Apple Inc. (AAPL) To Generate 6.5B Rev. In 2013 From Cheaper iPhone - InvestingChannel

Apple Inc. (AAPL) To Generate 6.5B Rev. In 2013 From Cheaper iPhone

Gene Munster, senior research analyst at Piper Jaffray believes that there is a 60 to 70 percent chance that Apple Inc. (NASDAQ:AAPL) will introduce a cheaper model of its iPhone this year.

iPhone

According to him, a lower priced iPhone would serve as a catalyst for the shares of the company, and he estimated that it would generate approximately $6.5 billion revenue for Apple Inc. (NASDAQ:AAPL) in 2013.

Muster believes the Cupertino-based technology giant would price its non-contract, low-cost model iPhone around $149 to $199, but he emphasized that the price would most likely be $199, because of the company’s reputation of charging a premium to the market.

He noted that Apple’s lowest non-contract iPhone costs $450 (plus taxes and levies), which is the iPhone 4. The price of a non-contract iPhone 4 in China and Brazil is around $490 and $750, respectively.

Munster predicts Apple Inc. (NASDAQ:AAPL)’s cheaper iPhone model would have lower; screen quality, processor, and casing than its existing relatives. He also expects that it would carry a gross margin of around 30 percent, compared with 55% to 60% gross margin of a standard iPhone.

In a research note, Munster wrote, “We had previously built in some expectation for a lower-priced iPhone starting in September 2013. In that quarter, we assumed about 30% of units are lower priced iPhones, which results in an ASP change from the ~$640 level we have consistently seen over the past three years to around $520. We have the cheaper iPhone contributing about $6.5 billion in revenue in 2013 or 3% of total revenue.”

The research firm reiterated its overweight rating and $900 price target for AAPL.

In a  related report, there are speculations that a few people in the investment community are concern over reports that a cheaper model of the iPhone would have a negative impact on Apple Inc. (NASDAQ:AAPL)’s high profit margins. It is one of the companies with the highest profit margin and receives high subsidies from wireless providers carrying the iPhone.


The post Apple Inc. (AAPL) To Generate 6.5B Rev. In 2013 From Cheaper iPhone appeared first on ValueWalk.

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