“Although Apple has repeatedly said that its iTunes Store operates at ‘just above break even,’ a thorough analysis of the service’s economics suggests it turns a profit roughly in line with the company average, with recent events paving the way for even greater gains,” Katie Marsal reports for AppleInsider.
Marsal reports, “Based on per-song cost estimates, the ubiquitous iTunes service generates an operating profit of at least 10 percent, and possibly as much as 15 percent, according to PacificCrest’s Andy Hargreaves. The analyst on Monday released a detailed report on the subject, in which he informed Apple investors that the economics of iTunes could soon serve as a boon for the company’s bottom line.”
“Applying that estimate to the $1.2 billion in revenue that iTunes is expected to generation in fiscal 2007, he believes the service will generate $0.09 to $0.14 in earnings-per-share for Apple,” Marsal reports.
Marsal reports, “Perhaps even more compelling, according to the PacificCrest analyst, is the incremental profit opportunity presented by the Cupertino-based firm’s joint announcement with music label EMI to start selling DRM-free tracks at an approximate 30 percent premium.”
Full article here.
[Thanks to MacDailyNews Reader “LinuxGuy and Mac Prodigal Son” for the heads up.]
Apple hits major milestones: 100 Million iPods sold, 2.5 billion iTunes Store songs sold – April 09, 2007