Sector Snap: iPhone-related price cuts limited

David Barden at Bank of America said its survey indicated that smart phones on average cost $158 in the third quarter, compared with $170 in the second. Most of the reduction was due to carriers increasing their discounts for buyers who sign two-year contracts.

The latest version of the iPhone went on sale July 11 in the U.S., costing $199 for the cheapest model. That was $200 less than the cheapest model of the previous iPhone generation. The new phone was subsidized by the carrier, AT&T Inc., while the old one wasn't.

Verizon Wireless cuts its average smart phone price to $148 in the third quarter from $183 in the second, according to Barden.

"We see this as evidence (Verizon Wireless) brought its industry-leading margin to bear in the quarter to maintain its market share in the face of the iPhone launch," Barden wrote.

Sprint Nextel Corp. and T-Mobile USA made much smaller cuts, and overall, the iPhone's effect on prices was "limited," in Barden opinion.

"We respond to the marketplace," said Verizon Wireless spokesman Jeffrey Nelson. "We're duking it out every day."

Shares of the wireless carriers were down midday Monday along with the general market.

Shares of Verizon Communications Inc., which owns the majority of Verizon Wireless, were down $1.30, or 4 percent, at $30.88 in afternoon trading. Its partner in the venture is Vodafone Group PLC of Britain.

AT&T's stock dropped $1.63, or 5.4 percent, to $28.37.