Tools business posted $4.77 billion in second quarter revenue, an 11% increase from the prior year period, reflecting double-digit revenue growth in Windows Server and SQL Server premium editions and more than 20% growth in System Center revenue.

“We saw strong demand for our business products and services, despite the soft PC market and continuing economic uncertainty in key parts of the world,” said Peter Klein, chief financial officer at Microsoft. “We delivered record earnings per share by continuing to manage our costs while investing for future growth.”

The Windows and Windows Live Division posted revenue of $4.74 billion, a 6% decline from the prior period. Microsoft has sold over 525 million Windows 7 licenses since launch.

The Online Services Division reported revenue of $784 million, a 10% increase from the prior year period. Bing organic US market share grew to 15.1% while Bing-powered US market share, including Yahoo! properties, was approximately 27%.

The Entertainment & Devices Division posted revenue of $4.24 billion, an increase of 15% from the prior period. The Xbox 360 installed base now totals approximately 66 million consoles and 18 million Kinect sensors. Xbox LIVE now has 40 million members worldwide, an increase of 33% from the prior year period.

“In addition to the continued strength of our commercial business, this holiday season was the strongest in Microsoft history, thanks to good sales execution and compelling products like Xbox 360 and Kinect,” said Kevin Turner, chief operating officer at Microsoft. “We are seeing a lot of excitement for new devices, from Windows 7 Ultrabooks to new Windows Phones, as well as growing anticipation for Windows 8.”

Business Outlook

Microsoft is revising operating expense guidance downward to $28.5 billion to $28.9 billion for the full year ending June 30, 2012.

Webcast Details

Peter Klein, chief financial officer, Frank Brod, chief accounting officer, and Bill Koefoed, general manager of Investor Relations, will host a conference call and webcast at 2:30 p.m. PST (5:30 p.m. EST) today to discuss details of the company’s performance for the quarter and certain forward-looking information. The session may be accessed at http://www.microsoft.com/investor/. The webcast will be available for replay through the close of business on Jan. 19, 2013.

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Todd Haselton

January 19th


Despite no new device last quarter, iPhone made up over 56% of AT&T’s Smartphone sales (2.8 million activations)

AT&T just released its earnings and showed strong iPhone sales despite having a 16-month old device on hand with updates looming.  The carrier reported activating 2.7 million iPhones in the quarter out of a total of 4.8 million total devices.  Android device sales doubled year over year.

Non-iPhone Smartphone Sales Increase. AT&T continues to deliver robust smartphone sales. (Smartphones are voice and data devices with an advanced operating system to better manage data and Internet access.) In the third quarter, the company sold 4.8 million smartphones, representing nearly two-thirds of postpaid device sales. Sales of Android devices more than doubled year over year, and almost half of all smartphone sales were non-iPhone devices. During the quarter, 2.7 million iPhones were activated.

Our polls show that significantly more than half of all US iPhone users go with AT&T, due mostly to the higher data rates and ability to talk and use data at the same time.

Press release follows:

AT&T Reports Solid Earnings, Strong Cash Flow, Robust Mobile Broadband Sales and Improving Wireline Revenue Trends 

in Third-Quarter Results

  • $0.61 diluted EPS compared to $2.07 diluted EPS in the third quarter of 2010 and $0.54 when excluding one-time gains in the year-ago quarter
  • 2.1 million increase in total wireless subscribers to pass 100 million subscribers, with gains in every customer category
  • Best free cash flow in two years even with higher capital spending
  • First sequential growth in wireline business revenues in three years
  • Best wireless EBITDA service margin performance in six quarters
  • Sales of Android and other non-iPhone smartphones were almost half of 4.8 million smartphone sales in the quarter
  • Branded computing subscribers (includes tablets, aircards, MiFi devices, tethering plans and other data-only devices) up 505,000, to reach 4.5 million
  • 18.0 percent growth in wireless data revenues, up $857 million versus the year-earlier quarter
  • 11th consecutive quarter with a year-over-year increase in postpaid subscriber ARPU (average monthly revenues per subscriber), up 1.4 percent to $63.69
  • Total churn improves; postpaid churn stable
  • Continued growth in strategic business services revenues, up 19.3 percent year over year
  • Fifth consecutive quarter of year-over-year growth in wireline consumer revenues, driven by AT&T U-verse® services
  • 176,000 net gain in AT&T U-verse TV subscribers to reach 3.6 million in service, with continued high broadband and voice attach rates
  • 19.6 percent growth in wireline consumer Internet Protocol (IP) data revenues to reach  half of consumer revenues, driven by continued AT&T U-verse expansion

Note: AT&T’s third-quarter earnings conference call will be broadcast live via the Internet at 10 a.m. ET on Thursday, October 20, 2011, at www.att.com/investor.relations.

DALLAS, Oct. 20, 2011AT&T Inc. (NYSE:T) today reported third-quarter results, highlighted by solid earnings and free cash flow, continued strong mobile broadband growth and sequential growth in wireline business revenues.

“Mobile broadband growth continues to be robust, execution was strong across the business, and we delivered another solid quarter,” said Randall Stephenson, AT&T chairman and chief executive officer.

“Smartphones, connected devices and tablets all posted impressive gains. Our first LTE 4G markets are up and running with terrific speeds. And we continue to work toward a successful completion of our planned T-Mobile USA merger. The next waves in the mobile Internet revolution represent tremendous growth potential, and we are laying the groundwork required for that future.”

Third-Quarter Financial Results 

For the quarter ended September 30, 2011, AT&T’s consolidated revenues totaled $31.5 billion, down $103 million, or 0.3 percent, versus the year-earlier quarter.

Compared with results for the third quarter of 2010, AT&T’s operating income margin was 19.8 percent, compared to 17.2 percent; operating expenses were $25.2 billion versus $26.2 billion; and operating income was $6.2 billion, up from $5.4 billion.

Third-quarter 2011 net income attributable to AT&T totaled $3.6 billion, or $0.61 per diluted share. These results compare with reported net income attributable to AT&T of $12.3 billion, or $2.07 per diluted share, in the third quarter of 2010, which included one-time gains from a tax settlement and the sale of Sterling Commerce. Excluding one-time gains, earnings were $0.54 in the third quarter a year ago.

Third-quarter 2011 cash from operating activities totaled $10.4 billion, and capital expenditures totaled $5.3 billion. Free cash flow — cash from operating activities minus capital expenditures — totaled $5.1 billion.

Compared with results for the first nine months of 2010, year to date through the third quarter, cash from operating activities totaled $27.2 billion versus $25.4 billion; capital expenditures totaled $14.7 billion compared to $13.7 billion; and free cash flow totaled $12.4 billion versus $11.6 billion.


Led by continued strong performance in mobile broadband in the third quarter, AT&T continued to grow revenues, add subscribers, increase postpaid ARPU and expand margins. Highlights included:

Subscribers Pass 100 Million Mark. AT&T posted a net gain in total wireless subscribers of 2.1 million, to reach 100.7 million in service. This included gains in every customer category. Net adds for the quarter include postpaid net adds of 319,000. Excluding the impacts of the Alltel and Centennial integration migrations, postpaid net adds were approximately 384,000. Prepaid net adds were 293,000, connected device net adds were 1,038,000 and reseller net adds were 473,000. Third-quarter net adds reflect adoption of smartphones, increases in prepaid and reseller subscribers and sales of tablets and connected devices such as automobile monitoring systems, security systems and a host of other emerging products.

Strong Quarter for Branded Computing Device Sales. AT&T had another strong quarter with branded computing subscribers, a new growth area for the company that includes tablets, aircards, MiFi devices, tethering plans and other data-only devices. AT&T added 505,000 of these devices to reach 4.5 million, an almost 80 percent increase from a year ago. Most of those new subscribers were tablets, with 290,000 added in the quarter, of which more than 35 percent were postpaid.

Total Churn Improves, Postpaid Churn Stable. Total churn declined to 1.28 percent versus 1.32 percent in the third quarter of 2010 and 1.43 percent in the second quarter of 2011. Postpaid churn was 1.15 percent, compared to 1.14 percent in the year-ago third quarter and 1.15 percent in the second quarter of 2011. Excluding the impacts of the Alltel and Centennial migrations, postpaid churn of 1.11 percent for the quarter was unchanged versus the year-ago quarter.

Non-iPhone Smartphone Sales Increase. AT&T continues to deliver robust smartphone sales. (Smartphones are voice and data devices with an advanced operating system to better manage data and Internet access.) In the third quarter, the company sold 4.8 million smartphones, representing nearly two-thirds of postpaid device sales. Sales of Android devices more than doubled year over year, and almost half of all smartphone sales were non-iPhone devices. During the quarter, 2.7 million iPhones were activated.

At the end of the quarter, 52.6 percent of AT&T’s 68.6 million postpaid subscribers had smartphones, up from 39.1 percent a year earlier and 31.1 percent two years ago. The average ARPU for smartphones on AT&T’s network is 1.9 times that of the company’s non-smartphone devices. More than 85 percent of smartphone subscribers are on FamilyTalk® or business plans. Churn levels for these subscribers are significantly lower than for other postpaid subscribers. The number of subscribers on tiered-data plans continues to increase. About 18 million, or nearly half, of all smartphone subscribers are on tiered-data plans.

Wireless Revenues Grow. Total wireless revenues, which include equipment sales, were up 2.8 percent year over year to $15.6 billion. Wireless service revenues increased 4.3 percent, to $14.3 billion, in the third quarter.

Wireless Data Revenues Lead Growth. Wireless data revenues — driven by Internet access, access to applications, messaging and related services — increased by $857 million, or 18.0 percent, from the year-earlier quarter to $5.6 billion. AT&T’s postpaid wireless subscribers on monthly data plans increased by 16.5 percent over the past year. Versus the year-earlier quarter, total text messages carried on the AT&T network increased by 22 percent to 196.3 billion, and multimedia messages increased by 54 percent to 4.3 billion.

Postpaid ARPU Continues Growth. Driven by strong data growth, postpaid subscriber ARPU increased 1.4 percent versus the year-earlier quarter to $63.69. This marked the 11th consecutive quarter AT&T has posted a year-over-year increase in postpaid ARPU. Postpaid data ARPU reached $25.14, up 14.2 percent versus the year-earlier quarter.

Wireless Margins Expand. Third-quarter wireless margins reflect strong smartphone sales, solid customer upgrade levels and some residual Alltel and Centennial merger costs. This was offset in part by improved operating efficiencies and further revenue gains from the company’s growing base of high-quality smartphone subscribers. Year-over-year comparisons are also influenced by the launch of iPhone 4 at the end of the second quarter a year ago.

AT&T’s third-quarter wireless operating income margin was 29.6 percent versus 23.1 percent in the year-earlier quarter, and AT&T’s wireless EBITDA service margin was 43.7 percent, compared with 37.6 percent in the third quarter of 2010. Without customer migration and integration costs from the Alltel and Centennial mergers, the EBITDA service margin would have been 44.0 percent. (EBITDA service margin is earnings before interest, taxes, depreciation and amortization, divided by total service revenues.) Third-quarter wireless operating expenses totaled $11.0 billion, down 5.9 percent versus the year-earlier quarter, and wireless operating income was $4.6 billion, up 31.7 percent year over year.


AT&T’s third-quarter wireline results were highlighted by the first sequential growth in wireline revenues in more than four years. Other highlights included:

Wireline Consumer Revenues Stable. Driven by strength in IP data services, revenues from residential customers totaled $5.3 billion, an increase of 0.2 percent versus the third quarter a year ago, the fifth consecutive quarter of year-over-year growth.

U-verse Attach Rate Drives ARPU Growth. AT&T U-verse TV added 176,000 subscribers to reach 3.6 million in service. In the third quarter, the AT&T U-verse High Speed Internet attach rate was 90 percent and about half of new subscribers took AT&T U-verse Voice. Three-fourths of AT&T U-verse TV subscribers have a triple- or quad-play option from AT&T. ARPU for U-verse triple-play customers was almost $170, up 5.7 percent year over year.

AT&T’s U-verse deployment now reaches almost 30 million living units. Companywide penetration of eligible living units is 15.7 percent, and 24.8 percent across areas marketed to for 36 months or more. AT&T’s total video subscribers, which combine the company’s U-verse and bundled satellite customers, reached 5.4 million at the end of the quarter, representing 22.6 percent of households served.

U-verse Broadband Continues Strong Growth. AT&T U-verse High Speed Internet delivered a third-quarter gain of 504,000 subscribers to reach a total of 4.6 million, helping offset losses from DSL. Overall, AT&T posted a slight net gain in wireline broadband connections. More than 70 percent of consumers have a broadband plan of 3 Mbps or higher.

IP Data Half of Consumer Revenues. U-verse continues to drive a transformation in wireline consumer, reflected by the fact that consumer IP revenues now represent 50.9 percent of wireline consumer revenues, up from 42.6 percent in the year-earlier quarter. Increased AT&T U-verse penetration and a significant number of subscribers on triple- or quad-play options drove 19.6 percent year-over-year growth in IP revenues from residential customers (broadband, U-verse TV and U-verse Voice) and 2.9 percent sequential growth. U-verse revenues grew 50.1 percent compared with the year-ago third quarter and were up 6.0 percent versus the second quarter of 2011.

Continued Growth in Revenues Per Household. Wireline revenues per household served increased 5.0 percent versus the year-earlier third quarter and were up 1.4 percent sequentially (average revenues per household is total wireline consumer revenues divided by the average monthly households in service), driven by AT&T U-verse services. This marked AT&T’s 15th consecutive quarter with year-over-year growth in wireline consumer revenues per household as U-verse scales and represents a larger portion of wireline consumer revenues.

Consumer Connection Trends Continue. In the third quarter, AT&T posted a decline in total consumer revenue connections primarily due to expected declines in traditional voice access lines, consistent with broader industry trends and somewhat offset by increases in U-verse TV, broadband and VoIP (Voice over Internet Protocol) connections. AT&T U-verse Voice connections increased by 119,000 in the quarter and 648,000 over the past four quarters. Total consumer revenue connections at the end of the third quarter were 41.9 million, compared with 43.7 million at the end of the third quarter of 2010 and 42.5 million at the end of the second quarter of 2011.

Wireline Business Revenues Grow Sequentially. Total business revenues were $9.3 billion, an increase of 0.7 percent sequentially and down 2.7 percent versus the year-earlier quarter. The year-over-year decline reflects economic weakness in voice and legacy data products somewhat offset by growth in IP data. Excluding the effect of the third-quarter 2010 sale of Japan assets, business service revenues, which exclude CPE, declined 1.7 percent year over year, compared to a year-over-year decline of 3.4 percent in the year-ago quarter.

Robust Strategic Business Services Revenues. Revenues from the new-generation capabilities that lead AT&T’s most advanced business solutions — including Ethernet, VPNs, hosting, IP conferencing and application services — grew 19.3 percent versus the year-earlier quarter, continuing strong trends in this area. This now represents a nearly $5.8 billion annualized revenue stream.

VPN Growth Drives Business IP Revenues. Total business IP data revenues grew 10.2 percent versus the year-earlier third quarter, led by growth in VPN revenues. IP-based solutions allow customers to easily add managed services such as network security, cloud services and IP conferencing on top of their infrastructures. Total business data revenues grew 1.8 percent year over year.

Wireline Revenues Increase Sequentially. Third-quarter total wireline revenues were $15.0 billion, down 2.2 percent versus the year-earlier quarter but up slightly sequentially. Third-quarter wireline operating expenses were $13.2 billion, down 1.3 percent versus the third quarter of 2010 and up       1.3 percent sequentially. Wireline operating income totaled $1.8 billion, down from $2.0 billion in the third quarter of 2010 and down versus the second quarter of 2011. AT&T’s third-quarter wireline operating income margin was 12.1 percent, compared to 13.0 percent in the year-earlier quarter and down from 13.1 percent in the second quarter of 2011. Improved consumer and business IP data revenue trends and execution of cost initiatives helped to partially offset declines in voice revenues.

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Seth Weintraub

October 20th


HTC profit up 68% in Q3, revenue climbs 80%

HTC on Thursday announced unaudited consolidated results for the third quarter of 2011. The company said in a statement that revenue came in at NT$135.8 billion for the quarter, up 79.07% from the third quarter last year, and unaudited net income rose 68% year-over-year to NT$18.6 billion after taxes. Operating income climbed to NT$20.2 billion in the third quarter, and HTC reported earnings of NT$22.03 per share. HTC’s brief statement to investors follows below.


1.Date of occurrence of the event:2011/10/06
2.Company name:HTC Corporation
3.Relationship to the Company (please enter ”head office” or ”affiliate company”):Head Office
4.Reciprocal shareholding ratios:N/A
5.Cause of occurrence:Taoyuan, Taiwan–October 6, 2011–HTC Corporation (TWSE: 2498), a global leader in smartphone innovation and design, today announces unaudited consolidated results for 3Q 2011. For the third quarter of 2011, total revenues reached NT$135,821 million with 79.07% year-on-year growth. Unaudited operating income was NT$20,190 million, net income before tax was NT$21,291 million, net income after tax was NT$18,638 million, and unaudited earnings per share after tax were NT$22.03 based on 846,016 thousand weighted average number of shares.
7.Any other matters that need to be specified:None

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Zach Epstein

October 6th


Ticonderoga: iPhone 5 to ‘steamroll’ new BlackBerry phones, PlayBook an iPad ‘casualty’

Among the firms losing hope in Research In Motion following another dismal earnings report, Ticonderoga Securities is telling investors to be cautious with RIM. Analyst Brian White fails to see the pot of gold at the end of this rainbow, and suggests that competitors — Apple, in particular — are beating RIM to the punch. ”In our view, the fall of RIMM with its ‘too-little-too-late’ BlackBerry refresh will continue to add to Apple’s momentum that we believe could be off the charts with the iPhone 5 launch,” White wrote in a note to investors on Friday. Read on for more.

RIM on Thursday reported fiscal second-quarter earnings that missed Wall Street’s consensus as well as the company’s own forecast. Profit tumbled almost 60% year-over-year to $329 million and the company burned through more than half of the cash it had at the end of the first quarter, leaving RIM with $1.4 billion on hand. The vendor shipped 10.6 million smartphones, below the 11 million to 12.5 million range it had projected, and it only managed to ship 200,000 PlayBook tablets into sales channels.

“RIMM continues to struggle with smartphone market share and we expect the new BlackBerry 7 devices will be steamrolled by Apple’s iPhone 5 in October,” White wrote in his note. BGR noted in an earlier report that RIM’s share of the global smartphone market may have dipped into the single digits last quarter. The analyst continued, “We believe it is only a matter of time before the iPhone and iPad challenge RIMM’s enterprise dominance. Furthermore, we believe the PlayBook is poised to follow HP’s TouchPad as the next casualty of iPad’s tablet dominance.”

RIM co-CEO Jim Balsillie said during the company’s earnings call on Thursday that it would soon begin selling its PlayBook tablets at lower price points, though he did not elaborate. Balsillie also noted that a software update would be made available for the PlayBook next month that will finally bring native email and other PIM functions to the device, as well as RIM’s Android app player.

White sees a bumpy road ahead for RIM, and he says it is difficult to take the company’s optimistic outlook seriously. “For 3QFY12, RIMM expects revenue of $5.3-$5.6 billion (up 27%-34% Q/Q vs. nine-year average of up 16%) versus the Street’s estimate of $5.27 billion, with BlackBerry shipments at 13.5-14.5 million (up 27-37% vs. nine-year average of up 21%),” the analyst wrote. “Having repeatedly provided an overly optimistic outlook and the iPhone 5 poised to launch soon, we believe RIMM will again come up short.”

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Zach Epstein

September 16th


Sterne Agee: RIM’s Q2 may beat the Street, long-term still a concern

As RIM prepares to report its earnings on Thursday for the second fiscal second quarter of 2012, all eyes are turning north following the Waterloo, Ontario-based vendor’s first-quarter report, which was something of a bloodbath. RIM’s first quarter performance wasn’t abysmal — the company did see gains in several international markets — but it missed the Street’s consensus by a wide margin, trimmed its second-quarter guidance and stated that would soon be laying off workers in an effort to streamline operations. RIM has since launched its first wave of BlackBerry 7 smartphones and while sales of its new devices won’t really be reflected in its second-quarter earnings, some analysts still believe RIM could beat Wall Street’s expectations when it reports later this week. Read on for more.

RBC Capital Markets analyst Mike Abramsky projected a second-quarter win for RIM in his note last week, and now Sterne Agee analyst Shaw Wu weighs in, noting that RIM could beat the Street when it reports after the market closes on Thursday. “We anticipate the company to meet or exceed consensus estimates of $4.5 billion in revenue and $0.67 in EPS (we have in-line revenue and 3 cents better EPS),” the analyst wrote. He believes RIM shipped 11.6 million handsets and 400,000 PlayBooks in the second quarter.

Looking forward to the third quarter, Wu’s checks indicate that RIM’s BlackBerry 7 phones are seeing good interest in terms of upgrade sales, so guidance is “likely better than feared.” The analyst also reasserted his earlier comments that carriers looking for a viable third option to shift some focus from Apple’s iOS and Google’s Android may turn to BlackBerry.

The long-term impact of BlackBerry 7 and QNX devices is still a big question mark however, and Wu isn’t yet sold that there is a pot of gold at the end of this rainbow. As a result, the analyst trimmed his projections moving forward. Wu now estimates that RIM’s full-year fiscal 2012 earnings will miss the Street’s consensus of $20.4 billion in revenue and EPS of $5.11 — he sees $20.3 billion and $5.05 — and fiscal 2013 earnings are now estimated to narrowly top the Street’s consensus of $22 billion in revenue (Wu sees $22.3 billion) and earnings of $5.22 per share (Wu sees $5.25).

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Zach Epstein

September 12th

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