Wall Street may have misread the signals coming out of Apple Stores in China

By Philip Elmer-DeWitt
December 17, 2012

FORTUNE — In a press release that represents first solid piece of good news for Apple AAPL investors in weeks, the company announced Sunday that sales of the iPhone 5 in China over its three-day launch weekend topped 2 million units.

“Customer response to iPhone 5 in China has been incredible, setting a new record with the best first weekend sales ever in China,” said Tim Cook.

The 2 million figure will come as a surprise to traders who pushed Apple to a 10-month low Friday after reports that Apple Stores in Beijing and Shanghai were nearly devoid of customers the day of the launch. It turns out that most of the action over the weekend was at the retail outlets of Apple’s carrier partners — China Unicom CHU and China Telecom CHA — where the phones were being sold on long contracts with generous price subsidies. See A not-so-quiet weekend for Apple in China and Taiwan.

Just before the news broke, Citigroup’s Glen Yeung lowered his Apple price target to $575 from $675 and changed his recommendation to Neutral from Buy. On Friday, UBS’ Steve Milunovich lowered his price target from $775 to $700, citing sources who told him they didn’t expect the iPhone 5 to do as well in China as the iPhone 4S.

“Milunovich needs new sources,” deadpanned The Loop‘s Jim Dalrymple.

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