Verizon Profit Margins Drop, The iPhone To Blame

The iPhone continues to be a hot seller for carriers, Verizon Wireless being one of the largest sellers of the must have device. Although that may be the case, the carrier announced today that profit margins dropped in the fourth quarter. This was due to record sales of the iPhone. They carry the latest smartphone from Apple, the 4S, as well as the previous generation.

In just 3 months, Verizon was able to sell an astounding 4.2 Million iPhones which was more than double the amount sold in the third quarter. The Wall Street Journal explains why:

“Verizon and rival AT&T Inc. ad said third-quarter iPhone sales were slower because of customers waiting to buy the newest version of the device, resulting in pent-up demand. Apple released its latest-version smartphone, known as the iPhone 4S, in mid-October on the three largest carriers including Sprint Nextel Corp.”

The smartphone will become an even bigger money maker as the iPhone 4S plans to go into China and 21 other markets.

“With sales of $47.1 billion, the device accounted for 43% of the Cupertino, Calif., company’s revenue in its fiscal 2011, up from 39% the year before.”

4.2 Million sales of the smartphone for Verizon in the fourth quarter, is a lot of contracts and money will be made in the long run so nothing to really be concerned with in that aspect.

Simply put, the money that carriers lose upfront on phones (potentially several hundred dollars upfront), is the same thing that one of the World’s largest mobile network operators is going through right now.

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