iPhone to Lower Verizon's Margins

Verizon Communications said profit margins for its wireless venture dropped in the fourth quarter due to record high sales of the Apple iPhone, the popular smartphone that typically costs more for carriers to buy than other handsets.

Verizon Wireless -- co-owned by Verizon Communications and Vodafone Group PLC -- sold 4.2 million iPhones in last year's final three months, Chief Financial Officer Fran Shammo said. That was more than double the two million iPhones activated in the third quarter. Verizon and rival AT&T had said third-quarter iPhone sales were slower because of customers waiting to buy the newest version of the device, resulting in pent-up demand. Apple released its latest-version smartphone, known as the iPhone 4S, in mid-October on the three largest carriers including Sprint Nextel. The iPhone has become increasingly vital to Apple's profits. With sales of $47.1 billion, the device accounted for 43% of the Cupertino, Calif., company's revenue in its fiscal 2011, up from 39% the year before.