Neil Hughes
Apple's realistic — and historically conservative — guidance provided to investors likely does not include projected revenue from the company's anticipated impending launch of the iPhone on China Mobile, suggesting to one analyst that shares of AAPL have great upside potential.
Apple gave its guidance for the current December quarter in October, at which point a deal with China Mobile was not in place. But this week it's been claimed that Apple and China Mobile have made an official arrangement to begin offering the iPhone on the world's largest carrier starting Dec. 18.
With a rumored launch date two full weeks before the conclusion of the December quarter, analyst Gene Munster of Piper Jaffray sees a potential benefit for investors in what is already expected to be a blockbuster quarter for the company.
Further, Munster does not believe most Wall Street estimates include potential China Mobile iPhone sales in their 2014 forecasts. Much like Amit Daryanani of RBC Capital Markets said on Wednesday, Munster also believes that Apple could sell 17 million iPhones to China Mobile customers in calendar 2014, resulting in $10 billion in additional revenue for the company over that 12-month span.
Munster noted on Thursday that sales of 17 million iPhone units would represent just 2 percent of China Mobile's total subscriber base of 759 million users in October. It would also account for 10 percent of the carrier's 176 million 3G smartphone subscribers.
"In terms of the mechanics of the 17 million units, it is likely that there would be a proportionally larger chunk of devices sold in the first month or two of the device's availability," Munster wrote in a note to investors. "We also note that if Apple updates the iPhone in the fall, China Mobile would likely get both the new device in addition to the typical pricing changes for existing devices, which could but the iPhone 5c at a more attractive mid-end price."
Piper Jaffray has maintained its price target of $640 for shares of AAPL, which reached a 52-week high Thursday morning. Trading of the stock has been trending higher following the launch of the iPhone 5s and iPhone 5c, as well as the new iPad Air and iPad mini with Retina display.
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19 Comments
Weren't some analysts saying Apple has no growth left and they need a cheapie iPhone to compete in China? What bozo should I believe this week.
I would expect an updated and upward guidance sometime after the 18th.
Much like they updated their guidance a week after they announced the 5s and 5c (I really think they hedged on the release date assuming it was gonna release in October, given all the hints about supply constraints, and setting up new lines for the 5c)
Given that Apple had little control over China Mobile's LTE roll-out, I would assume they assumed the worst. Don't book revenue until it's realized. Very much the apple way
I wish they would not do that. Make it a true surprise when they blow out the quarter with;
60,000,000 iPhones
30,000,000 iPads
10,000,000 iPods
100,000,000 iOS devices
I think there is always demand out there, it´s more on Tim and the supply chain. Apple has very accurate supply rates, so they are able to very accurately predict productions. They won´t be pulling numbers like these. They might beat their internal forecast, but not with more than a single digit increase. 55million iphones/23million ipads is possible based on the forecast + increased guidance. But your numbers would go against Apples new way of giving guidance in a very damaging way.
As long as Apple has incredibly reliably productions estimates, even if they *could* sell that many, they won´t be able to produce them.
Deal is not official yet so how will guidance show up?
Also have to keep in mind that current daily 5S production is 500K.
Fun begins when AAPL hits $650. World will want in for new highs above 700. Laggards (Funds) will be chasing the stock in 2014
I wish they would not do that. Make it a true surprise when they blow out the quarter with;
60,000,000 iPhones
30,000,000 iPads
10,000,000 iPods
100,000,000 iOS devices
err, welcome to publicly traded companies.
if they don't announce once they see a substantial (+/- 10%) factual and confirmed change in earnings, then all the 'insiders' can't buy or sell stocks, until it's publicly announced.
I'm sure some on the Board and the CSuite may like to realize profits (or buy more shares) based on stuff like this*. Also, it allows them to tell their suppliers about increased demand without setting off rumor alarms.
* it's year end... if not because of tax requirements, it may be as trite as 'baby needs new shoes, honey, can you go buy the entire city of Milan for me?'