Thursday, November 12, 2009
Frosty’s Winter Litigation Wonderland: AT&T Demands Verizon Pull Holiday iPhone Ads [With Full Complaint]
As clever as it is, Verizon’s reimagining of a Rankin/Bass animated Christmas television special as a criticism of AT&T’s wireless network coverage did not go over well with Ma Bell. On Wednesday, the carrier amended its complaint against Verizon, asking a federal court in Atlanta to force its rival to immediately pull the ad and two other holiday-themed spots that debuted with it.
The Pixi, the Palm Pre’s diminutive smart-phone sibling, arrives at market a few days from now (Nov. 15), and despite some potential pricing confusion with the Pre, analysts expect it to be another catalyst for the company’s comeback. In a note to clients today, Bank of America/Merrill Lynch analyst Vivek Arya said Palm is well-poised for growth in 2010.
Beginning Nov. 15, Verizon subscribers looking to get out of their smart-phone contracts early will pay $350 for the privilege. That early-termination fee is double the current one, but Verizon insists it’s justified because of the higher prices of today’s phones. An interesting move for a carrier that just last year agreed to pay $21 million to settle a class-action lawsuit filed by California consumers over the very early-termination fees it is now increasing. 
Droid, Motorola’s most anticipated cellphone since the launch of the Razr in 2004, arrived at market today, to a warm reception by most accounts. Some 2,000 Verizon Wireless stores opened early this morning, many to lines–though admittedly, the lines are far shorter than those that accompanied the launch of certain rival devices.
The Palm Pre may have been the most successful handset rollout in Sprint’s history, but it hasn’t stopped the carrier from hemorrhaging customers in the months following its launch. 
Verizon uncrated its latest iPhone challenger Wednesday morning, introducing the new $199 Motorola Droid, and it already has analysts buzzing about the life it may breathe back into Motorola, whose share of the phone market dropped by nearly half in the second quarter from 10 percent a year earlier.
Though the iPhone-slagging ad campaign for its forthcoming Droid handset may make negotiations uncomfortable, Verizon is still very much interested in adding Apple’s iconic device to its smart-phone lineup. But if and when it does is entirely up to Apple, according to Verizon CEO Ivan Seidenberg.
Verizon posted a decent third quarter this morning, besting consensus estimates. Analysts polled by Thomson Reuters had been expecting earnings of 59 cents on revenue of $27.17 billion. Excluding one-time costs, Verizon reported a profit of 60 cents a share on revenue of $27.3 billion. 
Add Morgan Stanley’s Kathryn Huberty to the list of analysts calling for Apple to broaden the iPhone’s distribution by ending carrier exclusivity deals. In a research note issued this morning, Huberty–noting that the iPhone’s market share grew 136 percent in France when Apple switched to multicarrier agreements there–said iPhone sales could more than double if the company took a similar tack in other countries.
Get ready for metered broadband. Speaking at the FTTH Conference and Expo in Houston Tuesday, Verizon Communications CTO Richard Lynch said the broadband industry is headed toward a pricing paradigm shift that will see it embrace the usage-based pricing common to the wireless broadband industry.
Analysts who follow Palm are already rolling their eyes over TheStreet.com’s claim that Verizon has balked at adding the company’s new Pre handset to its lineup. In a research note this morning, Deutsche Bank’s Jonathan Goldberg dismissed it as “off base.”
Well, now we know why Verizon Wireless CEO Lowell McAdam said he expects to have “devices like the Pre” on his network by next year: The carrier doesn’t plan to offer the Pre at all–according to unnamed sources cited by TheStreet.com, anyway.
Another point worth pulling out from Piper Jaffray analyst Gene Munster’s recent research note about Apple, this one regarding AT&T’s iPhone-exclusivity deal: Munster doesn’t see it lasting much beyond this year.
The Federal Communications Commission’s efforts to determine whether exclusive handset deals are promoting or hindering innovation in the wireless market are moving ahead with a focus on rural areas. That’s the word from agency Chairman Julius Genachowski, who says he’s concerned not just with the competitive ramifications of carrier-exclusivity deals but with their tendency to limit customer access to top smartphones. 
This recession is a long way from over if Verizon’s latest earnings are anything to judge by. Reporting second-quarter earnings that were a penny better than the 62 cents per share Wall Street had been expecting, the company said it suffered a nasty 21 percent drop in profit thanks to the econalypse, which is pinching enterprise customers pretty hard these days. 
