Monday, August 29, 2011

Determining Apple's Next Buy Signal

| AUG 25, 2011 | 9:30 AM EDT

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Now that Steve Jobs has resigned as CEO, the question is what's the next buy signal forApple (AAPL)?

There have been a number of announcements and rumors this week relating to Apple including that the company will announce a slimmed down version of iPhone 4 announced in September. It will be called iPhone 4GS with 8G of memory -- a much smaller version.

There was also news on Tuesday that Sprint (S) would sell the iPhone starting this Fall. It helped juice Sprint's stock by 10% on Tuesday and it means that Apple might sell another 6 million phones next year.

While all that is a net positive for Apple's stock, these are both relatively small pieces of news for a company the size of Apple.

What might be much more significant for Apple and its stock is if the company can confirm a specific plan for taking this smaller and cheaper version of the iPhone (or perhaps an even smaller/cheaper model) that is targeted for the pre-pay emerging market with specific carrier partners in China and India.

There has been a lot of speculation about Apple announcing a deal with China Mobile(CHL). In addition to newly appointed CEO Tim Cook's personal visits, Steve Jobs apparently courted China Mobile directly over the last few months.

Announcing a deal with China Mobile that is geared toward the prepay market in China (representing over 90% of China's cell phone market) would be a huge deal for Apple.

That is the kind of single news piece that could move Apple's stock. And it might be coming as soon as in a few weeks.

As far as Jobs himself, I actually think we're about to see that there has been a "Jobs discount" built into Apple's stock, rather than a premium. This fear -- will Steve leave? -- has been hanging over the company for some time. Now, there is certainty about Cook's ascension.

I don't expect it to happen today, but I think that as investors see Cook perform in the next few weeks and months, we are going to see many more buyers than sellers of Apple.

At the time of publication, Jackson was long AAPL.

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