Apple and China Mobile: The Week in Review
Looking at a five day chart of Apple (NASDAQ: AAPL) it paints the perfect of picture of what went on with it’s deal with China Mobile (NYSE: CHL) last week: A lot of ups and downs but the end, a whole lot of nothing.
Here’s a recap in case you missed some of the coverage.
In recent weeks, rumors of the impending deal have resurfaced. This came largely after leaks of promotional materials reportedly from China Mobile announcing the availability of the new iPhone on its newly upgraded network.
It was widely reported that China Mobile users could purchase an iPhone starting December 18.
This week, the news coverage heated up. The December 18 date hadn’t changed but it prompted analysts to come out with reports detailing how such a deal could be advantageous to Apple. Amit Daryanai of RBC Capital Markets believes that of China Mobile’s 755 million subscribers, 170 million are currently high-speed data customers. If Apple sold 17 million iPhones to China Mobile customers, that would equate to between $9 and $10 billion in annual revenue or about $3 per share.
On Thursday, the Wall Street Journal reported that the two companies had signed a deal, citing an unnamed source. According to the report, China Mobile was to announce the Apple deal at an event on December 18 and news broke that China’s Ministry of Industry and Information Technology had granted licenses to China Mobile and its competitors to operate high-speed mobile networks.
But later, a China Mobile spokesperson said that negotiations with Apple were ongoing but the company had nothing to announce. Reuters later reported similar information from a China Mobile spokesperson.
So where is the deal now? By official measures, it’s back where it started. Neither Apple or China Mobile have said anything other than, “we’re negotiating”—something that has gone on for a long time. Most people closely watching the deal still hold on to the December 18 announcement but as that date is now less than two weeks away, it’s looking less likely.
Apple’s stock price over the past five days is a perfect representation of the news cycle surrounding this deal. Despite a lot of volatility, the stock ended the week almost exactly where it started: $560.
Disclosure: At the time of this writing, Tim Parker was long Apple.
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