Apple may be working on iPhone for Verizon: report

SAN FRANCISCO (Reuters) - Apple Inc AAPL.O appears to be working on a new iPhone model for No. 1 U.S. mobile carrier Verizon Wireless, the Wall Street Journal reported on Monday.

A customer tries out the new iPhone 3GS on the first day it is being sold at the Apple Store in Zurich June 19, 2009. REUTERS/Christian Hartmann

Verizon Communications Inc VZ.N shares surged on the news, rising 3.4 percent in after-hours trading, while the shares of AT&T Inc T.N, the current exclusive carrier of the iPhone in the United States, fell 2.2 percent.

Apple is apparently developing a CDMA-compatible iPhone model that would work on Verizon’s network, the Journal reported, citing people briefed on the matter.

An Apple spokeswoman said the company does not comment on rumors and speculation.

Verizon also declined to comment. Verizon Wireless is a venture of Verizon and Vodafone Group Plc VOD.L.

When asked about the report, an AT&T spokesman said: “We have a great relationship with Apple and we don’t comment on the specifics of that relationship.”

AT&T also repeated previous comments that the iPhone “will be an important device for us for quite some time.”

Apple has released a new iPhone model every summer for the past three years and is widely expected to do so this summer.

But a CDMA-compatible iPhone may come later in the year, the Journal report suggested.

Contract manufacturer Pegatron, a unit of Taiwan-based Asustek 2357.TW, is scheduled to start mass producing CDMA iPhones in September, the report said, citing one source. But it was unclear when Apple might start selling that model.

Broadpoint Amtech analyst Brian Marshall said it was “only a matter of time” before the iPhone landed with Verizon.

He said Verizon has a better network than AT&T and a larger base of customers. Marshall expects a Verizon iPhone to happen early in 2011.

Verizon has roughly 6 million more wireless customers than AT&T.

Rumors have been swirling for some time about Apple launching an iPhone with Verizon. AT&T has been the sole U.S. carrier since the iPhone’s debut in 2007 and some iPhone users have complained about the quality of the AT&T network.

“AT&T has known all along that its exclusive relationship with Apple would change into something else some day. From the beginning of its relationship with Apple, AT&T has factored this change into its business and technology planning,” a person familiar with AT&T said.

Verizon shares rose to $31.50 from a close of $30.45, while AT&T shares slipped to $25.97 from a close of $26.51

Apple shares rose 2.3 percent to $237.65 in extended trading from a close of $232.39.

Reporting by Gabriel Madway and Sinead Carew; editing by Andre Grenon