Analyst: Apple could sell a million iPhone gift cards

Kaufman Bros. analyst Shaw Wu has been checking with his contacts in Apple's (AAPL) supply and distribution channels and reports that demand for the iPhone is "fairly healthy" in the U.S., Europe and, with the exception of Japan, most of Asia Pacific. He's anticipating sales of 6 million units for the December quarter (Apple's fiscal 2009 Q1), down from 6.9 million in Q4 but in line with the Street's expectations of between 5 and 7 million.

But that significantly understates actual demand for the iPhone, Wu says, because it doesn't include the wild card in this holiday season's iPhone sales: the iPhone gift card.

"We think there is strong reception of AAPL's new iPhone 3G Gift Card program," Wu wrote in a report to clients Wednesday, "where the process of giving the iPhone as a gift is greatly simplified without the need for activation and personal information. ... We estimate several hundred thousand to one million units could be impacted."

The good news about these gift cards is that Apple gets to collect the revenue up front, which improves cash flow. The bad news for Apple's Q1 earnings is that it can't recognize the sale of an iPhone until the customer activates it. "The risk here is that the customer will likely activate post-Christmas," writes Wu. "Therefore revenue and units won't likely be recognized until the March quarter."

In a separate note issued Tuesday, Piper Jaffray's Gene Munster took a stab at estimating how many iPhones Wal-Mart (WMT) is likely to sell when it, as reported, begins carrying the devices three days after Christmas. Bottom line: Apple could sell as many iPhones through Wal-Mart in 2009 as it sells through its own Apple Stores. Munster's math:

"Our analysis begins with a simple count of 3,500 U.S. Walmart stores and 208 U.S. Apple retail stores. We are modeling for Apple to sell 45m iPhones in CY09; we assume that 30% (13.5m) are sold in the U.S., and one third of U.S. iPhones (4.5m) are sold at Apple retail stores. In other words, we believe the average Apple store will sell about 22k iPhones in CY09. In order for all 3,500 U.S. Walmart stores to sell as many iPhones as the Apple retail channel (4.5m), each store would need to sell 1,284 iPhones in CY09, or 6% of the total annual volume of each Apple retail store. We believe a Walmart store would likely sell a small fraction of the units that an Apple store would, but we also believe that 6% on a unit-basis is achievable."

UPDATE: Morgan Stanley's Kathryn Huberty, an analyst with a dismal record of predicting iPhone sales (see here), cut her Q1 estimate Wednesday to 4 million iPhones, down from 4.5 million (link). Her sales estimate for calendar 2009 of 14 million iPhones represents the bearish low end among Apple analysts. Munster's 45 million units is the bullish high.