“By unveiling a new leasing program, Apple may have done more than just unveil an easier way to buy an iPhone — it may have completely changed its business model,” Chris Ciaccia reports for The Street.
“Apple has taken its cash cow iPhone, which accounts for more than two-thirds of quarterly revenue, and effectively turned it into a subscription business,” Ciaccia reports. “By doing so, this may warrant a higher earnings multiple over time, as Wall Street begins to fully understand the nature of this change.”
“By allowing customers to pay roughly $27 a month for the iPhone 6s or $31 for the iPhone 6s Plus, Apple has effectively created an iPhone-as-a-service business. Apple thus becomes less reliant on the number of iPhone units sold each quarter,” Ciaccia reports. “A smoothing out of revenue (Apple is slightly dependent on the holiday season) could cause investors to re-rate shares considerably higher.”
Read more in the full article here.
MacDailyNews Take: So, how long do you think it’ll take for Wall Street to figure it out?
Apple shares could rally 50% on new iPhone Upgrade Program – September 14, 2015
iPhone Upgrade Program: Apple’s brilliant strategy to turn carriers into ‘dumb pipes’ – September 11, 2015
Apple takes aim at the carriers with annual iPhone Upgrade Program – September 10, 2015
How Apple’s annual iPhone Upgrade Program works and how much it costs – September 9, 2015