Apple's iPhone Deal with China Mobile Has Huge Profit Potential

Apple pushes aggressively into China marketApple (AAPL) buys many of the components for its electronic devices from Chinese suppliers. Now, it plans to get more aggressive about selling those devices in the world's largest cell phone market, which could substantially boost its earnings. Beijing's Ministry of Industry and Information Technology has just announced that there are now 910 million mobile phone subscribers in China. Users of 3G networks rose to almost 74 million. The number of wireless subscribers in the world's most populous nation is more than three times the number in the U.S., and its growing much more rapidly.

The Shanghai Daily reports Apple will begin to sell the iPhone this fall with China Mobile (CHL), by far the largest wireless operator in the People's Republic. Apple already has a partnership with smaller China Unicom (CHU). "A new iPhone with China Mobile's network will debut and the cooperation will be announced in September," China Mobile's Beijing-based marketing official Liu Yang said on his microblog, according to the newspaper.

China could be crucial to the growth of iPhone sales, which in turn are essential to growth in Apple earnings. Apple's stock price has stagnated below $345 since early June, down from its high water mark of $364.90 -- this despite the fact that the Wall Street forecast consensus for its share price is $450.

Some on Wall Street are concerned that iPhone sales growth rates could slow. Smartphones powered by Google's (GOOG) Android OS have passed Apple in operating system market share, according to most research firms that cover OS data. Apple sold 18,647,000 iPhones in its most recently announced quarter according to its 10-Q, an increase of 113% over the same period a year ago.

It's impossible to underestimate the value of the Chinese market to smartphone companies as that nation's legions of wireless users grow rapidly toward the 1 billion mark. If the iPhone can capture a market share in the People's Republic similar to its U.S. level, Apple's earnings will skyrocket.




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kv37

Apple best be careful. The Chinese will reverse engineer them.

June 27 2011 at 7:49 AM Report abuse rate up rate down Reply
LIFLUKE

China is desirous of building a self sufficient city just outside of boise idaho if you doubt me google sinomach to learn more. Some of this info mill turn your stomach.i kid you not.

June 25 2011 at 9:32 PM Report abuse rate up rate down Reply
ireyl42

how do THE AMERICAN PEOPLE FEEL ARE THEY HAPPY ABOUT THIS. THIS CHINA IS NOT A MEMBER OF OF UNITED NATION HOW DO HE FEEL THE PERSON WHO BRING ALL THIS MANUFACTURING IN CHINA BY THE YEAR 1994. HOW ABOUT THE DEMOCRAT WHY THEY DID NOT TAKE ACTION ABOUT THIS BEFORE THERE BIGGEST CONTROL IN CONGGRESS&SENATE. IT IS THERE MISTAKE. AMERICA IS BROKE .

June 25 2011 at 9:25 PM Report abuse +1 rate up rate down Reply
AdamC

There is a bigger potential in royalties and it will make the profits of the iPhone look like peanuts.

June 25 2011 at 9:13 PM Report abuse rate up rate down Reply
likes2kayak

Most Americans hate buying Chinese junk.. Apple won't be any better and it will be made on the backs of the Chinese children!

June 25 2011 at 8:39 PM Report abuse rate up rate down Reply
rdins4

I agree this has huge potential for Apple, thats why I've been averagin in on their stock and waiting for the Christmas season :)

June 25 2011 at 3:34 PM Report abuse rate up rate down Reply
IRVING

How much of Apple is owned by Americans, is what we have to ask. The Chinese have so much capital that they can buy all of the smoke and mirrors they need to make this seem harmless and legitimate Be wary, we are under financial attack brought on by our own naive sense of fairness and I'm sorry to say greed. We must develop a rebirth of sefish patriotism.

June 25 2011 at 9:19 AM Report abuse +2 rate up rate down Reply
Tony Tho Nguyen

Say no to Made in China. Buy Made in USA only.

June 25 2011 at 2:52 AM Report abuse +2 rate up rate down Reply
1 reply to Tony Tho Nguyen's comment
bobgedeon

I know many American Nguyen's originally from V.N.. Great Americans who constantly warn me of the true face of China. Be aware!

June 26 2011 at 9:31 AM Report abuse rate up rate down Reply
frank1946

It costs 18 % more to make it in America than in China (excluding wages), so fix Healthcare, Medicare and Medicaid, cut corporate taxes by 50 % and trash the NLRB (so our companies do not pack up and leave) and Viola !

We can blow their socks (?) off !

America can work just great IF the Dems stop worshipping Utopia and pay attention to competition around the
Globe.................make a level playing Field and we can kick Butt !

June 25 2011 at 1:02 AM Report abuse +2 rate up rate down Reply
jsuperdad37

why such a big deal about profits and copyrights . we have seen big corporations do as they please in order to make huge quick profits . its done every day . hello ! read the wall street journal . please . what bothers me is that they do it legally . i have seen with my own eyes back in1960 and 1961 in CUBA , when the chinese tried to beat the russians to the punch by flooding the island with all kinds of trinkets.and lots of rice . it was like a big carnival .army trucks replica of the late 1930's chevy an ford . german blaupunt stereo fm am shortwave huge beautiful radios . identical copy . parker 21 and 51 ink pens . and list goes on . incredible . china does not care about copyrights or any rights for that matter . lets be realistic. the chinese know what they doing .we dont .

June 24 2011 at 7:48 PM Report abuse -1 rate up rate down Reply