by Christopher Freeburn | July 11, 2013 12:18 pm
Here are your Apple rumors and AAPL news items for today:
Sales Shortfall: When Verizon‘s (VZ) Verizon Wireless signed a multi-year deal with Apple (AAPL) in 2010, it agreed to specific iPhone purchase commitments in future years, Bloomberg notes. Now, with smartphone sales cooling, the wireless carrier could be on the hook for up to $14 billion this year, according to Moffett Research. Under its deal with Apple, Verizon Wireless must sell $23.5 billion in iPhones in 2013. But last year, the company sold iPhones worth less than half that amount. That means it could face a shortfall of between $12 billion and $14 billion in iPhone sales this year. That could dent earnings between $4 and $5 a share. Reports indicate that global sales of the iPhone are slowing. Analysts expect Apple, which derives half of its sales from the iPhone, to report a 22% decline in third-quarter revenue, compared to last year. By contrast, Sprint (S) is expected to meet its $15.5 billion iPhone sales commitment contained in its agreement with Apple. Moffett says that Apple will likely renegotiate some of the Verizon Wireless commitments but was unlikely to give the company a total pass on any sales shortfall since it would then be pressured to do the same for other carriers. A number of global carriers have balked at the terms Apple demands in order to carry the iPhone, including Japan’s NTT Docomo (DCM) and China Mobile (CHL).
Fallout: A federal judge’s ruling that Apple improperly colluded with five publishing companies to raise e-book prices is likely to give added advantage to the digital book market leader, Bloomberg notes. The verdict could result in greater government oversight of the Apple’s online book, movie and music sales. Meanwhile, Amazon (AMZN), which dominates the e-book market, is likely to leverage the court decision to more aggressively price e-books and boost its already dominant market share. The Department of Justice accused Apple of pressuring publishers to adopt the agency model for e-book pricing on the iBookstore, allowing them to raise prices. Amazon, by contrast, sets its own pricing for e-books sold for its Kindle e-readers. A representative of the Authors Guild said that the decision could increase Amazon’s power over the book publishing industry, reducing competition. The judge will set a new trial to determine what damages Apple will have to pay. Apple says it will appeal the verdict.
Discovery: Apple’s plans to build a new flagship store in Madrid have hit an archeological snag, AppleInsider notes. During excavations for the new store, workers found the ruins of a 15th century hospital. The Buen Suceso hospital was built during the early 1400s to treat victims of the plague. It was torn down in 1854 to clear space for other buildings. In 2009, construction crews working on another project close to the Apple Store site uncovered the remains of a church from the same period. The new store will be Apple’s third outlet in Madrid.
For more about the company, check out our previous Apple Rumors stories.
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