Sprint Nextel’s plan to offer Apple’s iPhone 4S may slash its operating margins almost in half if enough people activate new phones, analysts said.
Sprint, which has lost money for 15 consecutive quarters, could see quarterly operating margins drop to 9 percent from the 16 percent reported because activations of each iPhone might cost the company up to $150 more than a typical smartphone, said James Ratcliffe, an analyst with Barclays Capital in New York. John Hodulik, an analyst with UBS, said fourth-quarter margins could be between 9.8 percent and 11.5 percent. Sprint will begin selling the iPhone 4S on Oct. 14 along with larger competitors AT&T and Verizon.
Hodulik estimates Sprint will sell 1.2 million iPhones in the fourth quarter. Bloomberg News
