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Apple Gets Rare Downgrade on Doubts It Can Keep Selling iPhone for $600
09 Apr 2012 EDT - CNBC.com
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Apple received its first downgrade in nearly six months from Wall Street after an analyst doubted wireless carriers will keep offering giant iPhone subsidies, hurting profit margins for the tech juggernaut and world’s largest company.

“We expect post-paid wireless operators to remain firm in their plan to stunt the pace of phone upgrades in 2012 and we expect to see some initial evidence of their success in the current quarter,” wrote BTIG’s Walter Piecyk, a veteran technology analyst, in a note to clients Monday. “This will increase the need for Apple to grow its business in the pre-paid dominated emerging market space, in which handset subsidies are a rarity and the $600 ASP (average selling price) of the iPhone represents a big chunk of a household’s monthly income.”

Wireless operators were happy at first to offer these generous subsidies for the iPhone on expectations that their usage would raise customer’s wireless bills, making up the difference and then some. But it hasn’t exactly played out that way, especially for a carrier like AT&T , Apple’s largest customer.

While Apple shares are up 55 percent this year and 87 percent over the last 12 months, AT&T’s stock is up just 2 percent in 2012 and flat over the last one year. Piecyk went to a “neutral” rating from a “buy.”

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