Sprint Commits to Buying $20 Billion Worth of iPhones, To Get Redesigned iPhone 5 Exclusively?

[MNRunLeft]

If the technology for Sprint to roll out the iPhone5 is in place whereas the LTE isn't then I don't think its out of the question that $20 billion guaranteed is essentially being paid to Apple to release their version now rather than sitting on it until all version are ready for release in Q1. Sprint pays big bucks to get a leg up on the competition in hopes of stealing customers who have to have the latest and greatest, while Apple gets a big fat check to release something they already have done rather than sitting on it until the other versions are complete.

The biggest issue imo is the timing, doesn't seem like Apple would want to rain on their own parade releasing the 5 and the 4S at the same time.

 

[Number 41]

I don't know if this has been mentioned before, but it's probably Sprint is getting the iPhone 5 for their network + wimax, because Apple won't have alot of units to sell with WiMax so Sprint had to agree to buy $20 billion worth to make the phone profitable for Apple because they would have to develop drivers and custom things for it.

Apple just wanted a guaranteed profit, incase they don't sell many WiMax iPhone 5's.

Stop thinking logically.

Look at this from Apple's Perspective:

SPRINT: We want you to build a WiMAX 4G iPhone 5 for our network.

APPLE: We don't think there's any money in that.

SPRINT: We'll pay you, up front, for all of the phones. Let us worry about how to sell them.

APPLE: Deal.

SPRINT: By the way, our WiMAX chips are available now and fit your requirements for power consumption. Can we get the iP5 now?

APPLE: Make it $20 Billion, in that case.

 

[vazquez1085]

First of all, I dont beleive this rumor. Secondly, IF it was true, as my friend Jim Collins would say, this is definetly Sprint "Gasping For Salvation"

 

[butterfly0fdoom]

That presupposes that Apple intended to release a non-LTE iP5 with just HSPA+ tech -- if they did that, they'd have to release ANOTHER phone with LTE tech later.

This way, they can release 1 iP5 to Sprint w/ WiMAX (and cash that phat check for $20B), and release 1 world-band LTE iP5 for GSM and Verizon CDMA when the LTE chips are ready.

Huge win for Apple.

It's unlikely to unfold that way anytime soon. A worldphone that supports both GSM and CDMA as well as LTE isn't likely to be cost-effective considering the costs of all the various chipsets and antennas required (especially when considering how costly a quad-band LTE antenna is likely to be, considering how it took years for quad-band GSM and quad-band HSPA antennas to become the norm).

I was originally about to cite the sheer cost of this rumored deal as a reason why it can't possibly be true, but then I realize the bean counters at Sprint are probably all morons considering most of Sprint's big decisions over the past few years.

 

[KingCrimson]

Apple just made another $30 billion in cash without lifting a finger. All the worlds' corporations are beating down a path to 1 Infinite loop BEGGING Apple to take their cash!

 

[mpiddy76]

I'm not buying it......

This doesn't make sense since I keep hearing how At&t and Verizon have hired extra staff to help with the rush they will get when the iPhone 5 is released.

 

[firewood]

Sprint has over 50M customers currently. If half of their current customer base doesn't switch and but upgrades to some new wimax iPhone model, Sprint would be able to cover at least 25M of the 30M units promised. If enough crazy fanboys switch carriers just to get the more fashionable model (but with the same CPU/GPU as the 4S) 6 to 9 months earlier, Sprint might be able to cover the additional 5M units and turn a profit on the deal.

 

[mattwallace24]

Ha...no way this deal includes exclusivity. This is a lagging carrier's price to entry into the iPhone market. Nothing in the WSJ report or any other business headline mentions exclusivity, but they do mention this was the price Sprint had to pay Apple to play.

Sprint is finished as a company. As of their last annual report, they have less than $4B in cash. They lost almost $3.5B last year. The report indicates they won't see any positive income from this deal until 2014!!! How can they cover over $20B in new incremental expenses? This will decimate their remaining cash, force them to take dramatically increase their long-term debt (double it!!!), and chew up their already weak cash flow. Can you say no significant cash left over for network investments or customer acquisitions.

An updated WSJ report indicates they either have to double their base of subscribers in the near term OR have every current subscriber drop their current phone and by an iPhone in order to cover this commitment (or a combination of the two). Does anyone really expect millions of subscribers to leave AT&T or Verizon to jump to Sprint? Seriously? AT&T didn't even see a dip in subscribers when Verizon got the iPhone, so I can't see a mass exodus from either of them to Sprint. So Sprint's only chance is to sell most of these phones to their existing subscribers. How is that a winning bet??? So they eat around $400 per phone to hand them out to their own users but don't raise rates?

This was the bet Dan Hesse should have made 5 years ago. Way too little and way too late. This is the final nail in Sprint's coffin. Let the fire sale begin. Sprint's stock is already down 10% on the rumor. Was it is finalized and people really look at the underlying financials, Sprint will be able to be picked up for next to nothing.

 

[BC2009]

I think if Sprint paid for anything, it was for Apple to make the iPhone 5/4s support WiMAX -- which is something Apple was not going to do of their own volition. Either way.... last day of crazy rumors, tomorrow is the real deal.

 

[PaulieORF]

Versus the chorus of Boos if they told everyone that no one is getting an iPhone 5 until the LTE chips are ready for a world-band phone?

I'd rather get an iPhone 5 on Sprint (with promise of future iPhone5 on other carriers) than some crap spec bumped iP4S tomorrow.

In my opinion, an "redesigned" iPhone 5 without 4G would probably be plenty for everyone this year, with LTE/WiMax coming with next years iPhone 2012. Do you really think if Apple announces an iPhone 5 tomorrow, they will specifically say "the all new redesigned iPhone 5, without 4G!"?

 

[flux73]

NO...it say's "Sprint Nextel Declines on Report It Committed to Buy 30.5 Million IPhones" RIGHT IN THE TITLE.


and then it sates...."To win the right to carry the device, Sprint had to commit to buying the phones from Apple Inc. (AAPL) whether Sprint could find buyers for them or not, the Wall Street Journal reported."


it DOES NOT say that they have committed to ANYTHING.

Are you drunk?

 

[kas23]

If the WSJ is publishing this, then it is not a rumor. Not just individuals, but whole departments would be fired if they goofed on such a tremendously huge story.

As for Sprint, I've had them before and I never had any problem with them. I have an iPhone 4 right now and am about 9 months towards the end of my contract. If they pay my ETF, I would switch in a heartbeat.

But, in all seriousness, this is a gamble on Apple's part. It doesn't matter if they have a contract to buy $20 billions worth of iPhones, if Sprint goes belly-up, then that Contract is toast. And it seems to be in vogue nowadays for corporations to use bankruptcy to get out of contracts.

Why doesn't Apple or Google just outright buy Sprint.

 

[iMacx]

Bet big, win big

Go big or go home i guess.

 

[Himynamesnoah]

Stop thinking logically.

Look at this from Apple's Perspective:

SPRINT: We want you to build a WiMAX 4G iPhone 5 for our network.

APPLE: We don't think there's any money in that.

SPRINT: We'll pay you, up front, for all of the phones. Let us worry about how to sell them.

APPLE: Deal.

SPRINT: By the way, our WiMAX chips are available now and fit your requirements for power consumption. Can we get the iP5 now?

APPLE: Make it $20 Billion, in that case.

I was hoping someone would explain it better, but I'm almost positive this is what's happening. Why lose money making the iPhone 5 exclusive, and who else besides Sprint wants a WiMAX iPhone for their network.

 

[mattwallace24]

Sprint has over 50M customers currently. If half of their current customer base doesn't switch and but upgrades to some new wimax iPhone model, Sprint would be able to cover at least 25M of the 30M units promised. If enough crazy fanboys switch carriers just to get the more fashionable model (but with the same CPU/GPU as the 4S) 6 to 9 months earlier, Sprint might be able to cover the additional 5M units and turn a profit on the deal.

According to the Wall Street Journal, Sprint's contract customer base is smaller (around 30 million). I don't see Sprint giving away iPhone's to month by month customers and even if they did, these aren't the types of consumers to drop hundreds on a new phone.

 

[Dammit Cubs]

If this is true then sprint better upgrade their network immediately because right now, if you add the iphone. Then ATT will look like Verizon when it comes to network reliability.

 

[marklachance]

WoW if this is true ... for once i am happy to be with sprint ...

cant wait to rub my iphone 5 to my family who all have AT&T and loved rubbing it in my face all these years ... haha

You're gonna rub your iphone?

 

[Number 41]

But, in all seriousness, this is a gamble on Apple's part. It doesn't matter if they have a contract to buy $20 billions worth of iPhones, if Sprint goes belly-up, then that Contract is toast. And it seems to be in vogue nowadays for corporations to use bankruptcy to get out of contracts.

How is this a gamble on Apple's part? They made $20 billion doing absolutely nothing and, likely, giving up absolutely nothing.

Even if Sprint gets an "exclusive" iP5 you can bet your bottom dollar that "exclusivity" runs out the second the LTE chipsets are expected to be ready for the iP5 on AT&T and Verizon.

 

[Bucktag04]

Alright, BGR's claims are the problem with this rumor... I have a membership with a private investment research site and they claim the same thing as what the WSJ is quoted in saying...

"Sprint Nextel Corp. S is gambling that a heavy $20 billion investment in Apple Inc.'s iPhone will help the ailing wireless carrier out of a decade-long slide, The Wall Street Journal reported Monday in its online edition. Sprint is expected to commit to buy at least 30.5 million iPhones from Apple over the next four years for about $20 billion, according to the Journal. The wireless carrier would also lose money on the deal until 2014, the Journal reported, citing people close to the matter."

I would like to point out the fact that there is no mention of an exclusivity agreement or exclusive anything!!! That claim is solely big-time BS made up by someone at BGR to get some traffic/attention etc. Also, if we just use some common sense and remember that Apple has been generating over $20 billion in revenue for the last several quarters ($20b+ every 3 months) ...so this clearly is not some huge strategic deal that Apple is capitalizing on. 4 years = 16 quarters = $1.25 billion per quarter locked in from Sprint. That does not even equal 1% of revenue needed per quarter. And in return Apple releases their next generation Iphone 5 and what do you know it will be available for Sprint as well. Come on faithful ones, Apple is not that dumb!

 

[lilo777]

Respect to T-Mobile

for not bowing to Apple pressure.

 

[Gasu E.]

I can see Sprint being cut in, but not exclusively

I can see limited exclusivity in return for their $20B-- a 6 month lead for example.

 

[Rodimus Prime]

So, every single existing iPhone customer (in the US) would have to switch carriers to get at this new hardware on day one? If true, talk about Cupertino shafting their loyalists. Smells like a load of BS.

Would not be the first time in recent years. Cupertino already had said FU to their loyalists multiple times. If it is true the loyalists will defend Apple tooth and nail.

 

[JMPATLANTA]

News Flash

Sprint just lost over 10% of it's value today on the Street due to this leaked story whether true or not.

If story is true, this means that Hesse's bet may not be that good.

If story is false, then the WSJ has a lot of explaining to do costing Sprint 10% of it's value in one day.

 

[kas23]

...

This was the bet Dan Hesse should have made 5 years ago. Way too little and way too late. This is the final nail in Sprint's coffin. Let the fire sale begin. Sprint's stock is already down 10% on the rumor. Was it is finalized and people really look at the underlying financials, Sprint will be able to be picked up for next to nothing.

Sprint has very competitive prices. I could see them winning some new customers if they announce tomorrow that they will pay people ETFs to change. I would consider it. AT&T is just not cutting it for me.

As for someone buying Sprint, I hope we see a non-traditional buyer. Someone like Apple, Google, or Microsoft.

 

[Flav247]

ITT: Lots of angry ATT and VZW customers mad they will have to wait for 2 months to get a iP5.

I'd bet money this is all true. It makes total sense.