This Is What the iPhone Has Done to Telecom

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If there's a theme emerging from the summer tech earnings season, it's that Apple's (Nasdaq: AAPL  ) iPhone is equal parts enabler and destroyer.

Need proof? You'll find it in the Mac maker's blowout earnings report. The iPhone brought in $13.3 billion in revenue as sales more than doubled to 20.3 million units, which means prognosticators who had called for 15 million to 17 million in unit sales are probably cleaning out their desks. This is the iEmpire at work, Fool.

The crust is shifting!
Like a massive earthquake kicking off an endless wave of aftershocks, the iPhone is changing the fortunes of virtually everything it touches -- for good or ill. Here's a closer look at three companies whose earnings either suffered (or benefited from) the iPhone's influence.

1. AT&T (NYSE: T  )
The former Ma Bell booked $31.5 billion in second-quarter revenue, up 2.2%, and per-share earnings matched last year's $0.60. Overall wireless revenue improved 9.5%, and wireless-data revenue -- an essential element of smartphone plans -- grew 23.4%. AT&T activated 3.6 million iPhones during the quarter, with 24% of those customers new to the carrier.

Handsets using Google's (Nasdaq: GOOG  ) Android operating system accounted for 40% of the 5.6 million smartphones AT&T sold during Q2, but the large number of iPhone activations suggests that the robot is more alternative than replacement -- though both could very well be cutting into sales of Research In Motion's (Nasdaq: RIMM  ) BlackBerry.

2. Nokia (NYSE: NOK  )
Or maybe the former Finnish phenom is the iPhone's primary victim, since Apple has passed Nokia as the world's largest smartphone supplier. Profits have suffered as a result. Last night, the company reported a net loss of about $530 million (368 million euros) as revenue declined 7.3% on a 34% drop in smartphone shipments. Remember that deal with Microsoft (Nasdaq: MSFT  ) ? Yeah, it isn't helping yet. Investors sold the news, and the stock is down more than 3% as of this writing.

A rally may not be in the offing. During yesterday's conference call with analysts, CEO Stephen Elop referred to a "shift in the product mix" toward cheap devices as a leading cause of Nokia's poor Q2 performance. The implication? Once the smartphone leader, Nokia is rapidly becoming the king of feature phones. That may be fine for a low-cost Asian manufacturer, but not for one of Europe's largest companies.

3. Verizon (NYSE: VZ  )
Big Red put up Big Numbers in Q2, thanks in large part to subscribers who were hungry for its iPhone. The company activated more than 2.3 million iPhone 4 handsets on the way to booking $0.57 a share of earnings on $27.5 billion in revenue. Analysts had been calling for $0.55 and $27.43 billion, respectively.

The numbers could continue to improve. Since February, when Big Red's iPhone first went on sale, Verizon has activated 4.5 million Apple handsets. "Sales have been steady, and in fact, [the iPhone] is one of the top-performing phones on our 3G network in terms of voice quality, with the least number of dropped or lost calls and high overall customer satisfaction," CFO Francis Shammo said during this morning's conference call with analysts.

Steady sales. Top performer. Customer satisfaction. This is the iEmpire at work, Fool. For investors, the iPhone opportunity looks richer than it ever has.

Do you agree? Which of these four stocks would you use to bet on the iPhone? Seriously, I'm asking. Please vote in the poll below and then leave a comment to tell us what other ways the iPhone will affect the market. You can also add all four of these stocks to your watchlist for up-to-date analysis as soon as it's published.

Fool contributorTim Beyers is a member of theMotley Fool Rule Breakers stock-picking team. He owned shares of Apple and Google at the time of publication. Check out Tim'sportfolio holdings andFoolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insightsdelivered directly to your RSS reader.

The Motley Fool owns shares of Google, Microsoft, and Apple.Motley Fool newsletter services have recommended buying shares of Microsoft, AT&T, Google, and Apple and creating a bull call spread position in Apple. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insights makes us better investors. The Motley Fool has adisclosure policy.


Read/Post Comments (7) | Recommend This Article (3)

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 July 22, 2011, at 6:12 PM, tiger132 wrote:

    There is something that I don't understand. You give AAPL 3 stars, but you give GOOG 4 stars. AAPL is growing faster than GOOG and just gave a tremendous quarterly result. It also has more room to grow.

    Can you explain your reasoning?

  • Report this Comment On July 22, 2011, at 6:51 PM, daillengineer wrote:

    The Fool doesn't give the star ratings, the CAPS community of investors do.

  • Report this Comment On July 22, 2011, at 8:40 PM, fatmonk wrote:

    500 million iPad is like a mission impossible.

    iCloud is changing the carrier world too....

    I am waiting to see the iPhone 5G... thinner, faster and sexier....

  • Report this Comment On July 22, 2011, at 10:54 PM, Gpot wrote:

    > fatmont spot on. Apple tsunami Blown estimates again by big waves.

    Not single analyst predicts even close on Apple quarterly estimates - never will. Analyst needs paradigm shift on better estimating futuristic company thru in-depth understanding of products & marketplace it touching.

    Frankly myself not big fan of Apple till 3wks ago after getting myself iPad2.

    Apple already shipping futuristic cloud computing compatible devices - Today.

    It will take markets by Big waves and will continue to.

    If u look closely at Apple design doesn't hv USB. Why?

    Simple, Steve jobs already making futuristic products to access clouds computing, storage space...

    Apple is ahead of time.

    YouTube is video of future. Not adobe player.

    Old PC is dying if designers continue

  • Report this Comment On July 23, 2011, at 10:10 AM, etgh wrote:

    Apple is clearly a very smart successful company. Their products do set trends and influence markets in a major way.

    One thing that amazes me is the ability of Apple marketing to convince us all of the slightly "mystical" qualities of the products. Take iCloud for example, cloud computing has been around for years and yet, many non-tech savvy folks believe that Apple invented it. Read Apple's marketing and you can see why one would form that opinion.

    Apple's product are good but in the final analysis, there not that good. They do have clear short comings like every other technology company.

    It's just their ability to control market opinion is so powerful, you don't want to or simply can't believe it.

  • Report this Comment On July 23, 2011, at 4:10 PM, thethreestooges wrote:

    AAPL OK for short term play. Trying to keep itself the most valuable company while outsourcing iPhones and iPads? Been there, Done that. Not that AAPL is too big to fail, but just too high valuation. What goes up must come down to earthly level. How is steve's health?

  • Report this Comment On July 23, 2011, at 6:19 PM, EvenSteppinWolf wrote:

    which one of the stooges are you, or are you all three?

    your comment made no sense. next time, try using words, phrases that you understand, ok?

    thanks in advance

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