Will iPhone Ring for Apple's Stock?

June 26, 2007 — -- It's not just consumers who are waiting for Friday's iPhone release. Investors also have a big stake in it as well.

For most of the year, Apple's stock price has risen and fallen -- mostly risen -- on news of the iPhone. It's impossible to predict whether the long-awaited release of the phone will cause Apple's stock to shoot up or fall short, but it's more than likely to move the market.

Apple's stock started the year at $83.80 a share. It's now trading at $123. Most of that push came from the iPhone, which combines the company's popular iPod music player with a touch screen that lets users surf the Web and get e-mail.

When the iPhone was first announced on Jan. 9, Apple's stock jumped 8.3 percent. But some other phonemakers didn't fare so well. Palm, maker of the Treo smart phone, fell 5.6 percent, and Research in Motion, maker of the BlackBerry, fell 7.8 percent.

The release will also have implications for AT&T, which is the sole carrier of the iPhone.

But Friday's release is just a small part of the overall iPhone picture. The real test for Apple in the long-term will be how many people shell out $500 or more for the phone and how well the company responds to that demand.

Further, any technical problems with the iPhone could hurt Apple's stock, testing investors' faith in the company.

The phone will cost $499 for four gigabytes of memory or $599 for a model with twice the memory -- that's much more costly than traditional handsets that often are knocked down to $100 or even less with contracts. The iPhone will only work on the network of AT&T, until recently Cingular Wireless, and requires a two-year service contract.

IDC Research, of Framingham, Mass., found that only 10 percent of those it surveyed would buy the iPhone at $499.

More than two of three people surveyed expressed interest but most said they were unlikely to buy based on the price and having to switch to AT&T.

It doesn't help Apple if everybody wants an iPhone, and not enough people buy one. But the company could also benefit from a possible "spillover" effect.