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Leap Wireless says iPhone sales falling short, could meet only 50% of first-year commitment

post #1 of 24
Thread Starter 
It was revealed in a recent filing with the U.S. Securities and Exchange Commission that Cricket, the prepaid cellular carrier owned by Leap Wireless, expects to sell about half the number of iPhones it committed to move over the first year of its agreement with Apple.

Cricket


Cricket began carrying the iPhone 4 and iPhone 4S in June of 2012 after entering into a commitment with Apple worth some $900 million, though weaker than expected sales may see the telecom miss the deal's first-year obligations.

As noted by BGR, Leap/Cricket's Chief Operating Officer Jerry Elliott previously claimed that ?sales of Apple devices were pretty good in the fourth quarter,? adding that he wasn?t concerned about meeting the commitment goals. When the carrier first began iPhone sales, it was estimated that the provider paid Apple a $150 subsidy for every contract-free iPhone 4S sold on its network.

Following the launch of the iPhone 4 and iPhone 4S on its network, Cricket rolled out Apple's latest iPhone 5 on Sept. 28, one week after the handset started sales with major carriers AT&T, Verizon and Sprint.

Under Cricket's pay-as-you-go pricing, customers pay $55 per month for an"unlimited" plan that includes talk, text and data. The carrier offers wireless voice and mobile data services over 4G LTE and 3G CDMA through Leap. As of September 2012, Cricket was servicing over six million subscribers.
post #2 of 24
Who the **** is Cricket? I love how AppleInsider loves splashing these headlines. I don't remember the last headline where carriers exceeded expectations, but I guess this no-name carrier and their numbers is meaningful.

Either way, I expect the stock to drop another $10 tomorrow even though this probably has nothing to do with iPhones and everything to do with the carriers ability to sell product.
post #3 of 24
So nobody wants to buy from Cricket? AT&T and Verizon aren't having trouble selling iPhones...

"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
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"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
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post #4 of 24

It's Cricket. Who wants an iPhone with Cricket? That's like buying a new Mercedes at a Kia dealership.

post #5 of 24
@slurpy

Cricket is pretty big here in Texas. It's no Verizon/AT&T but it's growing in popularity with the pay as you go folk.

Regardless of how this article may or may not affect Apple's stock, it is interesting to see the obvious. People are unlikely to purchase an iPhone 5 full price upfront to get the cheaper monthly payments.
post #6 of 24
Quote:
Originally Posted by Slurpy View Post

Who the **** is Cricket? I love how AppleInsider loves splashing these headlines. I don't remember the last headline where carriers exceeded expectations, but I guess this no-name carrier and their numbers is meaningful.

Either way, I expect the stock to drop another $10 tomorrow even though this probably has nothing to do with iPhones and everything to do with the carriers ability to sell product.


Cricket is essentially a bottom-of-the-barrell phone provider (like MetroPCS) popular with low-income folks and drug dealers that need prepaid, disposable plans.

It's no surprise they are not selling as many iPhone plans.  What is a surprise is that AI is making it a headline-worthy piece.  It should be changed to "Leap Wireless says iPhone sales to drug dealers and people with no money falling short."

Yep, expect another $100 drop in AAPL.

post #7 of 24
Quote:
Originally Posted by Suddenly Newton View Post

So nobody wants to buy from Cricket? AT&T and Verizon aren't having trouble selling iPhones...

 

Quote:
Originally Posted by bdkennedy1 View Post

It's Cricket. Who wants an iPhone with Cricket? That's like buying a new Mercedes at a Kia dealership.

 

Quote:
Originally Posted by sflocal View Post


Cricket is essentially a bottom-of-the-barrell phone provider (like MetroPCS) popular with low-income folks and drug dealers that need prepaid, disposable plans.

...

Yep, expect another $100 drop in AAPL.

 

If the news doesn't sound like it might boost $AAPL, it must not be credible or important? Are your only optics the ups and downs of the stock?

 

Quote:
Originally Posted by Idip31 View Post

@slurpy

Cricket is pretty big here in Texas. It's no Verizon/AT&T but it's growing in popularity with the pay as you go folk.

Regardless of how this article may or may not affect Apple's stock, it is interesting to see the obvious. People are unlikely to purchase an iPhone 5 full price upfront to get the cheaper monthly payments.

This is indeed an important point. Will be interesting to follow this. It will be also be interesting to see how other regional carriers fare.


Edited by ankleskater - 2/27/13 at 5:29pm
post #8 of 24
Personally I think the problem is Cricket not the iPhone. Most people who can afford an iPhone want to use it on a better quality cellular network than that offered by Cricket.
post #9 of 24

@sflocal: feeling extra cynical today?

 

I use a prepaid phone service, and I'm neither poor nor a drug dealer. I like saving over $50 a month for what is basically the same service, but without a contract. Pretty much everyone I know uses prepaid now, and likes not being locked in to a 2-year contract.

 

I agree that a full-price "unsubsidized" phone is unlikely to sell as well, but it isn't simply because of your cynically identified demographic… I don't think the unsubsidized 'unlocked' iPhones sell all that well through Apple either… and it isn't only poor people and pushers buying those, ya think?

 

I'd never heard of Cricket until now. Perhaps that's more the reason they aren't selling well… brand awareness? I'd give more weight to that than your mostly unfounded premise...

post #10 of 24

Definitely Cricket. 

 

They are a no contract, low income, no credit needed carrier. Also have to pay full price for an iPhone. Why would low credit / low income users come out in droves to purchase the $500.00+ iPhone?

 

 

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The reason why they are analysts is because they failed at running businesses.

 

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post #11 of 24
Quote:
Originally Posted by Idip31 View Post

@slurpy

Cricket is pretty big here in Texas. It's no Verizon/AT&T but it's growing in popularity with the pay as you go folk.

Regardless of how this article may or may not affect Apple's stock, it is interesting to see the obvious. People are unlikely to purchase an iPhone 5 full price upfront to get the cheaper monthly payments.

 

What it does mean is that T-Mobile is likely to struggle to sell full-priced iPhones as well (which they are planning to do). Given that the carriers would love to get rid of the subsidized phone model, it could lend credence to the idea that Apple will need to come out with a cheaper current model if it wants to expand its market share, or if the market suddenly shifts toward the pre-paid model. 

post #12 of 24
Also remember that all Cricket said was that they were going to miss their commitment.

Who knows how realistic that commitment was in the first place? Does Apple stock have to take a hit because Cricket can't forecast sales volumes before the sign a contract?

Actually Apple wins a bit because they will force Cricket to pay for phones they thought they could sell but can't. Good margins to get paid for a product you don't have to deliver.
post #13 of 24

In Australia PAYG phones are often used by children or those who don't qualify for credit.

 

Parents often get high end smartphones on plans swap the SIMs and give them to their kids to use.

 

If you are going to pay $55 a month to Cricket anyway it makes more sense to spend that money where it will subsidise the cost of a phone.

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post #14 of 24
Well gosh darnit! Here we are sitting at Cricket Wireless hatching a plan to put Apple's popular phones on our network because, duh, it's the most popular phone on the planet and it will boost our sales. Duh, right? Except... oh my... we completely forgot about our demographics when we made this decision. Well poo, our unrealistic expectations feel short of reality therefore Apple is doomed...

LOL
post #15 of 24
Quote:
Originally Posted by scott6666 View Post

Actually Apple wins a bit because they will force Cricket to pay for phones they thought they could sell but can't. Good margins to get paid for a product you don't have to deliver.

I believe Apple still has to deliver the products that Cricket bought. Whether or not Cricket can sell to the consumer is a different issue, but this doesn't impact Apple's margins one bit.

post #16 of 24
post #17 of 24
Quote:
Originally Posted by sflocal View Post


Cricket is essentially a bottom-of-the-barrell phone provider (like MetroPCS) popular with low-income folks and drug dealers that need prepaid, disposable plans.

It's no surprise they are not selling as many iPhone plans.  What is a surprise is that AI is making it a headline-worthy piece.  It should be changed to "Leap Wireless says iPhone sales to drug dealers and people with no money falling short."

Yep, expect another $100 drop in AAPL.

 

^^^ That. 

post #18 of 24
Quote:
Originally Posted by bdkennedy1 View Post

It's Cricket. Who wants an iPhone with Cricket? That's like buying a new Mercedes at a Kia dealership.

Many people here want to buy a Ferrari phone and then fill it with regular gas.
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"I got the answer by talking in my brain and I agreed of the answer my brain got" a 7 yr old explaining his math HW
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post #19 of 24
Quote:
Originally Posted by ankleskater View Post

If the news doesn't sound like it might boost $AAPL, it must not be credible or important? Are your only optics the ups and downs of the stock?

 

I'm not sure why you quoted my post in this reply. I wasn't talking about AAPL or any stock at all. Maybe your "optics" need cleaning.

"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
Reply

"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
Reply
post #20 of 24
Quote:
Originally Posted by KPOM View Post

What it does mean is that T-Mobile is likely to struggle to sell full-priced iPhones as well (which they are planning to do).

 

I guess you missed all the articles quoting the T-Mobile CEO a while back stating that they gain 100,000 iPhone users on their network PER MONTH.

 

And T-Mobile doesn't even offer an iPhone yet.

 

That's a lot of people bringing unlocked iPhones to T-Mobile already.

post #21 of 24
And T-Mobile is doing the smartest thing yet... Pay monthly for your iPhone -- to own it.. It will be huge...,
post #22 of 24

Wow. People here have officially become the whiniest little bitches on the boards. (Now am I supposed to say "LOL"?)

post #23 of 24
Quote:
Originally Posted by Slurpy View Post

Who the **** is Cricket? I love how AppleInsider loves splashing these headlines. I don't remember the last headline where carriers exceeded expectations, but I guess this no-name carrier and their numbers is meaningful.

Either way, I expect the stock to drop another $10 tomorrow even though this probably has nothing to do with iPhones and everything to do with the carriers ability to sell product.

 

I'm sure it is failing appeal of the iPhone that does it.  It couldn't be the call quality, or data download speeds or anything else so it must be Apple.

post #24 of 24
The Verge correctly reports that Cricket has recently lost 600,000 subscribers. That and their shoddy service may better explain things.

CEO covering his a..
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