AmTech Positive on iPhone 2.0 Software and App Store (AAPL)

July 11, 2008 11:08 AM EDT

American Technology Research issued a research note this morning citing its first impressions of Apple's (Nasdaq: AAPL) iPhone 2.0 software, which it was able to install a day ahead of the official release. The firm reiterates its Buy rating and $220 price target on Apple.

After a few hours of playing with the new Apple software, AmTech said its overall impressions were positive. The firm said its key take-away was that the new iPhone software allows the device to be highly customizable, given that users will now be able to download hundreds of applications that will make their iPhone more personal. Furthermore, the firm noted that "these Apps do not take up much storage space." Also notably, it took AmTech's iPhone about 12 minutes to update to the new software, compared to 1-3 minutes for previous updates.

AmTech calls Apple "one of the better fundamentally positioned companies" and believes the iPhone creates "an open-ended growth story." The firm sees Apple shipping 11 million iPhones this year, with 17 million shipped in '09, meaning that Apple will have sold about 31.6 million units by the end of '09, according to AmTech estimates.

The firm said, "For every 1 million incremental iPhone units, we estimate $0.10-0.15 in incremental EPS, recognized over 8 quarters." Additionally, AmTech estimates "that every incremental 50bps of incremental share gain (around 1.5m units) would be $0.45-0.50 per share in earnings."

Apple, Inc. designs, manufactures, and sells personal computers, portable digital music players, and mobile communication devices, as well as related software, services, peripherals, and networking solutions worldwide.

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