What if Verizon never gets an iPhone?

An analyst examines the impact on iPhone shipments and on Apple's share price

In the wake of Verizon CEO Ivan Seidenberg's remarks Thursday -- which seemed to pour cold water on rumors of the imminent release of a Verizon iPhone -- RBC Capital's Mike Abramsky takes a look at the implications in a note to clients issued Friday.

He begins by saying he is not surprised Apple (aapl) and Verizon (vz) may be having trouble striking a deal. He cites two possible reasons:

  1. "Verizon may not accept Apple's contract terms that risk its Android franchise, which could face significant cannibalization from pent up iPhone demand on its network"
  2. "Apple may not want iPhone to be second banana to Android at Verizon, and may be unwilling to accept less than prime marketing, subsidy support for a Verizon iPhone"

If the two companies don't come to terms, what does it mean? According to Abramsky:

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  • Given Apple's eagerness to expand its carriers to counter the rise of Google's (goog) Android, this makes deals with T-Mobile (dt) and possibly Sprint (s) more likely
  • The CDMA iPhone that some assumed was destined for Verizon is "increasingly likely" destined for other CDMA carriers in Japan (KDDI), China (China Telecom), Mexico (Telefonica), etc.
  • The impact of on RBC's estimates (currently assume 55 million iPhones fiscal 2011) is "nominal," Abramsky says. He had previously assumed 6-8 million iPhones could come from Verizon in 2011, but some of that -- perhaps up to 4-5 million -- could be made up by T-Mobile and Sprint
  • Given Apple shares has been rising recently largely on its  fundamentals, Abramsky doesn't expect this development to have a major negative impact on its share price

[Follow Philip Elmer-DeWitt on Twitter @philiped]

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