Apple Stock Could Rise 2% on iPhone 4 Sales in China
Apple (NASDAQ:AAPL) recently announced that its iPhone 4 handset will be available for sale in China starting tomorrow, September 25. The China launch comes three months after the iPhone 4’s U.S. release last June. By contrast, Chinese consumers had to wait nearly two years for the iPhone 4’s predecessor, the iPhone 3G.
Apple competes mainly with Nokia (NYSE:NOK), Research in Motion (NASDAQ:RIMM) and Motorola (NYSE:MOT) in the global smartphone market. China is a huge market for Apple, so we think it makes sense to release the iPhone 4 there as soon as possible. This move could potentially create an upside of 2% to the $361 Trefis price estimate for Apple’s stock. Our analysis follows below.
Potential upside to Apple’s stock
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Greater China (China, Hong Kong and Taiwan) contributes around 12% of Apple’s worldwide iPhone revenues. According to management, iPhone revenues from Greater China totaled $1.3 billion for the first six months of the company’s 2010 fiscal year (October 2009 to March 2010). Global iPhone revenues were around $10.9 billion during the same period.
We currently expect Apple to sell around 11 million iPhones in the fourth quarter of 2010, and 58 million during the whole of 2011. However, launching the iPhone 4 early in China means that Apple will be able to get the phone into the hands of Chinese early adopters far sooner than in past iPhone sales cycles. As a result the company could sell a whole lot of iPhones in 2010 and 2011.
Assume, optimistically, that Apple sells 50% more iPhones in China in 2011 thanks to the early release of the iPhone 4. This would add 6% to our global unit sales forecast for the iPhone 4 (61 million iPhones instead of 58 million).
In this scenario, Apple’s share of the worldwide mobile phone market could reach 4.5% in 2011 instead of the 4.2% that we currently forecast. In that case we see a potential 2% upside to the our Apple estimate. You can drag the trend-line in the chart below to create your own mobile phone market share forecast and see how it impacts Apple’s stock price.
[trefis_forecast ticker=”AAPL” driver=”10289″]
You can see the complete $361 Trefis Price estimate for Apple’s stock here.