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NEW YORK - Shares of Apple Inc. rose more than 3 per cent on Thursday as investors bet on strong demand for its media-playing iPhone, almost a week after its US launch, and speculation mounted over plans to sell the device in Europe.
Analyst estimates for iPhone sales
in its first weekend run as high as 700,000 units and investors are expecting that momentum to continue.
AT&T Inc., the exclusive US provider for the phone, said it had virtually sold out of the device in that time, though neither company has provided sales data.
"The stock is obviously anticipating very very strong sales for the iPhone and very good follow-through sales," said Andy Hargreaves of Pacific Crest Securities. "The stock isn't going to be a one-month wonder."
Apple has said it will start selling iPhones in Europe this year and in Asia in 2008, but gave no further details.
European media reports this week have said Apple may be close to deals with carriers in France, Germany and Britain, a three-country strategy that would mimic the launch of its popular iTunes online music store in Europe in 2004.
Apple shares have increased more than 50 per cent since the company unveiled in January the cell phone that combines Web browsing with the music and video playing capabilities of its best-selling iPod device.
"People are anticipating strong sales to continue through next year," said Hargreaves. "If you don't believe that's true then definitely the stock is expensive. We're kind of on the side that the momentum will continue."
Hargreaves has a 12-month price target of US$130 for the shares. That does yet not include full expectations for events such as widening iPhone distribution to electronics retailers including Best Buy.
Hargreaves said he expects Best Buy to start selling the phone in time for back-to-school shoppers.
Investors are also keeping close watch for news on how quickly Apple is able to replenish stocks of the phone and indicators of its financial impact. Research firm iSuppli said on Tuesday the phone would generate a 55 per cent profit margin, after hardware and manufacturing costs.
In Europe, wireless operators including Vodafone Group Plc, T-Mobile, owned by Deutsche Telekom and Orange, owned by France Telecom have been cited as potential iPhone partners.
Telefonica's 02 said on Thursday that it had not signed a deal with Apple after reports that it was poised to clinch the first European agreement in what would be a blow to Vodafone, which operates in multiple countries.
"It would be a somewhat of a disappointment" if Vodafone did not reach a deal with Apple since it is such a large carrier size, Hargreaves said.
Apple shares were up US$3.18, or 2.5 per cent, to US$130.35 on Nasdaq in the early afternoon, after trading as high as US$131.75 earlier in the session. AT&T shares were down 31 cents to US$41.19 on the New York Stock Exchange.
- REUTERS