Apple Takes Hit As AT&T Posts Disappointing iPhone Numbers
SAN FRANCISCO (Dow Jones) -- Shares of Apple took a hit Tuesday morning after wireless carrier AT&T issued disappointing activation numbers for the iPhone for the last two days of the second quarter, when the device first went on sale.
In addition, a telecommunications analyst issued a report before the opening bell that said demand for the device at retail outlets has seen a "significant decline" in recent days.
The news took some wind out of Apple's shares, which set a fresh all-time high of $144.18 on Friday. By mid-morning, the stock was trading down more than 3% at $139.19.
The stock has been on a run since the company first announced the device at a trade show in early January.
Since then, Apple shares have surged more than 40%, as investors anticipated strong demand for the touch-screen device. The iPhone went on sale at retail outlets operated by Apple and AT&T on June 29, leaving less than two full days before the end of the second quarter.
Numbers underwhelm projections
In its second-quarter earnings report Tuesday morning, AT&T said it activated about 146,000 customers who bought the iPhone during those two days.
This number would not include buyers who purchased the device with the hopes to re-sell it over venues such as Craig's List and eBay. However, the figure seemed to worry investors who had been primed to expect much larger numbers.
Before Tuesday, analysts had been projecting opening-weekend sales for the iPhone of between 200,000 and 400,000 units.
A few projections reached as high as 500,000 units, with analysts citing long-lines at stores and initial inventory figures for the device.Watch interview with Piper Jaffray analyst predicting initial iPhone sales of 500,000 units.
Investors will likely get a fuller picture of actual iPhone sales when Apple posts its own results for the June quarter on Wednesday.
Analyst notes 'thin demand'
"We have noticed decent inventories [of the iPhone] at stores, and thin demand at best," analyst Ittai Kidron of CIBC World Markets wrote in a report Tuesday. "In fact, most Apple store visitors were not looking at the device and only a very small subset bought it."
Kidron based his findings on "store checks." He also noted a recent survey of buyers of the device found that its key drawback is "poor data connectivity" that affects how quickly users can access and use the Internet over the device.
The iPhone works over AT&T's EDGE network for data, which is slower than other so-called 3G networks that are coming online in markets around the world.
Because of his findings, Kidron expects Apple to release a 3G version of the iPhone before this year's holiday season. Apple has given no indications of when or if it will update the device.
"With the weakness, we wouldn't be surprised to see AT&T and Apple step up their marketing efforts," he wrote.
(END) Dow Jones Newswires"
Posted to the site on 24th July 2007
