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China Telecom (CHA) says it plans to begin selling the iPhone 5 (AAPL +2.2%) in late November or...

China Telecom (CHA) says it plans to begin selling the iPhone 5 (AAPL +2.2%) in late November or early December, a little earlier than expected. During Apple's FQ4 call, Tim Cook would only say Apple expects a December Chinese launch. China Unicom's (CHU) chairman is more cautious in setting a timetable. Meanwhile, RBC is predicting Apple will finally reach a deal with China Mobile (CHL) in 2013, perhaps even before the Chinese New Year - the iPhone 5 doesn't support CHL's TD-SCDMA 3G network. (previous)
Comments (43)
  • They should do what it takes to get this china mobile deal done.

     

    600 million new customers, they have a $450 iphone 4, $550 4s and the premium 5 for $650 to cover the price points.

     

    I think it would mean at least an additional 30 million additional phones sold per year, probably way more.
    9 Nov 2012, 12:33 PM Reply Like
  • People don't realize that China Mobile is huge, but it also has a highly decentralized jurisdictional organization. It won't be delivered as one monolithic 600 million customer base like an AT&T, Verizon or KDDI. The deal has to be done jurisdiction by jurisdiction. My company works w/ CHL closely and that's just the way it is.....
    11 Nov 2012, 07:18 PM Reply Like
  • The stock is poised to explode. Never count apple out.
    9 Nov 2012, 12:37 PM Reply Like
  • @Man - I never did. But you know the haters they jump all over the "AAPL is doomed" stuff. Quite amusing to see them get all worked up. Everyone should have some humor in their day. Watching them go at it is mine. :) Long AAPL.
    9 Nov 2012, 01:00 PM Reply Like
  • Hating AAPL seems to be a full-time job (and obsession) for some resident commentators here on Seeking Alpha. Some even claim to know the 2013 / 2014 numbers that I don't think even Apple's CFO can predict.
    9 Nov 2012, 04:41 PM Reply Like
  • The pattern is they are unhappy in their own life and they are the chronic complainers. For them, life isn't worth living if they aren't complaining. Sad. But you know the Internet is a free soap box - lots of chatter. Just look at Twitter. Bitterness sucks. Let it go AAPL-haters.
    9 Nov 2012, 06:24 PM Reply Like
  • lots of idiots out there, it's just jealousy that they don't have any stock
    10 Nov 2012, 02:58 PM Reply Like
  • amen dwilly. Bitterness I guess.
    10 Nov 2012, 05:32 PM Reply Like
  • Not only will the China Mobile deal get Apple hundreds of millions of new iPhone customers, it will help to limit the fake iPhones now being made and sold there that harms Apple's global sales.
    9 Nov 2012, 12:44 PM Reply Like
  • Good price to get some more today. It is going to start creeping back up this month and pop in December.
    9 Nov 2012, 01:13 PM Reply Like
  • How appropriate that these comments were made at the sidelines of the big communist party meeting. These meetings are a catalyst for a 4G deal to finally get inked between Apple and China Mobile (CHL). This deal is strategically huge for both companies as well as Qualcomm. There are just too many CHL shares owned by party insiders for a deal not to happen. It may take longer than we hope but bottom line, it is very likely to happen, just like the Verizon deal. CHL shareholders (newly elected communist party insiders) won't sit and watch China Unicom (CHU) and China Telecom (CHA) enjoy a 3G duopoly on the iPhone forever. China Mobile will use the iPhone to move from 2G to 4G and leapfrog its 3G competition. At least that is my simplistic understanding from what I've read. If others have a clearer take, please comment.
    9 Nov 2012, 01:26 PM Reply Like
  • The Apple bears just want the warm fuzzy feeling of being right for a change....so they jump all over the opportunity to beat their chests and yell victory......imo they are late to the game and are desperate rimm nokia or msft longs ...also pretty sure they don't have the conviction to short aapl or the funds to cover ...
    9 Nov 2012, 01:47 PM Reply Like
  • Yep.
    9 Nov 2012, 02:09 PM Reply Like
  • It's really hillarious for them to spout Nokia, RIMM, Microsoft too and bad mouth Apple. Laws of probability on on Apple's side for sure. alot of this nonsense is adjustments for capital gains taxes @ 15% ending this year.
    9 Nov 2012, 08:07 PM Reply Like
  • so simply stated but so outspoken......
    10 Nov 2012, 04:29 PM Reply Like
  • KEY FACT: Funds will still own Apple at EOY. Plenty of people bought stock (fund mgrs incl.) in the runup from $550 - $700. The flush of the losers taking losses will diminish as new buyers take it back up.
    9 Nov 2012, 02:13 PM Reply Like
  • No wonder so many retail investors have left the market. A roller coaster ride from $530s to $705, back down into the $530s, probably headed due north from here. If you get in at the wrong entry points, you can get crushed.
    9 Nov 2012, 03:18 PM Reply Like
  • @Bail, There's so many bears that come out with their articles when the stock drops, I never know who to believe. It's a struggle between the Bulls pumping and the Bears deflating.

     

    One article came out from a perma bear when the stock was still in the $660's , and it posted a link to an article warning of an Apple correction. The article was based on the Elliot Wave theory. I wish I'd have heeded that article. It would have saved me from making a lot of bad trades, including some calls I'm still holding onto that expire in January and Februrary.

     

    It also correctly called the previous Apple correction from $644 down to $520's.

     

    Two things I've learned from the past 2 corrections. Apple never goes up in a straight line forever, and when it corrects, it can be a doozy.

     

    As long as it gets back up into the 700's, I should be fine. But my portfolio has taken a hit of over $100,000 just since the last peak. It is somewhat stressful, but I believe in Apple. Thank God my wife never checks the balance or I'd have some 'splainin' to do.

     

    But to think of all the money missed out on, because I didn't want to short the stock. Heaven forbid. Apple can do no wrong!

     

    And all the calls that could have been purchased at much lower prices. I'm holding 615, 640, 650, and 675 calls, when I should have been buying puts on the way down instead. But I always think the stock will do well, especially with all the catalysts it had going for it.

     

    But a lot of hedgies cashed in their chips, and ruined the party. Can't wait til the party starts up again.

     

    Here's a link to that Elliot Waves article, in case you missed it.

     

    http://onforb.es/Ra4AWi

     

    Anybody have any opinions on Elliot Wave theory, please post.
    9 Nov 2012, 04:35 PM Reply Like
  • Don't worry, it's going back up.
    9 Nov 2012, 08:03 PM Reply Like
  • i'm in a similar boat as you Mano. except my options expire in April. all the price points you added on the call side could've been an easy profit 100 less bought on the put side. but hindsight is 20/20. a nice rebound to 600 by mid december will boost those calls back up before the monster earnings in jan. at what price or when do you plan to get out of those calls or do you ride them through jan and feb?
    10 Nov 2012, 10:06 AM Reply Like
  • I'm learning that options move little after the volatility goes away. For example, I have a FB put that I held thru earnings, and saw the value almost completely wiped out after earnings. Now, the stock has dropped back to where it was before earnings, yet the value of the put has hardly changed because it expires next Saturday. So as long as I can get close to even on those Jan calls, I may have to dump them in December. Now might be a good time for some more FB puts.
    11 Nov 2012, 11:51 PM Reply Like
  • China, baby!
    9 Nov 2012, 06:25 PM Reply Like
  • if they got the production thing fixed, look out!!
    9 Nov 2012, 06:25 PM Reply Like
  • ManoLive- you have to think 1 - 2 years from now where will it be.

     

    Apple is not Rim, Nokia, Look at David Einhorn's 14% position and belief it can become a trillion dollar company.

     

    People who use apple aren't switching but buying more products. The second hand market tells its own story, everyone wants these products, that trend will continue and grow.

     

    The market can be irrational sometime and this is a classic case and a classic opportunity.
    9 Nov 2012, 11:33 PM Reply Like
  • Thanks for the response, Johnycarrs. I haven't sold any of my aapl positions. Hopefully the stock will start an uptrend soon, and stay there. I never thought we'd be back at these levels again. Buying opportunity? That's what I thought throughout the downturn, so I bought, bought, bought, and now I'm a little trigger shy.
    12 Nov 2012, 10:23 AM Reply Like
  • A CHL deal before CNY (early February) would be an incredibly powerful influence on the stock's price. An article noted that the deal signing alone would contribute $45 to the stock price based solely on the current (low) multiple and earnings from the estimates of iP5 sales. Unfortunately, it seems that Cook & Co. don't have the mojo to get China rolling in the direction we need, so I expect it to not happen. I'm starting to feel like Rocco did about ex-Jobs AAPL, in that Cook just doesn't seem to have the passion or the execution that Jobs did. I know it's not a one person story, but the inability to get supply ramped up properly knowing that demand would be huge for the iP5, the inability to get one mobile carrier in China signed on (really, is it that hard?..) and the lackluster presentation on the recent earnings call (didn't sound so enthused) make me think Cook is a good guy, but just not good enough. Discuss.
    10 Nov 2012, 08:42 AM Reply Like
  • I'd like to focus on the common criticism that the lack of supply is Cook's fault.

     

    Until we know the numbers, we can't really say what kind of job Apple in general and Tim Cook in specific has done with the iPhone 5. It may very well be that an incompetent handling of this difficult launch would have been a much larger disaster than the reported supply constraints we have seen here. If we knew all the details and saw what the plans were and could see how many were selling and how quickly the production is ramping up, we may think that Tim Cook has done an excellent job in this roll out. Judging Cook solely on what we now see without numbers and back story may be a mistake. It is possible he goofed. It seems more likely to me it was only his genius at the logistics involved in this sort of global roll-out that made it as good as it was.

     

    Can you think of a number of units sold that would make you feel that Apple had performed a minor miracle to get the iPhone 5 out as quickly as it has? Is it 40 million? 50 million? Surely when we get the sales figures on the earnings call we can better assess whether Tim Cook is doing well or not.
    10 Nov 2012, 05:59 PM Reply Like
  • I agree. I have been watching how we had chip problems with TSMC, screen problems at Sharp, and quality problems at Foxconn....Cook did not sacrifice quality for higher numbers...which is the approach that I expect from Apple. After seeing them navigate that without total disaster has left me with more confidence in Cook than when it all started. I am watching the diversification away from Samsung supply, and it has been difficult and painful...yet one that I think is necessary. The problems were all exascerbated by the across the board product refreshes, which we will see the benefits only after the holidays.
    10 Nov 2012, 09:04 PM Reply Like
  • My employer has fulfillment contracts with China Mobile. They're very difficult to deal w/ and won't be delivered in one bulk deal across all jurisdictions in China even if a deal does get done.

     

    Tim Cook is a highly competent manager, but I'd agree w/ you that he's not Steve Jobs. Of course, no one else is Steve Jobs either. The reality is that Steve is gone and I can't think of another CEO who'd perform better than Tim Cook has thus far.

     

    I'd also argue that Tim Cook has released Apple's value more effectively than Steve would have by instituting the dividend and buyback. In terms of supply, the supply is now rapidly catching up w/ demand. Stores now actually have inventory on the shelves. Consider that Steve never had to manage Apple when the demand for its products was at such enormous volumes. Cook has been the supply chain guy right along. Jobs also liked to introduce products at a shortage to stir up interest.

     

    People act as if manufacturing 300 million mobile devices (projected) in a year is a routine task.

     

    My grade for Tim Cook in his first year: B+
    11 Nov 2012, 01:29 AM Reply Like
  • @Somporn

     

    I think one of the stumbling blocks is that China Mobile wants a piece of the App Store action. I can only guess that this sits rather poorly with Apple. http://bit.ly/Q6KNvn

     

    WRT supply, some are suggesting that maybe Apple overreached with the design making it so damn complicated to build, it's hindering production.

     

    “It’s not easy to make the iPhones. We are falling short of meeting the huge demand,” Terry Gou said, according to Reuters. His comments echo what an anonymous Foxconn official told the Wall Street Journal last month, that “the iPhone 5 is the most difficult device that Foxconn has ever assembled.” The reason? “To make it light and thin, the design is very complicated,” this person said. http://bit.ly/TD9RHo

     

    PS. Terry Guo, is a Taiwanese tycoon who leads Hon Hai Precision, a company that manufactures electronics on contract for other companies.
    11 Nov 2012, 05:55 PM Reply Like
  • Luke in June 2010, Guo complained that Apple devices were "very difficult to make". That ended up working out fine. I think we're going to need to see the Q1 sales figures before we can get real perspective on how big an issue this is.
    12 Nov 2012, 01:21 AM Reply Like
  • DM, Apparently he's said this before, so point taken. But this particular story ran Nov 7, 2012. http://bit.ly/PODtmJ
    12 Nov 2012, 01:55 AM Reply Like
  • No, I wasn't trying to correct you. I was just saying this guy complains a lot about how Apple stuff is to make :)

     

    I hope that just like they overcame the challenges of 2010 they will overcome the challenges this time around.
    12 Nov 2012, 03:09 AM Reply Like
  • I hope so.
    I've heard it's costing them more to overcome these challenges. Although I doubt these costs will have any material effect on revenues.
    12 Nov 2012, 11:58 AM Reply Like
  • SS former Is.....thats a bold call but too early of a call...TC has been putting alot of effort into the Chin expansion....he is dedicated with Sunday night conferences and 430 am emails...... Please don't join Rocco yet...
    10 Nov 2012, 10:39 AM Reply Like
  • How do you know this? I just don't see what the problems are (now that the technical issues are resolved) and he didn't mention CHL in the recent earnings call. Cook had better execute something very shareholder-friendly and quick - CHL deal, buyback, iTV, or leaked information that iP5 production is meeting demand - otherwise all the goodwill he earned (and the stock's run-up) will evaporate.

     

    Many say "well, AAPL is up 40 (or 50 or whatever) % for the year so it's been good..." - well, not really. It rose in value in the late winter-early spring season in my opinion because the valuation was compelling - trading in the very low teens multiple and under 10x ex-cash - the price just caught up to the earnings on a very conservative P&G-level multiple. It's not really "up"; the earnings rose and the stock's price multiple caught up with at least the S&P (at, say, 13-14x). The big "run-up" in AAPL was really just the multiple expanding to meet what modest, or low growth, companies are valued. Few S&P components' earnings have grown 50% or 60% YoY. AAPL's did, and even the wildly conservative estimates of 20% in FY13 are way beyond a P&G or even an IBM yet it's valued like them. So Cook can't sit there and say, "well I presided over an exceptional run up in the stock price" because that was really just price catching up with earnings at a flat market multiple - no real premium for the name at all in terms of multiple - so his "shareholder friendly" tenure hasn't been such.

     

    We need some big catalyst and soon, otherwise... the "luster" will have faded. Sure, they'll hit $45 or 50 or 55 of earnings in FY13 but at a 13-14 multiple that's only...well $700, which would be nice, but... ah well...
    10 Nov 2012, 11:41 AM Reply Like
  • Why does it need to be soon, holding options that expire in the next 2 months?
    11 Nov 2012, 07:17 PM Reply Like
  • In recent years I've never seen the sentiment turn so wildly negative like it has in the last six weeks. I don't think that the simple earnings beat in January will be enough to fuel a multiple expansion that we want to see. After that we will hear all sorts of things about how the holiday quarter is finished and there's nothing new on the table and so on. That's why I think he needs to do something in the next eight weeks in order to regain some kind of momentum. What's happened is that stock price is beginning to look like a mockery on television and people are talking very "doomsday" about the name.
    11 Nov 2012, 10:09 PM Reply Like
  • Well.......def believe this should be buyback time.......a new catalyst would also be nice..... most important achieving more seperation /dependency from Samsung and goog it's greatest rivals at present..
    10 Nov 2012, 12:24 PM Reply Like
  • Google is making zero money on Android handsets. Samsung is much less profitable than AAPL on each handset sold. I think the "BMW Strategy" (be the higher-end, lower volume, higher profitable) is good but needs to address those buyers in China, and be able to supply the would-be buyers today in SF or LA, etc. Cook needs to spawn some good news about the stock amid the media's frenzy about an "Apple bear market". I hope most conspiracists are right, that shorts and money managers bought puts and sold it wildly, locking in gains, in order to allow for the Q1 run-up that most missed in August (the stock went from 585 to 650+ on basically nothing, in the quietest part of the year, early August).
    10 Nov 2012, 01:01 PM Reply Like
  • SS I ve said it before TC needs to throw the shareholders a bone once in a while....I think he thought the big refresh and mini was going to be applauded louder....he is a huge shareholder also, plus they just lost a s/load in market cap...
    10 Nov 2012, 10:24 PM Reply Like
  • Do you think you could correct the last line of the note, which should read "- the iPhone 5 supports CHL's TD-SCDMA 3G network"?

     

    From what I understand, the iPhone was specifically designed to support that network (see http://on.wsj.com/UF6PFX).
    11 Nov 2012, 06:34 PM Reply Like
  • fwiw..... Apple buys all APs used for production of iPhone and iPad from Samsung Electronics with the volume estimated to be 130 million units last year and more than 200 million units this year.
    12 Nov 2012, 12:04 AM Reply Like
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