1 in a 10,0000 Chinese can afford an $800 iphone. 1 in 5000 can afford a $400 iphone. Do the Math. China mobil will add sales of 5mil a quarter at a profit of $100 a phone.
Sentiment: Strong Sell
China Mobile has been a rumor for 4 years.
Cook unable to close the deal.
Revenue sharing the issue.
Chinese want a piece of the pie.
Time, like option theta burn, mitigating AAPL's opportunity.
No longer holding my breath for this one.
I am in China now and China Mobile is a great company; however, if they do hit the trigger with AAPL, it will depend on the consumers outlying cost for the product. If it is cheap enough, they could sell many millions; however, China Mobile would be hurting Chinese companies selling inexpensive products. Right now AAPL products cost more here than in the US and they are overpriced there. Many people are becoming wealthy here but still millions upon millions of people that are making well under $500 a month...
80% of users on China Mobile are pre-paid... They have to buy the iPhones for $895, which most don't have the money... Apple will have to make a cheap iPhone first before a deal with CM can be made... Cheap iPhones will cut into Apple profit margins and cannibalize the premium iPhones - Apple would have done it already if it's that easy... Apple will have to lower its EPS or risk losing more market shares, which also cut down revenue and EPS... So that's why AAPL is down here from $705 and will be down much more...
From Jan 10, 2013
NEW YORK (TheStreet) -- Apple (AAPL_) bulls, this is the news you've been waiting for.
Reuters reported that Apple CEO Tim Cook met with China Mobile (CHL_) Chairman Xi Guohua Thursday, as the two companies discuss "matters of cooperation." The news was confirmed by a China Mobile spokesman.
In an emailed statement obtained by Reuters, China Mobile noted, "In the morning, Apple's CEO Tim Cook visited China Mobile's headquarters. China Mobile's Chairman Xi Guohua and Tim Cook discussed matters of cooperation." A confidentiality agreement was signed, according to the statement.
Sentiment: Strong Buy