Seeking Alpha

Apple lower amid report of muted China Mobile demand, price concerns

  • Sell on the news? After rallying on Wednesday following reports of solid China Mobile iPhone pre-registrations - CNBC reported 1.2M - Apple (AAPL -1.1%) is trading lower on launch day.
  • The NYT reports "only about a dozen customers" showed up at a Beijing store to buy iPhones, in spite of an appearance by Tim Cook, and that the huge lines accompanying some past Apple launches haven't existed.  Launch pictures posted by journalist Jahangir Naina appear to show healthy interest.
  • China Mobile's pricing is raising eyebrows. The carrier, which has an ARPU in the ~$10/month range, is selling the 16GB iPhone 5S for RMB5,288 ($874) unsubsidized, and for RMB5,488 ($907) with a 2-year, $23/month contract (its cheapest iPhone contract plan). The WSJ observes China Unicom and Telecom offer cheaper iPhone plans.
  • With the iPhone squaring off against Android phones that (per research firm Umeng) carry an unsubsidized ASP of just $233 within China, China Mobile's pricing/subsidy support could have a big impact on whether the carrier is able to hit bullish sell-side forecasts for 20M+ 2014 iPhone sales.
Comments (73)
  • Yawn.... same BS price manipulating baseless rumors, probably to help drive stock price to options max pain...
    17 Jan, 01:06 PM Reply Like
  • I would guess that for all the option max pain there is some market maker is having max pleasure.

     

    Looks like the 550 price is the culprit today.
    17 Jan, 01:18 PM Reply Like
  • Keep calm and wait for the numbers and January 27th. This manipulation downward before the actual numbers is always so disgusting. Keeps them of the streets, I guess.
    17 Jan, 01:34 PM Reply Like
  • "Yawn.... same BS price manipulating baseless rumors, probably to help drive stock price to options max pain..."

     

    Hasn't that been happening for over a year now?
    17 Jan, 02:29 PM Reply Like
  • "Keep calm and wait for the numbers and January 27th."

     

    And also the Google Ad click numbers on the 30th.

     

    I don't think they will be that great due to a huge loss of users to Apple during the holiday season.
    http://bit.ly/1cBNvgY
    17 Jan, 02:31 PM Reply Like
  • I can't confirm or deny, but there are a number of traders on twitter that are all giggly over what they think is the predictablility of max pain.
    17 Jan, 05:06 PM Reply Like
  • We need to wait at least a quarter to confirm either way, but my view is that Apple's China "strategy" has been and is a total boondoggle.
    17 Jan, 01:08 PM Reply Like
  • The same has been professed about almost every Apple's move. But I agree about China - too early to tell.
    17 Jan, 01:28 PM Reply Like
  • Can you please elaborate on this? I don't follow.
    17 Jan, 01:29 PM Reply Like
  • Here's a novel idea - let's wait until Apple releases financials that include China Mobile data, i.e., not the financials being released later this month.

     

    Let's judge the company based on what its audited financials reveal and NOT a never-ending line of rumors & leaks.
    17 Jan, 01:11 PM Reply Like
  • But, but, wouldn't it be better to draw a conclusion from the line outside of 1 of 3,000 stores that was probably being controlled for security reasons as CM's Chairman and Tim Cook were both present?
    17 Jan, 01:30 PM Reply Like
  • AND if anywhere in the country will have a muted response, I imagine it would be Beijing since Apple products debut/ there first and are seen most often. Beijing it stands to reason would also have a bigger fraction of the pre orders. The deeper problem here is one of mathematical illiteracy. you could think of the Apple ecosystem as a large growing organism with hundreds of millions of parts. The point is the things that big don't die off or even start to decay overnight. assuming that Apple is over because of one bad photo op is just as rational as the Aztecs who thought they had to make the sun come up every day
    17 Jan, 02:23 PM Reply Like
  • That's only 1.8 phones per hour, if the stores are open 10 hours per day.
    17 Jan, 01:12 PM Reply Like
  • The photos clearly contradict the NYT report. The photos show long lines and packed stores. Clearly more than "a dozen" as reported by NYT. I've always thought of the NYT as an agenda driven newspaper. It seems to me like they'll blatantly manipulate truth to get the results they need.
    17 Jan, 01:19 PM Reply Like
  • Here's the really story with FACTS! Figures NYT would publish a hit piece on Monthly Leap Options experation day http://bit.ly/1cATvGN
    17 Jan, 01:23 PM Reply Like
  • "The NYT reports "only about a dozen customers" showed up at a Beijing Apple Store to buy iPhones, in spite of an appearance by Tim Cook, and that the huge lines accompanying "

     

    Obviously from the photos released Tim Cook is NOT at an Apple store in Beijing, but instead at a small China Mobile outlet. http://bit.ly/1cATvGN

     

    Sadly many small retail APPL sellers are falling for the BS.
    17 Jan, 01:25 PM Reply Like
  • More than just retail investors due to volume. We had the same bs article when the 5 was launched in China. Pre-orders = no long lines, however the 5 blew out the expectations.
    17 Jan, 04:21 PM Reply Like
  • how can anyone here believe NYT journalist who probably cant read, because the caption clearly states China Mobiel store and doesnt look like AAPL store?
    17 Jan, 07:32 PM Reply Like
  • I agree that the NYT's report seems to be very slanted and not accurate.
    Also they don't bother to mention that the phones have been available in China since last September. So comparing today's CHL rollout to a brand new launch of a new product is not fair. They offer up opinions about Apple losing it's aspirational appeal without any substantiation. They neglect to mention that the idea of the preorders was to make it easier for the Chinese consumer to get the phone without having to stand in line. They use Wedge partners estimates absent any other analysts pov that would balance their clearly negative slant!
    I have seen this so many times before about Apple
    That it is reliably consistent. We just witnessed it in September when there was SoOnmuch press about the lack of demand for the equally poorly reviewed new IPhones and them the outright rejection of the 1st weekend sales reports by Apple as basically lies.
    17 Jan, 01:30 PM Reply Like
  • noise.... more specifically, NYT just trying to be sensational. Having a story about long lines for Apple phones is just old news and boring. That's so 2007 to 2013. Have story that only 12 customers showed up in an Apple store? Now that sells!

     

    Yawn. In the end, it's earnings that matter.
    17 Jan, 01:40 PM Reply Like
  • This is a reality check. Apple in China will be HUGE!
    http://bit.ly/1cByuM4
    17 Jan, 01:48 PM Reply Like
  • Apple in China IS HUGE!
    17 Jan, 07:46 PM Reply Like
  • Can we please have some honest reporting. Can someone in the press stand up and say OPTIONS EXPIRATION to explain these moves. Attributing to bs news items is totally disingenuous and simply foments fear. There are totally expected technical reasons for the stock to be down this and virtually Friday..AAPL is a derivative of its options. Can someone in the media just say that instead of making stuff up??
    17 Jan, 01:49 PM Reply Like
  • For honest reporting you would need actual reporters. When newspapers folded en masse and started giving away their product on line and Time Warner decided CNN was about Nancy Grace instead of Wolf Blitzer, the market for accuracy went out the window.
    17 Jan, 02:00 PM Reply Like
  • Are we asking for truth and integrity from Wall Street and it's Media cohorts ?
    Absolutely no chance of that !!
    The whole system stinks of corruption and manipulation.
    The whole of last year was project WS fantasy about Apple for its own greedy end.
    Investors in Apple should do their own research and simply ignore
    the manipulation, lies, half truths and subjectivity from Wall Street sources.
    17 Jan, 03:31 PM Reply Like
  • Just to clarify above. NYTs article - positive/negative- would not make any difference today. Where is SA and others who know better not telling it like it is. Its OPTIONS!
    17 Jan, 01:56 PM Reply Like
  • Certainly OPTIONS going into a 3 day financial weekend, so fear and options. No one made a mistake buying.
    17 Jan, 04:04 PM Reply Like
  • Apple generally dips before earnings reports, and most long term Apple investors know that makes it an excellent time to buy. Sure it is the iPhone launch day in China, but my sense is that the pull back is not due to the "sky is falling" NYT article and pictures, but to profit taking moves by mutual and hedge fund managers as a result of Apple's recent run up in price. Next week's earnings report will tell the tale. Right now the usual rumors surrounding sales numbers and quarterly earnings are creating a stir and some panic selling is obviously occurring. For me it is a time to patiently wait for what I believe will be blow out Christmas quarter earnings, and for Apple to spike higher on the good news.
    17 Jan, 02:04 PM Reply Like
  • I disagree. Apple doesn't dip before earnings. this is purely result of China/NYT report + options.
    17 Jan, 02:06 PM Reply Like
  • Starting next week, AAPL will build into earnings which are out on Monday the 27th. I think 580-590 is in the picture. In the meantime, keep adding!!
    17 Jan, 02:20 PM Reply Like
  • AAPL would be down today if the NYTs article was positive. Its options... period.
    17 Jan, 02:57 PM Reply Like
  • CHL is today's news and it will trump last quarter's earnings news. Apple will spike higher on good news, assuming we have some but then back down from whence it came. $525-$575 for the foreseeable future. You better be quick on the trigger after earnings.
    17 Jan, 04:20 PM Reply Like
  • Yes, the news seems to be selective and incomplete, but here's my take on the slant of news media over the past year or year and a half, in regard to Apple. The Yankees, Cowboys, Heat, and Fighting Irish are amongst the most popular teams in sports. In each case, prolonged success over a period of time led to a huge fanatic fan base, followed and/or accompanied by an irrational hatred from virtually everyone who was not a fan. These teams dominate the news still, but negative news stories overshadow any success achieved. They are then in a no-win situation of sorts.

     

    Apple was an unlikely success story in many ways, but they received plenty of recognition for their accomplishments. They were beloved by Wall St and Main St alike for years. Now they are like the Heat. They are the best, but emotions overshadow logic. The press recognizes a good angle, and the public likes to see greatness fall. There is also a common feeling of jealousy among people who dislike Apple for its success. Much of the press coverage, particularly in regard to that ludicrous 'morality' downgrade from Cleveland Research, sounds more like an Ayn Rand novel than financial news. All we can hope for in the short term is a new 'greatness crumbling' story, ie Samsung, accompanied by an Apple comeback, 'phoenix rising' story. In the meantime, I am patient. If Apple's 58 billion dollar quarter doesn't impress Wall St, I will buy more shares on the tumble, like Apple's Board will do. At some point the Web 2.0 bubble will burst, or Apple will come out with a new overwhelmingly popular product, or a new black-hatted villain will enter the stage, or Apple will buy back enough of its shares(possibly expedited by a tax holiday or tax reform) that a 10:1 P/E ratio on $100 per share earnings will mean a $1000 share price. Above all, my patience is aided by the knowledge that the dividend is going up at least 10% as of this year's annual meeting...and 10+% next year after that.
    17 Jan, 02:09 PM Reply Like
  • NWCats404 Comment 76

     

    Good advice
    PS I agree about the jealousy bit also - sadly a base human trait.
    17 Jan, 03:47 PM Reply Like
  • The NYT writer must be a Google share holder.
    17 Jan, 02:23 PM Reply Like
  • "selling the 16GB iPhone 5S for RMB5,288 ($874) unsubsidized, and for RMB5,488 ($907) with a 2-year, $23/month contract"
    The contract price is NOT RMB 5488. It's RMB 3788. Chinese carriers all require a refundable deposit (or advance monthly payment), which is RMB 1700 for this contract. RMB 3788 + 1700 = 5488. Even that no-contract price of RMB 5288 comes with certain amount of monthly free 4G data. No reporters in US media can understand the details of China Mobile's pricing?
    17 Jan, 02:24 PM Reply Like
  • I'm sure they won't well any phones in china, just made up the 1.2 million orders. Their margin is falling, right? Apple is clearly is a company with no strategy and vision. Forget earnings, they just don't know how to "innovate". Don't waste time in financials, the brilliant research analysts have decided this company is among the worst in history. Don't let financial performance get in the way if opinion
    17 Jan, 02:32 PM Reply Like
  • I strongly feel apple stock is being manipulated by financial analysts and bloggers. There are nearly 3000 stores that will start selling iPhones over the weekend. What is the hurry for this analysis, can't they wait for a few days to have a better idea.
    17 Jan, 02:32 PM Reply Like
  • Just saw a picture of Tim Cook at Apple store in China and I don,t think The New York Times
    Reporter knows how to count.
    17 Jan, 02:33 PM Reply Like
  • Interesting how unsubstantiated anecdotal reports -especially on a Friday as options expire - drive stock price meaningfully downward. Even when the company has history of either living up to its released numbers (1.2 million phones sold). Don't let facts get in the way of a story
    17 Jan, 02:33 PM Reply Like
  • One of the best sell signals is when people start posting conspiracy theories. Served me well in BBRY.
    17 Jan, 02:38 PM Reply Like
  • I agree that there are a lot of conspiracy theorists out there, but in this case it seems like extraordinarily irresponsible journalism to write a piece drawing such a conclusion based on info from one store out of 3,000. If the CHL deal flops, I'll be the first to admit that Apple investors should be concerned. Unlike the NYT reporter, however, I don't have a deadline to hurry for, so I will watch the entirety of the situation unfold, and then make my determination.
    17 Jan, 02:49 PM Reply Like
  • Why doesn't a SA author take a little time and publish an article on options Friday and how it has affected price these last few months? Shouldn't be too hard to do and would be an article that actually added content (imagine that). Even just aggregating the price changes on Friday as compared to the other four days of the week would tell a story.
    17 Jan, 02:42 PM Reply Like
  • Yes it is rather interesting that the NYT's story was coincidental with an options expiration date.
    And after looking at all the other pictures submitted for view of the lines and crowds, I am now wondering what incentive the 2 reporters bylined on the story might personally have. Clearly they are not motivated by the truth and or neutral journalism. Wonder if CHL will announce any sales results in the near future. I hope they don't and it only becomes apparent when Apple gives q2 guidance. I am hoping that the company is still aggressively buying back shares and will also announce an increase to both the dividend and the buyback. Every share bought back reduces the dividend expense to Apple.
    17 Jan, 02:47 PM Reply Like
  • It you believe the NTY's story is ridiculous, and this drop is due to options manipulations, then it is time to add or sell puts.

     

    I looked at this week options yesterday, there was $100M equity difference between 550 & 555 strikes, then another $100M between 540 & 550 strike, I had a bad feeling that the MM would try very hard to push the price down, they are really working hard to get the $200 M.
    17 Jan, 03:01 PM Reply Like
  • I would like to read an article about trading AAPL options. I don't know much about options, so I am in no rush to begin trading them, but I would be interested in learning some more of the nuts and bolts aspects of how AAPL options trading occurs.
    17 Jan, 03:08 PM Reply Like
  • NWcats, if you are the owner of AAPL stocks, the simplest strategy is to sell covered calls against your holdings, I prefer to do it when AAPL has a big rally like this Wednesday, you could sell next week $565 covered calls for $5 (a contract worth $5x100= $500), it is down to $1.2 now, you can close it today for a profit of $380 to help reduce your stock cost basis. you can look at some example here: http://bit.ly/1b8BPT8

     

    Then there is another article here to explain how to profit by selling aapl puts:
    http://bit.ly/1b8BS1c
    17 Jan, 04:10 PM Reply Like
  • If you new to options trade with a licensed professional because they can be dangerous if you don't know what your doing. I would read a few books before trading if your interested. I like to buy deep in the money calls to increase my leverage at time. I will be selling stock and doing this on Monday. 200 shares of stock can be replaced with 5 option contracts with a delta of about 0.8 to 0.9. This means that you get 80 to 90 cents of upside on 500 shares instead of one dollar of upside on 200 shares. After a run up in the stock you can either initial a bull call strategy or sell and go back into the common stock. These are things that I do specifically with Apple.
    17 Jan, 06:00 PM Reply Like
  • Just hit 540!!
    19 Jan, 10:39 AM Reply Like
  • The weekly Friday beat-down has begun.
    17 Jan, 03:21 PM Reply Like
  • This ride is getting tiresome.

     

    The stock was around 480-500 at the time of the 5s 5c reveal if my memory is correct.

     

    Since then we have seen enormous sales with the 5s, Ipad Air and IPad retina mini.
    In addition the deal with China Mobile has been completed and now today the phones go on sale.

     

    The grand result of all this 10%

     

    BAC is up almost that much just in. January after being up in the 30%+ range last year.

     

    If Apple is not over 575$ after it reports I will really have to question holding on. If the report is as strong as I expect. SMH SMH SMH
    17 Jan, 03:38 PM Reply Like
  • UnStopaBull Comment 136

     

    "If Apple is not over 575$ after it reports I will really have to question holding on. If the report is as strong as I expect. SMH SMH SMH"

     

    Don't be a victim of Wall Street manipulation hold on to your share long term.
    17 Jan, 04:04 PM Reply Like
  • Maybe I should buy Twitter.....what an iconic brand and moat they possess. To the moon baby...
    17 Jan, 04:56 PM Reply Like
  • Sell your stock in a company with the worlds strongest balance sheet ? Some of ya'll need to wise up and quit taking the bait , figures don't lie but liars can figure .
    17 Jan, 05:37 PM Reply Like
  • Today was an absolute joke. If not manipulation then we have some stupid people out there. Truthfully today's drop was a good thing for me because I plan to sell 200 share on monday afternoon. I will re-invest that money in deep in the money Apple calls. Something like January 15 with a strike of 470. Cheers to stupid people and to the weekend.
    17 Jan, 05:49 PM Reply Like
  • The NYT is not the best source for wise business reporting, especially regarding Apple, a company it hates and has written many negative articles about (it once claimed that the iPhone would be a flop). Any investor who listens to their dribble and sells the stock should stay out of the market. In the meantime I'll keep backing my truck up to the dividend bank every 3 months and collect my cash.
    17 Jan, 06:12 PM Reply Like
  • If Apple or CHL releases some decent weekend sales data relating to the CHL launch by Tuesday the backslide should reverse...but otherwise the lunatics are running the asylum.
    17 Jan, 06:44 PM Reply Like
  • AAPL is the most disrespected stock in the market. Just have to know that a major correction will come and all the idiots who jumped out of the market and have finally jumped back in over the last 2 years will run to AAPL. Why? Because profits matter. These people holding the high flyers are going to get crushed. While AAPL may actually rise.
    17 Jan, 07:19 PM Reply Like
  • I heard on public radio today that the NSA has installed malware on phones sold anywhere outside the US. With Apple phones, it requires that the malware actually be touched by someone in the NSA. With android phones, the phone doesn't need to be physically touched and it is completely undetectable. This major security issue is having BIG consequences for all cell phones sold outside the US since the US laws do not apply elsewhere. After Steve Jobs died, only then did Apple agree to the NSA "Prism" - WAY later than other companies did (Google, Yahoo, Microsoft, etc). The NSA overreach is very likely going to impact all sales of US based cell phones...
    17 Jan, 07:42 PM Reply Like
  • Correction to my previous post: with Apple phones it requires the phone to be physically touched to install the malware.
    17 Jan, 07:43 PM Reply Like
  • According to what I heard today on public radio, roughly 3% of ALL cell phones have the malware installed by the NSA (and it is undetectable).
    17 Jan, 07:47 PM Reply Like
  • The market is correct in forecasting drastically declining margins. It is just underestimating the decline right now, but the truth will rapidly become evident.
    17 Jan, 09:57 PM Reply Like
  • If the available China Mobile supply was pre-ordered and prepaid, there's no rush to pick it up on the first day when you expect there will be long waiting lines. Notice that most of the persons in the photos at the stores were in their twenties. Now think of how many young adults there are in China. Give it a little time. This will be BIG.
    18 Jan, 01:31 AM Reply Like
  • With Cook used the phrase "watershed moment", what did that mean? It seems that he was suggesting that after many months, Apple has just entered into an agreement with the world's largest Telephone carrier. But that happened on December 19, 2013. And CHL has been taking pre-orders since then
    The details have never been publicized, projected sales, price, and pre-orders. And which phone sold the most 5s or 5c What is unusual that this is the first such speech for Cook in over a year.
    The NYT article appeared on the front page, which tells us that it had senior editor's approval.
    Phillip Elmer Dewitt has posted 151 pictures from China on his twitter page.
    It would seem when the market opens on Monday we may know about the activity of the first weekend. In the USA, the beginning of the Christmas selling season begins about 30 days from Christmas. The Chinese New Year is in 14 days. And there is little conversation about the buildout of the 500,000 base stations 4G TD-LTE by the end of 2014 in China by CHL. and how it will affect the trading in of the old Iphones.
    In conclusion it seems that the NYT article was improperly written, when it spoke about the small crowds
    If Cook had stopped in the men's room to take a leak, might said and "Cook was nowhere to be found"
    Yellow journalism approved by the editor of the NYT? Shameful!!!
    18 Jan, 11:35 PM Reply Like
  • Apple rarely announces weekend results in China/Asia. I think there has only been one exception to that. I don't know of any instance anywhere in the world where Apple has announced weekend sales of any single carrier. For that matter, I don't recall any single carrier announcing how many iphones they sold in a kickoff weekend.
    19 Jan, 08:18 AM Reply Like
  • I enjoy ready the commentary here as regards AAPL. What I completely fail to understand is how the system is rigged against the individual investor. I am long term with AAPL. Can anyone direct me to where I can get insight into what the SEC is doing to stop these "manipulative" institutional thieves? Oh! Sorry, I guess I should say shrewed businessmen & women.
    19 Jan, 03:24 AM Reply Like
  • The trade term for the group you refer to is "the smart money"

     

    Having said that, the NYT writer has a history of being negative towards Apple and that's the lens he looks through. I do not assume he was attempting to manipulate AAPL, but even if he was, manipulation is extremely difficult to prove.

     

    There was someone [I can't recall his name] who made an announcement that they took a large short position in Apple. It was played up on CNBC and the traders promptly ran the stock down. He closed his short position that afternoon. When it was suggested he manipulated the stock his response was .... ~"If you think a single person can move a stock, you're in the wrong job." He doesn't really respond to the alleged manipulation. Perhaps we're all in the wrong job.

     

    When you hear a rumor on CNBC that a pipeline has been blown up in the Saudi oil fields, what do you expect to happen to the price of oil during the 15 minutes CNBC takes to find out that it's a bogus rumor? If you're the person that managed to inject that rumor into the news feed, it can be a very profitable 15 minutes.

     

    Once upon a time, the news media would verify a rumor before they reported it. Those days are gone. They would prefer to be the first ones to report it, rather than be right.
    19 Jan, 08:30 AM Reply Like
  • As someone who was in Beijing this weekend I can tell you there were long lines at China Mobile retail outlets throughout the city,despite the cold and the smog,and despite the pre-orders already booked by many consumers.
    The NYT Times article was incorrect at best and dishonest at worst,and no doubt bears were conspiring to put out a story that the sales were not going well to drive down the stock.If this is how American capitalism is an example to the world,give me Asian capitalism anytime.
    The crowds were kept away from the Beijing facility where the CEO's were for obvious security reasons.
    The reporting on this in the U.S. media was ignorant and also typical of American arrogance and condescension towards China
    19 Jan, 10:46 AM Reply Like
  • I'd argue that this is a case of the U.S. media trying to bash Apple rather than China or CHL. Many put a negative spin on U.S. Apple launches too whenever they can. I'd say it tends to stem from either the bias of the owners or just an attempt to boost circulation using the National Enquirer approach. Bashing Apple is a cottage industry in the U.S.
    20 Jan, 06:32 AM Reply Like
  • that is excellent reporting nickysg - i'm glad that SA offers a forum for actual news. anyone who sold their AAPL stock based on that heresay hopefully locked in a huge loss for themselves.
    20 Jan, 09:58 AM Reply Like
  • Thanks Nickysg for that info. There are just so many incorrect/dishonest articles such as this NYT, as well as analyst downgrades with reasoning that are poor beyond believe.
    21 Jan, 02:18 PM Reply Like
  • Thanks nickysg for your first hand accounts of the crowds this weekend. I have been trying to google search for info and except for Fridays pics I haven't found much. Even with the NYT ridiculous account of only 12 people, you could come up with over a million phones sold every 30 days, based on 3000 stores. To read that the reporter was in Japan and not China makes me question how this report was given any credibialty at all. That's again for your account.
    19 Jan, 12:29 PM Reply Like
  • Just buy as the price of the stock drops due to rumors and unfounded fear. Their loss, our gain.come January 27 and there'll be a buying frenzy again. Investors are so fickle.
    20 Jan, 06:51 AM Reply Like
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