Verizon CFO lauds iPhone, says no plans to incentivize selling rival low-subsidy handsets

Posted:
in iPhone edited January 2014
Verizon Communications Chief Financial Officer Fran Shammo said on Monday that Apple's free-on-contract iPhone 4 produced "a lot" of volume for America's Verizon Wireless, and despite high subsidy costs, the telecom will not offer incentives for sales staff to push low-cost alternatives.

Fran Shammo
Verizon Communications CFO Fran Shammo.


Shammo made the comments during the Deutsche Bank 2013 Media, Internet & Telecom Conference earlier today, in which he fielded a few questions pertaining to the performance of Apple's iPhone on Verizon's U.S. network.

It was announced in January that Apple's iPhone accounted for 6.2 million of the 9.8 million smartphones Verizon activated in the fourth quarter of 2012, the strongest period of sales since the carrier starting selling the handset in 2011.

According to Shammo, the uptick in iPhone customers was mostly in thanks to the iPhone 4 price drop, which allowed Verizon to offer a free-on-contract Apple smartphone for the first time. The handset led to strong growth in 3G subscriber numbers, an important point given that the company is no longer investing in building out that network. All capital allocated to Verizon's 3G services are for maintenance only, Shammo said.

As for subsidies, the CFO was asked whether he would incentivize Verizon's salesforce to sell low-subsidy units in an attempt to manage margins. Shammo was against such practices, saying it is important that customers leave a Verizon store with the device they want.

"The worst thing that can happen for us is for me to incent [sic] a salesperson to get you into a phone that you walk out the door with thinking you are going to like and in three days you come back because you don't like it," Shammo said, according to a transcript (PDF) provided by Verizon. "Therefore, now I've just subsidized two smartphones because that phone you used I can't resell as a new phone."
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Comments

  • Reply 1 of 56
    maccentricmaccentric Posts: 263member
    Sadly, I expect Apple stock to drop another $10 tomorrow due to this news. /s
  • Reply 2 of 56


    So imaginative! Ugh!

  • Reply 3 of 56
    maccentricmaccentric Posts: 263member
    The real Ugh! is the market reaction to the parade of great news about this company. Best quarter ever and they fall off a cliff. At least those of us in for the long term can load up on stock at low prices for the next leg up.
  • Reply 4 of 56
    jungmarkjungmark Posts: 6,926member
    According to Shammo, the uptick in iPhone customers was mostly in thanks to the iPhone 4 price drop...

    WS spin: no one want an iPhone 5.
  • Reply 5 of 56
    jragostajragosta Posts: 10,473member
    maccentric wrote: »
    Sadly, I expect Apple stock to drop another $10 tomorrow due to this news. /s

    Pretty much.

    Note, however, that he didn't say anything denying the fact that sales people pressure people to buy Android phones.
  • Reply 6 of 56

    Quote:

    Originally Posted by MacCentric View Post



    The real Ugh! is the market reaction to the parade of great news about this company. Best quarter ever and they fall off a cliff. At least those of us in for the long term can load up on stock at low prices for the next leg up.


     


    I'm in for the long term, too....but lately I've been real nervous about what's happening! Are you confident Apple can rebound in the near future? What's your opinion?

  • Reply 7 of 56
    michael scripmichael scrip Posts: 1,916member
    File this under "DUH"

    Even if Verizon has to write a $450 check to Apple to subsidize the iPhone 4... Verizon still ends up with around $1500 over the life of that contract.

    The customer gets the "free" iPhone 4 they want... and Verizon gets tons of money.

    I don't know why this is such a shock.
  • Reply 8 of 56
    Any positive news doesn't help at this point. This is probably the most scrutinized stock ever, and almost all the pundits are wrong. Wall Street will never understand Apple, also Apples justifiable secret habits make all the big hedge fund managers very nervous. In a short time from now they will jump on board again, late out of the gate. Take a look at that Greenlight shumck, from what I understand he didn't get in till it was in the 500s. Let all the joyriders go, those of us in it for the long run and do know Apple will be handsomely rewarded.
  • Reply 9 of 56
    rogifanrogifan Posts: 10,669member

    Quote:

    Originally Posted by MacCentric View Post



    Sadly, I expect Apple stock to drop another $10 tomorrow due to this news. /s


    Apple could announce a cure for cancer and the stock would drop.  I'm just waiting for the Google and Amazon drop.  It will happen.  If people think Apple was overvalued well what the hell is Google and Amazon right now?  Apple's PE is around 9 now.  Google's is 24.  Does that make any sense?

  • Reply 10 of 56
    Verizon stands to benifit just as much as apple from the retention of the iPhone. Why mess up that relationship with the customer over 'low-cost' or otherwise known as cheap and useless alternatives?

    People buy the iPhone, they love it, and they come back for more. Apple is selling these people cocaine and verizon/at&t/sprint are raking in the dough.
  • Reply 11 of 56
    cash907cash907 Posts: 893member


    That's nice. They also said they had "no plans" on selling the iPhone right up until they announced they were selling the iPhone.


    These statements aren't worth the cheap plastic keys they're tapped out on.

  • Reply 12 of 56
    radster360radster360 Posts: 546member

    Quote:

    Originally Posted by Rogifan View Post


    Apple could announce a cure for cancer and the stock would drop.  I'm just waiting for the Google and Amazon drop.  It will happen.  If people think Apple was overvalued well what the hell is Google and Amazon right now?  Apple's PE is around 9 now.  Google's is 24.  Does that make any sense?



     


    So true! Even the Oracle of Omaha is advicing Tim to not to cave in to the WS! Other than manipulation of AAPL, there is no meaningful explanation on what is happening to this share.Yes, maybe the ride to $700 might be over done, but, at the same time the spiral down is way over done. If you are long term, I wouldn't worry too much.

  • Reply 13 of 56
    ankleskaterankleskater Posts: 1,287member

    Quote:

    Originally Posted by MacCentric View Post



    Sadly, I expect Apple stock to drop another $10 tomorrow due to this news. /s




    This is getting so old that we can smell it across the internet.

  • Reply 14 of 56
    gatorguygatorguy Posts: 24,178member

    Quote:

    Originally Posted by jragosta View Post





    Pretty much.



    Note, however, that he didn't say anything denying the fact that sales people pressure people to buy Android phones.


    Yes he did, and it's mentioned in the article title. If you were really interested in the facts you could have read the Verizon CFO's actual quote on the subject too. When asked about whether Verizon offers incentives to salespeople to move non-iPhone handsets he said:


     


    The answer is, no, we don’t and it is critical that we don’t do that. "


     


    He then went on to explain why:


     


    "Because the worst thing that can happen for us is for me to incent a salesperson to get you into a phone that you walk out the door with thinking


    you are going to like and in three days you come back because you don't like it. Therefore, now I've just subsidized two smartphones because that


    phone you used I can't resell as a new phone."


     


    "...so every handset is treated equally within our lineup. And that is important to us"


     


    http://www22.verizon.com/investor/DocServlet?doc=vz_deutsche_conf_trans_2013.pdf


    Page 9 speciifically.


     


    Another of your talking points bites the dust JR . . .

  • Reply 15 of 56
    jragostajragosta Posts: 10,473member
    gatorguy wrote: »
    Yes he did, and it's mentioned in the article title. If you were really interested in the facts you could have read the Verizon CFO's actual quote on the subject too. When asked about whether Verizon offers incentives to salespeople to move non-iPhone handsets he said:

    " <span style="background-color:rgb(245,245,245);color:rgb(87,74,66);font-family:'Helvetica Neue', Helvetica, Arial, sans-serif;font-size:16px;line-height:25px;">The answer is, no, we don’t and it is critical that we don’t do that. "</span>


    [SIZE=14px]<span style="background-color:rgb(245,245,245);color:rgb(87,74,66);font-family:'Helvetica Neue', Helvetica, Arial, sans-serif;line-height:25px;">He then went on to explain why:</span>
    [/SIZE]

    "Because the worst thing that can happen for us is for me to incent a salesperson to get you into a phone that you walk out the door with thinking
    you are going to like and in three days you come back because you don't like it. Therefore, now I've just subsidized two smartphones because that
    phone you used I can't resell as a new phone."
     
    "...so every handset is treated equally within our lineup. And that is important to us"

    http://www22.verizon.com/investor/DocServlet?doc=vz_deutsche_conf_trans_2013.pdf
    Page 9 speciifically.

    [SIZE=14px]<span style="background-color:rgb(245,245,245);color:rgb(87,74,66);font-family:'Helvetica Neue', Helvetica, Arial, sans-serif;line-height:25px;">Another of your talking points bites the dust JR . . .</span>
    [/SIZE]

    And, yet, there are endless reports of people being specifically talked out of the iPhone they wanted when they walked into Verizon stores.

    Yeah, I'm sure that Verizon's CEO is really going to publicly admit that they're screwing over their largest supplier.
  • Reply 16 of 56
    anonymouseanonymouse Posts: 6,857member

    Quote:

    Originally Posted by Gatorguy View Post


    Yes he did, and it's mentioned in the article title. If you were really interested in the facts you could have read the Verizon CFO's actual quote on the subject too. When asked about whether Verizon offers incentives to salespeople to move non-iPhone handsets he said:


     


    The answer is, no, we don’t and it is critical that we don’t do that. "


     


    He then went on to explain why:


     


    "The reason for that is because what is more important for us is when a customer walks into a store that customer walks out with a phone that they will be happy with and not return under our 30-day guarantee. Because the worst thing that can happen for us is for me to incentivise a salesperson to get you into a phone that you walk out the door with thinking you are going to like and in three days you come back because you don’t like it. Therefore, now I’ve just subsidized two smartphones because that phone you used I can’t resell as a new phone."


    http://www22.verizon.com/investor/DocServlet?doc=vz_deutsche_conf_trans_2013.pdf


    Page 9 speciifically.


     


    Another of your talking points bites the dust JR . . .



     


    Right, because we should take everything he says at face value even though it conflicts with every previous independent report on the topic because, hey, why would he possibly lie to us? Yes, yes, he even gives a rationale to his lie, but it's just that. If Verizon were so intent on pushing the iPhone, then why do they spend so much money advertising other phones?


     


    He's got about as much credibility as you do, none.

  • Reply 17 of 56
    gatorguygatorguy Posts: 24,178member

    Quote:

    Originally Posted by jragosta View Post





    And, yet, there are endless reports of people being specifically talked out of the iPhone they wanted when they walked into Verizon stores.



    Yeah, I'm sure that Verizon's CEO is really going to publicly admit that they're screwing over their largest supplier.


    image


    If he was lying it only takes a single salesperson to prove it. Sounds like a stupid comment to make if it's so easily proven wrong. Should we wait for your evidence of his lying?


     


    Don't let facts get in the way of your FUD. What you want to believe is much more important than the truth. Carry on sir, carry on. . .

  • Reply 18 of 56
    swissmac2swissmac2 Posts: 216member


    This website has more anti-Apple shills than nearly any other Apple related new site.


     


    Only short selling speculators and Samsung shills care about Apple's cash pile, or its share price fluctuations. As the Sage of Omaha and ex-Head of Goldman Sachs, Warren Buffet, says "...buying Apple shares now is like buying dollar bills for 80 cents."


     


    As for Verizon, this makes good sense - if an iPhone 4 is free, how does a "cheap" Samesung look different? Why would they mess with a strategy that brought them two thirds of their new subscribers?

  • Reply 19 of 56
    MacProMacPro Posts: 19,718member
    gatorguy wrote: »
    :lol:
    If he was lying it only takes a single salesperson to prove it. Sounds like a stupid comment to make if it's so easily proven wrong. Should we wait for your evidence of his lying?

    Don't let facts get in the way of your FUD. What you want to believe is much more important than the truth. Carry on sir, carry on. . .

    IMHO the problem isn't so much necessarily with Verizon officially encouraging such tactics with offers. There are a hell of a lot of sales staff who are also Apple haters out there talking folks out of Apple devices given half a chance. I have heard this happen numerous times in Best Buy, Target and AT&T stores (I've never actually been in a Verizon store) when a sales person is explaining to an older couple how the Android tablet/phone is the same as an iPad/iPhone only better bla bla bla.

    What needs to be done is an official policy by Verizon et al stating that their staff must not try to talk any customer who is specifically asking for an iPhone or an iPad by name into taking some piece of crap instead just because they (usually the spotty young sales guy) loves his Android and hates Apple. Make it a firing offense. /rant
  • Reply 20 of 56
    MacProMacPro Posts: 19,718member
    swissmac2 wrote: »
    This website has more anti-Apple shills than nearly any other Apple related new site.

    Only short selling speculators and Samsung shills care about Apple's cash pile, or its share price fluctuations. As the Sage of Omaha and ex-Head of Goldman Sachs, Warren Buffet, says "...buying Apple shares now is like buying dollar bills for 80 cents."

    As for Verizon, this makes good sense - if an iPhone 4 is free, how does a "cheap" Samesung look different? Why would they mess with a strategy that brought them two thirds of their new subscribers?

    I'd have to respectfully disagree on the 'more anti-Apple shills than nearly any other Apple related new site' part. The CNN Money Tech news/Apple 2.0 section has a seemingly automatic flood of Apple hate spewed the instant a post is made.
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