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AT&T to take earnings hit from iPhone subsidies
posted 4:23 pm Mon June 09, 2008 - NEW YORK
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AT&T Inc. says its profits will take an estimated $600 million hit because of the iPhone's new lower price.AT&T, which is the iPhone's exclusive U.S. carrier, confirmed it's subsidizing Apple Inc. s latest multimedia gadget, which goes on sale July 11 for $199. AT&T put the cost at 10 cents to 12 cents per share, or roughly $600 million. AT&T expects to the new iPhone to add to revenue in 2010 since no further "revenue sharing" will be required. That points to Apple and AT&T dissolving a rumored arrangement whereby AT&T paid Apple a share of the service fees paid by iPhone users.
The dissolution of that deal means Apple is switching to the business model used by other handset makers, whereby carriers subsidize the retail price of the phones in exchange for a two-year contract.
The dissolution of that deal means Apple is switching to the business model used by other handset makers, whereby carriers subsidize the retail price of the phones in exchange for a two-year contract.
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