Bernstein analyst sees $204 billion in Apple customer ‘lifetime value’ rising to $373 billion by end of 2014

“Sanford Bernstein’s Toni Sacconaghi this afternoon weighed in with his latest think piece on Apple (AAPL), musing about the question of whether Apple stock should be treated like that of a cable company,” Tiernan Ray reports for Barron’s.

“‘We believe that rather than being a transactional company with volatile revenues, Apple is a platform company with stable, almost annuity-like revenue streams, driven by strong user lock-in,’ writes Sacconaghi,” Ray reports. “The apps and other content that go into Apple’s i-devices give it 90% or greater customer repurchase rates, he notes, with an implied ‘annual churn’ for the iPhone customer base of less than 5%, which is “far better than the 15%+ reported for most cable/telco companies,’ he observes.”

Ray reports, “Sacconaghi computes the ‘lifetime value’ of an Apple iPhone customer at $700 to $900, $600 to $650 for the Mac, and $275 to $300 for the persona who buys an iPad. The ‘net present value’ of those customer valuations is $204 billion right now, likely going to $293 billion in fiscal 2013 (ending September of that year) he estimates, and to $373 billion at the end of fiscal 2014, he projects.”

Read more in the full article here.

17 Comments

  1. I wonder how he calculated ‘lifetime value’, and whether it reflects net profit or gross purchases.

    So far as Macs are concerned, I’ve spent THOUSANDS over the years, not the measly $600-650 quoted. Doubtless there’ll be more ‘000s in the years ahead, too.

  2. Yup, makes that current PE ratio look pretty hard to understand doesn’t it?

    Here’s hoping that Cook decides to split the stock, say 10 for 1, and make the stock more attractive to individual holders instead of institutional investors.

      1. Yeah that’s a well thought out retort. Any split would make it much easier and cheaper to own Apple stock. The average guy can’t buy more than a share or two at a time. Trading fees are expensive where I live. It seems ridiculous to have to pay 29 dollars per trade. It would be great to pick up several shares at once to divide that fee by. Of course it’s perception. But I do believe a split would attract a hoard of people “on the fence” about buying in.

        I just love people. A single derogatory word to someone you don’t even know. Nice.

        1. 10 to fucking 1? yea sorry you missed the boat, but I’d rather not dilute my shares so people can afford to jump on now.

          buy a share.. or a partial share. get a new broker- $29 is a rip off.

          use the internet.

          and yea- a discussion would be 2-1 split=- POSSIBLY. 10 to 1 is just retarded. as simple as that word as simple as the hope.

          1. Maybe you could remind me? Which is more, ten dollars or 100 dimes? If I am not mistaken, they are exactly the same. How do your share get diluted in a split? Is the average stock purchaser so slow witted that they can’t see that ten stock units would be the same as one stock unit is now if there was a ten for one split?

            And what about brokerage fees? If you pay $29 for a trade now, how is that going to be more or less if you pay $29 a trade after a split? If you pay a fee for each unit traded, wouldn’t it be better to leave the stock as it is? No split?

            shinolashow, you weaken your point when you use foul language and it reflects badly on your intellect. Perhaps you might find it possible to remove the expletives before posting if that is the normal way you write and talk.

            1. I’m specifically not here to wow anyone with intellect much less a dainty little flower like yourself.

              how about growing some thicker skin, son?

          2. You would not “dilute” your shares with a 10:1 split. You would end up with 10 times as many shares, theoretically worth 1/10 as much as before. But a split can have a positive influence on share price by increasing demand from small investors. The last time that I checked, over 70% of AAPL was owned by institutional investors, so increased demand from small investors might bump up the AAPL share price a bit. Keep in mind that after a 10:1 split, the effect of a $3 upward move would be the same as a $30 move pre-split.

            This is not rocket science. If you knew anything about finance and basic mathematics, then you could tell sh!t from shinola.

            1. Mr. Shinolashow says “…I’m specifically not here to wow anyone with intellect ..”
              That’s the biggest understatement of the day, and absolutely on target.

              and “…growing some thicker skin, son?”
              I would swear that is my Uncle Rob speaking as he loved to tell everyone how a real man speaks and acts, except he died, for real, in a no helmet (to prove a point) motorcycle crash.

  3. Make that tens of thousands of dollars. A little back of the envelope calculating indicates that since 1980, I have spent close to $100,000 on Apple products for the family. I had a Lisa that cost more the $10,000!

  4. Hmmm, let’s see:
    Performa in 1996
    3 iMacs
    5 PowerMacs
    3 MacBook Pros
    2 iPod touch
    1 iPhone 4
    Numerous accessories, keyboards, Airports etc.
    My daughter has had one iBook & now has a new MacBook Pro
    My son has had an iBook and now has a MacBook.

    I’d say this guy is way light on the figure but his concept is bang on.

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