Apple Inc.has set a name for itself as a company that boasts non-traditional products that fills the need for superior engineering and technology in its products. Despite a row over patents with Samsung and its phone like Samsung Galaxy S4 using Android to ride a similar platform as the iOS, Apple has maintained its integrity in the tech world. The expansion into the Chinese market with a "low budget" phone will be a challenge for the Cupertino-California based software maker.
CEO Tim Cook said in a recent interview that the only way to expand into China is with China's mobile's assistance, since China mobile offers the reputation and strength of coverage that Apple relies on. Doing business in China can be tricky, but Apple has already released the iPhone 5 in China and has done some groundwork.
With declining sales of the iPad and a slimmer iPad 2 and no new products in the offing, Apple Inc. is betting on its iPhone line of products for a turnaround in its momentum. Though the iPad mini and the iPad mini 2, has also done well, it will need to see more new releases for the consumer to be hooked on the product in order to create an "iphone-like" phenomenon.
UBS has reinstated a 'buy' rating for Apple (NASDAQ: AAPL) based on its China strategy and the release of its two new iPhone models. Meanwhile, the price target for Apple Inc went up from $500 to $560.00 while EPS estimates was up to $44.65/$48.45 from $42.29/$45.80 for 2014/15.
Steven Milunovich told the Street Insider, "We have rejiggered conservative assumptions in our detailed product model for the expected midrange iPhone 5C. Our price assumption increases from $379 to $399 and the gross margin rises from 32% to 38% on a lower bill of materials, making the 5C accretive to earnings." He also felt that a deal between Apple Inc. and China mobile is looming.
"Based on income, we estimate the iPhone opportunity in China is at least one-third the total 3G subscriber base or over 100mn users," Milunovich said. He added, "Our model incorporates sales of 17mn iPhones through China Mobile in F14, 70% 5C and 30% 5/5S, which adds an estimated $3.25 of EPS. Each incremental one million units would add about $0.20 per share to our estimate."
Apple Inc. will also want to make an entry into the Indian market since it too has a full-fledged Chinese market sold on the streets. A Chinese made iPhone 5, for example, might coast as little as Rs. 2, 500, which is approximately $40 and you can always bargain that down to $30, if you're lucky.
At 5:30pm Australia EST time, Apple shares added 1.25 points, the equivalent of 0.26% to take its stocks up to $502.36
A record of analyst ratings news for Apple Inc, and separate individual ratings are listed according to a streedinsider.com report.
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