iPhone 5 in China - Start Big, Stay Big

By Tony Rizzo December 17, 2012

Late last week, various websites were showing a pretty and snowy picture of the Apple store in Beijing China, along with a deep cordoned area for guiding the flow of traffic into the Apple store itself. Along with the photo, however, came a view of a rather empty Apple store, with no one standing in any lines.

A clever headliner noted that the iPhone 5 was met with “frigid sales” in China. Heh, surely worth a little laugh from Google and Samsung perhaps.

But now it’s Monday, and Apple issued a press release today to announce that it has sold over two million new iPhone 5s in China, a scant three days after its launch on that snowy December 14.

So who’s laughing today? Apple.

Tim Cook gushed his usual collection of superlatives in describing the phenomenal, record-breaking sales Apple encountered over the weekend. He can be excused for the gushing. He did step back to note, just a bit more soberly, that “China is a very important market for us and customers there cannot wait to get their hands on Apple products.”

No doubt he is further thrilled at the implications for ongoing global sales, as well as for North American sales as we close in on Christmas. The iPhone 5 will also become available in more than 100 countries by the end of December, making it the fastest global rollout of an iPhone ever.

Is there really any doubt that Apple will have anything less than an enormous holiday quarter? A Citibank analyst team (Glen Yeung, Walter Pritchard and Jim Suva) cut Apple's price target to $575 and now rates it neutral, down from a buy rating.

This analyst team certainly seems to have doubts, although this analyst team has, if you were to ask us, rather foolish doubts. It’s the analyst team we should doubt.

What is Apple going to report in its next (holiday) quarter? Think big, think bigger, then think biggest.

The analyst team at Citi based its new rating on reports that Apple has cut back production on the iPhone 5 in numbers that are larger than what should be the case if Apple’s holiday sales were going to be a homerun. That general perception has, over the last four months or so, sent Apple’s stock “reeling” to just the positive side of $500 (somewhere around $508, along with roughly a $176-billion drop in market value).

But lo and behold, as we write at about 4:30 p.m. on Monday evening, the stock has bounced up to $518.99 at the market’s close and is at currently at $519.30 in afterhours trading.

Of course one should consider it a favor whenever a report or analyst rating comes out that drops the stock down, creating buying opportunities. Once the holiday earnings report is in the books, there will be plenty of folks buying up Apple at $700 again, and as reality begins to settle in around next year’s likely iPhone product launches and the reality of Apple TV, those same folks will be looking to buy at $800 and possibly $900 (where Piper Jeffrey’s Apple analyst Gene Munster has his Apple target sitting).

Enjoy those low prices while you can. And think of China: as much as Android is the low cost option everywhere one looks (especially in the Asia-Pac region), Apple remains the smartphone with the cachet, and those that can afford it – as well as those that can sort of afford it – will buy it. It is what makes Apple big – and what will keep it big in the foreseeable future.

Edited by Braden Becker

TechZone360 Senior Editor

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