International sales expected to account for 80% of iPhones sold in 2010
International expansion of the iPhone is the single most important driver of Apple stock in 2010, with overseas sales predicted to account for 80 percent of all of the company's handset sales by the end of 2010, one analyst believes.
Brian Marshall with Gleacher & Company (formerly Broadpoint AmTech) issued a note to investors Wednesday, in which he increased his 2010 iPad sales estimates to 12 million in calendar year 2010, and 20 million in 2011. And while those figures are astounding for a new product cateogry, the analyst said that the iPhone is still in the "driver's seat" for Apple.
That's because Apple's international carrier partners offer a postpaid subscriber base more than six times larger than AT&T, the exclusive wireless carrier of the iPhone in the U.S. Despite that, international sales in calendar year 2009 represented only 60 percent of total units sold.
Out of 65.1 million potential postpaid subscribers in the U.S., Apple has a market penetration of 4.1 percent. Overseas, with its 150 carrier partners, Apple could access 460.7 million subscribers, but it only had a penetration of 1.3 percent as of March.
Marshall sees the international numbers growing even more by the end of 2010, making overseas sales responsible for 80 percent of the iPhones sold this year. He has "conservatively" estimated that the company will sell 40 million iPhones in calendar year 2010, and another 50 million in 2011.
To put the numbers in perspective, last quarter Apple sold 8.75 million iPhones in a three-month span, the best-ever quarter for iPhone sales. To achieve 40 million in sales by the end of 2010, Apple would need to far exceed those numbers.
Sales will no doubt be bolstered by this week's launch of the iPhone 4 in the U.S., France, Germany, the U.K and Japan. Last week, Apple revealed that more than 600,000 handsets were preordered on the first day of availability.
While the iPhone remains the most important aspect of Apple's business, the iPad represents a significant growing market, Marshall said. On Tuesday, the company revealed that it sold 3 million iPads in the product's first 80 days of availability.
"Amazingly, in its first quarter of introduction, we believe the iPad family will exceed $2bil in revenue (roughly 14% of our estimate of $15.1bil for AAPL's total revenue in the June '10 quarter)," Marshall wrote. "Recall it took the iPhone four quarters to cumulatively reach $2bil+ in revenue."
Gleacher & Company has a price target of $355 for AAPL stock. The estimates call for $65.8 billion in revenue and $15.75 earnings per share in calendar year 2010, increasing to $74 billion revenue and $17.75 EPS in 2011.
Brian Marshall with Gleacher & Company (formerly Broadpoint AmTech) issued a note to investors Wednesday, in which he increased his 2010 iPad sales estimates to 12 million in calendar year 2010, and 20 million in 2011. And while those figures are astounding for a new product cateogry, the analyst said that the iPhone is still in the "driver's seat" for Apple.
That's because Apple's international carrier partners offer a postpaid subscriber base more than six times larger than AT&T, the exclusive wireless carrier of the iPhone in the U.S. Despite that, international sales in calendar year 2009 represented only 60 percent of total units sold.
Out of 65.1 million potential postpaid subscribers in the U.S., Apple has a market penetration of 4.1 percent. Overseas, with its 150 carrier partners, Apple could access 460.7 million subscribers, but it only had a penetration of 1.3 percent as of March.
Marshall sees the international numbers growing even more by the end of 2010, making overseas sales responsible for 80 percent of the iPhones sold this year. He has "conservatively" estimated that the company will sell 40 million iPhones in calendar year 2010, and another 50 million in 2011.
To put the numbers in perspective, last quarter Apple sold 8.75 million iPhones in a three-month span, the best-ever quarter for iPhone sales. To achieve 40 million in sales by the end of 2010, Apple would need to far exceed those numbers.
Sales will no doubt be bolstered by this week's launch of the iPhone 4 in the U.S., France, Germany, the U.K and Japan. Last week, Apple revealed that more than 600,000 handsets were preordered on the first day of availability.
While the iPhone remains the most important aspect of Apple's business, the iPad represents a significant growing market, Marshall said. On Tuesday, the company revealed that it sold 3 million iPads in the product's first 80 days of availability.
"Amazingly, in its first quarter of introduction, we believe the iPad family will exceed $2bil in revenue (roughly 14% of our estimate of $15.1bil for AAPL's total revenue in the June '10 quarter)," Marshall wrote. "Recall it took the iPhone four quarters to cumulatively reach $2bil+ in revenue."
Gleacher & Company has a price target of $355 for AAPL stock. The estimates call for $65.8 billion in revenue and $15.75 earnings per share in calendar year 2010, increasing to $74 billion revenue and $17.75 EPS in 2011.
Comments
No reason to make a CDMA phone when you can't even produce enough GSM ones.
High international sales is not a suprise since they are rolling this phone out much earlier for the international community.
It doesn't help that AT&T got 13,000,000 verification inquiries and was only able to process 600,000 before they stopped taking orders.
Gleacher & Company has a price target of $355 for AAPL stock. The estimates call for $65.8 billion in revenue and $15.75 earnings per share in calendar year 2010, increasing to $74 billion revenue and $17.75 EPS in 2011.
The forecasted increases in revenue and EPS (about 12%) don't seem to support an increase in stock valuation of 30% at least not on the face of it. Normally I can see how they got from one figure to the other, but in this case there seems to be a disconnect.
I know that most Americans want the option of a Verizon phone and I feel lucky being in the UK with lots of carrier options, but if predictions like this come true and I see no reason why they won't it shows that Apples current strategy of one iPhone model for all countries makes a lot of sense.
No reason to make a CDMA phone when you can't even produce enough GSM ones.
Exactly. Now that AI has published this, lets hope we see a lot less articles here hyping a phone for Verizon. It always was about international expansion and Apple have made it clear in earnings calls that it's a big interest. Prioritising a CDMA phone would have been a foolish move. The best way to ignore the giant in the room (Nokia) would be to not focus on the international markets. Apple may not say it much but they can't help but face how successful Nokia is and would love to be on their turf.
It doesn't help that AT&T got 13,000,000 verification inquiries and was only able to process 600,000 before they stopped taking orders.
That is truly sad. Apple really should get its act together and open the iPhone up to multiple carriers in the U.S. as soon as they can. Talk about cannibalizing their own potential sales.
The forecasted increases in revenue and EPS (about 12%) don't seem to support an increase in stock valuation of 30% at least not on the face of it. Normally I can see how they got from one figure to the other, but in this case there seems to be a disconnect.
They make the assessment that PER is 20 times earnings, which despite the earnings uplift is more subdued. With a lower PER expectation though if anything that should flatten the price against EPS.
No reason to make a CDMA phone when you can't even produce enough GSM ones.
QFT!
That is truly sad. Apple really should get its act together and open the iPhone up to multiple carriers in the U.S. as soon as they can. Talk about cannibalizing their own potential sales.
As saarek succinctly states it's more complex than simply "opening" the iPhone to multiple carriers.
Exactly. Now that AI has published this, lets hope we see a lot less articles here hyping a phone for Verizon. It always was about international expansion and Apple have made it clear in earnings calls that it's a big interest. Prioritising a CDMA phone would have been a foolish move. The best way to ignore the giant in the room (Nokia) would be to not focus on the international markets. Apple may not say it much but they can't help but face how successful Nokia is and would love to be on their turf.
I know that most Americans want the option of a Verizon phone and I feel lucky being in the UK with lots of carrier options, but if predictions like this come true and I see no reason why they won't it shows that Apples current strategy of one iPhone model for all countries makes a lot of sense.
No reason to make a CDMA phone when you can't even produce enough GSM ones.
It doesn't help that AT&T got 13,000,000 verification inquiries and was only able to process 600,000 before they stopped taking orders.
I am assuming a verification query includes things like eligibility for upgrades and not just activation. I was actually one of those people trying to verify that I could upgrade since the media was indicating that I could but AT&T was not indicating same. After numerous tries I finally got thru and was indeed given my correct status (upgrade at $199 waiving $18 fee). I actually did not plan on ordering that day but did want to be able to plan for the near future (looks further now with the high demand). I don't know that there is anyway to tell how many would have actually bought phones but since many were having problems similar to mine I have to expect that at was maybe a tenth or less of that 13M.
I am sure it is difficult to estimate demand for a product like this and with security issues even more difficult to outsource order handling but I have got to believe that a company that can keep an international cellular phone network running (I know a lot of people are unhappy about performance) should be able to do better than AT&T has done. Possibly Apple will be able to take some of that load off AT&T when they are up an running with the new data center.
They make the assessment that PER is 20 times earnings, which despite the earnings uplift is more subdued. With a lower PER expectation though if anything that should flatten the price against EPS.
They are projecting a substantial increase in P/E over that time period. The justification for this isn't clear, unless they are expecting multiples to increase throughout the market over the coming year.
They are projecting a substantial increase in P/E over that time period. The justification for this isn't clear, unless they are expecting multiples to increase throughout the market over the coming year.
It's extremely difficult to justify any reliable reason for multiples to increase across the market. Plus at 20-25 times earnings for a fairly mature company the best way to think of it is that it is more than fully valued.
Apple doesn't need to sell every cell phone in the US. It's great that there is a market for Android. That's not a bad thing for Apple. But they are plenty successful with the one carrier for now. Why isn't that enough? It would be one thing if the phone struggled, if sales were hard to come by. If they needed a bigger footprint in the marketplace. Ah, they don't.
And honestly, the more Android choices, the more diluted that market becomes. The more handsets, the less often a given piece of software from the Android store will work on your particular phone. It's not a dire threat to Apple. It's going to get far uglier for all the various hardware producers (now Dell too!?) to make money and differentiate their particular phone in a MEANINGFUL way. I see rapid price drops, and manufacturers using ever cheaper hardware designs just to survive. Android may be Androids biggest problem.
Why don't you ask Nokia how ignoring the US market has gone. A second phone on Verizon would do nothing detrimental to the iPhone juggernaut overseas. The "giant in the room" here in the US is Android and Apple is extremely foolish if they ignore this growing threat.
Why don't you ask Nokia how ignoring the US market has gone. A second phone on Verizon would do nothing detrimental to the iPhone juggernaut overseas. The "giant in the room" here in the US is Android and Apple is extremely foolish if they ignore this growing threat.
Nokia have said they're concerned with the lack of US market share though they also know they don't need to dominate a single market to succeed.
The issue is time and money spent to engineer a phone just for CDMA, which, correct me if I am wrong, goes away in the next 24 months. ...
I'd be surprised if it did. I remember being at a Palm development conference in 2002 where everyone was talking about 3G as though it was something developers should be designing their apps for right then. How long did it take for that to become a reality, in the US at least?
I think technology rollout predictions, like software schedules, always tend to be more sanguine than reality shows in retrospect.
And CDMA is not going away in the next 24 months. Verizon has said CDMA will be around for 8-10 years. If Apple ever plans on releasing a Phone on Verizon or Sprint, they will have to do a CDMA phone.
The issue is time and money spent to engineer a phone just for CDMA, which, correct me if I am wrong, goes away in the next 24 months.
Apple doesn't need to sell every cell phone in the US. It's great that there is a market for Android. That's not a bad thing for Apple. But they are plenty successful with the one carrier for now. Why isn't that enough? It would be one thing if the phone struggled, if sales were hard to come by. If they needed a bigger footprint in the marketplace. Ah, they don't.
And honestly, the more Android choices, the more diluted that market becomes. The more handsets, the less often a given piece of software from the Android store will work on your particular phone. It's not a dire threat to Apple. It's going to get far uglier for all the various hardware producers (now Dell too!?) to make money and differentiate their particular phone in a MEANINGFUL way. I see rapid price drops, and manufacturers using ever cheaper hardware designs just to survive. Android may be Androids biggest problem.
Here's an interesting post about iPhone market penetration in Finland:
http://www.tuaw.com/2010/06/23/iphon...land-of-nokia/
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