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July 2nd, 2007

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11:11 am - A good example of Irrational Exuberance

If you thought people who had to get their hands on the first model of the iPhone the moment they were released were a little crazy, that’s nothing compared to stock market investors.

Apple stock has increased 43% since the iPhone was announced on January 9 until its introduction last Friday – that translates to a value of 32 billion dollars.

Apple sold 525,000 iPhones this weekend, and with an average price of $549, that’s $288 million in sales.

But that’s sales only. Apple’s net income on sales last year was 10.3%, so their estimated profit on those iPhones will be $30 million.

Now, granted Apple has other products and profit centers, including computers, iPods, music sales, and battery replacement. But if those only increase at regular levels (or perhaps reduced ones, because of market saturation), Apple will need to sell 559 million more iPhones to be worth the increase in its stock.

That’s almost two iPhones for each man, woman, and child in the U.S.


(23 comments | Leave a comment)


[User Picture]
Date:July 3rd, 2007 05:05 pm (UTC)

fun with numbers


Yes, I'm not surprised, but I'm not sure the hardware "costs" have included the R&D necessary to develop such a product, or the marketing costs to launch a major new product line like this. Even with the sales of a new product line, I'll be surprised if Apple's net profit is much (if any) higher than ~10% this year.

Truly, with ~$1,000-1,500 in contract charges for each iPhone sold, AT&T stands to make more money than Apple, though, as you say, we don't know what sort of financial arrangement the two companies have for Apple's choice of AT&T as dedicated wireless provider -- and profit margins for wireless providers are slim due to their ever-growing infrastructure building costs.

As someone who doesn't have to travel for work and has a landline phone on my desk and at home, I am very happy with my free phone and $7/mo plan from Virgin. If I had a longer train commute I'd probably want some sort of personal video player, but until that day I'm also quite happy reading my news and watching movies the old-fashioned way: from the internet and cable, on much larger monitors. ;)

Date:December 12th, 2007 08:09 pm (UTC)

Re: fun with numbers

Apparently when an app on the iPhone crashes, the phone notices after 30 seconds, writes out a crashlog and continues to work. On next connect with iTunes it wants to post the crashlog.


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