Apple in Talks With Goldman Sachs Over Potential iPhone Buyer Finance Options

Apple is in talks with its investment bank Goldman Sachs about the possibility of offering customers financial loans when buying Apple products, according to a report by the Wall Street Journal on Wednesday.


The Wall Street firm is in talks to offer financing to shoppers buying phones, watches and other gadgets from Apple, people familiar with the matter said. Customers purchasing a $1,000 iPhone X could take out a loan from Goldman instead of charging it to credit cards that often carry high interest rates.
Talks between Apple and Goldman Sachs remain at an early stage and could still fall apart, according to WSJ. Both the tech giant and the investment bank declined to comment for the report.

In September 2015, Apple partnered with Citizens Financial Group to offer customers zero-interest loans for iPhone upgrades and higher-interest options for other device purchases. Part of Goldman's discussions with Apple are said to involve taking over some form of Apple's iPhone upgrade program.

Apple's upgrade program is designed for users who want to have the newest iPhone every year, and comes with AppleCare+ included. Those who sign up for the program can trade-in their current iPhone for a new model after 12 monthly installments are made, starting a new cycle of the program each year. Apple started the program around the same time that wireless providers began reducing buyer subsidies for iPhones.

Goldman Sachs is said to view the potential partnership as a way of growing its new consumer bank, as it looks beyond corporate clients to more fully embrace retail banking and consumer lending. Two years ago the investment firm launched Marcus, an online lender that helps people refinance credit-card debt, while the bank is also building a "point-of-sale" financing business that will offer loans to shoppers at checkout, according to people familiar with the firm who spoke to WSJ.

Related Roundup: 2018 iPhones

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iPhone 8 Predicted to Cost $999 For 128GB And $1,099 For 256GB, With No 32GB Model

Apple's so-called "iPhone 8" with an OLED display and wireless charging is widely expected to cost in the neighborhood of $1,000 in the United States, and Wall Street analysts continue to guess just how much it'll sell for.

iPhone 8 concept by Benjamin Geskin

The latest prediction comes from Goldman Sachs analyst Simona Jankowski, who today said she expects the rumored high-end iPhone to be available in 128GB and 256GB storage capacities for $999 and $1,099 respectively. Unlike the iPhone 7, she doesn't believe the iPhone 8 will be available in 32GB.

An excerpt from her research note distributed today:
Relative to the 128GB iPhone 7 Plus, we estimate the new features and higher commodity prices to increase the bill of materials by over $70, which we expect Apple to offset via a $130 price increase, resulting in a starting price of $999 for the 128GB capacity and $1,099 for the 256GB capacity (we don’t expect the iPhone 8 to come in 32GB).
Apple's most expensive smartphone to date is the iPhone 7 Plus with 256GB of storage, which retails for $969 in the United States.

UBS analyst Steven Milunovich shared entirely different pricing expectations last month, so it's clear that analysts are simply guesstimating. He thinks the iPhone 8 will come in 64GB and 256GB storage capacities for $850-$900 and $950-$1,000 respectively. His research note didn't mention 32GB or 128GB models.

The takeaway here is that the iPhone 8 will likely be very expensive. The device's exact price tag is likely privy only to Apple at this point, however, so treat any estimate with a healthy dose of skepticism for now.

Goldman Sachs raised its 12-month price target for Apple's stock to $170, up from $164, based on strong iPhone 8 expectations.


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