waconner

After receiving today's announcement about Apple's 4th Quarter earnings for fiscal year 2007 exceeding profit expectations by 67%, a couple of things have become evident.

1) Apple will sell more than the stated goal of 10,000,000 iPhones in year 2008.

Apple reported selling 1,119,000 iPhones during Q4, bringing the total number of iPhones sold since launch to 1,389,000. This means they are now averaging around 14,935 iPhones sold per day.

Personally I would not be surprised if Apple sells more than 13,000,000 iPhones during 2008.

My reasoning? In order to meet their stated goal of 10,000,00 iPhones sold by the close of 2008 it has become clear they will need to move approximately 18,842 phones per day over the next 365 days.

This will be an increase in the current sales progress of approximately 3,907 iPhones. Apple will begin rolling out the iPhone to Europe in November of this year beginning in England, France, and Germany.  In order to meet the goal that means they need to produce only 1,303 iPhone sales per day in each of these countries over the next year. This of course should be a very easy number to reach in a continent that is more accustomed to using smart phones and who has a more dense distribution of Wi-Fi hotspots than the US.

 Apple also indicated in their conference call today that they are on target to debut the iPhone in the smart phone savvy continent of Asia during 2008.

We also know that Apple has committed to providing iPhone operating system upgrades for version 1.0 iPhones over the next 24 months following the June 2007 launch. This, in conjunction with the official software development kit which is scheduled to be revealed in February or March of 2008, should serve to increase the adoption rate of the iPhone as the perceived usefulness of the phone increases.

2) Apple will not be splitting the stock anytime soon.

In the past Apple had historically split the stock when it hit near $100, but of course the $100 dollar mark per share has come and gone and they are rapidly approaching the $200 per share price. With the $200 price per share approaching it begs the question by some investors if Apple might consider splitting the stock. I don't think they will because splitting the shares is often done by companies as a strategy to motivate the casual investor to purchase shares because of a perceived affordability of the stock. This action is often prompted when a company's stock trading becomes stagnant. Stagnation is not something that Apple's stock has been suffering from this year. Their stock has been one of the most dynamic securities this year.

The other reason that investors generally like a stock split, particularly before a holiday season, is because it generally makes it easier for investors to access their stock equity by making it easier to liquidate smaller portions of their holdings for the purposes of holiday shopping, buy a car, etc. When a stock is trading at a very high level an investor may often find it psychologically difficult to sell off in order to generate disposable income. This latter reason is yet another reason why Apple will not want to split. It is the same reason that Google has not split their shares. Both companies want to discourage the public from selling off any shares for any reason because it could result in a loss of market capital which is vital to every company, but particularly companies in the tech sector which must maintain research and development budgets if they hope to remain competitive.

Then again, Apple now has over $15.4 billion in cash available and zero debt. Will they perhaps go shopping for the 700Mhz spectrum that the FCC will be putting on the auction block in January 2008, in complete competition against or complete cooperation with their iPhone partners Google and AT&T? I doubt they will compete against those two companies because they simply don't have enough money. Google has been spending like mad lately, but they still have more money available for spectrum shopping.