This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Apple's Future, Like Its Products, Will Be Made in China (Update1)

Stocks in this article: AAPL T VZ CHA CHL

(Updated to provide analysts' iPhone estimates in the fifth paragraph.)

NEW YORK (TheStreet) -- For all the worries about Apple (AAPL) failing to live up to lofty expectations, the company has one word for the doubters: China.

Apple is generating record revenue growth in mainland China, thanks in large part to a deal with China Telecom (CHA) during the fiscal second quarter, as well as an expanded relationship with China Unicom (CHU).

IPhone sales in China had staggering growth in the second quarter.

CEO Tim Cook said yesterday on Apple's earnings conference call that it was an incredible three months in China, which produced $7.9 billion in revenue, up three-fold. Perhaps that makes perfect sense since Apple's products are made in China (though they're "designed in California," as the company says on its devices).

"So it is mind-boggling that we can do this well," Cook said. The Cupertino, Calif.-based company generated $12.4 billion in revenue from China in the first half of fiscal 2012, compared with $13.3 billion for all of last year.

Many analysts didn't see such a bullish earnings report coming. Apple bulls such as Piper Jaffray's Gene Munster had forecast 33 million iPhones, Hudson Square's Dan Ernst 28 million and Barclays Capital's Ben Reitzes 32.97 million sold during the quarter, well below the 35.1 million actually sold.

Goldman Sachs analyst Bill Shope noted that Apple's growth in other countries outside the U.S. may now be the most important component for Apple.

8 Stocks Rising Fast on Rich People's Spending

"International share gains and growth in China, in particular, should be a greater factor for iPhone and iPad growth over time, and it also should be a key driver of upside surprises in the near term. Indeed, when looking at Apple's overall revenue growth in China, it's becoming clear that Apple's emerging market momentum may be the most important component of the revenue story," Shope wrote in a note to clients. He raised his price target to $850 from $750 and rates the shares "conviction-buy."

China will be a tremendous opportunity for Apple, as it continues to expand into the country, especially once Apple brings the iPhone to China Mobile (CHL), the country's largest mobile carrier. Apple sold the most number of iPhones for any period except the first quarter.

Apple generated earnings of $12.30 per share on $39.2 billion in revenue for the second quarter. Analysts polled by Thomson Reuters were looking for earnings of $10.02 a share on revenue of $36.69 billion. A total of $22.7 billion of revenue was from the iPhone, now available in more than 100 countries, and none of more importance than China.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,030.21 +6.04 0.03%
S&P 500 2,081.88 -0.29 -0.01%
NASDAQ 4,773.4720 +8.0480 0.17%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs