Markets

Sprint and the Apple iPhone 5: Don't Expect the Earth to Move

By Conrad Aenlle

Updated on: August 24, 2011 / 10:08 AM EDT / MoneyWatch

There were earthshaking events on Tuesday, but the report that Sprint would sell the next version of Apple's iPhone, the iPhone 5, was not one of them. The stocks of both companies (AAPL, S) were up on a strong day all around on Wall Street - the gains were 4.8 percent for Apple and 10.1 percent for Sprint - but it's difficult to see how the news will materially affect Apple's business or pull Sprint back from the brink of irrelevance, if not oblivion.

The Wall Street Journal, citing unspecified sources, said that Sprint would begin selling the iPhone 5 in mid-October. That can only do Sprint good, but if the report of the timing is correct and if it applies to others selling the new iPhone model, then it suggests that Apple is introducing the phone later than many had anticipated:

"Sprint Nextel Corp. will begin selling the new version of the Apple iPhone in mid-October, people familiar with the matter said, filling a huge hole in the No. 3 U.S. carrier's lineup and giving Apple Inc. another channel for selling its popular phone. The timing, however, indicates Apple's new iPhone, which is expected to be called iPhone 5, will hit the market later than expected and too late to contribute to sales in the company's fiscal fourth quarter, which ends in September. Most observers had expected the device to arrive next month."
Such a brief delay is probably no big deal, and the same is probably true of the potential good news as well as the bad. It's hard to envision a significant improvement in Apple's financial results from adding Sprint to its list of vendors. Sprint is not just the No. 3 mobile carrier; it's a distant and unprofitable No. 3. Chances are, too, that many Sprint users (does it have enough for a subset of them to amount to "many"?) who wanted an iPhone have already abandoned Sprint to get one from AT&T (T) or, more recently, Verizon (VZ).

That may limit the benefit that Sprint receives too. More important, so may the fact that Sprint needs Apple more than Apple needs Sprint. Between the money it will have to kick back to Apple for the iPhone handsets and the low rates it commands on its calling plans, Sprint may see little profit in the arrangement.

If and when Sprint starts selling the iPhone 5, the earth is unlikely to move for either its shareholders or Apple's. That's a shame in the case of Sprint because the company could really use some new development that shakes it out of its funk.

On ZDNET: iPhone 4 May Help Sprint More