The downside of the iPhone’s gargantuan success as a money maker for Apple is that it can also have an “outsized impact” on Apple profits. The iPhone contributes 49.2 percent of Apple stock value, one analyst warns. Wall Street also said the iPad has replaced the iPod as the tech giant’s halo product, buoying sales of other Apple products. Even so, at least one analyst thinks that Apple could go as high as $540 a share.
The iPad now comprises 12.2 percent of Apple’s stock price, according to Needham & Co.’s Charlie Wolf. The analyst told investors he raised Apple’s target share price to $540, up from $450 largely on the “assumption that the device should capture a materially larger share of the tablet market than we previously forecast.”
Wolf substituted the iPad for the iPod as the Apple ‘halo’ device to sell Macs. Traditionally the Cupertino, Calif. company has used the iPod to pull consumers in, who often then buy a Mac. Mac sales now account for 11.5 percent of Apple stock value while the growth of the App Store culture pushed iTunes importance to 5.1 percent of the stock’s value.
Ed Sutherland is a veteran technology journalist who first heard of Apple when they grew on trees, Yahoo was run out of a Stanford dorm and Google was an unknown upstart. Since then, Sutherland has covered the whole technology landscape, concentrating on tracking the trends and figuring out the finances of large (and small) technology companies.
11 responses to “The iPhone’s Success Could Put Apple Profits at Risk… But Apple’s Stock Is Still Worth Up To $540 A Share”
That’s a damn fine problem to have.
opppsss, i dropped my wallet… : )
tinyurl.com/2df4ccp
Aaaaaaawwwwwww the iPad only has 12% :( I love my iPad waaaaaaaaaaay more than my iPhone. In fact, as long as I have my iPad, I don’t even need an iPhone. I think I could live with a prepaid phone of some cheap android……………yeah, that last bit was a lie. Well, it’s all a lie. I love my iPhone’s camera, so I want to keep my iPhone too.
I’m probably rather ignorant but when a company has two or three hot selling products that are all profitable, that is usually a good thing, right? Apple really doesn’t have that many products but most of them are doing rather well. Wouldn’t most companies kill to have the problems that Apple has? One might easily figure that since Apple probably has the best economies of scale of all tech companies, that Apple would be hit the least when it comes to margins, relatively speaking. Exactly how could Apple avoid the problems that it is having as consumers shift from one Apple product to another? Wouldn’t the profit margins be higher on the iPad than they would on, say, the iPod Classic?
This article doesn’t even make any sense! Neither of the analysts explained why the iPhone/iPad’s “amazing” profits were harming the company. They target the stock $110 higher, then they say the profit strength could possibly hurt the company? When Apple’s stock passes $600, I wonder what they’ll say next (ANALYST: “Apple’s about to go out business!! THEY’RE MAKING TOO MUCH MONEY!! OH NO!”). lol