IPhone Sales Fall Short of Expectations
AT&T Inc. wiped some of the glow off Apple Inc.'s iPhone on Tuesday, releasing numbers that showed fewer people than expected signed up for service in the first two days of the multimedia cell phone's release.
AT&T -- the iPhone's exclusive carrier -- said it activated 146,000 iPhones on June 29 and 30, a number that disappointed investors following some analyst forecasts that Apple would sell 500,000 or more iPhones in its first weekend.
The news interrupted a steady rise in Apple's stock price that started with the iPhone's release. The 18 percent surge generated $18 billion in shareholder wealth.
On Tuesday, Apple shares fell $8.81, or more than 6 percent, to $134.89, wiping out more than $7 billion of Apple's market value.
Analysts cautioned against reading too much into AT&T's activation numbers, saying the actual number of iPhones sold may be much higher but was not reflected in the figure because many users had activation problems and couldn't sign up for a few days.
"It's just had such a run on overexpectations, I don't see this as any sort of disappointing metric in terms of the iPhone overall," said Ingrid Ebeling, an analyst with JMP Securities. "I think it's just gotten a little overhyped over the past month."
Also weighing on Apple's stock Tuesday was a report from CIBC World Markets that said demand for the iPhone has experienced a "significant decline" in the past 10 days, a slowdown driven in part by dissatisfaction with the slow data transfer speeds on AT&T's network. CIBC used store visits and a survey of iPhone buyers to reach its conclusions.
CIBC said it expects Apple and AT&T to boost their marketing push for the iPhone and the companies could introduce a new model in November -- earlier than expected -- that operates on a faster network. The two models now available cost $499 and $599.
Apple spokesman Steve Dowling declined to comment.
Apple is expected to release more information on the iPhone's sales in its third-quarter earnings report on Wednesday. The company has been tightlipped about its near-term sales forecasts, saying only that it hopes to sell 10 million worldwide by 2008.
Shaw Wu, an analyst with American Technology Research, said the little information Apple is likely to release will be closely watched by investors looking for signs of the iPhone's momentum.
"Even though it's only two days of information, it's definitely going to be looked at carefully," Wu said.
Analysts are expecting Apple to continue its strong profit growth. According to a survey by Thomson Financial, Apple is expected to earn 72 cents a share on $5.29 billion in revenue for the third quarter.