Apple Stock This Week: Carrier Battles and Lackluster Preorders

Apple (NASDAQ: AAPL  ) finished the week down about 1.5%, slightly underperforming the S&P 500's smaller loss and suggesting the market's sentiment toward Apple stock was basically unchanged this week. Here is the most important news and analysis related to Apple stock that surfaced during the week.

iPhone 5c.

Underwhelming iPhone preorders at China Mobile?
After a Dec. 22 announcement that Apple has finally officially put ink on a deal with China Mobile, the world's largest carrier's iPhone preorders and sales are set to be closely scrutinized by the Street. In fact, estimates are already under way. Estimates began with forecasts for iPhone sales at the carrier in China Mobile. Now Wedge Partners (via Cult of Mac) has put a figure on preorder estimates for the first weekend, estimating orders of 100,000. That's less than the 120,000 and 150,000 estimated preorders for China Unicom and China Telecom, respectively, when they launched the iPhone 5s and 5c in September.

Though 100,000 orders may seem small for a carrier that boasts 763.3 million total wireless customers, Fool contributor Adam Levy isn't worried about the underwhelming number. Beyond the fact that the iPhone lineup is several months old now, Levy suggests that the most important thesis for Apple in China remains unchanged: over the long haul, a steadily growing Chinese economy will provide an ongoing stream of new customers for Apple.

Carrier battles
In an effort to lash back at T-Mobile after the carrier's gains in subscribers, AT&T has announced on Friday that it is offering up to $450 in credits to customers who switch to its wireless services from T-Mobile.

The credits come in two forms. First, customers switching to AT&T who trade in their smartphones can get a gift card for another phone worth up to $250, though it's still unclear exactly what phones will qualify. Second, the other $200 is simply a credit for switching that can be applied to a customer's bill or other AT&T products or services.

T-Mobile, according to Wall Street Journal author Ryan Knutson, was "widely expected to offer a similar promotion" before AT&T announced the deal. While these promotional and discount battles may weigh on the carriers' operating expenses, they're beneficial to Apple. Considering the premium prices required to buy Apple's iPhones, discounts like these may, in some cases, provide enough incremental motivation to compel a borderline iPhone customer to upgrade to the latest model. Most importantly, the irrefutably heated competition suggests that subsidies, whether they come in the form of traditional phone subsidies, interest-free financing, or big discounts, likely aren't going anywhere.

Meaningful news?
The week's Apple news wasn't pertinent enough to have any impact on a long-term investing thesis for Apple stock. Going forward, it will be worth taking a look at opening weekend sales of iPhones on China Mobile's network if the company decides to share them. The iPhone officially launches on the network on Jan. 17. Meanwhile, I remain convinced the stock is priced too conservatively and is an excellent holding for investors with a Foolishly long-term horizon.

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  • Report this Comment On January 04, 2014, at 12:28 PM, Thompr97 wrote:

    Chaim is right. China Mobile hasn't even announced pricing. These are folks that want iPhone regardless of price. Once prices are established and actual orders are underway, watch those sales climb - especially if there are decent subsidies like on the competing Chinese carriers.

  • Report this Comment On January 04, 2014, at 4:50 PM, 2sour wrote:

    guys ... go easy on Daniel ... he's just trying to get a better buying opportunity.

  • Report this Comment On January 04, 2014, at 11:31 PM, johnestromjr wrote:

    Daniel, I think things will pick up once they roll out 4G TD LTE. Right now it's only in a handful of cities. By year's end [supposedly] it will be in 530 cities with a combined population of over 500 million. Apple should also get a bump for Chinese New Year which occurs on January 31st. Patience, grasshopper.

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