Apple growth hinges on China, new devices

 Apple Inc's surprisingly strong performance in China soothed fears that iPhone sales were losing steam, though analysts wondered how long Chief Executive Tim Cook could sustain the company's sizzling growth without a revolutionary new product. 

Shares of the world's most valuable technology company, recouping much of their losses over the past two weeks, leapt about 9 percent on Wednesday after Apple again blew past Wall Street targets, tacking on close to another $50 billion in market cap. 

The bulls point to emerging markets, in particular China, whose mobile market is the world's largest and far from saturation and upcoming products like a 4G-enabled iPhone 5 and the oft-rumored Apple TV, as sustaining eye-popping growth such as the near-doubling of its net income in the second quarter. 

But the bears, with a longer-term view, fear that Google Android devices will eventually put pressure on Apple's margins in China as they have elsewhere, and wonder if Apple will be successful in tacking on another blockbuster consumer device to its portfolio. 

Sales in China, particularly, are key for Apple to maintain its pace of revenue growth in the longer term, said Carolina Milanesi, consumer technologies analyst at Gartner. "That's the big question," she said, referring to market share in China. "From an affordability perspective, I think the opportunity is there to allow it to maintain that growth or at least not to see an immediate drop in sales." 

In products, "TV seems to be one that everybody is looking at," she added. Shorter term, over the next year, some investors and Wall Street analysts note that Apple's sales of the all-important iPhone could flatten out over the next few quarters as consumers await the next version of the popular smartphone. 

Apple's own revenue forecast was more conservative than usual for the fiscal third quarter, a period during which an upgrade of the iPhone or iPad are unlikely. 

"We note that iPhone product cycles appear to be getting increasingly pronounced, with fiscal first quarter and second quarter benefiting from very strong iPhone 4S product cycles in the US and China respectively," said Toni Sacconaghi, analyst with Bernstein Research, adding he expected the next couple of quarters to see "more sluggish unit sales." 

But for now, sales of 35.1 million iPhones in the last quarter saw Wall Street analysts extend their love affair with Apple shares with a slew of hiked stock-price targets as concerns eased that the company was losing market share in the cut-throat smartphone market.