On July 7, the financial news world was rocked after leaked information regarding an Apple-China Mobile partnership possibility. The deal consists of China Mobile (CHL) offering the iPhone to its customers. This is huge considering that China Mobile is the largest wireless carrier in the world with over 611 million subscribers.
Apple (AAPL) analyst, Brian White of Ticonderoga Securities confirms of a leaked photo by Chinese news provider Sohu.com (SOHU) of an iPhone with the China Mobile logo on it. The analysts predicts China Mobile to begin selling the iPhone in September of this year. Ticonderoga Securities believes this deal could provide Apple with $70 billion in revenue considering that the smartphone market in China represents a 100-125 million subscriber opportunity.
Needless to say, call volume for Apple shot up huge, with the stock closing up $5.74 or 1.6%. China Mobile closed up on .15 or .32%.
It is easy to see how Apple is the big winner hear, but let's not forget that China Mobile stands to profit very much from this deal, as well as Qualcomm (QCOM). These other companies should not be overlooked. You can expect to see China Mobile's 2012 profitability to rise significantly, with Qualcomm getting a nice ride off this deal.
In the past, Apple good news always comes over-speculation on price targets. This week, I saw people estimating $600/share. That is absolutely ridiculous. I believe Apple will reach new all-time highs on this new partnership, but not $600/share. I believe the price ends up around $380-390 over the next year.
Aside from this deal, Apple has a very bright outlook. Apple will benefit from continued success in the tablet market with its successful iPad. Not to mention, the iPhone 5 release in the US is highly anticipated by consumers. It doesn't end there; there are rumors that Apple is trying to expand into an internet service sector, as well as a Netflix (NFLX) like service, in which you can pay a subscription to watch TV shows, movies, etc. Although this is yet to be seen, you can bet that Apple has a few tricks up its sleeve. Apple is one of the best run and most innovative companies in the world and I believe they have more to offer in the coming years.
I recommend buying Apple as well as Apple LEAP calls. I would also have a small stake in China Mobile in the form of stock or longer term calls. I think these two companies' partnership will prove to be very profitable for both parties and their shareholders.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.