Verizon: We have a good relationship with Apple
Verizon Communications Inc. Chief Financial Officer John Killian said the phone company has good ties to Apple Inc., whose iPhone is powered exclusively by AT&T Inc. in the U.S.
Locally, Verizon has operations in Schaumburg.
"They're very well aware of our network quality, where we're going with LTE," Killian, 54, said today at a conference in New York. "Very good relationship, very good dialogue." Verizon is currently upgrading its network with the high-speed wireless technology known as Long Term Evolution.
Verizon's mobile-phone business, the largest in the U.S., has lost out on new subscribers as customers who covet the iPhone flock to AT&T. Apple may decide to sell the phone through more U.S. carriers as soon as next year, about three years after its exclusive debut with AT&T, said Broadpoint AmTech Inc. analyst Brian Marshall.
Verizon Chief Executive Officer Ivan Seidenberg has said the carrier is interested in selling the iPhone after AT&T's exclusivity contract ends, and that the decision lies with Cupertino, California-based Apple.
Verizon Wireless, based in Basking Ridge, New Jersey, has pushed back against AT&T's iPhone dominance with promotions highlighting gaps in AT&T's network. Advertisements for Verizon's new Droid phone, made by Motorola Inc., declare that "Everything iDon't, Droid does."
LTE will reach as many as 30 markets by the end of next year and more than 285 million people by the end of 2013 as Verizon builds out, Killian said. The company believes it can meet its goal of adding about 1 million wireless customers this quarter, he said.
Verizon's Strategy
"Verizon has to do what they have to do," said San Francisco-based Marshall, who doesn't own the stock and advises investors to buy Apple shares. "They're getting smoked, and the reason why they're getting smoked is they don't have the iPhone."
Apple shouldn't be surprised by the ads, and Verizon has to work with the device lineup it has now, Killian said. Apple spokeswoman Natalie Kerris didn't immediately respond to a request for comment. Verizon spokesman Bob Varettoni and AT&T spokesman Mark Siegel declined to comment.
Verizon Communications, which co-owns the wireless unit with Vodafone Group Plc, advanced 14 centsstr to $33.39 at 4:01 p.m. in New York Stock Exchange composite trading. Dallas-based AT&T fell 36 cents to $27.61. Apple advanced 92 cents to $189.87 on the Nasdaq Stock Market.
Subsidies
Apple and Verizon may be at odds over more than the tone of the Droid ads, said Shaw Wu, an analyst with Kaufman Brothers LP in San Francisco.
"The reason why these companies haven't worked together sooner than later, it really boils down to economics," said Wu. Apple gets an estimated $700 per phone from AT&T, Wu said in an interview. AT&T subsidizes the devices to sell them for $199 each. Apple likely would get less from Verizon, he said.
"Business is business," said Wu, who doesn't own shares of either Verizon or Apple. An Apple partnership with Sprint Nextel Corp. or T-Mobile USA Inc. may be more likely, he said.
Verizon has put its power behind the Droid, which debuted Nov. 6. Motorola, based in Schaumburg, Illinois, may sell 1 million phones by the end of the year, said Mark Sue, an analyst for RBC Capital Markets in New York. Verizon won't comment on the size of the ad campaign.
"The initial success is due to all the money they're spending," said Charlie Smith, chief investment officer at Fort Pitt Capital Group Inc. in Pittsburgh, which owns AT&T and Verizon shares. "I don't think this is going to be a major hit to the iPhone."
Apple's iPhone models were the second and third most popular consumer smart phones last quarter, according to research firm NPD Group Inc. RIM's BlackBerry Curve 8300 lineup took first place. The newest iPhone, the 3GS, sold more than 1 million units in its opening weekend in June.