Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Morgan Stanley (MS), China Mobile Ltd. (ADR) (CHL): Here’s How Apple Inc. (AAPL) Wins in China

One of the negative aspects of Apple Inc. (NASDAQ:AAPL)‘s most recent quarterly results was an unexpectedly large slowdown in China. This was particularly concerning because at $4.9 billion in revenue during the third quarter, Apple’s Greater China business accounts for about 14% of its total sales — and Apple needs this number to grow substantially in the years ahead if it’s to muster any type of significant revenue growth from this point forward. Instead, Apple Inc. (NASDAQ:AAPL)’s Greater China operating segment revenue declined by 14% in the third quarter on a year-over-year basis and 43% when compared to the second quarter of 2013.

Apple Inc. (AAPL)

Also of concern to Apple Inc. (NASDAQ:AAPL) investors is the rapid rise in market share for Google‘s Android operating system, which has taken a commanding lead in China and other global markets. In fact, some estimates peg Google’s share of the Chinese smartphone market at more than 70%.

However, recently published research from Morgan Stanley (NYSE:MS) suggests that Apple Inc. (NASDAQ:AAPL)’s prospects in China are about to receive a substantial boost from the rumored launch of a lower-priced iPhone “5C” on September 10.

Morgan Stanley (NYSE:MS) surveyed 2,000 Chinese mobile phone users and found that 23% of potential smartphone buyers intended to purchase the iPhone 5S, which was slightly above the 19% of phone owners that chose the iPhone in Morgan Stanley’s previous survey in January 2013. However, that number jumped to 36% if Apple Inc. (NASDAQ:AAPL) were to launch a lower-priced iPhone.

As for how low the iPhone 5C would have to be priced, the survey found that Chinese consumers consider US$486 (or RMB 4,000) to be an acceptable price range. That’s a very positive sign for Apple, because it’s widely expected to price the iPhone 5C at $399 or less.

Also interesting to note is that Morgan Stanley (NYSE:MS)’s survey found that Apple could receive an additional 6% boost in market share if it were to reach a deal with China Mobile Ltd. (ADR) (NYSE:CHL) to bring the iPhone to its massive network of subscribers. With recent reports of talks between Apple CEO Tim Cook and China Mobile Ltd. (ADR) (NYSE:CHL)’s management, the two companies may be making progress on this front.

The article Here’s How Apple Wins in China originally appeared on Fool.com and is written by Joe Tenebruso.

Joe Tenebruso manages a Real-Money Portfolio for The Motley Fool and is an analyst on the Motley Fool Stock Advisor and Supernova premium service teams. You can connect with him on Twitter @Tier1Investor. Joe has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Apple and Google. It also owns shares of China Mobile.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading...