Cricket Wireless will be sitting on about $100 million worth of unsold iPhones come June, the company's parent, Leap Wireless, said in a statement. Under its agreement, Leap is obligated to continue purchasing a certain quantity of iPhones from Apple, so until that agreement expires, Leap and Cricket both seem to be pretty much out of luck.
"At our current purchase rate, we project that we will purchase approximately one-half of our first-year minimum commitment through June 2013 ... if Apple were to require us to meet the annual minimum commitment in each of the three years of the contract term, we estimate that we would be required to purchase approximately $100 million of additional iPhones in mid-2013 above our current purchase rate, approximately $150 million of additional iPhones in mid-2014 above our current purchase rate and approximately $200 million of additional iPhones in mid-2015 above our current purchase rate," Leap Wireless said in an SEC filing.
Leap first began offering the iPhone through its Cricket Wireless subsidiary last June. The company continues to invest additional revenue into advertising campaigns featuring the iPhone, but these have been having little effect. Cricket has stated that it believes at least part of the problem stems from network limitations endemic to Cricket's ... well, subpar network. In all fairness though, there's really no earthly reason why the company should not have anticipated this.
Unless Apple decides to show mercy, which it's not known for, the prospects for Leap seem grim. The company released a statement earlier speculating on what might happen should sales not pick up and Apple forces them to honor their commitment:
"If we were unable to sell such additional devices at the rates and prices we project, such differences could have a material adverse impact on our business, results of operations and financial condition."
Well, duh.
