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Apple Shifts iCloud Data to China, Complies With Country Law
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Per Reuters, Apple (AAPL - Free Report) will be shifting Chinese users’ iCloud data to local data centers to ensure compliance with the country's newly implemented cyber-security regulations.
Moving the cryptographic iCloud account keys to China makes it simpler for local authorities to obtain information on an iCloud user as they will no longer have to seek approval from the U.S. legal system to do so.
In order to comply with the rules, Apple established its first data center in China in July 2017, which is operated in cooperation with Guizhou-Cloud Big Data Industry Co., Ltd. (GCBD), a data management enterprise co-founded by the Guizhou provincial government.
Reportedly, in January, the company notified users that the stored information would be moved to servers operated by GCBD.
However, the move has raised concerns among human rights activists as they fear that easier access to personal information might lead to arrests of so-called “political dissidents”. Apple was quoted saying, "While we advocated against iCloud being subject to these laws, we were ultimately unsuccessful."
Notably, shares of Apple have gained over 28.2% in the past year, outperforming the industry’s 27.7% rally.
China Figures
China represented 20.3% of Apple’s total revenues in the last reported quarter. The company benefited from improvement in iPhone, Mac, iPad and Wearables sales, leading to a 10.6% year-over-year increase in revenues.
Per market research firm IDC’s latest Quarterly Mobile Phone Tracker report for China, Apple shipped approximately 10% fewer phones in 2017 compared with 2016. However, the launch of Apple’s highly-awaited iPhone X was a breather for the company in the fourth quarter as it helped it become a leader in the premium segment.
Nevertheless, we note that the smartphone market in China is slowing down, as evident from IDC’s latest data. In fourth-quarter of 2017, the market declined 15.7% year over year. Moreover, it dropped 4.9% year over year in 2017.
This doesn’t bode well for Apple amid intensifying competition from regional players who are offering feature-rich smartphones at a much cheaper price.
In a bid to promote domestic manufacturers, the Chinese government has created an increasingly challenging regulatory environment for foreign companies to operate, which is a concern for Apple.
We therefore believe complying with Chinese regulations is of utmost importance as the country continues to be an important market for Apple. The company has also stepped up investment in the country to woo the government in a bid to protect its business interests.
Long-term earnings growth for NVIDIA, Lam Research and Paycom is projected to be 10.3%, 14.9% and 10%, respectively.
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With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
Image: Bigstock
Apple Shifts iCloud Data to China, Complies With Country Law
Per Reuters, Apple (AAPL - Free Report) will be shifting Chinese users’ iCloud data to local data centers to ensure compliance with the country's newly implemented cyber-security regulations.
Moving the cryptographic iCloud account keys to China makes it simpler for local authorities to obtain information on an iCloud user as they will no longer have to seek approval from the U.S. legal system to do so.
In order to comply with the rules, Apple established its first data center in China in July 2017, which is operated in cooperation with Guizhou-Cloud Big Data Industry Co., Ltd. (GCBD), a data management enterprise co-founded by the Guizhou provincial government.
Reportedly, in January, the company notified users that the stored information would be moved to servers operated by GCBD.
However, the move has raised concerns among human rights activists as they fear that easier access to personal information might lead to arrests of so-called “political dissidents”. Apple was quoted saying, "While we advocated against iCloud being subject to these laws, we were ultimately unsuccessful."
Notably, shares of Apple have gained over 28.2% in the past year, outperforming the industry’s 27.7% rally.
China Figures
China represented 20.3% of Apple’s total revenues in the last reported quarter. The company benefited from improvement in iPhone, Mac, iPad and Wearables sales, leading to a 10.6% year-over-year increase in revenues.
Per market research firm IDC’s latest Quarterly Mobile Phone Tracker report for China, Apple shipped approximately 10% fewer phones in 2017 compared with 2016. However, the launch of Apple’s highly-awaited iPhone X was a breather for the company in the fourth quarter as it helped it become a leader in the premium segment.
Nevertheless, we note that the smartphone market in China is slowing down, as evident from IDC’s latest data. In fourth-quarter of 2017, the market declined 15.7% year over year. Moreover, it dropped 4.9% year over year in 2017.
This doesn’t bode well for Apple amid intensifying competition from regional players who are offering feature-rich smartphones at a much cheaper price.
Apple Inc. Revenue (TTM)
Apple Inc. Revenue (TTM) | Apple Inc. Quote
Conclusion
In a bid to promote domestic manufacturers, the Chinese government has created an increasingly challenging regulatory environment for foreign companies to operate, which is a concern for Apple.
We therefore believe complying with Chinese regulations is of utmost importance as the country continues to be an important market for Apple. The company has also stepped up investment in the country to woo the government in a bid to protect its business interests.
Zacks Rank & Stocks to Consider
Apple carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the broader technology sector are NVIDIA Corporation (NVDA - Free Report) , Lam Research Corporation (LRCX - Free Report) and Paycom Software (PAYC - Free Report) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth for NVIDIA, Lam Research and Paycom is projected to be 10.3%, 14.9% and 10%, respectively.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>