There have been consistent reports that Apple Inc. (NASDAQ:AAPL) has reached an agreement with China Mobile. The world’s largest carrier was expected to officially announce the deal on December 18, but it didn’t materialize. That disappointed investors, as Apple stock declined 0.76% to $550.77 on Wednesday.
What caused the delay in the Apple-China Mobile deal?
China Mobile chief Xi Guohua said yesterday that it is still negotiating a deal with Apple Inc. (NASDAQ:AAPL) and they have no announcement to make yet. China Mobile is rolling out a new 4G network, so it was widely expected that the carrier would announce a deal with the iPhone maker soon. It’s the only major Chinese telecom carrier that doesn’t offer iPhones yet. China Mobile’s competitors China Telecom and China Unicom have already been offering iPhones. Of course there are some iPhone users on China Mobile’s network, but they are restricted to 2G. According to Tim Worstall of Forbes, it’s Apple Inc. (NASDAQ:AAPL)’s terms and conditions that have been a major hindrance in the deal.
Analysts still positive on Apple Stock
Most analysts were optimistic on Apple stock because a possible deal with Chine Mobile would expose the Cupertino-based company to more than 759 million customers. Apple Inc. (NASDAQ:AAPL) tops the list of Piper Jaffray analyst Gene Munster’s best stocks for 2014. He has a $640 price target on the stock. Munster says major catalysts for potential upside in Apple stock are the release of the iPhone 6, the iTV and the iWatch next year. And of course, an agreement with China Mobile.
Susquehanna Financial’s analyst Christopher Caso is also bullish on Apple stock, raising his price target from $625 to $650. Mr. Caso said Apple Inc. (NASDAQ:AAPL) has reportedly lowered production of the iPhone 5C and increased iPhone 5S production. That should increase the company’s sales and margins. Susquehanna Financial estimates that the iPhone builds should be in the 52 million to 54 million range. Mr. Caso has increased his Q1 guidance for Apple Inc (NASDAQ:AAPL) from $56.6 billion in sales and $13.54 in EPS to $57.1 billion in revenues and $14.02 in earnings.
Apple Inc. (NASDAQ:AAPL) is expected to launch some breakthrough products next year. That’s the key reason analysts are optimistic about the stock. Moreover, Apple Inc. (NASDAQ:AAPL) is unlikely to miss the opportunity to join hands with China Mobile. So a deal with the world’s largest telecom operator will be icing on the cake.
Apple Inc. (NASDAQ:AAPL) shares went down 0.19% to $549.75 in pre-market trading Thursday.