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  • Unsold iPhones Piling Up at Leap Wireless (Cricket)

    Alright, I thought this was funny because for the longest time, even I didn't know that the iPhone 5 was back in stock and available for purchase at Cricket. After the fiasco with unlocked phones going overseas, I thought they had pulled to plug for a while on it.

    Well many are available for purchase. If your customers have to ask, is it available then you haven't done a good job of making it known that they were.

    Wall Street Journal

    For Leap Wireless, a big bet on the iPhone is becoming a big headache, Anton Troianovski reports on Markets Hub. Photo: Getty Images.

    Video available here: Unsold iPhones Piling Up at Leap Wireless -

    For one of the country's prepaid cellphone carriers, a big bet on the iPhone is becoming a big headache.

    Leap Wireless International Inc., LEAP -0.76% which operates the Cricket cellphone brand, said it is on pace to sell half as many iPhones as it committed to sell during the first year of its contract with Apple Inc., AAPL +2.64% which ends in June.
    As a result, Leap said, it could end up with $100 million worth of unsold iPhones by the middle of this year. That spells more trouble for Leap, a company struggling to keep pace with larger competitors, and sheds light on the challenges facing Apple in cracking the huge market for smartphones being bought by lower-income consumers.

    Why is an old iPhone still worth hundreds of dollars? New research suggests a surprising explanation: hoarding. Kelli Grant explains on digits. Photo: Getty Images.

    Leap, which has about 5.3 million total subscribers, is also handicapped by the fact it lacks the robust nationwide networks of the country's biggest carriers, and because technological limits mean it can't sell the iPhone in all of its markets.
    Leap last year became the first major pay-as-you-go carrier in the U.S. to offer the iPhone. National carriers like AT&T Inc. T +1.02% and Verizon Wireless subsidize customers' iPhone purchases in exchange for two-year contract commitments.

    Leap, on the other hand, is selling the iPhone for more money up frontó$500 for the latest modelóbut doesn't requiring customers to sign contracts and charges less per month than other carriers do.

    U.S. carriers have been looking for ways to reduce the amount of money they spend on subsidies, which have grown as consumers have been drawn to more expensive devices like the iPhone. But the weak iPhone sales at Leap indicate that weaning customers off of subsidies will be a tall order, even though buying phones at full price is common in Europe and elsewhere.

    Apple regularly convinces wireless carriers seeking to sell the iPhone to commit to buying a large number of the devices. Given the iPhone's popularity, meeting those commitments generally hasn't been a problem for carriers.

    But as part of its annual report filed with the Securities and Exchange Commission on Monday, Leap disclosed its iPhone purchase commitment did present a challenge. The company said it was working to improve iPhone sales with more marketing and offering more financing for buyers of the device, and noted that its contract with Apple allowed it to lower the price at which it sells the iPhone to consumers.

    Leap spokesman Gregory Lund said the company is in discussions with Apple and that the slow iPhone sales came as the company's overall customer additions were lower than expected in the fourth quarter. An Apple spokeswoman declined to comment.

    "We are not concerned about...meeting the Apple commitment," Chief Operating Officer Jerry Elliott said in a conference call with analysts last week. "We think that's going to be fine."

    Analysts, however, voiced concern. BTIG Research analyst Walter Piecyk said in a research note on Wednesday that the poor iPhone sales could worsen the company's cash burn. He estimated Leap expects to have sold about 160,000 iPhones by June, the end of the first year of its contract with Apple, leaving the company on the hook for buying another 160,000. Mr. Lund declined to comment on that estimate.

    Moody's Investors Service downgraded Leap debt on Tuesday by one notch further into junk territory, citing the iPhone purchase commitment as one concern.
    For Apple, Leap's disclosure highlights headwinds on the low end of the market. The company has faced an onslaught of competition from lower-priced

    smartphones running Google Inc.'s GOOG +2.08% Android operating system. To help crack the market for cheaper devices, the company has been working on a lower-priced iPhone, The Wall Street Journal has reported.

    But even on the high end, Apple is facing steep competition. Leap's Mr. Elliott said Apple faced strong competition from Samsung Electronics Co.'s 005930.SE +0.97% latest smartphone, the Galaxy S III. "I would say there was a stronger device in our lineup," he said, referring to the S III.

    Write to Anton Troianovski at

    This article was originally published in forum thread: Unsold iPhones Piling Up at Leap Wireless (Cricket) started by chrisngrod View original post
    Comments 8 Comments
    1. hotcheetos25's Avatar
      hotcheetos25 -
      I'm actually glad they have so many iPhones still unsold. I personally have an iPhone 5 from Cricket but the fact that it does not have 4G just kills me. I would turn to an SIII but have had bad experiences with Android phones and have just preferred to stick with Apple. I doubt this will end well but it could end better by placing 4G on the iPhone.
    1. iftikhar1993's Avatar
      iftikhar1993 -
      It is economical to be on $55 3G plan, being on 3G $55 the data cap last longer than other wise on 4G!
    1. cafox's Avatar
      cafox -
      I have a solution Cricket! Give some dan inventory to your dealers.. let them sell the damn phones!
    1. Starus's Avatar
      Starus -
      How about advertising the dam phones. I don't see any commercials of s3 or i5
    1. accordman's Avatar
      accordman -
      Every dealer here locally has an iPhone 5 sign. The no 4g sucks but there's no 4g in my area either way.

      Sent from my iPad using Tapatalk HD
    1. cafox's Avatar
      cafox -
      Still no inventory for dealers! WTF? Either this story is bogus or Cricket has the worst inventory management people ever! I suspect the latter is true.
    1. pvsoares's Avatar
      pvsoares -
      i work at a cricket store and its not a ( PREMIER ) store so we dont carry the iphone 5 or any iphone for that matter but any way, we get about 3 to 6 customers a week asking for the iphone 4/5 but we send them away because we are told we cant sell them because we are not a ( PREMIER ), if cricket just gave the iphones to EVERY STORE they would sell more, not anyone's fault but theirs for punishing stores that want to sell more then 1 carrier!

      if the store i work at only sold cricket, we would not be in business and not make rent and bills or be able to buy the phones, so selling other carriers HELP!

      customers also come in and say WOW $200 $400 $700 for a phone, wow i can pay the deposit at another carrier with 2 year contract and get that phone for cheap, we say this is contract free, they LOL and walk away! for some reason no one wants to pay full price for a phone (me to)

    1. indica's Avatar
      indica -
      Cricket has sent out iphone advertisements in my area, and we are one of the markets that does not get iphones.
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