China Mobile iPhone Estimates All Over The Map
Spend some time reading analyst estimates concerning China Mobile (NYSE: CHL) and the iPhone and one key point should stand out: Nobody has any idea the impact the company’s deal with Apple (NASDAQ: AAPL) will have on either company’s bottom line.
Leading up to the deal, the estimates were lofty. Dow Jones cited reports from analysts that believed 39 million iPhones would make their way to the hands of China Mobile customers.
Related: iPhone Finally Comes to China Mobile
Then, on December 24, Jun Zhang and Brian Blair of Wedge Partners said, “we believe there will still be an inventory correction in Q1 and less smartphone component shipments as a result. We expect China smartphone sell -through will continue to be weak until low-middle range 4G smartphones come out in the middle of 2014.”
At the time of this report, the duo estimated 2014 sales of 16 million iPhones--less than half of those more lofty estimates.
This includes six million un-subsidized, unlocked iPhone 5S and 5C phones.
“We believe the initial procurement by China Mobile is 10-12 million units and is mostly iPhone 5s, accounting for 85% of total initial procurement for 1H:14,” they write. “We don’t expect China Mobile will aggressively promote the iPhone until 2H:2014 to coincide with 4G service launching in over 100 cities around the middle of the new year.”
Now the company’s analysts are saying that China Mobile likely only took about 100,000 preorders for the phones to date due to launch on January 17. AllThingsD pointed out that it’s still early in the pre-order period and Wedge analyst Brian Blair told the tech blog, “What’s important to remember is these phones launched in September,” he said. “Now here we are several months later and there’s no subsidy being offered that’s so special that the preorders are off the charts. If this had been in September when the phone launched globally, I think the numbers would be a lot higher.”
Cynthia Meng of Jefferies believes that China Mobile will move 12 million units.
She maintained her hold rating and lowered her price target to $57 on China Mobile citing increased subsidy costs related to the iPhone.
Citigroup’s Asia tech analysts have a Buy rating on China Mobile with a price target of $63.20. They believe that 10 million iPhones will be sold but have concerns that China Mobile’s 4G network will be in place enough to support large-scale rollout of the technology.
“Initially only 13 key cities have LTE networks that smoothly support the 4G data to 2G voice network fall back for TD-LTE iPhone,” they said.
To be fair estimating anything in China is no easy task. The most reliable data will likely come from Apple when/if the company ever discloses how many phones it sold to China Mobile.
Until then, be careful about getting too bullish on this deal.
If there's anything to learn over the past month, estimates ranging from 10 million to nearly 40 million units means that analysts have no idea.
Disclosure: At the time of this writing, Tim Parker was long Apple.
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