There's no place like home. Just ask Kevin Garnett of the Boston
Celtics, or Deron Williams of the Utah Jazz. In the second round of
the NBA playoffs the home team has won 20 out of 21 games played. As
influential as the home court advantage is in the NBA, it might even
be more so for Apple (AAPL).
Over the last few weeks Apple has been signing international iPhone distribution deals at an astounding pace. Why so much urgency? Sure, they want the 3G iPhone to become a major global player, but the urgency has everything to do with their home court advantage; aka, the low dollar.
Even Apple has taken notice that the low dollar might be on its way
out and they realize that it's time to seize the moment. Let's take a
look at the grandaddy of them all, India. Vodafone and Bharti Airtel
will reportedly market the new handset through a staggering 250,000
retail outlets, including franchisee-owned shops. Compare this
rollout with the meager 7,000 Apple and AT&T stores in the US.
On top of this staggering 250,000 number, consider the profit effect of the low dollar; iPhones will be priced at 23,000 Rs or about $545 each. The US retail price is $399. The raucous fans in Boston, Utah, New Orleans or San Antonio can't touch that kind of home court advantage.
Apple stock is taking a well-deserved breather this week after a big
run from the $120's, however I attribute this stock price recovery to
improved broad market conditions and a huge Mac quarter. The
international iPhone story has yet to be priced into the stock. The
market is still thinking that Apple will sell only 10-12 million
phones this year. I don't think so. All they need to do is sell 40
iPhones per store in India to reach 10 million.
The iPhone home court advantage story could end with India's 1.1
billion population and still be a great investment play. But it
happens to be just the beginning, Apple has been busy, real busy.
Check out the list of recent deals: Telecom Italia (TI) Mobile will be
selling the iPhone in Italy, Rogers (RCI) will market the device in Canada,
Swisscom (SCM) earned the rights to sell the device later this year in
Switzerland, while SingTel through its subsidiaries said it would
market the phone in Singapore, India, the Philippines and Australia.
America Movil (AMX) said it would offer the Apple handset throughout Latin America, while Vodafone (VOD) announced deals for Australia, the Czech Republic, Egypt, Greece, Italy, India, Portugal, New Zealand, South Africa and Turkey. Orange gets France, Austria, Belgium, the Dominican Republic, Egypt, Jordan, Poland, Portugal, Romania, Slovakia and Switzerland. Market share madness is ready to roll.
Apple's newest board member, Avon CEO Andrea Jung, was responsible for Avon's (AVP) direct sales program launch in China. Her role on the Apple board was clearly defined in the press release announcement from Steve Jobs, "Andrea will be our eighth board member, and I think she will add a new dimension to our already lively board discussions." Jung added, "I feel privileged to join this exciting and dynamic team and look forward to working closely with Steve and the board during the next phase of Apple's growth." What could that next phase of growth be? Operation Get Apple Into China.
China Mobile (CHL) maintains a subscriber base of 375 million -- more than the population of the United States and by far the largest in the world. They already provide service to 400,000 iPhones that have been unlocked and smuggled into China. It should be no surprise that Andrea Jung was the only board member not in attendance at Apple's annual shareholder meeting in March. I'll bet I can guess where she was.
iPhone China could be right around the corner. Prepare yourselves to see Apple blow away even the highest iPhone sales estimates. I'll see you around $300 a share by the earnings report in January.
Disclosure: Long AAPL