Apple's iPhone has Wall Street chattering

By Elinor Mills, CNET News.com
Jan 18, 2007

Apple sold 21 million iPods during its first quarter, but financial analysts asked almost as many questions of Apple executives Wednesday about a product that won't ship until June.



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Executives didn't have any new revelations about Apple's iPhone after CEO Steve Jobs unveiled it last week at Macworld. The company held a conference call Wednesday afternoon to discuss its first-quarter results, which exceeded expectations by a large margin.

Apple's iPhone is essentially a widescreen video iPod that makes phone calls and can browse the Web, and the company plans to ship it in June for Cingular's cellular network. One of the more persistent questions about the iPhone has been Apple's decision to use Cingular's EDGE (Enhanced Data Rates for GSM Evolution) network. That will get you online at around 75Kbps to 135Kbps, not much faster than dial-up.

Apple chose the EDGE standard for the iPhone because that standard is found in many more locations than Cingular's much-faster HSDPA (High-Speed Downlink Packet Access) technology, said Peter Oppenheimer, Apple's chief financial officer. "Obviously, we'll be where the technology is over time," he said, alluding to the fact that an iPhone with support for speedier networks is a likely bet for the future.

Chief Operating Officer Tim Cook declined to comment on some other inquiries, such as whether users will be able to replace their iPhone batteries and the projected gross margin for the product. However, Cook did mention that Apple should have more to say about projections for the iPhone during next quarter's earnings call and that the company will release more specific information in June before it launches the product.

With regards to Cisco Systems' lawsuit against Apple for using the iPhone trademark owned by Cisco, Cook read the same Apple statement distributed last week by public relations staffers. "We think the Cisco lawsuit is silly," he said.

Financial analysts are so curious about how Apple's iPhone will affect iPod sales that one actually asked if Apple anticipates a slowdown in iPod sales during the upcoming quarter as people wait for the iPhone to arrive. Oppenheimer demurred, saying "it's really too soon to tell that."

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