Seeking Alpha: Apple could make $4 billion a year from Android sales
Apple's cross-licensing deal with HTC seems like a good idea just from the viewpoint that it keeps the two companies out of the courtroom for a decade. Now J.M. Manness, writing for Seeking Alpha, points out that the deal and others like it could be a complete windfall for Apple. The company could make about US$4 billion a year from sales of Android phones if it was able to sign similar deals with all manufacturers using Google's mobile OS.
Between replacement smartphones and new sales, analysts believe that the smartphone market will be greater than 1 billion units by 2015. If Apple was to get an $8 per phone license payment from every Android manufacturer and Android phones were to pick up about half of the smartphone market, Apple would make $4 billion -- pure profit, of course, since there are no material or overhead costs associated with these payments.
Manness notes that this ends up being about $4 in earnings added per share of AAPL and says that "even at Apple's current depressed P/E of 12.5 (roughly), this alone would add over $50 to the stock price."
The only fly in the ointment for Apple investors is that so far, HTC is the only Android manufacturer that has agreed to a licensing deal. Samsung's mobile division CEO has publicly stated that the company has no intention of signing any such deal with Apple.
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