Apple Inc.'s initial iPhone sales may have beat analysts' top projections, suggesting Chief Executive Officer Steve Jobs will reach his goal of making mobile phones as profitable to the company as computers and the iPod.
Shoppers may have bought as many as 700,000 units over the weekend, Goldman Sachs Inc. analyst David Bailey said, twice his projection of 350,000. Piper Jaffray's Gene Munster pegged sales at about 500,000, more than twice his original 200,000 estimate.
More than a third of Apple's 164 stores were out of stock by last night, according to the company's Web site, leaving shoppers in states such as Hawaii, Nevada and Utah to try AT&T Inc. stores. AT&T, the exclusive provider of wireless service for the iPhone, said most of its 1,800 stores sold out within 24 hours.
"This is a very successfully handled launch," Munster, based in East Palo Alto, California, said in an interview today. He's rated Apple's shares "outperform" since June 2004. "The real sign of success would be what kind of legs this product has in 2008 and 2009. In 2009, we estimate a third of Apple's sales will be from iPhone. This is a huge product."
J.P. Morgan Securities Inc.'s Bill Shope said sales may have reached 312,000 in the days following the device's June 29 debut. American Technology Research analyst Shaw Wu, who called his initial 50,000 estimate conservative, said in a note today that Apple may have sold five times as much.
Shares of Cupertino, California-based Apple fell 53 cents to $121.51 at 12:29 p.m. New York time in Nasdaq Stock Market trading. Before today, they had gained 43 percent since Jobs unveiled the combination iPod media player and phone on Jan. 9.
AT&T Fixes
Mark Siegel, a spokesman for San Antonio-based AT&T, declined to confirm whether stores had completely sold out of the device, saying only that "things have just gone extraordinarily well." Apple spokesman Steve Dowling didn't return a call seeking comment before regular business hours.
AT&T is still fixing problems for some customers who can't activate their new phones, Siegel said today in an interview. Some business customers need approval from their companies' communications departments to switch to personal subscriptions, he said. The "overwhelming majority" have activated the phone.
Siegel declined to say how many iPhones the company has sold or how many users switched to AT&T, the largest wireless service provider in the U.S., from other providers. AT&T's calling plans for the phone cost $60 to $220 a month.
Sales started on June 29 at 6 p.m. in each U.S. time zone as part of Jobs' plan to gain a foothold in what he called a "giant market."
EBay Sales
The iPhone, which costs $499 and $599, sold online for a premium at online auction service EBay Inc. The device sold for an average price of $774, with the highest bid at $12,500, according to data today from San Jose, California-based EBay.
There's "nothing else quite like" the iPhone, said Michael Gartenberg, an analyst at JupiterResearch in New York. "Most consumers have never seen that kind of functionality."
At Apple's store in New York's SoHo neighborhood, fans counted down the minutes and then the seconds as employees in black-and-white T-shirts arranged iPhone displays. The first two phones went to film director Spike Lee and actress Whoopi Goldberg.
"I'm an Appleholic," said Stephanie Richmond, who bought her 8-gigabyte iPhone from Apple's Fifth Avenue store in New York. "I have every Apple product, and I think they're all great."
'Appleholic'
Customers are allowed one phone each at AT&T's stores and two at Apple's outlets. Shoppers can check Apple's Web site to see if the iPhone is in stock at any of its stores. There's a wait of two to four weeks for customers who order the phone online from Apple, according to the site.
The iPhone merges capabilities of Apple's iPod with a handset that also serves up Web pages and e-mail, pitting the product against less expensive ones from Nokia Oyj, Samsung Electronics Co., Research In Motion Ltd. and Palm Inc.
Shoppers interviewed at Apple's stores in New York and California favored the $599, 8-gigabyte model of the iPhone over the less costly 4-gigabyte version.
"For $100 more, you get double the storage," said engineer Rick Evans, 50, who picked up his iPhone opening night at Apple's store in Stanford, California. "It's a no-brainer."
Jobs said last week that Apple had boosted manufacturing to meet estimated demand. "We've taken our best guess, but it wouldn't surprise me at all if it ain't enough," Jobs, 52, said in an interview with the Wall Street Journal.
Jobs's Leadership
Under his leadership, Apple's annual profit has surged to almost $2 billion from $65 million in the past five years, while sales more than tripled to about $20 billion.
Jobs says he aims to sell 10 million of the phones in 2008, capturing 1 percent of the global market for handsets. He expects consumers will buy 1 billion mobile phones next year, which would be almost four times the number of personal computers sold.
Apple may top that 10 million forecast, especially after releasing new versions of the iPhone next year, UBS AG analyst Benjamin Reitzes, in New York, said in a report today.
The company said it plans to release the iPhone in Europe later this year and in Asia next year.
The enthusiasm of buyers such as Apple co-founder Steve Wozniak may put Jobs well on the way to that goal.
"I was going to only use the iPhone as a test phone at first, but I'm ready now to make it my primary number," said Wozniak, who got in line at 4 a.m. on June 29 to buy the phone. "I was still a bit negative after a couple of test calls, but then I tried the browser and was shocked at how wonderful it was to have real Web pages."