Goldman: iPhone Will Drive Apple Shares

A survey on handset branding conducted in the U.S., U.K., China and India before Apple Inc. (AAPL) unveiled its plans for the iPhone demonstrates several positives for the company, Goldman Sachs analyst David Bailey said in a research note.

One of the most interesting pieces of information is that Apple ranked as the fourth most popular multimedia handset brand in the U.S., despite the lack of any iPhone announcement at the time.

The number of potential iPhone buyers is equivalent to 75% of current iPod owners, while just less than half of these possible purchasers have never owned an iPod, the survey showed

In the U.S., 71% of survey respondents indicated that they were interested in a mobile phone from Apple.

The buying intentions survey adds to the confidence Mr. Bailey has in his iPhone sales forecast of 4 million units for the 2007 calendar year and another 10.5 million in 2008.

As a result, Apple's growth could climb by 20%, he said, adding that the iPhone represents the next big growth phase for the company.

Mr. Bailey recommends the stock as a core holding and thinks it should be bought on dips before the iPhone launches in June.

He has a US$102 price target on Apple shares, representing upside of roughly 20%.

Comments

[Malkiel:]

I tend to think Apple will see increased pc sales by 4q as pc buyers look for alternatives to Microsoft's poorly received Vista. If these sales haven't been figured into the above report then there may be some icing on the cake...

2007 Feb 28 04:29 PM

[Tom B:]

Moreover, there will be fewer "under $1000" PC;s to choose from because of Vista's system requirements. In contrast, I expect 10.5 to have about the same system requirements as 10.4.x, though I have no data on that.

2007 Mar 01 01:44 PM

[R Anders:]

Thomas Bart, I question your assertion that there will be fewer "under $1000" PC's. I am expecting the opposite. My neighbor just bought a Sony Viao laptop with Vista something something for $700. I couldn't believe it was so inexpensive until I started thinking about it.
Isn't there a glut of hardware in the inventory pipelines? Considering that and Vista's current popularity, how are the sony's and dell's gonna sell computers without slashing the price? How will these companies compete with Apple without a comparable product?
I was heretofore expecting a "mass exodus" from the Windows world but now it seems to me that "the masses" will purchase Vista PC's because they are cheap.
I do agree, however, that Apple will continue to see increased pc sales as more and more people get hip to Apple.

2007 Mar 04 07:17 AM