Apple falls, Sprint up after iPhone launch

NEW YORK (Reuters) - Shares of Apple Inc. (AAPL.O) closed down and AT&T Inc. (T.N) finished up slightly but Sprint gained about 4 percent on Monday amid mixed Wall Street iPhone sales estimates for the device's first weekend on the market.

Some investors were disappointed with initial iPhone sales, while others saw early estimates as a boost to Sprint Nextel (S.N), a smaller rival of AT&T, the exclusive U.S. service provider for Apple's first cell phone.

"I think there was a bit of a relief rally ... Sprint's not going to get destroyed on this," at least in the second quarter, said JP Morgan analyst Thomas Lee, adding that some investors had been worried because the iPhone had launched on the second to last day of the June quarter.

Sprint, which had promised improvements in customer growth for the second quarter, is seen as the most vulnerable to iPhone-related customer losses because it has a high proportion of customers who use data services included in the iPhone.

Bill Shope, who covers Apple for JP Morgan, estimated Apple sold about 312,000 iPhones on Friday and Saturday, he said in a research note.

"We believe initial demand may have been disappointing, but it's still early," Shope said "We don't believe supply was much better than expected, so demand could be a bit light."

Other analysts were more positive.

Gene Munster, analyst at Piper Jaffray, estimated sales for Friday and Saturday at 500,000, beating his original forecast of 200,000.

"We were surprised by the rate at which Apple was able to sell the handsets, with 50 cashiers processing up to 1,000 iPhones/hour in some stores," Munster wrote in a note.

At UBS, analyst Ben Reitzes said: "Given strong initial demand, we continue to believe our unit estimates of 950,000 for 2007 and 8.1 million for 2008 could prove conservative."

The iPhone, which combines a music player, a Web browser and a phone costs $500 or $600, depending on storage capacity.

About 2 percent of people who bought the iPhone have been experiencing delays in activating their service, a person familiar with the matter said on Sunday. AT&T said on Monday that it had resolved most activation delay problems.

Separately, Apple was hit by news that the biggest music company, Universal Music Group, has refused to sign a long-term deal with Apple's iTunes Music Store.

This could allow Universal to pull some of its artists' music from iTunes to sign exclusive deals with other partners. ITunes sells music that can be played on both the iPod and the iPhone.

Shares of Sprint closed up 87 cents, or 4 percent, at $21.58 on New York Stock Exchange. AT&T shares finished up 35 cents, or almost 1 percent, at $41.85 on the NYSE, while Apple shares closed down 78 cents at $121.26 on Nasdaq.

(Reporting by Yinka Adegoke and Sinead Carew)