Other telecom analysts, notably Craig Moffett of Bernstein Research, have been far more alarmed by the interplay between iPhone subsidies and wireless margins... and with good reason.
Amid a mid-2012 telecom stock surge that put Verizon and AT&T among the top performers on the Dow Jones Industrial Average, Moffett argued iPhone subsidies could turn wireless margins negative, potentially disproving a fundamental shift in telecom profitability.
While a later than expected rollout of the iPhone 5 has buffered carriers from the full-impact of handset subsidies, Moffett's analysis appears to be playing out in persistent earnings downgrades for Verizon and AT&T.
While Verizon and AT&T are up over the past year, shares are down nearly 10% in the past three months, as investors brace for an iPhone-based earnings hit.
The real question for analysts like Moffett and wireless investors to ponder is whether after a iPhone subsidy hit plays out in fourth quarter telecom earnings, industry leaders like Verizon and AT&T come back into favor and become a safe holding for investors, as they were in 2012.
In the wake of a fourth quarter margin decline, analysts like Schildkraut of Evercore appears to be more optimistic about the benefits of long-term wireless growth profiles of Verizon and AT&T. Will investors and analysts agree?
The debate on absolute subscriber growth and cyclical margin pressures takes on a new dimension as lagging carriers like Sprint
Meanwhile, demand for Google
Verizon reports earnings on Jan. 22, with analysts expecting 48 cents a share in profit on $32.1 billion in revenue, according to analyst estimates compiled by Bloomberg, as of Jan 14. AT&T reports on Jan. 24 with analysts expecting an adjusted profit of 55 cents a share in $29.7 billion in revenue, the Bloomberg data show.