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AAPL target at $250, 45m iPhones in 2009 - analyst

updated 01:05 pm EDT, Thu October 25, 2007

AT&T share revenue

Wall Street investors are underestimating the impact of Apple's revenue share agreement with AT&T over its iPhone cellular handset, according to one industry analyst. Researcher Gene Munster of Piper Jaffray has constructed a model of what he believes reflects the true impact of the iPhone and AT&T revenue share in the coming years. The model assumes iPhone average selling prices of $399 currently with $300 average selling prices in the future; those figures bring Apple $18 per subscription per month today and will fall to $9 per subscription per month by the end of calendar year 2009, according to Munster. Piper Jaffray raised its price target on Apple shares to $250 from $222, and maintained its 'Outperform' rating.

"Based on this model, we continue to believe that the iPhone and the revenue share agreement will be more impactful in '09 and beyond than currently factored into consensus thinking," the analyst wrote in a research note obtained by MacNN.

The model assumes Apple will sell 3.4 million iPhones in 2007, 12.9 million in 2008, and 45 million in 2009.

"While our calendar year 2007 and calendar year 2008 estimates are in-line with general Street thinking, calendar year 2009 units of 45.0 million is based on our belief that iPhone average selling prices will continue to decline over the next two years," Munster said. "Specifically, we assume iPhone average selling prices fall from $400 currently to $370 by the end of calendar year 2008 and to $300 by the end of calendar year 2009."

Based on data from Apple's September quarter, the company's current revenue sharing agreement with AT&T requires a share payment of $18 per subscription per month -- which is materially higher than the analyst's original expectation of around $6.50 per subscription per month.

"We are taking a conservative approach to the revenue share agreement and assuming that by the end of calendar year 2009 the monthly payment to Apple will be $9.00 per subscription per month."

by MacNN Staff





  1. ramallite

    Joined: Dec 1969


    2 million+ iPhones

    The model assumes over 2 million iPhones sold during the December quarter. They may be a little far-fetched... perhaps....

  1. Kenneth

    Joined: Dec 1969



    That's really high.

    I will make a move in 2008 anyway.

  1. ClevelandAdv

    Joined: Dec 1969


    Sounds Right

    With Cell phone sales expected to be around 1.5 Billion units in 2009 I think the iPhone can achieve that. IT would only be duplication its US market share and growing with the industry.

  1. UberFu

    Joined: Dec 1969


    those R pretty big words.

    That's 3,750,000 units sold per month for all of 2009_

    I need that job_ Get paid to make things up 2 years down the road based on some half-assed math equations_ Sign me up_

    Do they really see this thing becoming more popular than the iPod has become ??

    Also Apple doesn't tend to do minuscule price drops like that - so where they got the $30 initial drop is curios_

  1. macxprowler

    Joined: Dec 1969


    average selling price

    Munster did not say there would be a $30 price drop, he said that the average selling price was expected to drop by $30. This could occur with separate price points for different models or one model selling at $400 for a certain time period and the selling for less than $370 at a later time.

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