Wednesday, April 16, 2008

Apple gains after overseas iPhone price cuts

NEW YORK — Apple Inc. shares rose Wednesday as a Piper Jaffray analyst predicted promotional iPhone price cuts in the United Kingdom and Germany will pave the way for the release of a new iPhone model with 3G technology in June.

Apple shares rose $4.69, or 3.2 percent, to $153.07. In the past year, the stock has traded between $89.60 and $202.96.

Piper analyst Gene Munster said in a client note that starting Wednesday, Carphone Warehouse and wireless carrier O2, which sell the iPhone in the U.K., cut prices on the 8-gigabyte iPhone to 169 pounds ($333) from 269 pounds ($530). Munster also noted that near the start of the month T-Mobile cut the price it charges in Germany for the same model to 99 euros ($157) from 399 euros ($631), with qualifying cell phone plans.

Both promotions will stop at the end of June, the analyst said, and he thinks they mean demand for the product is light in Europe and that carriers are "draining the channel" in advance of a new iPhone model that includes 3G, or third-generation technology.

Munster also noted that recent checks of Apple stores in the U.S. showed a constrained amount of 8-gigabyte and 16-gigabyte iPhones. This makes him believe the company is probably "pacing its remaining supply of phones by trickling units into its retail channel until the new model is released."

"While limited availability of iPhones would put downward pressure on iPhone units in the June quarter, we believe it would be more than offset by the price cuts in Europe and the launch of a new model in June," Munster said.

The analyst thinks that a new iPhone would include 3G technology, as well as a redesigned facade and starting price of $349 to $399.

"The addition of 3G technology to the iPhone is a meaningful improvement to the current generation iPhone models, particularly in Europe, where 3G is more prevalent," he said.

Munster believes there is a sizable group of potential iPhone buyers that are waiting for a new model to be released, which could also help sales of the product.


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