Apple Inc. (AAPL): How a Rumor Gets Confirmed, and How Carriers Pay a Price

Apple Inc. (NASDAQ:AAPL) has always been a focus of rumor and innuendo, and even predictions – many of wich end up not coming true – mostly because of the company’s historical secretiveness about its activities and its innovations. And in such a competitive marketplace, that philosophy has worked well for Apple Inc. in a sense, as it has generated dozens of Apple Inc.-tracking websites that give the tech company ll kinds of Internet-based publicity even when nothing it happening outside the headquarters. After all, when a company only puts out about a half-dozen devices per year and yet the company gets about 400 media mentions in an average business day, it pays to be secretive.

But what is the cost for others who partner with Apple Inc.? From a reputation standpoint, aligning with Apple Inc. can be a huge boost due to its premium and elite status. But what about the bottom line for a company? In the short term, let’s say it’s an investment in long-term reputation building.

Apple Inc. (NASDAQ:AAPL)

Don’t buy China Mobile Ltd. (ADR) (NYSE:CHL) just yet

Appple Inc. (NASDAQ:AAPL) has been focusing its attention on China for quite a while; CEO Tim Cook had visited the county several times in late 2012 and the first part of 2013, maintaining that China was an important market for the company. And after months of negotiations, Apple Inc. finally had a major breakthrough in December when it announced that it had reached an agreement with China Mobile Ltd. (ADR) (NYSE:CHL) – not only the largest wireless carrier in China but also the world – to sell iPhones to the carrier’s 750 million-plus subscribers.

With China Mobile Ltd. (ADR) (NYSE:CHL) recently losing some subscribers to competitors who were offering the iPhone, this deal can be big in retaining existing customers, but the short-term effect on the company has been rough. Though China Mobile Ltd. (ADR) won’t be selling Apple Inc. (NASDAQ:AAPL) iPhones for a couple more weeks, several analysts have already reacted in negative ways to the deal, with several downgrading the stock and may reducing the company’s profit projections for the upcoming quarter by about 10 percent due to an increase in outlays thanks to Apple Inc.’s very high subsidies But this is not an isolated example – two other China wireless carriers saw their stocks move in a negative trajectory for about six months following the announcement of an iPhone distribution deal. Will the “curse” affect even the world’s largest wireless carrier for two full quarters? We may all have to wait and see.

Apple Inc. (NASDAQ:AAPL) rumor gets confirmed¬†… no, we mean it

How do we know that a rumor about Apple Inc. (NASDAQ:AAPL) is really just a rumor or is a legitimate story? Most of the time we can “confirm” a rumor when a research analyst actually mentions a rumor in a research note to investors. With an analyst’s reputation on the line and many investors often making their investments based on what analysts report, no analyst worth his salt would base its analysis ona rumor unless therumor can be confirmed.

Therefore, we believe now that Apple Inc. (NASDAQ:AAPL) is truly working on a large-size iPad, which is being called the “iPad Pro” for now. It had been rumored to be a 12- or 13-inch display device, and analyst Brian Wang of Evercore wrote about it in a recent note, saying tat this device would come to retail shelves by the fall of 2014.

But will this be a hybrid device, like the tablet-laptop Surface by Microsoft Corporation (NASDAQ:MSFT)? There seems to be some question, as rumors have floated about two different devices that could very well be the same device – one rumor talks about a larger iPad device, and another refers to a more powerful laptop. This new iPad, Wang write, will be designed for the enterprise (like MacBooks generally are). Who knows if these rumors actually refer to the same device, but Apple Inc. (NASDAQ:AAPL) CEO Cook has been on the record ripping the “confusion” of the Surface as a hybrid device, which would seem to indicate that Apple Inc. will keep laptops and tablets separate from each other. But are the comments more about the quality of the device and not so much the device itself?¬†Stay tuned.

 


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