China iPhone demand drives Apple's growth

More than half of the company's value comes from its iconic phone, and business could grow significantly as it pushes further into the world's largest mobile market.

By Trefis Nov 2, 2011 4:42PM

China is Apple's (AAPL) fastest-growing region by far.

The company clocked record sales of $4.5 billion there, or 16% of the global total, in its most recent quarter. Revenue in China grew to $13 billion in fiscal 2011, up from about $3 billion, or 2% of total sales, in 2009.

The iPhone accounts for over half of Apple's stock price, according to Trefis analysis. And if Apple and China Mobile(CHL) sign a carrier contract giving Apple access to 650 million subscribers, this has the ability to move the stock. Currently, China Unicom(CHU) is the exclusive carrier for the iPhone in China.

See the full Trefis analysis of Apple here

Trefis Breakdown of Apple's DriversOpening new stores & new carriers will increase penetration

Apple opened 30 new stores in the latest quarter, only nine of which were in the United States. The Hong Kong store, opened in the last weekend of the quarter, set a company record for the highest opening-day sales. 

Post continues below.

Greater China now has six Apple stores. The U.S. Apple stores have shown that these retail locations help better engage customers and sell more phones.

China Unicom's iPhone exclusivity on the mainland has been a boon to the mobile operator. However, China Mobile and Apple appear close to reaching a deal on its plans to carry the phone. The carrier is already selling and promoting the iPhone around Beijing in the hopes of signing up customers to its Wi-Fi plans in anticipation of a pending deal.

Once signed, the deal will be a huge boost to Apple as China Mobile is by far the biggest mobile operator with around 650 million subscribers. For perspective, China Mobile has a Trefis valuation of close to $230 billion while China Unicom's valuation is just over $50 billion, supported by its 170 million subscribers.

iPhone Market Share

China presents tremendous growth

"We're really doing everything basically that we're doing in the United States, we're doing in China" - Tim Cook, Apple CEO
The company has plans for large scale expansion with significant investment in the country. It has left no stone unturned as it aims to expand both its online store and retail presence. Apple is also concentrating on building third-party channels and spends a significant amount on advertising for promotions in the country as Cook and crew see ample long opportunity for growth.

We currently have a price estimate of $502 for Apple's stock, which is about 20% above the current market price.

Understand How a Company's Products Impact its Stock Price at Trefis
Tags: AAPL


Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.


StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

123 rated 1
262 rated 2
480 rated 3
651 rated 4
649 rated 5
629 rated 6
616 rated 7
496 rated 8
346 rated 9
111 rated 10

Top Picks

TAT&T Inc9



Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.