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Will the next iPhone be subsidized?
07 May 2008
A little company in New Jersey called Synchronoss had a very bad day today, and no one is quite sure why. I think it’s because the next iPhone will be subsidized.
Synchronoss sells software that allows cell phone companies and other communication service providers to activate cell phones and modems and cable boxes online. In particular, Synchronoss worked with Apple and AT&T to enable iPhone customers to activate the device at home via iTunes. This was one of many features that made the iPhone remarkable. Synchronoss deserves a lot of credit for pulling it off, and it was a huge deal for them, since AT&T accounts for more than 70% of their revenue.
Last night Synchronoss reported their Q1 earnings. This morning their stock dropped more than 40%. One line in the press release explains why:
“We have materially lowered our growth expectations for 2008 due in large part to reduced revenues associated with the iPhone.”
Synchronoss announced that they expect to make less money from the iPhone in 2008 than they did in 2007 - $30 million less. (more…)
