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Apple seeks Chinese iPhone fortune
2007-11-15 00:44:08 Forbes
iPhone to invade China?
On Tuesday, shares of Apple (nasdaq: AAPL) got a 7.0%, or $10.77, boost to $164.53 in morning trading after investors found out their company was in "preliminary contact" with China Mobile (nyse: CHL), the country's largest handset operator, about introducing the iPhone to the coveted Chinese market.
Huang Haibo, an executive at China Mobile, stressed the two companies have so far only made preliminary contact, without anything set in stone, yet, but noted they hope to bring the iPhone to China.
"The potential that the deal comes through is fairly high," said Pacific Crest Securities analyst Andy Hargreaves, "and Apple has alluded to entering the Asian market next year"
Apple's target is to capture the country's biggest carrier, and China Mobile and China Unicom (nyse: CHU) are pretty even in size with one another, Hargreaves said.
"Either one of those would be a material partnership for them," Hargreaves added. "Each one has over 70 million post-paid subscribers, which is the important number because you can have a billion pre-paid but that's not Apple's market."
The deal would be big, as it would essentially create another AT&T (nyse: T)Hargreaves said, and would give the company a foot in the door to the growing Chinese market. AT&T is the exclusive carrier of the iPhone in the United States.
"That would probably be the most important part of that relationship for Apple," Hargreaves argued.
Still, while Hargreaves called the news a "definite positive", and a "definite reason" to own the stock, he didn¡¦t feel Tuesday's rise in share price was warranted.
Tuesday's development came after Apple introduced the iPhone to Germany and Britain on Friday.
Apple said 1.4 million iPhones were snapped up in the first three months after its launch, and hopes to sell 10 million by the end of 2008.
(Carl Gutierrez, Forbes.com)