AT&T Coughing Up for iPhone -- TheStreet.com

TheStreet.com reports Apple is being paid between $150 - $200 by AT&T, which has an exclusive five-year service provider deal for the iPhone, for every iPhone sold, plus $9/month per phone, for the duration of the typical two-year customer contract, according to people close to the companies. Although neither company commented on the payment system, analysts apparently have not figured the bounty into their earnings models for Apple. One money manager is quoted saying, "This is unheard of, no one has this plugged this into their models." In fact, last Friday, Piper Jaffray raised its target for Apple to $205 from $140, based on iPhone booked revenue and its estimate that AT&T is paying Apple $3/month for new iPhone customer contracts and $8 for new subscribers that transfer service to AT&T. Still, the impact from the revenue sharing may be lessened if CIBC is correct in its observation this morning that "demand for the iPhone has seen a significant decline in the past 10 days." Shares of Apple fell slightly on Monday to $143.70.

Sources: TheStreet.com
Commentary: CIBC: iPhone Demand Has Seen Significant Decline • Apple To Announce Earnings: Will iPhones Overshadow Macs & iPods? • Apple Stock Will Hit $205 On iPhone Strength - Piper
Stocks/ETFs to watch: Apple Inc. (AAPL), AT&T Inc. (T). Competitors: Nokia Corp. (NOK), Motorola Inc. (MOT), Ericsson ADR (ERIC), Palm Inc. (PALM), Research In Motion Ltd. (RIMM), Verizon Comm. Inc. (VZ), Sprint Nextel Corp. (S), Microsoft Corp. (MSFT). ETFs: Internet Architecture HOLDRs (IAH), PowerShares QQQ (QQQQ), Technology Select Sector SPDR (XLK), iShares DJ U.S. Telecom Sector Index ETF (IYZ)
Earnings call transcripts: Apple F2Q07

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