Apple roundup: China Mobile, subsidies, FQ2/FQ3 expectations

4 months after launching 4G services and 3 months after beginning 4G iPhone (AAPL -0.1%) sales, China Mobile has announced it only had 2.79M 4G subs at the end of Q1.

One caveat: Not all of China Mobile's iPhone sales necessarily go to subs signing up for 4G services. China Mobile announced last month it added ~1M iPhone users and 1.34M 4G subs in February.

The WSJ takes a look at the efforts of U.S. carriers to lower subsidy spend, in part by offering discounts to consumers forgoing subsidies. AT&T's Randall Stephenson: "The industry is at a place where you can actually see line of sight to the subsidy equation just fundamentally changing in a very short period of time."

Apple's newest iPhones are typically subsidized by ~$450 by U.S. carriers in exchange for 2-year contracts. Tim Cook mentioned in January a shift by U.S. carriers to a hard 24-month wait between subsidies hurt FQ1 iPhone sales.

Expectations are low ahead of Wednesday's FQ2 report. Canaccord's checks suggest iPhone sales slowed in April due to competition and iPhone 6 anticipation. Also, UBS has cut FQ2/FQ3 iPhone estimates on concerns of weaker China Mobile and U.S. sales, and the consensus is for iPad sales to be flat to down Y/Y.

At the same time, many expect a dividend hike to be announced, and hopes are high for the iPhone 6. Susquehanna's checks lead it to think Apple is asking for 20%-30% more capacity from suppliers relative to the iPhone 5 and 5S launches.

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Comments (7)
  • 8747S1115R
    , contributor
    Comments (286) | Send Message
    I think it will be surprising to find out how much stock apple has bought back in the recent quarter considering they announced buying $14B worth in a two week span. Investors will be surprised to see how much the share count has decreased and PPS will have to adjust accordingly to maintain a $400B+ valuation. Throw in a dividend hike and additional buyback plans and we see $600 per share by end of week easy as pie.
    22 Apr 2014, 02:36 PM Reply Like
  • David RG
    , contributor
    Comments (2925) | Send Message
    Market cap doesn't stay the same when cash exits the business to retire shares. In theory total market cap will decline by the exact amount of cash used in repurchase. Each share remaining will have a greater claim on the overall business to compensate.


    Of course, that is only theory.
    22 Apr 2014, 03:08 PM Reply Like
  • DRVY
    , contributor
    Comments (22) | Send Message
 theory....true if repurchase is undertaken @ fair market value of shares.
    In reality....
    Repurchse is only done when market cap (i.e. stock price) is already lower than what it should be.
    22 Apr 2014, 03:20 PM Reply Like
  • pwdrhead1711
    , contributor
    Comments (115) | Send Message
    Steve-O, remember wallsteet views stock repurchase and dividends as negative, with regard to Apple, and overpaying by billions for startups as positive for all others. Don't forget, all solid logic with regard to fundamentals go out the window with technology stocks. Vaporware and fantasy good, profits, cash and fundamental strength, bad. It will take the built up demand of an large screen iPhone, payments, and at least one new product release in the next 6 months, or we are stuck in price purgatory. Apple can have a blowout 2Q, which isn't going to happen, but miss one metric and stock will tank at least 5%. When Tim Cook says hello on the conference call stock will drop another 5%. Look at the bright side, at least you can buy some more before September, cheap...
    22 Apr 2014, 03:45 PM Reply Like
  • Tales From The Future
    , contributor
    Comments (7619) | Send Message
    I think this quarter is largely irrelevant if the rumors about all the new 2H 2014 product introductions are true. For example the iWatch and its trademarks:


    "Apple may be hiding behind 'Brightflash' dummy corporation to trademark 'iWatch' name"

    22 Apr 2014, 03:55 PM Reply Like
  • ultraz2
    , contributor
    Comments (1086) | Send Message
    2.79 m sales at the end of Apple's Q2. The best thing going is that Apple has almost finished one month of Q3 already.
    22 Apr 2014, 04:07 PM Reply Like
  • pocohonta
    , contributor
    Comments (662) | Send Message
    When you lower your expectation, you will be pleasantly surprised (about Apple's earning number)
    23 Apr 2014, 10:31 AM Reply Like
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