Editor's Note: This content was originally published on
by Tim Parker.
Wednesday, Benzinga reported that
) might be close to a deal and while these rumors have surfaced in
the past, this time it looked like the real thing.
Later Wednesday, this story gained more momentum as two stories
excited investors even more.
Want China Times
reported that the iPhone 5S and the lower cost iPhone 5C may adopt
) TD-SCDMA chipset. In the past, Apple products weren't able to run
on China Mobile's proprietary network because its phones lacked the
technology. If this story is true, the barrier to entry into that
market will now be gone and a deal between the two tech giants is
not only probable, but the companies won't have to wait for new
hardware to be developed to monetize the partnership.
According to the article, the iPhone 5S will cost around $915 in
China while the 5C will be considerably cheaper at $555. Each is
said to launch in China on November 28 and if the Apple/China
Mobile deal happens, China Mobile could account for 25 to 35
percent of shipments.
Tuesday, our firm reported that a deal with China Mobile could be
worth as much as
$50 billion to Apple
If the market was looking for another reason to price the deal into
the stock, UBS analysts Steven Milunovich and Peter Christiansen
released a note raising Apple's price target from $500 to $560. The
primary reason for the price target change along with a boost in
2014 earnings from $42.29 to $44.65 was the upcoming iPhone 5C.
Milunovich and Christiansen believe that the deal with China Mobile
will happen and that the 5C will be a major revenue driver in the
country. They see a 38% gross margin. They said in the report, "We
estimate the iPhone opportunity in China is at least one-third the
total 3G subscriber base or over 100 [million] users."
They estimate that Apple will sell 17 million phones through China
Mobile with 70% being the 5C.
Additionally, they believe that Carl Icahn will be unsuccessful in
pushing the company to increase its share buyback program although
a $30 billion increase.
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