Verizon May Have To Pay Apple $14 Billion Due To Weak iPhone Sales

Posted Jul 11, 2013

Over the last few months, Verizon Wireless sold over 10 million iPhones.  However, Verizon may still have to pay Apple billions of dollars for not hitting iPhone sale estimates.  This is not entirely Verizon’s fault because Apple is facing a downfall of marketshare due to the popularity of Android smartphones.  Moffett Research suggests that Verizon may have to pay Apple up to $14 billion if they do not double their iPhone sales from last year, according to a report by the L.A. Times.

It was reported that Verizon made $45 billion in purchase agreements with Apple through the end of the year.  Most of that money is due to Apple according to Moffett’s estimate.  ?It is likely that Apple would be reluctant to simply ignore these commitments, since many other carriers around the world are probably in a similar situation, and a simple amnesty would set an unwanted precedent,? stated the Moffett report. ?It is therefore unrealistic to think that Apple won?t extract some consideration for renegotiating these shortfalls.?

Of the 10 million iPhones that were sold in Q4 2012 and Q1 2013, most of them were the iPhone 5.  Verizon will have to sell around $23.5 billion worth of iPhones 2013 to fulfill their commitment.