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Is Verizon Making Excuses for Apple?

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Verizon (NYSE: VZ  ) doesn't want you to believe the hype.

Earlier reports of shorter-than-expected lines of iPhone 4 buyers at Apple's and Verizon's retail stores weren't indicative of demand for the handset, Verizon Wireless chief executive Daniel Mead said over the weekend.

Mead told The Wall Street Journal that more than 60% of sales of its version of the iPhone were processed online rather than in stores. "If we had not done online, you would have seen a much different flow in the pictures," Mead said in an interview with the Journal.

Is that an excuse? Maybe. The report is nevertheless interesting in that it's the first time in years I've seen an executive be forced to refute reports of soft demand for any sort of Apple (Nasdaq: AAPL  ) device, iOS or otherwise.

The timing is also curious. On Wednesday, Apple will take an important step in defending against Motorola Mobility's (NYSE: MMI  ) well-received Xoom tablet and other threats to its burgeoning iOS empire when it unveils its next-generation iPad.

Earlier, Apple released a beta version of the newest edition of the Mac OS (code-named "Lion") to beta testers and security experts. The release is notable in that Lion is the first edition of the Mac OS to be imbued with iOS features, such as multitouch.

For investors, the question remains whether iOS competition from a slew of new Android devices, BlackBerry handsets, and the surprising tandem of Microsoft (Nasdaq: MSFT  ) and Nokia (NYSE: NOK  ) will harm the underlying growth story.

Color me unconcerned. Apple's valuation doesn't require outsized growth in order to generate healthy returns for shareholders from today's prices.

And for as good as today's competition looks, recent history says knocking Apple off its perch is going to require more than good design and a decent price point. This is Apple's market to lose, and the company won't go down without a bitter and expensive fight.

Do you agree? Disagree? Let us know what you think about Apple's iOS lineup, the competition, and Verizon's iPhone 4 using the comments box below. You can also rate Apple in Motley Fool CAPS.

Interested in more info on the stocks mentioned in this story? Add Apple, Microsoft, Motorola Mobility, Nokia or Verizon to your watchlist.

Microsoft is a Motley Fool Inside Value pick. Apple is a Motley Fool Stock Advisor selection. Motley Fool Options has recommended members purchase a diagonal call position in Microsoft. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers is a member of the Rule Breakers stock-picking team. He owned shares of Apple at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. You can also get his insights delivered directly to your RSS reader. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool owns shares of Apple and Microsoft and has written Apple puts. The Fool is also on Twitter as @TheMotleyFool. Its disclosure policy won't tolerate excuses, Wall Street. Shape up.

Read/Post Comments (11) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 28, 2011, at 8:24 PM, Henry3Dogg wrote:

    Shorter than expected by who?

    Apple didn't make prediction.

    Verizon didn't make predictions.

    The only people who made predictions were the press.

    Strange how when the press get it wrong, they blame someone else!

  • Report this Comment On February 28, 2011, at 8:43 PM, artlaz wrote:

    It was readily available online. The weather was terrible. It wasn't a new device, rather an 7 month old device available on a new network. I expected bigger lines, but what happened makes sense.

  • Report this Comment On February 28, 2011, at 9:16 PM, melegross wrote:

    If they did sell a million phones that first weekend as has been surmised, that's pretty good.

  • Report this Comment On February 28, 2011, at 9:21 PM, makelvin wrote:

    I am think Verizon's refuting the short line rumor help save Apple's face. Apple's iPhone 4 has already proven to attract long lines at ATT and elsewhere around the world. If Verizon's introduction of the phone is the only one that is soft in demand, it would only show that the years of rumored pend-up demand for a Verizon CDMA iPhone is highly exaggerated. This would only make Verizon look bad. So it is clearly to Verizon's best interest to dispel the rumor of low demand for their version of the iPhone. The are not doing this to help Apple as the title of your article implies.

  • Report this Comment On March 01, 2011, at 12:17 AM, ConstableOdo wrote:

    As an Apple fanboi, I figured Apple would easily be able to sell three million iPhones in three months on the Verizon network because I wasn't counting on the iPhone 5 being available on Verizon until next year. Maybe users are waiting for their contracts to expire before jumping to the iPhone. I honestly thought there would be better turnouts of consumers rushing to buy the Verizon iPhone.

  • Report this Comment On March 01, 2011, at 12:19 AM, inthefield wrote:

    if this, as reported, is the best selling device, on initial offering, that has been put out by VERIZON, It appears to me that some analyst somewhere would have already looked at other device offerings and come up with a more accurate estimate. Except Mead did say "by far the best" so analyst estimates could still be low. Yet media worries about lines when the real story is what they did sell. Myself, I buy on line for several reasons:

    1: My time is valuable to me.

    2: Standing in line sucks

    3: Ordered before line was even started

    4: Standing in line sucks

    5: They undoubtedly have the best network,

    AT&T wont even work in my house, in town

    And last but not least



    My thoughts are the I pad 2 will have CDMA incorporated, will be offered on both networks, and will be a big stock mover for both APPLE and VERIZON and Mr. T could possibly retract a little because of volatility on loss of revs. Qualcom could also be a big mover. We shall see soon.

  • Report this Comment On March 01, 2011, at 1:49 AM, Davewrite wrote:

    there has been too much misleading articles hinting at 'slow' Verizon iPhone sales, if you glance at Android and Windows blogs it would appear that sales were DISMAL.

    fact is:

    1) Verizon had said it has been the greatest launch they have had in their history. If that's bad than what about the OTHER phones? If iP4 which has been around for a while trashes every other phone launch they've had even much touted Droid 'Wonders' what does that say?

    2) Today Scott Moritz who hasn't been known to be a big fan of Apple (he called the iPad before launch the 'iFlop') estimates that Verizon probably sold a million iPhones at launch. So that to me is pretty good (remember it took weeks for Microsoft to sell 2 million WP7 phones on 60 carriers in 30 countries) and I suspect iP4 sales have been going steady as people's old contracts expire.

    3) "well-received Xoom tablet" not from half the reviews I've read, even (not big on Apple) ZDnet had an article 'Not ready for prime Time'. Well received? How many millions have they sold, how many pre-orders? I'm NOT saying the Xoom sales is bad but where are the data points? Haven't seen any numbers at all. I'm tired of articles with no numbers simply concluding everything apple is bad and everybody else is good. I own both Apple AND Google stock and you can't make investment judgements from no data.

    I'm tired of reading articles saying 2 million WP7 in 30 countries is 'a Great Start' (as ZDnet claims) and I million iPhones over a few days on Verizon is 'slow sales' or as here 'making excuses'.

  • Report this Comment On March 01, 2011, at 9:59 AM, WilliamDevine wrote:

    I believe that the problem with the iPhone on Verizon is that people got tired of waiting and bought Droids. With the contracts they have they cannot upgrade for about another year at that point you will begin to see some more sales. Also people may be waiting for the next iPhone for Verizon that uses the new LTE network. This version will allow both data and voice at the same time. The current EVDO phones can only do voice or data not both at the same time. EVDO = Evolution Voice Data Only, LTE = Long Term Evolution.

  • Report this Comment On March 01, 2011, at 10:12 AM, TMFMileHigh wrote:


    >>"well-received Xoom tablet" not from half the reviews I've read, even (not big on Apple) ZDnet had an article 'Not ready for prime Time'. Well received?

    Robert Scoble, a confessed iPad fan, gave the Xoom a nice endorsement here:

    Thanks for writing and Foolish best,

    Tim (TMFMileHigh and @milehighfool on Twitter)

  • Report this Comment On March 01, 2011, at 6:19 PM, rollingboy wrote:

    all those articles are dumb if you ask me. i went into my local verizon on feb 13, do you know what they told me? Sold out everywhere in my area and that im going to have to wait till the 18th to get one. Now if being sold out in 2 days is slow, im wondering then what the hell is fast sales????

    i ended up ordering it "online" which stopped me from standing "on line" lol!

  • Report this Comment On March 01, 2011, at 6:21 PM, rollingboy wrote:

    besides who cares if they sold slow or fast? apples happy, verizons happy, the customers are happy, everyone is happy. so really who cares if they sold slow or fast?

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