Tomahawk, WI 8/02/2013 (Basicsmedia) – A lot of times, reports fly all over indicating meetings which took place between CEOs of two or more companies. There is nothing strange about these meetings unless the reason for their taking place is shared with the rest of the public. This is where the recent meeting between the CEOs of Apple Inc. (NASDAQ:AAPL) and China Mobile is something of great interest.  One of the reasons why this meeting has attracted much attention is because of the possibility that the two companies are planning to work together and this will give APPL a much better foothold and presence inside China.

Why is this meeting of Interest to Investors?

It is important to realize that China Mobile is the only carrier of its kind inside China which is yet to start selling iPads and iPhones. This is something of great interest seeing that APPL is known the world over for developing, selling and distributing iPads and iPhones. Now, if the two companies are thinking of ways of cooperating in terms of business, then this is very great news to investors since China is a very large market which a lot of potential. China Mobile already has a huge network which it can use to distribute APPL’s iPhones and iPads all over the country.

One would also need to understand why APPL would even be thinking about taking such a step. It recently reported that there had been a 43% slump in sales across the Greater China, which includes Hong Kong and Taiwan. The sales which were affected were those revolving around April to June 2013, hence the need for APPL to think of ways of gaining rather than losing to its local Chinese rivals, who have already bridged the huge gap which existed in terms of technology used to make their products, vis a vis those of the American giant.

The Chinese government is set to start giving out 4G licenses later this year. When this happens, then China Mobile and APPL will both benefit in terms of revenue obtained from increased sales. These increased sales will mostly come from the increased product diversification which will now be in the Chinese market. China Mobile currently lags behind both China Unicom and China Telecom Corp in terms of customers who have already adopted the 3G technology. Any cooperation with APPL will, therefore, work to its advantage in terms of reducing this gap.

How Has the Market Responded to this news?

This is news which has the capacity to influence how APPL performs in the stock market. If investors display some level of confidence in the deal, there would be a strong showing with APPL stock price. Unfortunately, it is still too early to tell how much this will affect the stock price, but below is the diagram indicating how it performed on July 31, 2013. It is worth noting that APPL CEO also met with representatives from China Unicom and Unicom Telecom though there isn’t sufficient news regarding the outcomes of these talks and what was discussed.

1apple

Diagram showing how APPL performed on July 31, 2013. It is courtesy of http://finance.yahoo.com/q?s=aapl.

What Is My Advice to Investors?

I believe that if APPL can successfully negotiate with its China counterparts, it will gain more from this deal. Don’t forget that China, especially Greater China, has been of great benefit to APPL and currently, accounts for more than 13% of its quarterly sales, which amount to $5 billion. There is strong belief that this could triple when the full effects of this cooperation start emerging. I would advice investors to follow this news closely since it indicates that there could be better, and more improved, returns on investments very soon.

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