Verizon iPhone Sales Hint at Missed Estimates

Verizon announced during its first fiscal quarter earnings report on Thursday that it activated 4 million iPhones, which comes in above Wells Fargo analyst Maynard Um's 3.5 million unit target. The cell service provider's activations were down compared to last quarter, but are up year over year. Still, Apple's quarterly iPhone numbers may come in below expectations, leaving investors unhappy.

Verizon's quarterly iPhone activations could hint at sales missing analyst extimatesVerizon's quarterly iPhone activations could hint at sales missing analyst extimates

Mr. Um is expecting Apple to report 38.7 million iPhones sold for the quarter when it hosts its own earnings report next week. He stated,

The 4 million unit activations suggest Verizon will account for roughly 10.3 percent of our total iPhone units of 38.7 million. Given Verizon on average has accounted for 11.1 percent of Apple's quarterly iPhone unit sales in the last five quarters, we see potential for slight risk to our current quarter iPhone estimate.

Assuming Verizon's iPhone activations account for the same percentage as they have in previous quarters, however, Apple's iPhone numbers could come between 30.8 million and 36 million units.

Mr. Um noted that Apple's smartphone sales have grown year over year at 25 percent while the rest of the industry has grown at about 3 percent, while Verizon's total smartphone activations were down 27 percent compared to last quarter. Based on that, Mr. Um speculated that lower iPhone activations were due to an lull in overall smartphone sales and not Apple-specific.

Regardless of the iPhone figures Apple announces on April 23, Mr. Um sees an upswing in sales later this year. "We expect an acceleration in the back half of the calendar year with significant new product releases and iPhone 4S subscribers becoming eligible for upgrades," he said.

Mr. Um has a $600 to $630 12-month target range for Apple's stock, and an Market Weight rating. Apple is currently trading at $392.13, up 0.08 (0.02%).