Back to top

Analyst Blog

Taiwan’s Fair Trade Commission has slapped a fine of $666,700 on Apple Inc. (AAPL - Analyst Report) for restricting the prices charged by local vendors for iPhone contracts. This violates Taiwan’s free trade law as Apple Asia requires carriers to obtain its permission before setting contract prices on iPhones.

Reportedly, Apple Asia also instructed carriers to alter service contract and subsidy prices, which led to the imposition of the fine. These three carriers, namely Chunghwa Telecom Co Ltd, Taiwan Mobile Co Ltd and Far EasTone Telecommunications Co Ltd, entered into reseller contracts with Apple, by virtue of which it can set the right prices.

This news comes at a time when Apple announced its tie up with China’s leading mobile phone carrier, ChinaMobile (CHL - Snapshot Report), which is expected to help the iPhone maker to penetrate the world’s most populous country at a much faster rate. Although the Taiwan Fair Trade event may have some negative impact on Apple.

Now it remains to be seen how Apple sets the price in China, which is the second biggest market for iPhone. It is likely that the company can set prices over $700 for the phone in China. With the average annual income in China of about $2,100, the price point could be matter of concern, as it will not be affordable to many.

Given this, the iPhone deal might not be a game changer that many expect, though it will boost revenues. The real question is by how much, and this will only be answered once the iPhone goes on sale for China Mobile in a little less than a month from now (Jan 17th).

Although the China Mobile deal is a positive for the company, the current dispute with Taiwan’s Fair Trade Commission may rationalize growth prospects to some extent. Moreover, increasing competition from other companies such as, Samsung, Sony (SNE - Snapshot Report), Nokia Corp. (NOK - Analyst Report) and HTC are also likely to weigh on the stock.

Apple currently has a Zacks Rank #3 (Hold)

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
SYNAPTICS I… SYNA 78.11 +8.14%
GREEN PLAIN… GPRE 39.41 +5.12%
PILGRIM'S P… PPC 28.82 +3.08%
SKYWORKS SO… SWKS 52.07 +2.58%
CLAYTON WIL… CWEI 109.08 +2.51%