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    Consumers put iPhone buys on hold  
    Toronto Star  

Chris Sorensen

    January 07, 2009  

Rogers adds wireless clients, but fewer purchase smart phone as weakening economy slows demand

Add the vaunted iPhone to the list of things consumers are thinking twice about in the face of a weakening economy.

Rogers Communications Inc. said yesterday net wireless subscribers increased to 199,000 in the fourth quarter from 183,000 a year earlier a sign that cellphones are increasingly viewed as a necessity even when money is tight.

But that doesn't necessarily mean consumers are still opting for top-of-line models.

While Rogers trumpeted the sale of about 130,000 high-end iPhones over the three-month period ended Dec. 31, some analysts expected better sales of Apple Inc.'s popular all-in-one cellphone, iPod and mobile Web browser.

"The iPhone's subscribers tend to be diehard customers, but in this environment they might think twice," said analyst Amit Kaminer, of The SeaBoard Group.

Similarly, UBS Securities analyst Jeffrey Fan said in a note to clients that the nearly 50 per cent drop in iPhone activations compared with the previous quarter, in which 255,000 iPhones were sold, was "more than expected."

Fan had previously predicted holiday sales of about 200,000 during the holiday quarter.

Investors responded by pushing Rogers stock down nearly 6 per cent, or $2.19, to $35 yesterday on the Toronto Stock Exchange.

The slower-than-expected iPhone sales come as Canadians also turned up their noses at big-ticket consumer items such as automobiles. Despite incentives, vehicle sales plunged 21 per cent in December to their lowest level for the month in 12 years.

Retailers, meanwhile, had been complaining of slow sales prior to the Christmas holidays.

The iPhone first went on sale in Canada on July 11 and immediately gave the Rogers brand a boost as consumers flocked to the device despite its high price tag.

While the eight-gigabyte version of the device sells for an initial price of $199 with a three-year contract, the actual cost of ownership is much higher, with monthly bills that clock in around $100 once a data plan, voicemail and fees and taxes are included.

Other analysts said Rogers' fourth-quarter subscriber numbers show the cable giant is hanging in despite a tough economic times.

"Overall, we think the wireless results met the market's expectations," Greg MacDonald, an analyst at National Bank Financial, wrote in a note to clients.

Rogers also reported it gained only 4,000 net additions to its basic cable TV operations in the fourth quarter, compared with 20,000 additions for the same 2007 period.

Digital cable subscriptions remained flat at 61,000 for the quarter while the number of new high-speed Internet subscribers fell to 19,000 from 46,000. The number of new home-phone subscribers came in at 40,000, compared with 65,000 in the fourth quarter of last year.

"While our fourth quarter cable subscriber additions reflect the challenging economic backdrop, we continued to enhance our high penetration levels in Internet and home phone and achieved success during the fourth quarter with our seasonal digital cable campaign," Alan Horn, the company's acting CEO, said in a statement.

Rival Bell Canada Inc., meanwhile, rolled out its latest mobile offering yesterday: NHL hockey content for wireless devices. For an extra $8 a month, subscribers can view highlights and listen to live games on their wireless devices. While the service also promises the ability to view "select games live," agreements with television broadcasters mean most Canadian teams will not be included, Bell said.


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