Shares of Apple dip on lack of China Mobile deal, supplier's disappointing earnings

Posted:
in AAPL Investors edited January 2014
A pair of negative news bites related to Apple hit on Wednesday, potentially explaining why shares of the company dipped nearly 2 percent in morning trading.

Stock


A rumor from last month claimed that China Mobile, the largest wireless provider in the world, would begin selling Apple's iPhone 5s and iPhone 5c on Dec. 18. But rather than announcing availability of the iPhone, China Mobile instead said it's still in talks with Apple about a potential deal.

Separately, Jabil Circuit, which makes moldings and metal for Apple's iPhones, provided much weaker than expected guidance for its second quarter. That led Citigroup analyst Glen Yeung to speculate that Jabil's poor guidance could reflect negatively on Apple's forthcoming March quarter.

Apple reportedly accounts for about half of Jabil's diversified manufacturing services business, and Yeung believes a poorer-than-expected outlook could suggest iPhone sales may come in below market expectations of 42 million units for the quarter.Wells Fargo analyst Maynard Um dismissed Wednesday's lack of a China Mobile announcement as a "non-issue."

As for the lack of a China Mobile announcement, analyst Maynard Um with Wells Fargo downplayed its significance.

"While the missing announcement may be perceived negatively, we see this as a non-issue and believe this is more of an issue of timing and ultimately expect an agreement to be reached," he said in a note to investors Wednesday morning.

Market watchers are particularly interested in a potential deal with China Mobile, as the wireless provider boasts some 759 million subscribers, making it the largest carrier in the world. This week, China Mobile is launching its 4G TD-LTe high-speed network, and Apple's recently released iPhone 5s and iPhone 5c are both compatible.

Investors have been hotly anticipating a China Mobile deal for Apple for years, though speculation has increased significantly in recent weeks. That's led to a number of erroneous reports, misinformation, and false starts -- including the rumored Dec. 18 launch, which was promoted by mainstream publications such as The Wall Street Journal.

Wall Street analysts generally believe a deal with China Mobile would add about 17 million additional iPhone unit sales for Apple in the first year. That would represent a relatively conservative 10 percent penetration rate of the carrier's current 3G subscriber base of around 170 million customers.
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Comments

  • Reply 1 of 52

    Noise.

  • Reply 2 of 52
    China Mobile officials and Apple are still discussing the size of the bribe needed to get the contract signed.
  • Reply 3 of 52
    rogifanrogifan Posts: 10,669member
    Quote:
    Originally Posted by anantksundaram View Post

     

    Noise.


    Certainly Jabil Circuit is.

  • Reply 4 of 52
    Blaming or crediting certain events (or non-events) to stock movement is hardly a rational pursuit.
  • Reply 5 of 52
    Quote:
    Originally Posted by SpamSandwich View Post



    Blaming or crediting certain events (or non-events) to stock movement is hardly a rational pursuit.

    What event? This is just speculation. Nothing "happened". Nothing that was supposed to happen didn't "occur".



    AAPL is just a stupid and irrational game. I wonder why Tim doesn't wrestle the bull by the horns on this one. And believe it or not, if healthy, and in the same circumstances, a guy like Steve would eat these analysts alive.

     

    I don't think that there is a better CEO than Cook for Apple, he certainly is very important no matter the position he takes, but he should be "feared". Who would try this on Bezos? The guy would just buy the media (like he did) and destroy the company behind such manipulative games. They know it.

  • Reply 6 of 52
    malaxmalax Posts: 1,598member

    I'm glad that Cook is not obsessed with AAPL at the expense of Apple.  He will point out on the next call that trying to understand Apple through the lens of subcontractors and suppliers is a fools errand.  But analysts love to analyze, so what can you do?  You can focus on running the best company you can and let the financial noise sort itself out.

     

    AAPL wasn't the runaway stock success during the second act of Steve Jobs because Steve was courting analysts.

  • Reply 7 of 52
    rogifanrogifan Posts: 10,669member
    malax wrote: »
    I'm glad that Cook is not obsessed with AAPL at the expense of Apple.  He will point out on the next call that trying to understand Apple through the lens of subcontractors and suppliers is a fools errand.  But analysts love to analyze, so what can you do?  You can focus on running the best company you can and let the financial noise sort itself out.

    AAPL wasn't the runaway stock success during the second act of Steve Jobs because Steve was courting analysts.
    Yep. But it is sad how noise can greatly affect the stock when it doesn't seem to happen to Apple's peers.
  • Reply 8 of 52
    rogifan wrote: »
    But it is sad how noise can greatly affect the stock when it doesn't seem to happen to Apple's peers.

    I wouldn't call a 2% change greatly though.
  • Reply 9 of 52
    thomprthompr Posts: 1,511member
    Quote:

    Originally Posted by pedromartins View Post

     

    AAPL is just a stupid and irrational game. I wonder why Tim doesn't wrestle the bull by the horns on this one. And believe it or not, if healthy, and in the same circumstances, a guy like Steve would eat these analysts alive.

     


    I strongly disagree.  I have been following AAPL since 1998, and I recall numerous instances where people complained that Steve should "say something" to defend the stock, or whatever.  But Steve never spent any time responding to rumors or analyst speculation.  Never.  Tim is just following Steve's example in this.

     

    Thompson

  • Reply 10 of 52

    Time and time again, analysts are told not to judge how Apple is doing by using supply chain checks.  They just stubbornly refuse to listen and continue using the same tactics to manipulate Apple any way they can.  If Jabil relies on Apple for half of its orders, why isn't there a possibility that it's the other half of their clients who are cutting back orders.  I'm only saying there is a lot of speculation going on as far as Apple is concerned.

     

    You'd better believe no one would do this sort of thing with CEO Jeff Bezos' company, Amazon.  Tim Cook is worse than a wet noodle when it comes to protecting shareholders.I don't understand how the Wall Street Journal would be allowed to get away with giving out false information and yet Apple does nothing about it to squash those rumors.  Apple should just slap them with a lawsuit to prevent such things from happening in the future.  I don't know why anyone from the WSJ isn't being held responsible for writing articles gleaned from unsubstantiated sources.  The news media has absolutely no fear of retaliation from Apple and I have to blame Tim Cook for this.

     

    Apple stock is going absolutely nowhere with Tim Cook at the helm.  I'm really concerned when a stock can be moved so much by mere rumors.  There just seems to be so much wrong with a company like that.  The only positive thing about Apple's share price drop today is that if Apple is still buying back shares, then today would be a fine day to buy them back.

  • Reply 11 of 52
    jungmarkjungmark Posts: 6,718member
    What event? This is just speculation. Nothing "happened". Nothing that was supposed to happen didn't "occur".


    AAPL is just a stupid and irrational game. I wonder why Tim doesn't wrestle the bull by the horns on this one. And believe it or not, if healthy, and in the same circumstances, a guy like Steve would eat these analysts alive.

    I don't think that there is a better CEO than Cook for Apple, he certainly is very important no matter the position he takes, but he should be "feared". Who would try this on Bezos? The guy would just buy the media (like he did) and destroy the company behind such manipulative games. They know it.

    Stop this "Steve Jobs would" crap. Jobs didn't do anything concerning Apple stock price during its dips.

    Cook did say you can't judge Apple's supply chain with a single data point.
  • Reply 12 of 52
    rogifanrogifan Posts: 10,669member
    philboogie wrote: »
    I wouldn't call a 2% change greatly though.

    I'm not just talking about today. It's happened frequently over the past year+.
  • Reply 13 of 52
    thomprthompr Posts: 1,511member
    Quote:
    Originally Posted by Constable Odo View Post

     

    Tim Cook is worse than a wet noodle when it comes to protecting shareholders. 


    Steve would have done the same as Tim is doing now.  There is an ample amount of analogies from Steve's tenure as CEO.  It is the Apple way:  focus on the company and products, and the stock will eventually follow.  Those of us with the patience will be rewarded in the long run.  Those of us that watch the stock chart will be frustrated in the near and midterms.

     

    Thompson

  • Reply 14 of 52
    Quote:

    Originally Posted by pedromartins View Post

    Who would try this on Bezos? The guy would just buy the media (like he did) and destroy the company behind such manipulative games. They know it.

     

    Bezos - "The King of No Profits" but great stock for stock investors. Investors do not want lot of volatility in the names they are involved in and do not want much of a noise about that company in the media. Amazon is meeting that criteria and Apple is not, that is the reason why many institutions are staying away from Apple! Stability is the key not Volatility for stock investors!

     

    On the other hand traders and gamblers love volatility <img class=" src="http://forums-files.appleinsider.com/images/smilies//lol.gif" /> 

     

    Wall Street World where no brainer investment or trades crushes the investors mindset by volatility or loses! 

     

    Come on Carl Icahn -----> :err:

  • Reply 15 of 52
    http://forums.appleinsider.com/t/161101/iphone-preorders-through-china-mobile-to-begin-this-week-report
    Like I said earlier , those who believe wall shit journal is stupid
  • Reply 16 of 52
    I said at the bottom

    I am very excited and ready to see the dive of AAPL on 18th. FROM that day , u will become like me who disregard whatever news about Apple from Wall Shit Journal.

    ONLY stupid will trust the so-called source from WALL SHIT journal which has a long history of posting misleading news of AAPL.
  • Reply 17 of 52
    john.bjohn.b Posts: 2,722member

    Trying to predict AAPL quarterly results based on the results of one supplier is asinine.

  • Reply 18 of 52
    thomprthompr Posts: 1,511member
    Quote:

    Originally Posted by Constable Odo View Post

     

    I don't understand how the Wall Street Journal would be allowed to get away with giving out false information and yet Apple does nothing about it to squash those rumors.  Apple should just slap them with a lawsuit to prevent such things from happening in the future.  I don't know why anyone from the WSJ isn't being held responsible for writing articles gleaned from unsubstantiated sources.  The news media has absolutely no fear of retaliation from Apple and I have to blame Tim Cook for this.


    In order to win a lawsuit against the media for presenting a story that has false information requires more than just showing that the information is false.  You have to show that they had good reason to know it was false, and that's often a very hard thing to do when the press doesn't have to identify its sources.  Even if you can show that the publisher should have known the info was false, often you also have to prove malicious intent.  We can speculate that this indeed happened, but you have to prove it.

     

    For these reasons, and more, Apple won't ever sue for this.  One good other reason is precedence.  From that point on, every time a negative article came out containing either false information and/or false conclusions, if Apple didn't complain it would be viewed as confirmation.  As Steve figured out over a decade ago, you're better off letting the truth prevail in the long run.  What's a few more months for the truth to come out?

     

    On the flip side of things, you imply that if Apple started suing (and hopefully winning) that the manipulation would decrease.  I don't think so.  It is far too easy to write a speculative piece that makes it clear you are not 100% sure, but still tank or pump the stock.  This will protect you from repercussions.  

     

    The bottom line is that Apple is more vulnerable than Amazon, or Google, or most other names because it chooses to hold its cards close to its vest and because its main sources of revenue (now iPhone and iPad) are perceived by enough investors/traders (not me) as in danger of being knocked down a notch at a moment's notice.  Perfect conditions for rumors to have large impact.  You can't say that about either Amazon (nearly unassailable internet retail king) or Google (nearly unassailable search revenue king via advertising).  So I don't care what CEO Apple has or what lawsuits they throw, as long as their business strategy remains the same, they will be subject to what you see here.

     

    Thompson

  • Reply 19 of 52
    thomprthompr Posts: 1,511member
    Quote:

    Originally Posted by Rogifan View Post





    I'm not just talking about today. It's happened frequently over the past year+.

    It has happened frequently over the last decade and a half... as long as I have been watching.  SameShitDifferentDay.

     

    No big deal.  Come back in ten more years and see how well the stock is doing.

     

    Thompson

  • Reply 20 of 52
    Quote:
    Originally Posted by PhilBoogie View Post





    I wouldn't call a 2% change greatly though.

     

    at $500Billion Market Cap... 2% change is a great change at a more absolute scale.

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