Huge iPhone Fees Juice Apple
It's well established that the world's most talked-about phone has lured thousands of free-spending, lust seeking customers since its introduction last month. But the financial terms of the revenue-sharing deal have been kept under wraps.
Until now, that is.
People close to the companies tell TheStreet.com that AT&T is paying Apple a bounty of between $150 and $200 per phone -- plus $9 a month per phone over the life of the typical two-year customer contract.AT&T didn't comment, and Apple said it would have no comment. But the figures show Apple is getting an unprecedented windfall on the sale of each new iPhone. Bulls on the stock believe the nifty terms -- which haven't been baked into Wall Street's earnings estimates for Apple -- could push Apple's highflying stock into the stratosphere. "This is unheard of," says one money manager who is long Apple. "No one has this plugged this into their models." "It's a pretty sweet deal for Apple, and not all that bad for AT&T," says IAG Research's Roger Entner. AT&T agreed to a five-year exclusive pact to sell the iPhone. The deal included a two-pronged payment plan to Apple, as TheStreet.com reported in April. Wall Street knew Apple was getting a good deal, but it didn't know just how good it was.
|Want more? Check out TheStreet.com TV video. Scott Moritz discusses the Apple's iPhone deal with AT&T and how it will impact both companies.|
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