Wednesday, July 2,2008 @ 8:05pm
Carrier subsidies could bolster AAPL earnings
Apple is expected to have a large boost to its revenue due to how profit from the iPhone 3G will flow, with some analysts predicting it would sell through between 35 and 40 million units by the end 2010, representing up to $4 billion for the company. CNN Money writes that while customers will pay around $200 less than the previous generation device, Apple still stands to make an extra $100 off each unit, due to larger subsidies with wireless carriers.
In addition, since Apple requires users to sign a contract before obtaining the device, the number of individuals who will unlock the device will decrease, allowing for more stable revenue generation for all companies involved. However, Apple will not share in monthly revenue from each iPhone contract, as carriers will cover a larger subsidy of $300, generating more instantaneous profit for Apple.
Analysts assume that Apple makes just over $350 on each iPhone, a number which should increase as 2010 approaches, due to estimates of iPhone manufacturing costs dropping at least 30-percent, according to iSuppli.
Apple's stock price also seems to be reflecting on good iPhone news, having jumped 43-percent over the past year.