Verizon Moved 4.2 Million iPhones In Q4 But Costs Higher Than Expected

In the first quarter that Verizon Wireless (NYSE: VZ) was on board with Apple (NSDQ: AAPL) for an iPhone launch event, the company sold 4.2 million iPhones, accounting for more than half of the 7.7 million smartphones that its customers purchased in the fourth quarter. But that iPhone bounty came at a price, as Verizon’s earnings for the quarter were below analyst estimates on the high cost of iPhone subsidies.

Verizon’s overall results were quite poor, but that’s because of a one-time expense to devalue the pension fund administered by Verizon Communications, which operates Verizon Wireless as a joint venture with Vodafone (NYSE: VOD). Once you factor out that $3.4 billion charge, however, Verizon earned 52 cents a share, down slightly from a year ago and just under analyst expectations for 53 cents a share.

On a conference call following its earnings release Tuesday morning, Verizon CFO Fran Shammo told financial analysts that the company should be able to make up the difference over the life of the two-year contract that many of its smartphone sales require, given that a good percentage of those who bought shiny new smartphones around the holidays also likely opted for expensive data plans. However, Marketwatch notes that he also didn’t rule out the possibility that Verizon might raise prices for those plans in the future, following a decision by AT&T (NYSE: T) last week to raise plan prices in exchange for hiking data limits.

Of course, the iPhone numbers were highly anticipated given Apple’s own earnings report expected later on Tuesday as well as the interest in how iPhone sales in the U.S. split across the three carriers that now offer the device. Sprint (NYSE: S) paid a far higher price than Verizon to carry the iPhone, with profits not expected for many years, and we’ll get a sense of how that decision impacted its short-term results when Sprint reports in two weeks.

Verizon sold 2.4 million LTE smartphones during the quarter, and added 1.5 million new subscribers to maintain its status as the largest carrier in the U.S. with 108.7 million subscribers overall.