RBC Expects Apple iPhone To Reach 10 Million Target

Despite a high initial price, limited distribution and expectations for some glitches at the beginning, Apple Inc.’s (AAPL) much-anticipated iPhone will be a success, predicts RBC Capital Markets. In fact, analyst Mike Abramsky thinks the iPhone will achieve Apple’s 10 million unit 18-month sales goal and will have a 3% share of the global phone market by 2010. This would contribute an estimated US$90-million to fiscal 2007 revenue and US$1.3-billion to 2008.

With the smartphone hitting shelves at 6 p.m. on Friday, June 29, the market is eagerly anticipating consumer reaction. But it is the long-term growth and opportunity that is key to the iPhone’s success, given that many consumers have not yet used their phones for anything other than voice, text messaging and accessing simple content, Mr. Abramsky notes.

He expects Apple shares will see some volatility following the iPhone launch if growth disappoints or glitches with battery life, reliability or the touchscreen emerge. However, he thinks these problems could present buying opportunities for investors.

Mr. Abramsky initiated coverage of Apple with an “outperform” rating and a price target of US$160, which represents upside of roughly 33%.