Comments on: iPhone 2009: $10 billion profit?

By: Jason

Jason — Mon, 23 Jul 2007 19:35:37 +0000

(And certainly no where as impressive as the headline title of $10 billion!)

By: Jason

Jason — Mon, 23 Jul 2007 19:34:37 +0000

Fair enough, Admin. I agree with your central point, that Apple will make a lot of money from iPhone during iPhone’s product lifetime. It does, of course, make a big difference on a per-year accounting basis; your numbers are startling (7.5 billion dollars in 2009?! Whoa!), but inaccurate even granting the “guessing” aspect of it. But I suppose “5.5 billion dollars in 2009″ isn’t as impressive sounding.

Best,

Jason.

By: KenC

KenC — Mon, 23 Jul 2007 14:35:01 +0000

I’m not sure that you have the right figure for Apple’s 2006 net profit. My records show that it was just a hair under $2B, not $6B as you have above.

My own estimates would not show Apple’s margins at 25%. Operating margins last year were about 12%. I think this is historically high, and a more conservative net margin would be 10%. Using that, would lower your Munster 2009 estimate to about $1.5B in net income, quite far from your $6.176B you have estimated way at the top of this story.

BTW, I own 585 shares of AAPL.

By: Constable Odo

Constable Odo — Mon, 23 Jul 2007 01:32:55 +0000

Is it likely that Apple can sell 45 million iPhones in a year’s period. It sure sounds like a stretch to me. I hope they can but that number just seems so high. It might be possible if the iPhone was unlocked, but to convert so many people to AT&T in the US is mind-boggling.

By: Michael

Michael — Sun, 22 Jul 2007 21:41:05 +0000

Aha. but you’re assuming non-NA carriers will give Apple the same terms. Sure, lots of profit on phone sales, but no guarantees on revenue streams from Europe and Asia.

What should be more interesting is if they turn the iPhone into a mobile revenue stream (a la on-the-go-iTunes) which could accelerate growth in the digital download market. Not a lot of profit, though.

AAPLs pretty healthy no matter how you bake it. Mac sales are experiencing accelerating growth, iPhone adds another significant revenue stream (on top of iPods, which are suffering a shrinking margin rate and market saturation in many core markets).

Disclaimer: I’m long on AAPL.

By: admin

admin — Sun, 22 Jul 2007 05:08:43 +0000

Thanks Jason, you’re right about Apple recognizing the revenue over 24 months for iPhone (and AppleTV). I had originally tried to model that in my numbers, but found that the accounting niceties were obscuring the central point, that the iPhone moves Apple into a new era of profitability, no matter how that profit is recorded.

By: Jason.

Jason. — Sun, 22 Jul 2007 04:58:23 +0000

One small issue: Apple has stated they’ll recognize revenue over 24 months for the iPhone (they haven’t said anything regarding the alleged AT&T payments, but assume that they recognize it immediately).

Therefore using your numbers, it would be

2008: 1545.5M (plus half of whatever they do in 2007)
2009: 5636.5M

Best,

Jason.

By: John

John — Sun, 22 Jul 2007 00:42:38 +0000

I believe Gene Munster put the average iPhone price for 2009 at somewhere around USD 330…