Is it going to happen, an iPhone running on the Verizon network?
An article over the weekend in the Wall Street Journal indicated that Verizon was holding a major press conference on Tuesday. The speculation revolves around Apple's iPhone and the Verizon network. It has long been rumored that Verizon was anxious to capitalize on the success of the iPhone on its own network.
Tuesday may be the magic day.
We're going to take a little different view of events and look at all three stocks and see which stocks will benefit and which stocks will in fact lose if a deal is announced on Tuesday.
The Verizon network runs on a completely different chip in this case a CDMA chip that cannot be used on the AT&T network. In many ways it is said to be a superior network to AT&T, but that remains to be seen.
Analyst Gene Munster with Piper Jaffray said in a note to investors on Monday that he believes the launch of a Verizon iPhone will increase total 2011 U.S. handset sales for Apple by 2.5 million, a number he cautioned "may be conservative." In all, Munster sees AT&T selling 11 million iPhones, and 9 million from Verizon. Piper Jaffray analyzed the potential windfall for Apple which could sell between 10 and 12 million new iPhones just in 2011 to Verizon alone. This would, according to Piper Jaffray, add another $1.82 in earnings for Apple. Whether that comes true and whether Verizon announces on Tuesday, that yes, it does indeed have an agreement with Apple to market the iPhone remains to be seen.
But here is the real secret: normally stocks tell the story before the news comes out. So let's take a look at all three stocks now starting with Apple, then Verizon, and finally AT&T.
APPLE
Apple: Symbol (AAPL), remains in a strong uptrend. Based on MarketClub's "Trade Triangle" technology long-term traders remain long this stock from $103.60. That position was taken on March 2, 2009.
Intermediate term traders using MarketClub's intermediate term "Trade Triangles" are long this stock from $319.00. That position was taken on December 6, 2010.
All in all, Apple remains in a very positive mode and will be the beneficiary of having another huge distribution network for it's products (providing Verizon does in fact have a deal).
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VERIZON
Verizon: Symbol (VZ) remains positive and long-term traders using MarketClub's "Trade Triangle" technology remain long from $29.47. That position was taken on August 2, 2010.This stock remains well below it's highs of around $46 per share in 2007.
Intermediate-term traders remain long this stock from $33.That position was taken on December 6th, 2010.
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AT&T
AT&T: Symbol (T) remains slightly less positive compared to Verizon and Apple. Long-term traders using MarketClub's "Trade Triangle" technology continue to hold long-term positions from $23.42 taken on August 2, 2010.
Intermediate-term traders should be out of this market and on the sidelines waiting for a new signal weekly "Trade Triangle" signal.
AT&T remains well below the highs that were seen in October of 2007 around the $42.00 a share mark.
TRADE OPPORTUNITY
So here's a potential strategy for you, buy Verizon stock and sell short AT&T stock. Presently the spread is around $7.50. Verizon is currently selling at $36 a share and AT&T is selling at $28.50 a share. This spread could easily go to $10.00 and $15.00.
We would expect this spread to widen out in Verizon's favor if a deal is in fact put together between Apple and Verizon. At the present time the markets are saying that this is indeed the fact. The reason I say that is because our intermediate-term trend in AT&T is actually negative while the intermediate trend in Verizon is positive. This indicates to me that a deal is in fact done.
Please note that this is not a trade recommendation, but merely an observation. Any trades that you make with your broker are your responsibility. As always, listen to the market and use sound money management stops.
Every success,
Adam Hewison
President of INO
Co-founder of MarketClub
Apple continues to amaze. Any comments on BioTech? One company in particular continues to have good press releases but, it stays in the doldrums. IRBS on the OTC any comments?
Keith,
I tend to stay away from stocks like this because they're too easily manipulated. A stock trading under a dollar just flat-out scares me.
All the best,
Adam
Wow - should have bought Apple last year... Verizon has the "Droid" phone don't they? I would think Verizon would have to get a pretty sweet deal from Apple in order to carry the iPhone. A network re-gear, no. So, the iPhone would have to have a "chip" change inorder to work on the Verizon network anyway... I would have to agree with the above "Trade-op", except I am not a big AT&T fan anymore anyway.
Anthony,
Our first buy signal on Apple was at the 103.60 on March 20th, 2009, Our Trade Triangle technology is still long and bullish. Very strong upward trend underway.
All the best,
Adam
The current verizon apple phones look like they will only run on a 3G network, not a 4 G network. I suspect appl will fix that going fwd but buying a verizon phone now without a promise of a free upgrade to 4 G could be premature. I don't see prices for plans here in WY yet. In our state T has lousy coverage but Verizon is great. You know your local area. should be interesting. We may get some competition. Both companies look pretty good from a dividend standpoint.
Verizon, ATT, what's the difference? They are just phone company bureaucrats who could only function in a protected environment. Just buy Apple and hold. Don't say I didn't warn you.
I wonder if this will change the forward PE of AAPL? Maybe it's a buy now also, even though at a high valuation.
Anecdotally, my US colleagues who have switched to ATT due to their use of iphones for their medical practices are complaining about dropped calls and other annoyances. I have reason to believe these people may be an accurate sampling, so I would bet that Verizon may be quite successful in the short run. Also has an attractive 5.4% dividend. Mind you AT&T offers 6%. The big question for me is whether the dropped calls are a result of switching carriers or phones???
your comments are well taken.In fact, off the summer lows,where both were near 25,VZ has been the better name. But who knew then? The current charts favor VZ
I think the news is all good for Apple. Verizon, however, will be subsidizing each new iPhone customer about $200 which is the difference between the cost to Verizon and the amount Verizon will charge each new customer for the phone. There should be a pullback in the Verizon stock when this is accounted for in Verizon's ramp up. Don't use an iPhone, so I don't know how bad AT&T's service has been, or if Verizon's service will be any better.
Verizon can't be as good a network as ATT, I don't trust that and I've had an iphone on ATT for years now. But if it's a smart investment move, what the heck. Let's make some money. I just wonder what they'll call the new company if anything. ??