CPW looking to Apple Store franchise, as iPhone sales disappoint, say rumours

by Guy J Kewney | posted on 04 January 2008

Something very odd is happening in the mobile phone stock market, with "vague reports" about a Vodafone takeover of successful Carphone Warehouse in the iPhone market, conflicting with quite well-supported news from retailers, suggesting that the iPhone sales in the UK have been disappointing.

It's too soon to do more than guess what's behind the speculation. But a better source of gossip may be to investigate the looming CPW financial results announcements, which must be worrying senior management.

Other (probably more sensible!) rumours about CPW suggest that the Apple link may well be behind the share price rise; but not because of "strong sales" - rather, because of shrewd guesses about an Apple Store franchise for Charles Dunstone's company.

The official rumour mill was summarised by Bloomberg, which reported that CPW shares rose sharply this morning "on speculation the company may receive a takeover offer." But that report also suggested that the share jump might be due to "strong sales of the iPhone."

"Never mind the idea of Vodafone getting together with CPW," said one consultant, who suggested that the deal would be struck at a breakfast meeting between Ian Paisley and the Pope, "just look at the iPhone figures."

Scepticism about the idea of "strong sales" of the iPhone was not hard to find. One well-researched survey of the iPhone market in Britain quoted several grass-roots CPW sources, suggesting that iPhone sales have been far from strong:

Carphone staff were less bullish on iPhone sales, reporting plenty of interest in the device, but with a very low rate converting into sales, with the price tag being the main stumbling block.

One Carphone staffer said: "The iPhone was poor. We work in one of the bigger stores in our area and only sold one or two over the Christmas period. Our target last week was to sell 36 and we only sold one."And the alternative source, exclusive network provider O2, was hardly more encouraging, says MT:

O2 enjoyed a major spike in iPhone sales in the week before Christmas, after disappointing sales from the much-hyped 9 November launch.

Most stores are believed to have missed iPhone targets by some distance, with a typical-sized O2 store selling just one iPhone per week. However, that appeared to change in the final seven days, with O2 staff reporting a big upturn, with many stores selling one per day, and even more in large city centre stores.

One iPhone sold per day per CPW store is hard to reconcile with the concept of a "major spike" unless you accept that sales before were close to zero. Also, the idea that bitter enemies CPW and Vodafone might become the same company is in itself a weird concept. Nonetheless, that seems to be something that is taken seriously by people who you'd expect to know better.

Clearly, more is going on here than meets the eye! - any readers who think they can resolve this paradox, call the author on +44 7971 16 1234!

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