IPhone 5 hits China as Apple shares slide further

Fri Dec 14, 2012 1:29pm EST
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By Melanie Lee

SHANGHAI (Reuters) - The highly anticipated release of the iPhone 5 in China, Apple Inc's second-biggest market, failed to stop the recent share slide of the world's most valuable technology company on Friday, and analysts said Apple's longer-term China hopes may hinge on a partnership with the country's top telecoms carrier.

Apple's latest iPhone, sporting a larger 4-inch screen and 4G capability, was launched in the United States and 30 other countries in September, when the company sold more than 5 million of the devices in the first three days.

Apple's shares, however - once among the most desirable of portfolio holdings - have headed steadily lower since September on growing uncertainty about the company's ability to fend off unprecedented competition. This year saw a surge in sales of Amazon.com Inc's cheaper Kindle Fire and Microsoft Corp's first foray into the tablet market with its Surface.

Unlike the crowds that the iPhone 5 debut drew in many cities around the world since September, just one person was waiting at the Apple store in Shanghai's financial district when its doors opened at 9 a.m. on Friday.

"Some of our Chinese sources do not expect the iPhone 5 to do as well as the iPhone 4S," UBS analyst Steven Milunovich wrote in a note to clients.

China is Apple's fastest-growing market, bringing in about 15 percent of total revenue.

"In absolute terms, this (iPhone 5) launch will certainly result in strong sales for Apple in China. However, in relative terms, I don't believe it will move the needle enough in market share," said Shiv Putcha, a Mumbai-based analyst at Ovum, a global technology consultant.

Apple shares were down 3.6 percent at $510.55 on the Nasdaq on Friday afternoon. The stock has lost a quarter of its value since hitting a high of $705.07 on September 21, as it faces increasing competition from phones using Google Inc's Android operating system.   Continued...

A security guard stands next to an Apple retail store during the release of the iPhone 5 in Shanghai December 14, 2012. The China release of its iPhone 5 on Friday should win Apple Inc. some respite from a recent slide in its share of what is likely already the world's biggest smartphone market, but its longer-term hopes may depend on new technology being tested by China's top telecoms carrier. REUTERS/Carlos Barria