Apple In China: iPad OK?d, China Mobile Takes iPhone

Chances are the Cupertino, Calif.-based company will be able to start selling more products as early as next month, when it starts its fourth fiscal quarter.

Besides boosting revenue and profits from China, where Apple CEO Timothy Cook visited in March, the approvals could dramatically boost the company's prospects in China, where middle-class incomes are spurring consumer purchases. Market researchers say Samsung Electronics (Seoul: 5930) holds about 25 percent of Chinese smartphone sales while Apple's share is only around 7 percent.

The approvals could also assist Apple shares, which have fallen 14 percent from their all-time high of $644 set on April 10. At midday Monday, they were at $554.42, down $10.47.

China's Telecommunications Equipment Certification Center said the new iPad is compatible with China Unicom's (NYSE: CHU) 3G wireless services. The approval removes the last obstacle to selling the products.

Apple sold 11.8 million iPads last quarter, bringing cumulative sales to about 55 million.

The China regulatory approval came around the same time the same agency approved the acquisition of Motorola Mobility by Google (Nasdaq: GOOG), the No. 1 search engine. Google closed the $12.5 billion acquisition of the Motorola Android smartphone maker on May 22.

China Unicom had been Apple's exclusive iPhone seller until recently, when the company added China Mobile Ltd. (NYSE: CHL), the No. 3 carrier.

Last quarter, China accounted for $7.9 billion of Apple's overall revenue, or 20 percent of the total. We had an incredible quarter in China, Cook said, when he discussed results with investors.

But Apple's primary contractor, Foxconn, a unit of Taiwan's Hon Hai Precision Industries (Taipei: 2317), couldn't meet initial consumer demand: Before the Year of the Dragon began in late January, consumers rioted over iPhone shortages in Shanghai.

Cook visited Apple retail stores in Beijing and Shanghai during his tour, his first as Apple CEO.

Besides boosting Apple sales, analysts believe the company sells the iPhone 4S at a higher margin than in the U.S. Apple's overall gross margin, or sales less costs of revenue, rose to a record 47.1 percent last quarter from only 41.4 percent a year earlier.

For earnings, that could also add more to Apple's bottom line. Jefferies analyst Peter Misek estimates Apple will report third-quarter net income around $9.38 billion, or $10.02 a share, compared with $7.3 billion, or $7.89 a year ago.

Meanwhile, Misek and other analysts expect Apple to refresh the iPhone 4S before long with a successor, an iPhone 5 or whatever monicker Apple decides, which will be an improved product with better displays and features, a higher retail price and resulting higher margins.

Based on Monday's market, Apple's market capitalization is $516.2 billion.