iPhone could add 22% to Apple's earnings for 2007
Apple Computer's upcoming iPhone handset could potentially generate an incremental 70 cents in per share earnings and $6 billion in revenue for the company during the 2007 calendar year, one Wall Street analyst says.
"Extrapolating the news reported by Commercial Times in Taiwan (of Hon Hai shipping 12 million Apple iPhones in the first half of 2007), we ran some numbers to get a sense of the incremental impact," Bear Stearns analyst Andy Neff wrote in a research note to clients Wednesday morning.
The analyst, who had been modeling the Cupertino, Calif.-based iPod maker to earn $3.07 per share on $24.5 billion in revenue during 2007, said sales of the new device could add an additional $0.70 in earnings-per-share and $6 billion in revenue.
"Our estimates include 30 percent potential cannibalization of total (current) iPod unit sales by iPhone introduction," he wrote.
Given Hon Hai’s (Foxconn's) expectation of shipping 12 million iPhones during the first half of the year, Neff assumed total unit shipments could run as high as 29 million for the entire calendar year when the higher sell-through back-to-school and holiday quarters were factored into the mix.
In calculating the device's revenue potential, the analyst assumed Apple would price the phone around $300 without wireless carrier subsidies, which would fall below PALM's Treo with an average selling price (ASP) of $489 and RIMM's Blackberry with an ASP of $349.
"ASPs could end up higher/lower depending on features," he noted.
Neff also assumed an operating margin of 15 percent, slightly above the company's current operating margin of 14 percent. "Our margin assumption appears reasonable since PALM Treo’s gross margin is 35 percent - 40 percent while Apple's operating expenses as percentage of sales is about 15 percent," he wrote.
Sales of 29 million iPhones during the 2007 calendar year would represent an approximate 3 percent share of the overall mobile phone market, the analyst said.
"Extrapolating the news reported by Commercial Times in Taiwan (of Hon Hai shipping 12 million Apple iPhones in the first half of 2007), we ran some numbers to get a sense of the incremental impact," Bear Stearns analyst Andy Neff wrote in a research note to clients Wednesday morning.
The analyst, who had been modeling the Cupertino, Calif.-based iPod maker to earn $3.07 per share on $24.5 billion in revenue during 2007, said sales of the new device could add an additional $0.70 in earnings-per-share and $6 billion in revenue.
"Our estimates include 30 percent potential cannibalization of total (current) iPod unit sales by iPhone introduction," he wrote.
Given Hon Hai’s (Foxconn's) expectation of shipping 12 million iPhones during the first half of the year, Neff assumed total unit shipments could run as high as 29 million for the entire calendar year when the higher sell-through back-to-school and holiday quarters were factored into the mix.
In calculating the device's revenue potential, the analyst assumed Apple would price the phone around $300 without wireless carrier subsidies, which would fall below PALM's Treo with an average selling price (ASP) of $489 and RIMM's Blackberry with an ASP of $349.
"ASPs could end up higher/lower depending on features," he noted.
Neff also assumed an operating margin of 15 percent, slightly above the company's current operating margin of 14 percent. "Our margin assumption appears reasonable since PALM Treo’s gross margin is 35 percent - 40 percent while Apple's operating expenses as percentage of sales is about 15 percent," he wrote.
Sales of 29 million iPhones during the 2007 calendar year would represent an approximate 3 percent share of the overall mobile phone market, the analyst said.
Comments
I think the prediction is very reasonable as long as there is an unlocked version that will work on GSM networks.
Anyway you look at it, no real iPhone for me until 2008
Apple ought to announce it BEFORE Xmas, so people who might otherwise get stuck with a phone they will soon hate for one or even two(gack! Me and my effing Blackberry!) years as a so-called gift, can get an IOU for an iPhone.
Sorry, Steve, I didn't blab it, so don't blame me.
Both in terms of what is feasible and what I want.
What the iPhone Will Be
-Mike from News that Morphs
This is one of the best iPhone mockups I have seen.
Both in terms of what is feasible and what I want.
Nice, apart from the fact it will cut the face off you when using it. Phones can't have sharp corners.
If you like cutting your face off, then you may prefer this one.
$400-$450 seems more realistic to me. At that price, I'd expect a quad-band GSM with 4 Gig of flash memory. Tri-band UMTS/HSDPA would be useful, too - truly making it a world phone.
C'mon! If the analysts are talking about iPhone in public, the secret is out!
Apple ought to announce it BEFORE Xmas, so people who might otherwise get stuck with a phone they will soon hate for one or even two(gack! Me and my effing Blackberry!) years as a so-called gift, can get an IOU for an iPhone.
Sorry, Steve, I didn't blab it, so don't blame me.
The iPhone is nice but I'm going to hold out for an iTricorder. I often find myself in new and strange enviroments that I want instant analysis of while I play my tunes. An iTricorder would have helped me tremendously last night in the poker room at a casino I've never been to before. If I knew who the players and bluffers were from the get go I would have done much better. Come on Apple, what's the hold-up?
Don't get me wrong I desperately WANT to like the thing, I'm just a perpetual skeptic.
I realize that the analyst mentioned that the price depends on features but, if $300 ends up being the retail price of the iPhone, you're going to get a bare-bones handset.
$400-$450 seems more realistic to me. At that price, I'd expect a quad-band GSM with 4 Gig of flash memory. Tri-band UMTS/HSDPA would be useful, too - truly making it a world phone.
It all depends on what we mean when we say "price", doesn't it?
My Treo 700p, lists, or listed for $649, pretty fancy, no?
But, with a 2 year extention to my Sprint contract, and the fact that I hadn't gotten a new phone for 24 months, I paid $399.
Now, Verison has pretty much the same deal for $299.
So, depending on just what Apple plans to do, $300 isn't impossible.
It all depends on what we mean when we say "price", doesn't it?
My Treo 700p, lists, or listed for $649, pretty fancy, no?
But, with a 2 year extention to my Sprint contract, and the fact that I hadn't gotten a new phone for 24 months, I paid $399.
Now, Verison has pretty much the same deal for $299.
So, depending on just what Apple plans to do, $300 isn't impossible.
I agree, that with carrier subsidies, $300 is entirely possible, but ...
In calculating the device's revenue potential, the analyst assumed Apple would price the phone around $300 without wireless carrier subsidies, which would fall below PALM's Treo with an average selling price (ASP) of $489 and RIMM's Blackberry with an ASP of $349.
... the $300 quoted by the analyst is without subsidy.
I agree, that with carrier subsidies, $300 is entirely possible, but ...
... the $300 quoted by the analyst is without subsidy.
I agree. But it is still meaningless. Apple doesn't have to license the OS, or any of the other software, which takes a chunk out of the sales price. They might also sell direct for a large part of the sales. If they can do that, they get more profit, whch could allow them to reduce the price all over.
Palm has been sucessful with the Treos', but their sales are measured in much smaller numbers than we are seeing the estimates for Apple's phones, about 10% of it. That also brings the price down.
The $649 list on my phone is just that. most items are reduced 10 to 25% from list as a normal part of the pricing structure. With that, the price of the Treo could really be as low as $499. Then discounts from there.
Apple doesn't usually allow much discounting because of their low list, compared to the wholesale price. While that gets around the illegal price fixing, it effectively gives dealers little wiggle room.
If Apple priced their phone without the extra "discount" margin, the phone, again, might see a lower effective price.
All of these things together could allow $300 as a price, or possibly $349, to match the hi end iPod.
It also depends on what Apple is trying to do here. Are they going for a wide market, or for a smaller, but high end audience?
If the numbers being projected are correct, it will be the wide market.
This is one of the best iPhone mockups I have seen.
Both in terms of what is feasible and what I want.
I prefer a clamshell phone, but I'd go for that too!!!!!!!
All of the images look good except for this one. What kind of nano-fingers do you need to punch in a phone number, let alone an IM? I do like the flexibility behind two (possibly both touch screen) screens. However one large screen gives the possibility of video and virtual QWERTY keyboarding.
All of the images look good except for this one. What kind of nano-fingers do you need to punch in a phone number, let alone an IM? I do like the flexibility behind two (possibly both touch screen) screens. However one large screen gives the possibility of video and virtual QWERTY keyboarding.
I know, I noticed. Apple would do the keypad differently, but you get the concept right? I was hesitant about adding that image to the mix, but I had to show all aspects of what I was trying to convey.
If the iPhone can match its features, and also does music well, I will get it. BTW, for the above phone I paid €59 (taking €90 rebate into account). I'd be prepared to pay more for the iPhone, especially if it works really well with Mac OS X.