Analyst: Apple to Sell 45M iPhones in '09

by , 8:05 AM EDT, June 7th, 2007

Apple's iPhone launch is only weeks away, and Piper Jaffray analyst Gene Munster is predicting that will signal the beginning of a skyrocketing climb leading to 45 million units sold in 2009. For calendar year 2007, he expects Apple will sell 3.2 million units, and 12.4 million in 2008.

Looking at the 45 million unit prediction for calendar year 2009, Mr. Munster commented "While this may seem like a bold prediction, we believe a number in this area is not as far of a reach as some may think. Specifically, to reach iPhone units of 45 million, we believe the product will have 7.0 percent hand set market share in North America and 2.8 percent handset market share in the rest of the world."

Expected price reductions and a larger target market will help Apple hit those numbers, too. "We assume Street pricing on iPhone will have dropped to $338 by CY09 from $542 in CY07," he said. "Additionally, it is critical to keep in mind that the iPhone will be a combo device (iPod and mobile handset), which will attract more than just a mobile phone customer."

The aggressive sales numbers will also have an impact on Apple's bottom line. Based on Mr. Munster's sales predictions, Apple will show a 17 percent revenue growth for calendar years 2007 and 2008, and a 19 percent growth in 2009 when looking at the company's ratable revenue growth. Ratable revenue growth follows Apple's subscription-style practice of accounting for iPhone and Apple TV sales over a 24 month period.

Looking at the same figures as "booked" sales instead of subscription sales, Apple would show a revenue growth rate at 25 percent for calendar year 2007, 29 percent in 2008, and 43 percent in 2009.

Apple's 2009 EPS also shows a significant difference when calculated with a ratable formula instead of booked. The ratable year over year estimated earning per share in 2009 comes in at 21 percent versus 43 percent for booked sales.

While Apple will focus on ratable revenue, which has a smoothing effect on overall sales numbers, Wall Street will still likely focus on the booked revenue which will show more dramatic increases.

Mr. Munster added "While Apple is taking a more conservative approach to iPhone revenue recognition, we expect the Street will begin to recognize the magnitude of booked iPhone revenue and units, which would be positive for Apple."

Mr. Munster is maintaining his "Outperform" rating for Apple stock, and is raising his target price from US$140 to $160. Apple is currently trading in the pre-market at $125, up 1.36 (1.10%).

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