Verizon CFO: We expected the next iPhone sooner
The executive also addresses the continuing workers' strike in the Northeast, arguing that the cost structure must go down for the business to survive.
Verizon Communications Chief Financial Officer Fran Shammo acknowledged today that he doesn't really know what will happen once the next version of the iPhone comes out, but said he had expected it to launch sooner.
While the iPhone 4 has been a successful draw for Verizon, the company expects a much larger boost when the next version arrives at the same time for both it and AT&T. The impact of the new Apple device will be a positive, but it's still unclear how much of a catalyst it will be. Partly due to high expectations for the next iPhone, Shammo said that he is confident the company will meet its financial expectations. The CFO made his comments today at an investor conference in Boston that was streamed via Webcast.
Verizon Chief Executive Lowell McAdam previously said he expected the next iPhone to, although he acknowledged he wasn't sure.
Shammo also weighed in on the ongoing workers' strike affecting the Northeast territories, reiterating the company's position that the cost structure needs to change for the legacy wireline business.
"From a competitive cost structure, something has to change for it to be a viable and sustainable business," Shammo said.
Verizon is seeking changes in the contract that would allow it to tie pay to job performance, more easily fire workers, and require employees to contribute to their health plan premiums, something employees in other regions already have in their contracts. The union has called the moves unfair given the profits the company has reaped, and called for a strike that led to 45,000 workers walking off the job over the weekend.
Verizon is attempting to offset its deteriorating landline business with its faster-growing Fios service, which offers a faster Internet connection and video. But the cost of that business is much higher because of the need to acquire content and compete more directly with the cable providers.
The company cut 16,000 jobs last year to reduce its cost structure, but Shammo said that isn't something it could repeat.
A Verizon representative said there are no updates to the strike, and that talks continue.
Shammo also commented on the issue of rising subsidy costs in the industry, propelled by the high-end subsidies to keep the iPhone at $200. He said with the emergence of Chinese vendors making more affordable phones, he sees lower subsidies down the line.
Sprint Chief Financial Officer Joe Euteneuer said yesterday that the company plans to scale back handset subsidies and in-store rebates, according to the Dow Jones Newswires.