Analysts behold the power of Apple’s iPhone

“Before Apple Inc. shares cracked $100 six months ago, fund manager Stephen Coleman predicted they would surpass $200 by year-end. His post on the Web site Seeking Alpha drew ridicule from other investors,” Connie Guglielmo reports for Bloomberg. “‘I was called a fool and worse,’ said Coleman, founder of Daedalus Capital LLC in St. Louis, an Apple holder since 2004. After a 67 percent rise in fourth-quarter profit, the shares reached a record $191.79. Analysts say they will keep rising.”

MacDailyNews Note: At the end of last month, the same Stephen Capital said that Apple Inc. shares will rise further, “going to $600,” although no specific time frame was given at the time. Now, Guglielmo reports, “Coleman, using more aggressive cash-flow predictions for the iPhone, says the shares will reach $600 in 18 months.” [Thanks to MacDailyNews Reader “Macaday.”]

Guglielmo continues, “Chief Executive Officer Steve Jobs jumpstarted optimism about the power of the iPhone, the $399 Web-surfing mobile device he introduced in June, to generate a steady flow of cash. Analysts are revaluing the stock because each sale brings Apple a cut of monthly wireless service fees from AT&T Inc., and sales of the phone are recognized over 24 months.”

“This has led analysts including Credit Suisse’s Robert Semple and Deutsche Bank’s Chris Whitmore to use multiples of cash flow rather than earnings to estimate Apple’s stock price, reflecting an anticipated pileup of deferred revenue. Twelve analysts raised their estimates above $200 last month, even as earnings per share multiples reached their highest in two years,” Guglielmo reports.

“Jobs, 52, hasn’t made it easy for analysts to create their models. Apple doesn’t disclose its wireless cut or whether it gets an up-front payment for each two-year contract from San Antonio-based AT&T Inc., the largest U.S. wireless carrier. AT&T charges $60 to $220 a month,” Guglielmo reports. “Estimates of Apple’s monthly take vary from $10 to $20 per subscriber. Cash and short-term investments at Apple rose by $2.9 billion, or 12 percent, to $15.4 billion in the fourth quarter from the third in the first full period of iPhone sales.”

Guglielmo reports., “Piper Jaffray & Co. analyst Gene Munster bases his $250 estimate, the highest on the Street, on 25 times ‘booked’ profit of $9.50 a share in calendar 2009, higher than his $7.06 estimate for reported earnings. ‘The shipments in any given quarter are laying the foundation of what’s going to happen in the future,’ said Munster, who recommends buying Apple shares. ‘People are having trouble getting their arms around it because they think it’s too good to be true.'”

Much more in the full article here.

[Thanks to MacDailyNews Reader “Mike in Helsinki” for the heads up.]

37 Comments

  1. I simply don’t like the iPhone and I’m a big Apple fan from the very begining.

    I don’t like the iPodTouch either. Niether do I like iPods, outside of putting them on a huge playlist occassionally and forgetting about them.

    What is has to do I think is with my vision. For years I’ve used CRT’s (glossy of course) and it has ruined my nearsightness (so says the docs) and my fingers are the man type. Big and fat.

    Sure I could wear bi-focals and use a pen. But then again I got a huge 30″ and a MacBook Pro matte.

    Edge network is slow and can cost money, so really free Wi-Fi is the way to go. and I got a laptop with a larger screen and more capability.

    So I didn’t get excited about the iPhone and I’m not excited about a lot of Apple hardware lately. My friends are older and I usually buy new Mac’s for them for the holidays, but they detest the glossy iMac’s and the MacPro’s are too much for them.

    I wish Apple would get with the program.

  2. ” . . . what a way to open discussion!”

    Behold the power of MDN’s iThreads?

    ” width=”19″ height=”19″ alt=”wink” style=”border:0;” />

    P.S. And not to excessively seek the eggs of lice with prehensile precision but you left out Denholm Elliott!

  3. Well I agree with Charlie that glossy glass is a deal killer. I just passed on buying 30 new imacs due to the glossy screen issue, In a business setting flourescent lighting and windows really tire out the users. So I got mini’s and paired them with samsung monitors. Net result: investment in apple kit reduced 50%. And if they eliminate the mini and dont have a nonglossy imac alternative I’ll drop the cpu as well.

  4. I imagine ExxonMobil will grow a bit, and with crude edging $100/barrel now… profits are sure to be up…

    But I agree, $600 seems really high.

    Then again, what is the next move for Apple? The long awaited AppleTV explosion? A Newton revival? New Mac Pro? What about that pesky 700mhz spectrum?

  5. Where I’m at I got a Sony Store right next to a Apple Store.

    Sony carries matte and glossy screen notebooks and computers in all types.

    Apple only carries glossy.

    Both look hot and I can make Windows secure and cool looking because I’m in IT.

    What computer system did you think I went with?

    Sony.

  6. To Mauritius Kestrel:

    I had to stop somewhere, although Denholm Elliot should have made the list, having been quoted (from his Coleman part) in your post. Oh, and what an excellent way to phrase “to nitpick”!

  7. Sorry to break this to you. It’s not about what you do. It’s about our kids do.

    Yea but I control the money.

    I’m not ruining my kids eyesight for a shiny screen. They got matte screen laptops running Windows, what the rest of the world uses.

    Apple screwed up bad.

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