FORTUNE — Citi’s Glen Yeung on Monday tried to put a dollar figure on the potential cost to Apple (AAPL) of China’s state-sponsored propaganda campaign, now entering its third week.
Apple, he points out, is not the first foreign company to be targeted by the People’s Republic. YUM brands (part of KFC) saw sales fall 20% year over year in January and February after it was hit by a similar Chinese TV investigative report last December. Toshiba lost its No. 1 spot in Chinese notebook sales after state-run media reported in 1999 that the Japanese manufacturer had different policies for Chinese and American customers.
To calculate the damage the current campaign could do to Apple, Yeung uses Hewlett-Packard’s (HPQ) experience as a template:
Recall that a similar campaign hit HP in 2010, leading to a ~50% reduction in their PC share in China. Apple derives ~16% of its sales in China (CY12) and China accounted for ~24% of Apple’s revenue growth in the past 2 years (2010-2012). If Apple were to lose as much as 50% of their China market share, this would equate to ~$13.1B/$3.62 in revenues/EPS. We add this to our list of concerns about Apple’s market share dominance and still do not recommend the shares at this time.
Continuing the bearish tone that entered Citi’s Apple coverage with the departure of veteran analyst Richard Gardner, there’s more than a whiff of “we told you so” in Yeung’s remarks.
“While bulls remain stubbornly optimistic about Apple’s opportunities,” he writes, “these attacks put a wrench into Apple’s ability to strike a deal with China Mobile to open opportunities further in China. More importantly, however, we believe the undermining of Apple’s brand value can have a more insipid and long-lasting impact. Despite overwhelmingly positive ratings from our peers, we do not recommend Apple shares at this time and stand by our 12/16/12 downgrade to Neutral.”
Apple turned in its fifth down day in a week, closing Monday at $428.91, off $13.75 (3.11%).