Can the iPhone 5 Double Apple's Lifetime iPhone Unit Sales?

A new iPhone is coming. This we know. Sept. 12 is the rumored date for the device's unveiling, which is less than a month away. Many are expecting to see unprecedented upgrade activity to drive tremendous sales, and Apple (Nasdaq: AAPL  ) is already seeing speculation of the new model affecting its results. iPhone unit sales dropped 9 million sequentially in the fiscal third quarter as prospective buyers held off in anticipation of the next iPhone.

The latest analyst to chime in with massive estimates is Craig Berger, an FBR Capital Markets analyst who expects the device, be it named the "iPhone 5" or otherwise, to sell upwards of 250 million units throughout its lifetime, generating incremental earnings per share of $50 over that timeframe. Based on an average selling price of $575, that turns into almost $144 billion in sales and an estimated $47 billion in profit.

Berger notes that extended upgrade policies among carriers could potentially have a negative effect on domestic market share, but he also believes that upgrades rely more heavily on product launches nowadays instead of eligibility status. One key factor in getting to that 250 million mark is the assumption that China Mobile (NYSE: CHL  ) will finally be brought on as an official carrier, probably sometime in early 2013. Berger estimates that 13 million units in the first half of 2013 will be sold on China's largest carrier.

He has dubbed it the "iPhone 5 Tsunami," saying it will buoy the entire mobile sector, and highlights chipmakers Qualcomm (Nasdaq: QCOM  ) and Fairchild Semiconductor (NYSE: FCS  ) as key beneficiaries to the iPhone upside. Qualcomm provides the baseband modems while Fairchild sources power supply chips.

For additional context, 250 million is more iPhones than Apple has sold throughout the entire product's lifetime. Through last quarter, cumulative iPhone unit sales stood at 244.2 million, so we'd be talking about seeing the newest model double lifetime unit sales over its life cycle, which could span several years.

Even though Apple shares now sit at all-time highs, there's a lot to look forward to. Sign up for The Motley Fool's new Apple research service to get everything you need to know about the iPhone maker, complete with free quarterly updates.

Fool contributor Evan Niu owns shares of Apple and Qualcomm, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Apple, China Mobile, and Qualcomm. Motley Fool newsletter services have recommended buying shares of Apple and creating a bull call spread position in Apple. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.


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  • Report this Comment On August 20, 2012, at 8:09 PM, JaanS wrote:

    Well done Evan. For more on Apple's prospects, see:

    http://beta.fool.com/jaans/2012/08/20/understanding-apple-fl...

  • Report this Comment On August 22, 2012, at 2:14 PM, Darwood11 wrote:

    Will the iPhone 5 double Apple's sales? If Samsung loses in the courts, possibly.

    Remember back when MSFT was the enemy and AAPL was spending big bucks in attempt to show it was the "David" versus the MSFT "Goliath?"

    Well, that was then and this is now. So who is the current Goliath? Who is fighting to protect what they declare as "their intellectual property?"

    I'd suggest that AAPL is the new monopoly and as was the case, and continues to be the case for MSFT, there remains money to be made. But I'm not backing AAPL as the leader, not anymore.

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