Verizon iPhone: Selling the News All Around
The announcement that Verizon would begin selling the iPhone 4 for use on its network in February is, at least so far, one of those events for which the venerated Wall Street adage "buy the rumor, sell the fact" was created. The stocks of Verizon (VZ); Apple (AAPL), the iPhone's creator, and AT&T (T), the company whose network is losing the exclusive right to host the iPhone in the United States, were all lower in early trading Tuesday.
At 1 p.m. EST, the losses were about 0.3 percent for Apple and 1.6 percent each for Verizon and AT&T.
Some corporate developments are like Christmas presents: The anticipation of what you'll get is more fun than the actual getting. In the case of the iPhone, the move to Verizon had been widely expected almost since the primordial version of the iPhone first went on sale in mid-2007, and the chatter had increased markedly in the last few months, weeks and days. As Lowell McAdam, the president of Verizon, was quoted saying at an event Tuesday morning, "I guess if the press writes about something long enough, eventually it becomes true."
Not that explanations are necessary beyond the likelihood that the Verizon iPhone was already factored into share prices, but the decline in AT&T may be the easiest to comprehend conventionally. It's losing its monopoly.
Verizon may be falling as investors wonder how much the company will have to pay Apple for each iPhone it sells. AT&T paid up big to get the exclusive rights to sell the iPhone, and investors may fear that Verizon will pay too much for the right to sell it - and for the right to keep Sprint, T-Mobile and anyone else from doing so.
As for the underwhelming response of Apple's stock to the news, it could reflect concern that Apple's continued interest in achieving short-term gain by extracting as much as possible from AT&T and now Verizon for each phone is leaving the door open for Google and its Android smartphone operating system to offer viable competition to the iPhone. Google's stock (GOOG) was up in midday trading Tuesday.
There's no telling what the stocks of any of the iPhone principals will do from here, but keep in mind that AT&T's stock has underperformed the broad market since it began offering the iPhone three and a half years ago and that Verizon without the iPhone has beaten AT&T and the market alike.
