The new smartphone retails for a hefty $500 however there’s no contract concerned.
Leap Wireless had high expectations for the iPhone5, however to this point they need been tried wrong. currently it’s foretold there’ll be $100 million price of unsold stock by early summer. in an exceedingly recent 10-SEC filing, it’s expected the carrier can have sold-out about 1/2 its expected units.
Last year, Leap Wireless signed a commitment with Apple opposition. (NASDAQ:AAPL) for 3 years. A month later, Cricket started marketing the smartphones. within the agreement, Leap has got to purchase several phones from Apple albeit they don’t sell them.
Leap Wireless explains, “At our current purchase rate, we have a tendency to project that we are going to purchase roughly common fraction of our first minimum purchase commitment through june 2013 … If Apple opposition. (NASDAQ:AAPL) were to want us to fulfill the annual minimum commitment in every of the 3 years of the contract term, we estimate that we might be needed to buy roughly $100 million of further iPhones in mid-2013 above our current purchase rate, roughly $150 million of further iPhones in mid-2014 above our current purchase rate and roughly $200 million of further iPhones in mid-2015 above our current purchase rate.”
Although it’s evident the steep worth could have a major result on the sale numbers, Leap Wireless attributes the restricted network coverage as a causative issue to low sales instead. each Verizon Communications opposition. (NYSE:VZ) and AT&T opposition. (NYSE:T) offer coverage throughout the USA, whereas Cricket’s coverage isn’t thus intensive. this suggests potential customers have to be compelled to look elsewhere if they need to buy the iPhone five. the corporate another that if Apple opposition. (NASDAQ:AAPL) free associate degree AWS-compatible device within the close to future, they may sell the device in additional markets. Since it’s extremely unlikely that Apple can renegotiate, Leap could have to be compelled to look elsewhere.
Potential choices embody leasing or finance programs which might detached the payments over monthly payments. the corporate might additionally lower the value of the phone. Despite the massive money burden, the COO for Leap Wireless has no worries concerning meeting the Apple opposition. (NASDAQ:AAPL) commitment.