John Paczkowski

Recent Posts by John Paczkowski

Apple’s Big Plans for China

Not much in the way of news coming out of Apple’s annual shareholders meeting today. Oh, there was CEO Steve Jobs dismissing suggestions that the company use the $40 billion or so in cash and investments it has on hand to issue a dividend to investors. “Our goal is to increase enterprise value,” he said. “Which would you rather have us be? A company with our stock price and $40 billion in the bank? Or a company with our stock price and no cash in the bank?”

Aside from that, the only thing worthy of remark seems to be Apple’s plans for expansion in China. The company intends to open 25 stores in that country over the next two years. At the moment, Apple (AAPL) has a single store in Beijing and at least two others planned for Shanghai, including one at the Shanghai World Financial Center, so the company’s ambitions in the country are aggressive.

With good reason. Mac sales in China increased nearly 100 percent year over year in the first financial quarter of 2010. And while iPhone sales got off to a slow start, they’re ramping up. As of early January, China Unicom, Apple’s carrier partner in China, had activated some 200,000 iPhones.

Clearly, China is a country of enormous potential for Apple as COO Tim Cook noted during Apple’s January earnings call. “We have just really got going in China.” he said. “I really like what I see so far. Although the average income is not nearly as high as perhaps the United States and some other western European markets, there is a significant size middle class….”

The proof is in the numbers. “In fact,” as Cook noted, “if you look at greater China last quarter, which is China, Hong Kong and Taiwan, our revenues tripled year-over-year in that geography which is I think phenomenal by any measure. We have a tremendous focus on it.”