Did AT&T's exclusivity contract for the Apple iPhone benefit AT&T nearly as much as it benefitted Apple?

Question

When taking a look at stock quotes around the time the AT&T / Apple iPhone announcements were made... I can see Apple's stock price increasing.. but I can't really see AT&T's stock value increasing... am I missing something? Why did AT&T not benefit from the exclusivity deal. I'm sure many customers switched over to AT&T in order to have iPhone service... Was the whole "iPhone unlocking issue" a major factor in AT&T not profitting much? Maybe I am missing something.. but it seems like signing a contract with Steve Jobs basically means shafting yourself by playing basketball with Michael Jordan.

Answer 1

I think it is part perception and part reality. AT&T has and will make a lot of money on this, but perhaps not enough money to really move the needle on the stock.



When the hype surrounding the Halo game release ramped up, no one thought that it could move the needle on Microsoft. Then they stated earnings & showed the Halo sales & the extra XBox sales & it did move the needle, & the stock jumped.



The perception effect is this. VM Ware stock has had a huge run, but EMC stock not so much. But EMC owns 89% of VMW. If you buy EMC today you are getting the storage business for free, based on the VMW ownership. How is this possible? I don't know; investors are stupid. They will pay anything for the hot mojo.



Another example is Cypress semi owning 52% of Sunpower solar. Buy Cypress & you get the non-solar business for free.

Answer 2

People buy Apple stocks since they knew there's a new soon to be a hit product which is I-phone. Apple Stocks is based on sales, so they project a massive sales which is why the stocks went up.



AT&T is just a service oriented company, and they don't launch a new kind of service, what you got in I-phone services, Is still the same services you will got on any PDA like phones under AT&T. So there is no new product/service craze that will soar the AT&T stocks.



AT&T stocks maybe will soar when people buy the Iphone and uses the AT&T services, but I think mostly who buys the Iphone is old AT&T clients, so there is no actual increase of sales on part of AT&T.

Answer 3

It is my estimation that AT&T stock didnt' rise too much because the market watchers figured that Apple eventually would have to allow others to utilize its technology or face competition on competing networks with similar interface. IPhone had the hype. AT&T didn't really fuel any hype about its exclusivity....and historically telecom is always squidgy of a stock choice.

Answer 4

its the same price, but if you go to the apple store you have to register it with at&t still. either works, but buying it at at&t is more convenient.