Misek said Chinese sales should accelerate to the point where a sizable earnings boost is inevitable, simply for the fact that, based on Jefferies estimates, 400 million Chinese can now afford an iPhone.
“That’s a lot bigger than (the U.S.),” he added. “They’ve eclipsed us, and its staggering how quickly that’s happened.”
Apple’s mobile sales in China are already twice as big as other carriers, Misek notes, with nearly 700 million subscribers. This doesn’t even touch on the new iPad, which has yet to be offered for sale in mainland China.
Furthermore, wireless phone carriers such as Verizon Communications and AT&T are ensuring Apple’s continued success through subsidies, which average “around $400 a phone,” according to Misek.
“If you were an executive at Verizon or AT&T, and thought, ‘At Verizon, half my smartphone sales are iPhones’ or, ‘At AT&T, 75 percent of smartphone subscribers have iPhones.’ Are you going to jeopardize that? Or are you terrified that the day you cut subsidies, another carrier will subsidize it. It would be suicidal.”
If anything, Misek says the only concern Apple has going forward is Samsung Electronics.
“Samsung’s advantage is their OLED (light-emitting diode) screens , which we think are the future,” he said. “They are super-thin, self-emitting screens, which consume 90 percent less power."
The next question seems apparent: Couldn’t Apple woo any screen manufacturer it deems necessary? Last quarter, it added about $14 billion in cash to the balance sheet, bringing the total to $110 billion at the end of the second quarter. No competitor has come near that.
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Misek and Jefferies do not own shares in Apple.
Follow Jennifer Leigh Parker on Twitter @jparker741 .