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"&amp;lt;vc&amp;gt;&amp;lt;strong&amp;gt;The success of Apple's iPhone on the Verizon Wireless network has resulted in a short-term impact of as much as 6 percent to the carrier's gross margins as it waits to recoup its subsidies for the best-selling handset.&amp;lt;/strong&amp;gt;\r\n\r\nVerizon revealed on Wednesday it had sold &amp;lt;a href=\"http://www.appleinsider.com/articles/12/01/04/verizon_reports_sales_of_4_2_million_iphones_during_holiday_quarter.html\"&amp;gt;4.2 million iPhones&amp;lt;/a&amp;gt; in the last quarter of 2011, more than double the amount sold in the &amp;lt;a href=\"http://www.appleinsider.com/articles/11/10/21/verizon_sold_2m_iphones_last_quarter_700k_less_than_att.html\"&amp;gt;previous quarter&amp;lt;/a&amp;gt;. However, the notable growth came with a price, as iPhone subsidies cut into the company's margins.\r\n\r\nChief Financial Officer Francis Shammo &amp;lt;a href=\"http://www.bloomberg.com/news/2012-01-04/verizon-wireless-iphone-sales-doubled-to-4-2-million-units-last-quarter.html\"&amp;gt;indicated&amp;lt;/a&amp;gt; during an investor conference that Apple's handset would eat into Verizon's gross margins by as much as 500 to 600 basis points (5 to 6 percent), as noted by &amp;lt;em&amp;gt;Bloomberg&amp;lt;/em&amp;gt;. The wireless operator's margins stood at 47.8 percent in the third quarter of 2011 and have fallen \"to a range of 42 percent to 43 percent\" in the fourth quarter, &amp;lt;em&amp;gt;Reuters&amp;lt;/em&amp;gt; &amp;lt;a href=\"http://uk.finance.yahoo.com/news/UPDATE-3-Verizon-mobile-targetukfocus-1524765415.html?x=0\"&amp;gt;reported&amp;lt;/a&amp;gt; Shammo as saying.\r\n\r\nDespite the decreased margins, Shammo said Verizon was pleased with smartphone uptake on its network.\r\n\r\n\"This gives us a great momentum going into 2012,\" he said, adding that the company had gotten \"extremely close\" to its goal of 11 million iPhone sales in 2011. In fact, supply was a limiting factor for Verizon, as it finished the year with 120,000 backlogged iPhone orders.\r\n\r\nShares of Verizon dipped $0.52, or 1.31 percent, on Wednesday in light of Shammo's revelations.\r\n\r\nOne recent report &amp;lt;a href=\"http://www.appleinsider.com/articles/11/12/15/verizon_soaking_high_end_android_buyers_to_make_up_for_iphone_subsidies.html\"&amp;gt;hinted&amp;lt;/a&amp;gt; that Verizon was driving up the prices of high-end Android phones in order to make up money lost from larger subsidies for the iPhone. For instance, the Motorola Droid RAZR and Google/Samsung Galaxy Nexus are priced at $299, despite having the same no-contract $649 price as the iPhone 4S, which sells for $199 on contract. As such, it appears Apple is receiving a $450 subsidy, while Android licensees get just $350.\r\n\r\nRival carrier AT&amp;amp;T will have &amp;lt;a href=\"http://www.appleinsider.com/articles/11/12/07/led_by_apples_iphone_4s_att_expects_record_quarter_for_smartphones.html\"&amp;gt;outpaced Verizon&amp;lt;/a&amp;gt; in the fourth quarter with sales of 6 million smartphones in just the first two months of the period, compared to Verizon's overall smartphone sales of 6.4 million in the December quarter. AT&amp;amp;T, which enjoyed several years of iPhone exclusivity in the U.S., has endured its own &amp;lt;a href=\"http://www.appleinsider.com/articles/09/07/23/att_quarterly_earnings_fall_on_cost_of_iphone_subsidy.html\"&amp;gt;margin squeeze&amp;lt;/a&amp;gt; due to iPhone subsidies.\r\n\r\nVerizon's short-term margin dip will likely result in Apple's gain. The Cupertino, Calif., company is set to report its &amp;lt;a href=\"http://www.appleinsider.com/articles/12/01/04/apple_set_to_announce_likely_its_best_quarter_ever_on_january_24.html\"&amp;gt;best quarter ever&amp;lt;/a&amp;gt; on Jan. 24. Apple has said it is \"confident\" it will set &amp;lt;a href=\"www.appleinsider.com/articles/11/10/18/notes_of_interest_from_apples_q4_2011_conference_call.html\"&amp;gt;all-time records&amp;lt;/a&amp;gt; for iPhone and iPad sales in the holiday quarter."^^<http://www.w3.org/2001/XMLSchema#string>
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