I Told You So
At the risk of sounding slightly smug and possibly even obnoxious, I’m going to draw attention to a previous blog of mine: Bigger Is Not Always Better. While general narcissism is oftentimes good enough reason, I’ve got a much more widely accepted basis for calling attention to my own brilliance.
On Monday, October 20, I wrote about how the U.S., didn’t seem to get that “large” doesn’t always equate to “good.” I used the example of a small bakery that dropped Starbucks as a customer because the cost of supplying them was actually a drag on their overall profits.
Ironically, I called Starbucks “The Apple (Nasdaq: AAPL) of the java world.” And just three days later, a story confirming my admonition went public… about Apple.
Well, it was actually about AT&T (NYSE: T), but concerning their contract with Apple and the subsequent write downs they’re experiencing due to it.
Exclusive Benefits, Exclusive Costs
Right now, AT&T has sole rights to the iPhone, and that exclusivity is costing them and their shareholders at an already bad time since AT&T fell below Wall Street’s already adjusted earnings expectations by 4 cents a share this quarter.
Like virtually everything else, the company’s stocks are already down way past their peak. In the last 52 weeks, they’ve suffered a drop of over 50%, with shares down from $42.79 to $20.90. They’re gaining as I write this, but any positive results today could very well be erased tomorrow. In these markets, it’s difficult to be sure how each day will end.
According to the just released data, they spent $900 million on iPhone sales in last quarter alone. Just to make sure you caught that; they spent. Not made. Spent. Divided up, that’s $375 per new iPhone customer in upfront costs.
While AT&T allegedly warned that iPhone sales would cut off a total of 11 cents per share for the year total, shares dropped 10 cents for just the past three months.
The Cost Of Success
Business is booming though. It just isn’t all that profitable at the moment. AT&T sold 2.4 million iPhones this past quarter, a company milestone that they can still point to as a major achievement despite the fact that shareholders bailed out on Wednesday by 6%. In contrast, Apple rose 7%.
Taking it all in stride, AT&T bigwig Randall Stephenson said that overtime the addition will pay off. Not everybody agrees with him though, with understandable skepticism.
Critics point out that AT&T is trying to edge out competition to their own detriment, that the company is merely transferring wealth over to the very people they’re supposed to be making money off of (i.e. Apple).
With a $64 billion load of debt already accrued, and troubling times still ahead, they might be making a big mistake taking such risks and looking so far into the future instead of the present. Setting goals, making timelines and thinking ahead is a major part of every successful business. Why do you think the U.S. auto industry is suffering quite as badly as it is?
But there’s also something to be said with living in the present and understanding what’s happening in real time. When companies only focus on what could be instead of what is, they edge into dangerous waters.
http://www.smartprofitsreport.com/archives/2007/iphone-release-date471.html
Thursday, October 23, 2008 — by Jeannette Di Louie, Assistant Editor of Mt. Vernon Research
How One Company's Groundbreaking "Cancer Blaster" Could Make You Rich
While the World Health Organization predicts 12 million people will develop cancer in 2009, this little-known company is fighting the surge with its amazing cancer-killing device...
Although most people know nothing about it, this "Cancer Blaster" has already saved thousands of people around the world... Like Ohio resident, Caroline Brubaker, who says "with just three, pain-free outpatient visits, I had my life back" or Richard Swanson of Arizona who ended up cancer-free after just 4 hours of treatment...
The best part is, the company recently discovered an extraordinary breakthrough that could go mainstream in a matter of days... Read the full details to find out how you can get in ahead of the event - and be on your way to booking truly incredible gains.
|
One Response to “I Told You So”
Due to the amount of comments we receive Smart Profits Report will not be able to respond to all questions. By submitting your comment you agree to adhere to our Comment Policy.
Got something to say?
I’m long on T. So they shell out a bit in iPhone subsidies? They reap rewards NEXT year with a larger number of customers on expensive call/data plans.