Analyst on iTunes profits

Despite a general consensus that Apple turns little profit from its iTunes Store, Pacific Crest Securities analyst Andy Hargreaves believes iTunes music sales are generating real revenue for the Cupertino-based company. Hargreaves estimates that Apple will rake in 9-14 cents per share from iTunes in the September 2007 fiscal year, according to AppleInsider, generating operating profits in the 10-15 percent range. The analyst calculates the figure by subtracting wholesale cost, network as well as transaction fees, and operating expenses from the 99 cent retail price of songs sold on Apple's iTunes Store to arrive at an operating profit of about 10 cents per song. Hargreaves also suspects that Apple has built and is capable of launching a subscription music service to compete with cellular carriers that will launch within the next 18 months.

by MacNN Staff