Apple’s $3Bn BatteryPosted: June 18, 2007
Apple’s market capitalization increased $3Bn today on the news that it had improved the battery life of its soon to be launched iPhone. They also said the screen would be glass rather than plastic. My assumption is that the latter didn’t affect the stock as much as the former. Either way it seems that investors are betting big time on the iPhone and assume that any small improvement will have a big impact on sales. That said, today’s rise in Apple’s value is stunning. If you assume that all the people who will now buy the iPhone because its battery life is a bit longer buy the more expensive model then to generate $3Bn in additional value in one year you would need to sell an ADDITIONAL 400,000 phones by my calculations (I’ve made some basic assumptions on how much after tax is earned from each phone sold). That’s about a 1000 EXTRA phones (that cost $699) a day just to support today’s rise in stock value. Of course it could be that the market is only just getting its head around the fact that Apple is going to be a big player in the phone market alongside Motorola and Nokia. But remind me, how may phones a day do they sell that cost $699?