July 11th, 2007Rumor of $300 iPhone makes traders rich
Shares of Apple Inc. hit an all-time high Tuesday after an analyst said a patent filed by the company suggests it will come out with a second, cheaper model of its iPhone in its fourth quarter.
Apple shares finished trading up $2.02 to $132.35. During the session, the stock traded as high as $134.50, eclipsing a previous 52-week high of $133.34 set Friday.
Cupertino, Calif.-based Apple released the iPhone on June 29. The much-anticipated hybrid gadget contains cell phone, media player and wireless Internet functions. Current iPhone models retail for $499 to $599.
In a note to clients, J.P. Morgan analyst Kevin Chang said that based on a patent Apple filed in November, he thinks a new iPhone is coming that will cost $300 or less. It is likely to be controlled by a scroll wheel and might have limited functionality. He said the patent filing showed how to dial a phone number with the scroll wheel.
“We believe it’s a strong sign that Apple could potentially convert every iPod nano into a nano phone,” he wrote, referring to the company’s popular flash-memory-based music player.
The nano currently sells for $149 to $249, depending on the amount of included memory. The nano and Apple’s shuffle iPod comprise the majority of the estimated 50 million iPods the company sells each year, Chang said.
Chang said there’s “a decent chance” that Apple will accept operator subsidies for a cheaper iPhone model, which could sell 30 million to 40 million units in fiscal year 2008.
“The global introduction of this model should be much faster than iPhone, given the former’s limited functionality and lower customization requirement,” he wrote.
AT&T spokeswoman April Borlinghaus said the San Antonio-based company still has a multiyear deal to be the exclusive carrier for the iPhone. She described the analyst report on a cheaper iPhone model as “speculation,” adding that AT&T doesn’t comment on rumors and speculation.
Frost & Sullivan wireless analyst Daniel Longfield said Apple likely is mulling a less expensive follow-up to the iPhone so it can compete with handset producers such as Nokia and Motorola. But with its handsets flying off the shelves at prices of up to $600, he added, the company is unlikely to rush a cheaper model to market this year.
“I’d be shocked to see a less expensive iPhone on the market before 2009,” he said. What’s more, Longfield questioned whether Apple could offer the less expensive device to other carriers because of its five-year exclusive deal with AT&T.
“I just don’t see Apple trying to get around that,” he said.
