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Apple Products Help Boost the Economy While Leaving Consumers in Debt

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Samsung tries to lift the ban on the Galaxy 10.1 tablet in the US.

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MINYANVILLE ORIGINAL Analysts project that Apple (AAPL) will sell between 6 million and 12 million new iPhone 5s this month after the company likely announces the launch of the iPhone 5 at the Yerba Buena Center for the Arts in San Francisco tomorrow. Gene Munster, an analyst at Piper Jaffray (PJC), predicts that 6 million to 10 million iPhones could be sold by the end of September. Bill Chio of Janney has similar projections of 7 million to 10 million iPhone 5 sales. Brian White of Topeka Capital Markets estimates that Apple can sell 10 million to 12 million iPhones this month.

Apple needs a successful iPhone launch because the company's once-a-year upgrade to its products accounts for approximately 70% of its profits. The company reported disappointing iPhone sales in July, so it will need a successful launch. Sarah Rotman Epps, a mobile phone industry analyst at Forrester Research (FORR), told Bloomberg, "The iPhone is the make-or-break product for Apple."

How much does income generated by Apple actually help the overall economy?

A research note from JPMorgan's (JPM) chief US economist Michael Feroli yesterday states stated that Apple may boost GDP by adding between a quarter and half a percentage point to annualized economic growth in the fourth quarter.

Feroli reasons that about 8 million iPhone 5s will be sold in the fourth quarter, and the smartphones will sell at retail for around $600. Based on past iPhone sales, he assumes that $200 per phone will be added to imports, which is subtracted from GDP, and means $400 per phone sold will be added to GDP. As a result, iPhone 5 sales could boost fourth quarter GDP by $3.2 billion, or $12.8 billion at an annual rate. Fourth quarter annualized GDP growth would increase by 0.33%. He does point out that the estimate is "fairly large," and it should be "treated skeptically." But he believes the projection is reasonable based on the performance of the iPhone 4s launch.

Overall retail sales significantly outperformed expectations for October 2011 after the iPhone 4s launch. Half of the 0.08% increase that occurred in core retail sales occurred in online sales and computer and software sales. These two categories combined had their largest monthly increase ever. iPhone sales would have added between 0.1% and 0.2% to fourth quarter GDP over the third quarter after subtracting the import drag if the increase in retail sales definitely occurred from the iPhone. Feroli highlights the fact that the iPhone 5 launch will probably be much larger than the iPhone 4S launch.
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