iTunes and app sales projected to grow to 20% of Apple profit by 2020

iTunes content and the App Store are projected to be key drivers of growth for Apple moving forward, with one new forecast calling for content and apps alone to account for 20 percent of profits by 2020.

Research firm Macquarie Capital initiated coverage of AAPL stock on Monday, with an accompanying note penned by Ben Schachter provided to AppleInsider. He expects that this year alone, Apple’s iTunes, software and services business should generate about $30 billion on a gross revenue basis, which would be more than 83 percent of S&P 500 companies.

“That is almost equivalent to its iPad business and is more than Facebook, Twitter, Yahoo, LinkedIn and Netflix’s combined revenue (on consensus 2014 forecasts,” Schachter wrote.

He sees Apple’s software, content and services business being a key profit growth driver for the company going forward. In particular, he believes the sale of applications on the iOS App Store will be the main source of growth, but he also sees high potential for iTunes content with an updated Apple TV and other potential sales driving products.

Schachter believes earnings before interest and taxes through iTunes, software and services will account for 21.8 percent of the company’s profits this year. He sees it growing to 30.6 percent by fiscal 2017, and accounting for 36.4 percent of Apple’s profits by fiscal 2020.

Read the rest here.

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