Apple Inc. (NASDAQ:AAPL) May Have to Pull Out of China: Analyst

Apple Inc (AAPL) Store China
Apple Inc. may have to stop doing business in China. This is what Eurasia Group’s founder and president Ian Bremmer told CNBC’s Squawk Box. One would wonder why, because the ugly spat with the FBI mentioned plenty of cases where Apple co-operated well with the Chinese authorities. Bremmer even went on to add that he would find it very surprising if after five years Apple was still operating in China the way they do today.  This comes just a day before the firm is set to release its Q2 2016 earnings figures.
Apple Inc (AAPL) Store China

Apple Inc. may become the Next Facebook in China

The Chinese government is known to have strict control over the flow of information and communication that happens through the telecom and media channels available in the country. Recently, a Wall Street Journal report had said that China had shut down iBooks and iTunes Movies in the country. This was claimed to be a part of moves to bring online content under the same level of control as traditional media. Bremmer went on to add that Apple Inc. may end up treading a similar path as Facebook did. The latter is already banned in China.

Reasoning his belief, Bremmer said that many people don’t properly get the way technology is regulated in China. He added that the way Apple projects itself as someone safeguarding the privacy of the user can tilt the scales against Apple. Since the firm tends to make sure that nobody else can access the user’s data easily, it stores a lot of information in the cloud. The data centers of these clouds may not fall under Chinese jurisdiction. And that is not something that will please their government.

Bremmer said that there are only two ways from here. One is that Apple changes the way they operate, which he sees as unlikely. The other is that they face major hurdles trying to deal with Chinese consumers.

On the contrary, Gene Munster from Piper Jaffray doesn’t see much of a reason to worry. As per him, Apple can place bets on doing good business in China.

Pulling the Hype Out of Expectations

At the same time, Daniel Lacalle, CIO of Tressis Gestion, believes that Apple Inc.  may not get its usual share of attention this year. He explained his reasoning to CNBC on the grounds of a lack of ‘bullish’ news coming from Apple directly. Lacalle mentioned that at present there is nothing exciting coming out. There needs to be some announcement of some kind about sales, products etc. that can serve as a shot in the arm. Since he doesn’t see such a thing happening this year, he feels that the stock won’t be looked up a lot.

Lacalle then talked about what Apple is doing financially. He said that the firm is not efficiently using the available cash and that makes precise estimates difficult. Consequently, analysts have been keeping lower and lower expectations. While Apple may be relieved to see some easing in the pressure to deliver, Lacalle thinks that this trend will continue in the next year as well. The more such estimates keep getting lowered, the more will investors think twice before buying the stock.

He then ended by saying that if the firm really intends to attract investors, it will need to disclose something new and fresh. Unless that happens, it is set to pass through a period of consolidation.

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