Apple Inc. (AAPL) was reported to have been receiving complaints that some version of its recently launched iPad 2 was having difficulties in connecting with the Verizon Wireless network, and is thereby investigating the issue. The Verizon Wireless network is a subsidiary of Verizon Communications Inc., (VZ) and is co-owned by Vodafone Plc (VOD).
Users of iPad 2 for the Verizon Wireless network complained of connectivity issues while logging on to the Verizon 3G network. The iPad 2 was launched in three versions, with one version sold as WiFi-only and the other two compatible with AT&T (T) Wireless networks and the newly assigned Verizon Wireless network.
Apple is looking into the issue though the group complaining of problems on the Verizon Wireless network is small as of now.
Between the other two iPad 2 versions, neither the WiFi-only model nor the AT&T network model seem to be having any network related problems.
Apple previously had an exclusive agreement with AT&T, under which the iPad was launched last year. With the launch of iPad 2, it had roped in Verizon network in a bid to make the product more popular and widely available, while also making use of Verizon’s superior technology. However, with customers complaining against the connectivity issue, Apple is likely to have reason to be worried.
Since the launch of iPad 2, Apple seems to have been in the news for all the wrong reasons. Nokia Corp. (NOK) sued Apple stating that Apple had violated seven of its patents in all of its converged mobile devices including mobile phones, portable music players, tablets and computers. The case is currently under consideration by the U.S. International Trade Commission (ITC).
Apple was also plagued by supply constrains after a major earthquake and tsunami wreaked havoc in Japan and despite its iPad 2 being sold out in the US, fresh supplies were delayed by more than four to five weeks.
Recently, Apple was attributed a lower weight in the tech-heavy Nasdaq 100 due to the rebalancing of the index by the Nasdaq OMX Group that is responsible for maintaining the Nasdaq index, effective May 2, 2011.
Despite these negatives weighing on the stock, we have an Outperform rating on Apple shares, as we think it remains the favorite stock in the technological sector with its stupendous growth trajectory and the timeliness of innovative product launches, which have made it a wealth creator for its investors.
The negatives might have some short-term impact on the Apple stock but the trend is positive for the coming quarters.
Currently, we have a Zacks #3 Rank for Apple, which translates into a Hold rating in the short term.
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