iPhone profits: Apple cleared estimated $330 million in three days

Apple also made money on the Applications it sold through the iPhone App Store on iTunes.

I guess the market has turned on Apple. They no longer like Apple. With the results of this past weekend, Apple should be close to $200 per share, regardless of the general economy news. Especially after the huge rally today, Apple barely moved 1% up. Results have everything to do with the stock price, not the fact that everyone’s expecting it to go up so it won’t (how foolish). Apple opened up $7 on Monday before the depressing economy news rolled in. RIMM got downgraded today and still went up 5%, makes no sense at all. I’m only guessing now, but I think the market is hanging loose on Apple until the earnings report on Monday. Would be wonderful to see Apple skyrocket on Monday. We’ll see.

That’s why Rimm is up 5% today becuase of all the money Apple is making.

The amount Apple made over the weekend release is less important than the estimated amount the iphone will contribute to next quarters results. If the same ratio of weekend to full quarter iphone sales occur with the 3G that occured with the original iphone release then we can expect a 4x improvement for an iphone contribution to the 4th quarter revenu(1.3billion).
Add to that deferred revenue of another 370 million from previous iphones sold and you have a grand wapping total of $1.7Billion. With Operating margins at 40%, the iphone will add $680 million to earnings or 0.79/Share earnings or $27/share (assumung PE=35).

Now that’s what I’m talking about!!! So why has the stock traded down since the 1 Million sale announcement?

Has anyone talked about the fact that the 3g being “twice as fast” is bollocks. I had such high high hopes for this phone. But I live in the middle of Dallas where there is supposedly great 3g service, and I can’t even get a 3g connection to the internet at all. So the question is, why am I being charged an extra $30 a month for a garbage service that doesn’t even work as promised?

So, someone please tell me with this incredible product release, and new revenue chains just why the stock is down roughly $10 a share?

And it’s not b/c this is already priced in, there was no major run on the stock after jobs announced it.

Just can’t fathom how google’s hanging up in the 500s and apple’s been “mired” around 170 for most of the year.

If you are really looking at costs add in the extra staffing over the weekend at all the Apple stores.All hands on deck may equal 8 extra staff x 12 hours a days x 3 days x $15/hour x # of Apple stores = whatever….it’s a lot. But they still are making a boatload of money and introducing a new mobile platform that will dominate the market.

..and that 1% is based on cost to consumer not cost to carrier with subsidy etc.

The profit margin is quite a bit higher as your estimate of a $50 royalty payment per phone is absolutely absurd, where do you get those number? That would mean some business/businesses made $50 million over the weekend, please.

I hold 8 US Patents and have licenses on 3 currently so I know of what I speak, there is NO POSSIBLE WAY Apple is paying $50 per phone in royalties.. IMPOSSIBLE, Apple doesn’t even pay $50 per phone to have the actual phone built.

Based on typical royalty %s in this volume market of electronics Apple might be paying 2%, more likely 1%.

ex ped: The $50 royalty numbers came from iSuppli, as indicated in the piece. In an earlier teardown, done before they had the phone in hand, they used a similar number ($45). This is what Businessweek said about the royalties at the time:

Apple also has to pay about $45, or about 9% of the price of each handset, in royalties for patented 3G technologies, according to the iSuppli analysis. Chief among these collectors of royalties is wireless chipmaker Qualcomm (QCOM), who owns several patents related to a technology known as WCDMA used in the 3G chipsets. Others that may be collecting some royalties include Sweden’s Ericsson (ERICY) and Finland wireless giant Nokia (NOK).

I want an iPhone 3G, but the 2 AT&T Stores I went to are sold out.. I doubt I’m alone.

AT&T implied that the subsidy is paid up front when they said they’d be taking an earnings hit this year because of the subsidy for iPhone.

Apple is primarily a computer maker. Its revenue depends mostly on computer sales. The iPhone is an addition to the company. It also has other products: iPod, iTunes, App Store, iTV, etc. App Store revenue could be a surprise depending on how much it generates. The Apps have better profit margins than MP3’s.

how many of the those phones “sold” were actually in transit to carrier stores?

The #’s aren’t actual activations
…

Just the same old fuzzy math

ex ped: Good question. Nobody knows.

How many 1.0 phones did they sell btwn the 3G announcement & launch?

ex ped: Very few. They stopped making them in May.

But doesn’t the market or the current stock price already discount in these number? So what’s the next move for Apple? Thus the stock price in the next six months.

But Steve Balmer and Bill Gates said that the iPhone would never sell - “overpriced - no windows mobile or plays for surely” or something to that effect. Could the 2 geniuses at microsoft be wrong?

Considering the success of the iPhone 3G launch, it seems almost predictable that Apple has a terrific growth engine in its hands. But if you go back to 2005 when it all started, things didn’t look so obvious. I explored more than a dozen financial, operational and technical risk profiles that would have dissuaded just about any other company from embarking on the iPhone project:

iPhone: The bet Steve Jobs didn’t decline

Nice calculation and it is time to short since expectation is HIGH now for AAPL.

I am certain the subsidy is way too low. The sprint subsidy on just a regular RAZR phone is over $450 per phone to the dealer. That is on a phone with no data plan.

Apple hasn’t launched the 3G iPhone in all 70 countries with Carriers that agreed to a deal yet. Apple only lauched in 20 countries. France will launch this week. The amount of iPhones bought will continue to increase.
The fast 3G iphone is awesome. Check out this blog http://www.sports–today.blogspot.com

Is it a normal practice for carriers to pay the difference to phone makers upfront or is it usually amortized over a few quarters. Apple may not get the complete piece of $300-$350 right away that carriers are subsidising.

Apps store is amazing !!!! I downloaded 6 games and I am lovin it !!! it’s going to be a huge profit from Apps store !!!!

Cha Ching! Glad to be a stock holder and my holding which I bought a month ago (see details here : http://www.savingtoinvest.com/2008/06/oh-noi-just-bought-16k-worth-of-apple.html ) should hopefully benefit when Apple releases its results later. But stock is doing nothing now! What gives with such great numbers.

Doris? Toni?

Add in 15 million AppStore downloads, factoring them at an average of $4 each, with APPL getting 30% as their distribution fee. = $18 mill more.

Add in 33% opting for the APPLECARE extended warranty at $70 each, for another $23 million.

And the LINES ARE STILL THERE, most are completely sold out, and around the world, whenever a new shipment is reported arriving, there are five potential purchasers for every unit.

Philip,

Add to that the fact that 10 million Apps were downloaded over the weekend. I know it’s hard to judge the % of free versus paid, but I’m sure that there was a couple million made from apps this weekend too. Good article.