Analyst: Best Buy's iPhone Sales Impact Minimal
Analyst: Best Buy's iPhone Sales Impact Minimal
by , 9:35 AM EDT, August 13th, 2008
Best Buy's deal with Apple to sell the iPhone 3G will help drive up holiday sales numbers for the combination iPod and smartphone, but not by much, according to UBS analyst Maynard Um. While the increase in iPhone sales will likely be incremental, the Best Buy deal could be an indicator that Apple is successfully ramping up handset production to meet consumer demand.
"Further retail expansion with Best Buy supports our belief that iPhone production is on track and should not be a material issue as Apple ramps up to be available in more than 70 countries by the end of the year," Mr. Um said.
He added that "in order to move earnings by US$0.01 (assuming iPhone profits are all recognized in the quarter sold), each of the 970 Best Buy stores would have to take about 200 iPhones in the Dec quarter (about 194,000 units). From an initial volume standpoint, we believe this is unlikely."
Apple launched the iPhone 3G in 22 countries on July 11, and is set to roll the handheld out in another 21 countries on August 22. The company plans to continue iPhone rollouts through the rest of the year for availability in about 70 countries before 2009.
Mr. Um has a "Buy" rating and $195 target price for Apple's stock. Apple is currently trading in the pre-market at $177.70, up 0.97 (0.55%).
If you are interested in Apple's stock, join our forum members in the Apple Finance Boards, a moderated forum for Apple Investors and people who are interested in Apple's financial dealings. For other stories regarding Apple's stock activity, visit our updated Apple Stock Watch Special Report.
Observer Comments
Mr. Um is wrong. The Best Buy deal increases the number of retail outlets in which the iPhone can be sold the United States by more than 40%. Furthermore, his numbers indicated that Best Buy won't be able to sell more than 7 iPhones per store per day. What an idiot.
The exposure gained for the iPhone in this deal is huge. As one of the largest electronics retailers in the United States, Best Buy attracts a wide range of customers. These are different customers than those visit the Apple Store and AT&T retail stores. This is have a huge impact on the number of iPhones sold during the remainder of the year.
Do you know how many times I've ever been in an AT&T store... never. People don't wander into the AT&T store just to look around at the new phones & accessories... I love Apple stores, but they're not located in convenient locations for myself & many others. On the other hand, I go to Best Buy at least once a month, just like many other people, to pick up a new CD, DVD, video game, etc. Best Buy is a place that people regularly browse & shop, so the iphone as well as the other Apple products they sell will get that much more exposure. Plus many smaller towns don't have Apple stores, but they have a Best Buy, so this will get the iphone into many new areas.
Quoteaoevzb wrote:
Mr. Um is wrong.
I agree. I think the number will be way more than that. The iPhone is HOT and this is a huge new channel.
Now that BBY is expanding into Canada will the stores up here handle the iPhone and/or the iPod Touch as well?
edit: BBY does handle the iPod Touch up here
Wed Aug 13, 2008 1:52 pm Subject: Walking into Best Buy
QuoteGuest wrote:
Do you know how many times I've ever been in an AT&T store... never. People don't wander into the AT&T store just to look around at the new phones & accessories... I love Apple stores, but they're not located in convenient locations for myself & many others. On the other hand, I go to Best Buy at least once a month, just like many other people, to pick up a new CD, DVD, video game, etc. Best Buy is a place that people regularly browse & shop, so the iphone as well as the other Apple products they sell will get that much more exposure. Plus many smaller towns don't have Apple stores, but they have a Best Buy, so this will get the iphone into many new areas.
Then there is matter of accessories.
There is a Best Buy and an AT&T store a few blocks from my house, just across the street from each other. Ofttimes when I am taking my evening constitutional I will stop at the Best Buy, they already carry a lot of iPhone, and iPod, accessories. The AT&T store only carries a few iPhone accessories, shelf space is a factor because they must carry stuff for other phones and it is a small shop.
Wed Aug 13, 2008 11:27 pm Subject: Best Buy Mobile will kick iPhone sales into high gear.
I know for a fact, that more than a dozen times a day someone will ask, at the Best Buy Mobile store-within-a store, "Can I buy a iPhone here?" That simply means without any prompting or selling Best Buy will markedly increase iPhone and iPod touch sales. If Best Buy Mobile tries to sell iPhones that could mean sales nationally in the thousands each week in North America alone.
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