Biz Break: Apple's mystery China event has analysts, investors salivating
09/04/2013 02:51:35 PM PDT
09/04/2013 03:37:29 PM PDT
mercurynews.com/business/ci_23894844/apple-rumored-produce-gold-colored-iphone-chinese-market">a gold-colored iPhone. A deal would be vitally important to Apple, which reported a strong decline in revenues from the Greater China region in its most recent quarterly report as rival Samsung capitalized on greater familiarity and connections in the country.
Today: Apple (AAPL) schedules events in three international cities, including Beijing, sparking rumors that it has struck a long-awaited deal with China Mobile. Also: Intel (INTC) stock pops after product announcement on good day for Wall Street.
The Lead: Apple plans event in China, will China Mobile deal be announced?
A day after inviting American media to an event believed to be an iPhone announcement at its headquarters, Apple on Wednesday invited journalists in China to an event that will take place hours later, and the company's shares jumped as speculation abounded that a deal with that country's largest wireless carrier could be announced.
Apple has reportedly invited media to events in Berlin, Tokyo and Beijing on Sept. 11, a day after it is expected to show off new iPhone models in Cupertino. While Apple has held satellite launches in London and Tokyo before, as AllThingsD pointed out, the Chinese event is a new wrinkle for the tech giant, and led to rampant speculation that Apple has reached a deal with China Mobile.
Apple CEO Tim Cook met with China Mobile's leader in July in an effort to finalize a deal that would give Apple greater access to Chinese customers, and reports about Apple's next iPhone refresh points to a focus on Chinese customers, including a lower-priced iPhone housed in plastic instead of metal and
In this Monday April 1, 2013 photo, a man leaves an Apple store with an iPhone and an iPad in his hands in central Beijing, China. (Alexander F. Yuan/Associated Press)
"Unlike the early years of the iPhone ramp, there are now only marginal opportunities left to gain share through expanded distribution," ISI Group analyst Brian Marshall wrote in a note. "While this has heightened the importance of a low-cost iPhone to increase share, it has also put a greater spotlight on the largest remaining carrier which can significantly move the needle for iPhone units: China Mobile."
After rising only 0.3 percent Tuesday following the U.S. event invitations, Apple shot 2.1 percent higher Wednesday to close at $498.76 as other analysts issued positive notes. Cantor Fitzgerald launched coverage of the stock with a "Buy" rating and $777 price target, noting Apple "is on the verge of an extended product cycle that we believe will include a refresh of existing products, increased penetration within existing device categories and entirely new market opportunities," and Wells Fargo analyst Maynard Um raised his price target range and labeled the stock "Outperform," noting the possibility of a fingerprint scanner on the new iPhone based on technology Apple received in a 2012 acquisition.
"We believe investors may be underappreciating Apple's Authentec acquisition — specifically the ability to perform secure device-side authentication," Um wrote.
The possibilities for Apple and other tech giants embroiled in a war to gain share in mobile devices were highlighted by a new report from analytics firm IDC, which predicted that 2013 will be the first year that more than 1 billion smartphones are shipped internationally.
"Two years ago, the worldwide smartphone market flirted with shipping half a billion units for the first time — to double that in just two years highlights the ubiquity that smartphones have achieved," IDC research manager Ramon Llamas said in the company's release. "The smartphone has gone from being a cutting-edge communications tool to becoming an essential component in the everyday lives of billions of consumers."
IDC expects Apple to command 16.9 percent of the market in 2013, with the lion's share of phones shipped -- 75.3 percent -- running Google's (GOOG) Android operating system. IDC predicts that Android's share will decline in the next five years, though, with Apple gaining to 17.9 percent market share by 2017.
"The expected launch of a lower-cost iPhone will open up a wider addressable market," IDC predicted in its report, adding "Apple will also grow faster in subsequent forecast years due to enterprise and emerging market share gains that will be driven in part by a likely deal with China Mobile, which will give it greater reach into one of the world's fastest-growing smartphone markets.
Microsoft -- which made a big move this week by acquiring Nokia's mobile-phone business -- is also expected to command a greater share of the market in the future, with IDC predicting the Washington tech company's market share to grow from 3.9 percent this year to 10.2 percent in 2017.
"With the acquisition of Nokia's device and services unit, Microsoft will increasingly need to drive share gains by itself as OEM support for Windows Phone is expected to wane now that the company is set to become a full-fledged hardware maker," according to the report.
Apple is likely to be competing in other device markets besides mobile and personal computers by 2017: Rival Samsung showed off its smartwatch, called Galaxy Gear, on Wednesday, ahead of a likely Apple offering that could be dubbed the "iWatch." However, Business Insider pointed out that other companies rushed tablets to market ahead of the iPad, but Apple still won that battle once it pushed a superior product out.
SV150 market report: Intel, Adobe, Juniper and SanDisk push Silicon Valley to big gains
Apple's gains helped push Wall Street to strong gains Wednesday, as larger stock indexes also enjoyed a boost from news of the best month for automobile sales in six years. Silicon Valley stocks outperformed the larger indexes, with the SV150 gaining 1.3 percent thanks to similarly healthy performances from other area tech giants, led by Intel.
The Santa Clara chipmaker was the largest gainer in the Dow Jones industrial average Wednesday, increasing 2.6 percent to $22.64 after announcing its new Atom line of data-center chips, which it hopes will find widespread use in microservers. Analysts believe Intel is aiming at the networking market and has come up with a product that will sell well, with RBC Capital analyst Doug Freedman proclaiming "Intel will likely be the microserver platform of choice."
LinkedIn couldn't keep up with Silicon Valley's advance, dipping 2.9 percent to $238.93 after announcing that it will sell about $1 billion worth of new shares to finance upcoming expansion; the news didn't change Wunderlich Securities analyst Blake Harper's opinion, as he reiterated a $250 price target for the Mountain View professional networking company's stock. Fellow social network Facebook also declined, falling 0.2 percent to $41.78 as a report said that its attempt to follow Twitter into hashtags is not creating the Menlo Park company's desired effect. San Francisco-based Yelp balanced the social sector, however, jumping 6.8 percent to $55.95.
San Jose-based Adobe (ADBE) gained 2.3 percent to $46.93 after announcing a cut-rate price for cloud subscriptions to its photography software, and Palo Alto's VMware gained 0.4 percent to $84.97 after launching a new version of its Fusion desktop virtualization software. Juniper Networks jumped 6.5 percent to $20.72, eBay (EBAY) gained 2.3 percent to $51.45, Google increased 1.3 percent to $871.63, and Milpitas-based SanDisk moved 3.3 percent higher to $57.14 after a fire at rival Hynix's factory in China.
Up: Yelp, Juniper, Applied Materials, Intel, Electronic Arts (ERTS), Adobe, eBay, Apple, Zynga, Google, Cisco (CSCO), AMD, Netflix (NFLX), Yahoo (YHOO), SunPower (SPWRA), Tesla, Oracle
Down: Pandora, LinkedIn, SolarCity, Salesforce, Hewlett-Packard (HPQ), Workday, Facebook
The SV150 index of Silicon Valley's largest tech companies: Up 17.36, or 1.34 percent, to 1,310.02
The tech-heavy Nasdaq composite index: Up 36.43, or 1.01 percent, to 3,649.04
The blue chip Dow Jones industrial average: Up 96.91, or 0.65 percent, to 14,930.87
And the widely watched Standard & Poor's 500 index: Up 13.31, or 0.81 percent, to 1,653.08
Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/jowens510.