Phone sales based on App Store, carrier deals

UBS analyst Maynard Um has switched his rating for Apple stock from Neutral to Buy, and substantially raised his price target, pushing it from $170 to $265. The increase is linked mainly to predictions of repeating iPhone hardware revenue, driven by a growing install base, and the "stickiness" of the App Store. Also important in this regard is thought to be the coming end of exclusive carrier arrangements, such as O2's control over the United Kingdom. Apple is now expected to sell 36 million iPhones in the 2010 fiscal year, instead of 25.9 million. Pro forma revenue and EPS figures are predicted to be $51.6 billion and $11.08.

Um further suggests that Apple is working on the foundations of a new service, one which could allow for "seamless" access and movement of digital content across all of its products. Users would in theory be able to tap into material from both iTunes and MobileMe on any device, and additionally exploit various forms of social networking. Such a service could be the element that lures more people into buying Apple hardware, says Um.

Morgan Stanley analyst Kathryn Huberty has meanwhile elevated her own predictions for 2010, calling for at least 41.7 million in iPhone sales, double those expected for 2009. More emphasis is placed on non-exclusive carrier deals, which Huberty notes increased iPhone marketshare in France by 136 percent. American freedom of choice may have to wait, as Apple is not expected to sign a deal with Verizon until 2011, when the carrier's LTE (4G) deployment should be finished. AT&T is likewise building out an LTE network.

Huberty is now forecasting $45.3 billion in revenue for 2010, scratching an earlier number of $38.2 billion. The new accompanying EPS estimate is $10.50, 13 percent over Street consensus.

by MacNN Staff