Piper: AT&T sharing revenue with Apple
updated 09:15 am EDT, Thu July 19, 2007
Piper: iPhone income share
Although Apple is already said to be earning a substantial margin on each iPhone, it may be earning extra through its agreement with AT&T, note analysts with the research firm Piper Jaffray. Gene Munster and Michael Olson argue that AT&T is sharing subscription revenue with Apple, based on the circumstances under which a person bought their iPhone. At a minimum, Munster and Olson estimate $3 a month per existing AT&T customer, for the duration of their two-year contract; this figure is said to go up by $8, however, if the person switched to AT&T for the iPhone. Other less likely arrangements range from a mere $5 bonus for new subscriptions, to $7 for current subscribers and $14 for new ones.
Under the $3/$8 plan, it is suggested that this could add $0.02 to Apple's earnings per share (EPS) in 2007. The real income is not set to arrive until 2008 though, when extra EPS may reach $0.15. By 2009 the growth could hit $0.58, adding tremendously to the company's bottom line.
uh oh
07/19, 11:00am reply
more 'disastrous' news for RiM and other carriers!
interesting to contrast this with Apple's refusal to pay Universal for each iPod sold. I wonder if this agreement with AT+T will come up in negotiations...
climacs
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Joined: Sep 2001
Serious Revenue
07/19, 11:12am reply
If this is true, and Apple gets $3 per month from AT&T for each iPhone customer, plus another $8 per month for each iPhone customer that is new to AT&T, this would be some VERY serious revenue for Apple.
Assuming they sell ten million iPhones by the end of 2008 as they have (conservatively) predicted, and assuming that 50% of those are to customers that are new to AT&T, that would mean approximately $70 million in revenues going from AT&T to Apple EACH MONTH by January 2009.
MacnTX
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Joined: Apr 2004