Analyst: iAd Could Generate US$2.5 Billion in Revenue for Apple

| Apple Stock Watch

Apple’s new iAd mobile advertising network could add US$2.5 billion in revenue per year, and $1.00 in earnings per share, according to Broadpoint AmTech analyst Brian Marshall. Mr. Marshall said that while Multitasking was the big announcement in iPhone OS 4, iAd “stole the show and will be significant to the financial model.”

“In fact,” he wrote in a research note to clients obtained by The Mac Observer, “we believe the iAd platform could generate an incremental ~$2.5bil in revenue and $1.00+ to AAPL’s financial model when the business hits its stride.”

To put those numbers into perspective, ~$1.00 EPS would be ~10% more to his current calendar 2010 estimates of $12.75 for the company. That said, he cautioned his clients that he made numerous assumptions to arrive at those numbers.

“In our view,” he offered in summary, “Apple remains the best technology company on the planet with numerous catalysts on the horizon (e.g. international iPhone ramp, iPad ramp, emerging recurring revenue stream from content purchases/Ad sales, etc.). We currently see no real business model issues.”

Mr. Marshall reiterated a “Buy” rating on AAPL and a price target of $280. Late in the Friday trading session, Apple was trading higher at $241.29, up $1.34 (+0.56%), on light volume.

*In the interest of full disclosure, the author holds a small share in AAPL stock that was not an influence in the creation of this article.  

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10 Comments Leave Your Own

Noted tech analyst

I think it will generate $3.75 billion in revenue! Wait .... 1.9 billion. Or 4.73 billion! Or 1 TRILLION DOLLARS! YES!!! 1 TRILLION!!!

Tiger

Well, in just six days of sales, the iPad has generated no less than $280 million in revenue for Apple based on the lowest single price for a device.

And that’s probably more responsible for the $1 gain per share Apple has enjoyed in their stock price this week.

daemon

How much of that revenue will go to stock holders? Zero.

Apple doesn’t earn money for it’s owners, the stock holders, but for itself.

Tiger

http://seekingalpha.com/article/197992-apple-s-cash-trajectory?source=yahoo

Yet, it’s an extremely conservative company. I know many investors who make lots of money on their Apple stock without ever getting a penny in dividends. They understand that going in. Apple DOESN"T pay dividends. If you don’t like that, don’t buy it. It’s not like it’s a new policy either.

Bryan Chaffin

I think it will generate $3.75 billion in revenue! Wait .... 1.9 billion. Or 4.73 billion! Or 1 TRILLION DOLLARS! YES!!! 1 TRILLION!!!

Ha! smile

WES

The total return from owning Apple is in the form of capital appreciation from growth not dividends. In this case, the company’s growth has been so substantial as to greatly exceed any measily return one might have had from a 1% or 2% dividend yield. Furthermore, the stock holders, in aggregate are the owners of the company and no one else!

Bryan Chaffin

Re: Shareholder value

All that money not paid out in dividends is also baked into the stock price. about 20% of the total share price is sustained by Apple’s cash holdings, which is of value to shareholders.

Terrin

I bought 200 shares of Apple at around 14 dollars a share. It has split twice, and now is at over $240 a share. You do the math.

How much of that revenue will go to stock holders? Zero.

Apple doesn?t earn money for it?s owners, the stock holders, but for itself.

Neil Anderson

The ad dollars were going to Google before, now they’re flowing to Apple. Sounds good.

Constable Odo

I don’t quite understand why revenue figures for iAd are all over the place.  From next to nothing to some huge amount.  I guess I’ll just have to wait and see.  I do know that I want Apple to get all in Google’s face and take some of their ad market share.  It still won’t be a full payback for Android’s cut into what could have been iPhone’s market share, but every little bit helps.  I look forward to Apple getting into the search engine business, too, but maybe it wouldn’t be the best idea for Apple to be spreading itself too thin.

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