Apple financials
Apple is reporting its first quarter earnings after the market-close tomorrow, January 22nd.
Apple had a terrific holiday season and has stood out from the retail pack. Check out these eye-popping comparisons.
The key ingredient to Apple's success this quarter and long-term surprise is the revenue coming from the iPhone. I've posted this before [iPhone's unique royalty and revenue sharing] and want to reiterate the importance of the iPhone's revenue sharing agreements w/ AT&T. Apple makes a percentage of the subscriptions and data plans paid to AT&T for iPhones. Gene Munster, an analyst at Piper Jaffray, estimates the revenue per iPhone to be $18 a month.
And the best news - for us retail investors - might be that the street is in the dark about the revenue sharing... for a number of reasons. The numbers aren't readily available and are not clearly published. Analysts need to infer the revenue sharing numbers from other factors in Apple's financial statements, making this "a rather complex algebra problem". The complexity of iPhone's revenue sharing is evident in the number of analysts positively revising Apple's price targets.
Let's do a little math ourselves. Apple sold 4 million iPhones since its launch. 4 million multiplied by $18 is 72 million a month just for iPhone subscriptions and data plans. That's 864 million a year! And the iPhone has only just begun to sell in international markets. Tack on iTunes music and move rentals... and you got yourself a buy recommendation for Apple.