Citi is not happy about AT&T’s (T) decision to subsidise the iPhone rather than engage in further revenue sharing with Apple (AAPL). The bank has worries about the near-team upside of the deal and trimmed EPS estimates for AT&T.
…we remain concerned about the risk to consensus ’09 EPS, as pressures on wireline margins and now upfront costs from aggressively pushing the iPhone with subsidies are likely to limit upside potential for the stock.
Citi maintains HOLD, target from $40 to $39. Citi prefers buy-rated Verizon (VZ).
Bank of America also lowered its estimates based on guidance, although they do believe the revenue model could be a net positive in the end. Bank of America maintains BUY.