Higher Sales + Less Profit = Angry Investors
Investors knew that Apple was going to offer the iPhones at cost. Investors knew the plan. Why are they upset now?
Apple Inc’s (AAPL.O) iPhone is giving its sole U.S. carrier AT&T Inc (T.N) a big boost in subscribers and buffering the impact of slower landline sales, but the success is coming at a cost that many AT&T investors do not like.
Because AT&T offers subsidies to make the iPhone more affordable in exchange for a commitment to monthly payments, strong sales lift its revenue but hurt profit margins. That weighed on the company’s third-quarter results and drove its shares down 4 percent by midday on Wednesday.
Everyone involved with the AT&T deal knew that they were not going to recoup the money they were subsidizing for a few years. I don’t understand why they are unhappy about that now, except the fact that the economy has tanked and they want to make as much off their money as they can before things get real bad.
What else is it?
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