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.