Verizon Could Face Up to $14 Billion in Unsold iPhone Purchase Commitments for 2013

Bloomberg yesterday reported on a research note from analyst Craig Moffett pointing out that Verizon could potentially face a massive bill from Apple of up to $14 billion this year based on current iPhone sales rates and the carrier's commitment to purchase a minimum number of iPhones from Apple.

Under a multiyear deal signed with Apple in 2010, Verizon Wireless is obligated to buy $23.5 billion worth of iPhones in 2013 alone, according to Craig Moffett, a telecommunications analyst who left Sanford C. Bernstein & Co. earlier this year to start his own research firm. Since the purchase commitment is more than twice what Verizon Wireless sold in 2012, the company may have a shortfall of $12 billion to $14 billion, worth $4 to $5 per share, Moffett said in the report.

Apple routinely requires new iPhone carriers to commit to purchasing a certain number of iPhones over a period of years, a requirement that has led some carriers to balk at offering the device.

As Moffett points out, Apple's contract with Verizon requires the carrier to purchase more than twice as many iPhone this year as it did last year. During the first quarter of 2013, Verizon activated four million iPhones on its network, a figure representing roughly $2.5 billion in hardware value at Apple's average selling price of about $613 per unit.

verizon_iphone_cook
While the first quarter may have been a somewhat slower one for the iPhone at Verizon following the iPhone 5 launch in September 2012, it only represented a 25% increase in units over the first quarter of 2012, indicating that the carrier is indeed well behind pace for meeting its purchase requirements for 2013.

moffett_verizon_commitments

Amounts in millions of dollars (Source: Moffett Research, company reports)

Apple is expected to introduce an upgraded iPhone 5S later this year, with a lower-cost plastic iPhone also apparently in the works, but it seems unlikely that those launches will be able to generate the massive increase in sales volume needed at Verizon to meet the carrier's contract requirements.

Moffett notes that it is unlikely Apple will require Verizon to pay the full amount of any shortfall this year, particularly if it reaches the $12-14 billion amount estimated by Moffett, but that any renegotiations will likely see Apple extracting some concessions from Verizon as the iPhone maker seeks to hold other carriers to their commitments.

Update: Nomura analyst Stuart Jeffrey has released his own note examining the situation and concurs with Moffett that Apple and Verizon are in a difficult spot. Verizon disclosed at the end of its 2012 financial statements that it holds $23.5 billion in purchase commitments for 2013, with Moffett and Jeffrey both believing that the iPhone accounts for the vast majority of that amount.

Jeffrey notes that Verizon could still satisfy its obligation by making a massive advance purchase of iPhones for 2014 at the end of 2013, although such a purchase would obviously have an effect on any purchase requirements to be built into a renewal contract with Apple. Alternatively, Apple could simply allow Verizon to roll over its commitment into 2014 in order to prevent Verizon having to make a massive expenditure at the of the 2013, although such an allowance would undermine Apple's minimum purchase agreements with other carriers.

Related Forum: iPhone

Popular Stories

iOS 26 Battery Glass Feature

iPhone 16 Pro Max 80% Charge Limit: One Year Later, Was It Worth It?

Wednesday September 24, 2025 3:58 pm PDT by
With the iPhone 15 series, I did an experiment and kept my iPhone's Charge Limit set at 80 percent for an entire year. It provided an interesting look at the impact of charge limits on battery longevity, so I decided to repeat it for the iPhone 16 line. Since September 2024, my iPhone 16 Pro Max has been limited to an 80 percent charge, with no cheating. As of today, my battery's maximum...
iOS 26

Everything New in iOS 26.1 Beta 1

Monday September 22, 2025 12:44 pm PDT by
Apple released the first beta of iOS 26.1 today, just a week after launching iOS 26. iOS 26.1 mainly adds new languages to Apple Intelligence, but there are a few other features that are worth knowing about. New Apple Intelligence Languages Apple Intelligence is now available in Danish, Dutch, Norwegian, Portuguese (Portugal), Swedish, Turkish, Chinese (Traditional), and Vietnamese. AirPo...
iPhone 17 Pro Colors

Skipped the iPhone 17 Pro? Here's What is Rumored for iPhone 18 Pro

Tuesday September 23, 2025 8:55 am PDT by
While the iPhone 18 Pro and iPhone 18 Pro Max are still a year away, there are already a few rumors about the devices that offer an early look ahead. Below, we have recapped some of the early iPhone 18 Pro rumors so far. This story was published previously, and it has been updated to reflect the latest rumors. Many early rumors prove to be true, but nothing is confirmed yet, and Apple's...
apple tv 4k new orange

Next Apple TV Expected to Launch This Year With These New Features

Monday September 22, 2025 10:00 am PDT by
The next Apple TV is expected to be released later this year, and a handful of new features and changes have been rumored for the device. Below, we recap what to expect from the next Apple TV, according to rumors. Likely Features N1 Chip With Wi-Fi 7 Last year, Bloomberg's Mark Gurman said the next Apple TV would be equipped with Apple's own combined Wi-Fi and Bluetooth chip, which is...
iphone 17 pro dark blue 1

Apple Blames In-Store MagSafe Chargers for iPhone 17 Pro Display Model Scratches

Wednesday September 24, 2025 10:22 am PDT by
The marks on the iPhone 17 Pro models that people have noticed at Apple retail stores are caused by the chargers that Apple uses, Apple confirmed today. Apple told 9to5Mac that worn MagSafe charging stands in stores are causing marks on the iPhone 17 Pro and iPhone 17 Pro Max. Apple says that the marks are not scratches, and are instead material transfer from the stand to the phone. The...
iPhone 17 Pro USB C Port

iPhone 17 Pro Max's USB-C Charging Speeds Tested With Apple Chargers

Monday September 22, 2025 7:29 am PDT by
The website ChargerLAB has tested the iPhone 17 Pro Max's USB-C charging speeds with a variety of Apple's chargers, from 18W to 140W. The device reached a peak charging speed of around 36W with the following Apple chargers:40W Dynamic Power Adapter with 60W Max 61W USB-C Power Adapter 67W USB-C Power Adapter 70W USB-C Power Adapter 96W USB-C Power Adapter 140W USB-C Power AdapterFor...
AirPods Pro 3 Newsroom

Apple's 'Back to School' Offer Ends Soon, Now Applies to AirPods Pro 3

Wednesday September 24, 2025 7:20 am PDT by
Apple's annual "Back to School" promotion for students ends soon, so act fast if you want to score free AirPods with the purchase of an eligible new Mac or iPad. Until Tuesday, September 30, college students and qualifying educational staff in the U.S. can receive free AirPods 4 with Active Noise Cancellation when they purchase an eligible new Mac or iPad from Apple. This is a $179 value. ...
ios 26 digital id passport wallet

Apple Confirms iOS 26 Wallet Passport Feature is Coming in 2025

Tuesday September 23, 2025 1:06 pm PDT by
Digital ID, the iOS 26 feature that lets U.S. passport holders add their passports to the Wallet app, is coming later in 2025, Apple confirmed today. Apple updated the release timing wording of Digital ID on its iOS 26 features page. "Digital ID will be coming later this year with US passports only," it reads. Prior to today, the footnote for the feature said "Digital ID will be available ...
Apple Intelligence General Feature 2

iOS 26.1 Adds New Apple Intelligence Languages and Expands AirPods Live Translation

Monday September 22, 2025 11:15 am PDT by
With iOS 26.1, Apple Intelligence is gaining support for additional languages, including Danish, Dutch, Norwegian, Portuguese (Portugal), Swedish, Turkish, Chinese (Traditional), and Vietnamese. Apple announced plans to expand the languages that can be used with Apple Intelligence last year, and now the added language support is here. Apple Intelligence is now available in the following...
maxresdefault

iPhone 17 Pro is Vulnerable to Scratching, But Not Where You Might Think

Tuesday September 23, 2025 2:18 pm PDT by
Early reports have suggested that the iPhone 17 Pro and iPhone Air are more vulnerable to scratches and scuffs, primarily due to damage spotted at Apple Stores. Apple customers have discovered that the iPhone Air and iPhone 17 Pro models Apple has out for display at its retail locations have scratching in the area of the MagSafe charger. Those devices are handled by hundreds to thousands of...

Top Rated Comments

bidwalj Avatar
159 months ago
And the geniuses keep training to push their employees to sell non iPhones....
Score: 34 Votes (Like | Disagree)
Robert.Walter Avatar
159 months ago
Wasn't Verizon one of the carriers offering its sales folks bigger incentives to sell anything but the iPhone, such that these folks started steering even iphone intenders to other brands?

Kinda schizophrenic if you ask me.
Score: 30 Votes (Like | Disagree)
KJESPOKO Avatar
159 months ago
Put the blame on Verizon

If this is true, Verizon should be to blame. Every time you go to a Verizon store the sales people are never pushing the iPhone. If you ask about the iPhone, they immediately try to get you to buy a different phone. Their sales reps are obviously incentivized to sale other phones, not iPhones.
Score: 26 Votes (Like | Disagree)
tekno Avatar
159 months ago
Very bad news for Apple.
Score: 21 Votes (Like | Disagree)
MacFan1957 Avatar
159 months ago
Very bad news for Apple.

How is that?

Read the thing through, not just the headline, and you'll begin to realize why analysts have a worse reputation that lawyers or politicians!
Score: 19 Votes (Like | Disagree)
CJM Avatar
159 months ago
How is that?

Read the thing through, not just the headline, and you'll begin to realize why analysts have a worse reputation that lawyers or politicians!

Well no carrier will agree to a similar purchase order in the future, that's for sure.
Score: 15 Votes (Like | Disagree)