“People close to the companies tell TheStreet.com that AT&T is paying Apple a bounty of between $150 and $200 per phone — plus $9 a month per phone over the life of the typical two-year customer contract… The figures show Apple is getting an unprecedented windfall on the sale of each new iPhone. Bulls on the stock believe the nifty terms — which haven’t been baked into Wall Street’s earnings estimates for Apple — could push Apple’s highflying stock into the stratosphere,” Scott Moritz reports for TheStreet.com.
“‘This is unheard of,’ says one money manager who is long Apple. ‘No one has this plugged this into their models.’ Wall Street knew Apple was getting a good deal, but it didn’t know just how good it was,” Moritz reports. “‘At $145, Apple is valued at about 25 times forward EPS,’ says the money manager. But with these sweeter-than-expected terms, ‘you could easily see it as a stock worth $200.'”
“Verizon Wireless — co-owned by Verizon and Vodafone — was the first company approached by Apple. But Verizon nixed the deal,” Moritz reports. “It was thought at the time that Verizon didn’t like the financial terms, but sources at the company now confirm that the deal was killed even before the terms were discussed. It was Apple’s unbending position on iPhone distribution and the applications that would run on the phone that brought the talks to a quick end, these people say.”
More in the full article here.