Apple iPhone 5 China sales "incredible," but stock falls below $497

Apple (NASDAQ:AAPL) is happy to announce that, in the first three days of official trading in China, two million iPhone 5 units were sold. However, that’s not stopped the analysts putting the boot in and cutting their predictions: Citigroup being the latest bear. In early trading, the stock continued its downward trajectory.

On the one hand, 2 million doesn’t sound much, in a country populated by 1.5 billion.

On The Other Hand, when you compare it with the number of Chinese 3G subscribers, it seems much better.

iPhone 5 in China

Eric Savitz reports:

Apple late Sunday said [it] sold over 2 million new iPhone 5 units in China in the first three days. … “Customer response to iPhone 5 in China has been incredible, setting…the best first weekend sales ever in China,” Apple CEO Tim Cook said in a statement.

Robert W. Baird analyst William Power notes that the strong debut for the iPhone 5 in China is in contrast to reports on Friday of very light traffic to Apple stores.


“Very light traffic”? Jonny Evans explains:

China is the world’s last superpower with a huge consumer market that’s only now coming into its time…and the country accounts for 15 percent of Apple’s revenue. … This success seems widely reported as failure because of the lack of huge queues…on launch. That’s a response to riots that took place when iPhone 4 launched in China. … The company now offers an online lottery system for Chinese iPhone sales.

Customers care about well-designed products which look nice, are easy to use, and don’t require they go through hoops to make safe and secure. … Apple’s success in China this weekend suggests that…when given the choice customers want an iPhone 5 more than…any other device. … In China this weekend we see what happens when…customers vote with their wallets.


And Jim Dalrymple mocks the doubters:

These numbers clearly put to rest speculation by analyst Steven Milunovich who said “some of our Chinese sources do not expect the iPhone 5 to do as well as the iPhone 4S.”

Milunovich needs new sources.


But Shana Lynch notes another analyst downgrade:

After two investment banks cut their price targets…last week, another twisted the knife. … Citigroup Inc. has cut its price outlook…from $675 to $575 and dropped the company from a buy to neutral.

Reports from Asian supply chain sources suggest Apple heavily cut orders for its iPhone 5.


And Philip Elmer-DeWitt sees a still-sliding stock:

Apple, which closed Friday at $509.79, fell below $497 in pre-market trading for the first time since Feb. 15, 2012.


Meanwhile, Alex Short does the math:

I don’t understand how in a country of 1.5 billion people you can call 2 million explosive debut. I can see that statement working for a smaller country, though.


So Horace Dediu calibrates the numbers:

It’s a lot less than what we saw with…the first tranche of launch countries. But it’s not far from [that] achieved by the iPhone 4. The pricing and 3G penetration in China are far less favorable making this even more impressive.


And Brian Marshall fixes the demoninator:

We view this as a very strong launch…in light of a relatively limited 3G subscriber base in China.

AAPL had sold over 5mil iPhone 5 units in the weekend of its launch. … We estimate ~2mil iPhone 5 units were sold at U.S. carriers…in the first 10 days of launch or ~1.0% penetration of a post-paid subscriber base. … AAPL sold over 2mil units at China Unicom and China Telecom, or ~1.5% penetration of a ~130mil 3G subscriber base.

 

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This is OTOH: curated, fluff-free news and commentary, for people too busy to sift the gold from the sludge. is an independent analyst, writer and editor. You can Google-Plus him at , follow him as @richi on Twitter, pretend to be his friend at Facebook.com/richij or just use boring old email: fs@richij.com. Richi publishes a full profile and disclosure of his industry affiliations.

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