Analyst: A Verizon iPhone Won't Hurt Motorola; AT&T May Embrace Android


Perhaps only one person knows exactly when Apple's (AAPL) wildly popular iPhone will be available to Verizon Wireless subscribers: Apple CEO Steve Jobs.

But assuming Verizon (VZ) does get the iPhone, what does that mean for Motorola (MOT)? The telecommunications company has been one of Verizon's top partners on Google's (GOOG) Android operating system with the popular Droid device. In July, Bloomberg reported that Verizon would begin selling the iPhone in the beginning of 2011.

"People are worried for Motorola because Verizon has been one of their top customers," Gleacher & Co. analyst Mark McKechnie told DailyFinance. "I get that, and the iPhone is going to be a headwind, but Motorola will continue to thrive despite the iPhone coming to Verizon."

A Verizon iPhone "will clearly have an impact, but our high-level analysis suggests this can be offset by growth at other U.S. and international carriers, including China, where [Motorola] recently launched three new phones," McKechnie wrote in a note to clients Monday morning.

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McKechnie's Gleacher colleague, Apple analyst Brian Marshall, believes the iPhone will launch on Verizon in the first quarter of 2011, and estimates 11.5 million units shipped for the year.

McKechnie said AT&T (T) may counter the loss of iPhone exclusivity by introducing new devices, possibly manufactured by Motorola. "It wouldn't be crazy for AT&T to fight back with an Android device," McKechnie said.

What's more, the other major carriers may try to combat a Verizon iPhone by rolling out new Android devices of their own. McKechnie said he anticipates Sprint (S) and T-Mobile, as well as AT&T, "to fight back with reinvigorated Android campaigns in response to Verizon, resulting in [Motorola's] Android units to non-[Verizon] U.S. carriers growing from 2.5 million units in 2010 to 5.5 million in 2011." T-Mobile is a subsidiary of Deutsche Telecom (DT).

McKechnie maintained his buy rating on Motorola with a $10 price target.