updated 10:20 am EDT, Tue June 10, 2008
AmTech on iPhone 3G
Neither Apple, its investors or the public at large should be overly concerned about tradeoffs Apple has made in the pricing of the iPhone 3G, writes analyst Shaw Wu of American Technology Research. Apple confirmed yesterday that in exchange for getting carriers to subsidize the new device, it is dropping revenue sharing requirements in most cases; buyers will meanwhile have to pay an extra $10 per month on their monthly subscriptions.
For Apple, Wu suggests, any lost sharing income will be made up for by higher unit sales. The public will get a two- to five-times speed increase, and for every million iPhones sold, it is believed that investors will receive an extra $0.10-0.15 in EPS over a stretch of eight quarters, only a slight decrease over previous estimates of $0.15-0.20. Wu continues to recommend Apple stock as a buy, with a $220 price target.