Apple's (AAPL) blow-out fiscal second quarter, led by huge gains in sales of iPhones, will raise the prospects for a range of companies, including suppliers and even competitors, along with polishing its own reputation.
Apple, the maker of the iPad tablet, MacBook laptops and iPhone smartphone, last week reported a 94% jump in earnings to $11.6 billion and a 59% increase in revenue to $39 billion for the first three months of the year, well above analysts' estimates.
Leading Apple's bandwagon in the period was the sale of 35 million iPhones, accounting for about half of its revenue in the quarter.
Apple's share price closed at $610 Wednesday, up 9% that day, which has to have investors thinking about what else will ride along on its coattails.
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Obviously, its suppliers, various chip and interface components makers, such as Broadcom (BRCM) and Qualcomm (QCOM), will benefit, along with a handful of others on the prospect that they will see a flood of new orders.
Since Apple saw most of its iPhone growth in China in the quarter, that nation's service providers should eventually get a boost as more people will log on with their new iPhones and ring up big charges for sending email, surfing the Internet and making voice calls.
And Apple's big gains give hopes to its competitors as well, as its success shows that there is still a huge international market for smartphones. So lower-priced providers using the Android communications platform should be able to find market share by following in Apple's footsteps.
Motorola Mobility (MMI), which is about to be acquired by Google (GOOG), and Korea's Samsung Electronics (SSNLF) are the leading Android phone makers.
Google, better known for its Internet search engine, has cited Motorola Mobility's library of 17,000 patents for smartphones as the impetus for its acquisition and that shows its intent on being a mobile-communications player.
Here are 10 stocks that should benefit from Apple's success in selling iPhones, arranged in descending order of analysts' "buy" ratings:
5. China Mobile (CHL)
Company profile: China Mobile, with a market value of $220 billion, is one of three national telecommunications firms in China and controls almost 70% of the country's wireless market, boasting the world's largest subscriber base, at more than 630 million.
Dividend Yield: 3.71%
Investor takeaway: Its shares are up 12.6% this year and have a three-year, average annual return of 9.6%. Analysts give its shares one "buy hold" rating, three "holds," one "weak hold," and one "sell," according to a survey of analysts by S&P.
Morningstar analyst Dan Su says China Mobile is "handicapped by the mandate to use the less-mature TD technology in 3G," which leaves out most Apple products for now.
China Mobile's 3G wireless services operate on a Chinese-developed standard not supported by the iPhone. The handicap means China Mobile, unlike its two main competitors in China, is unable to bundle the iPhone as part of its data-service packages.
But the company recently announced plans to speed up the build-out of 4G TD-LTE network over the next few years. And last week the company said it began 4G wireless services in Hong Kong, adding the city to test markets ahead of a nationwide rollout in mainland China slated for 2014, on expectations that its 4G, which is being developed on a standard known as TD-LTE, will support the next-generation of Apple's iPhone.
4. TriQuint Semiconductor (TQNT)
Company profile: TriQuint, with a market value of $916 million, makes high-performance radio frequency components and modules, used by its customers in 3G and 4G cellular base stations.
Investor takeaway: Its shares are up 5.3% this year and have a three-year, average annual return of 9%. Analysts give its shares three "buy" ratings, one "buy/holds," six "holds," and one "weak hold," according to a survey of analysts by S&P.
S&P says "we see mobile devices, (the company's) largest business segment, benefiting from the increasing adoption of smartphones and the expansion of RF (radio frequency) content required for 3G/4G technology" used in mobile handsets.
3. China Telecom (CHA)
Company profile: China Telecom, with a market value of $35 billion and one of three national telecommunications firms in China, is a provider of wireline telephone, Internet and managed data services in 20 of the 31 provinces in China.
Dividend Yield: 1.8%
Investor takeaway: Its shares are down 8% this year, but have a three-year, average annual return of 5.4%. Analysts give its shares three "buy" ratings, one "buy/hold," and three "holds," according to a survey of analysts by S&P.
S&P, which has it rated "hold," says "the introduction of the CDMA-based iPhone in China will enable the company to strengthen its position in the 3G market, translating into stronger revenue per user and data growth. However, we believe the company will face earnings pressure due to margin contraction in 2012."
But Morningstar analyst Dan Su writes that "on March 9, (the company) became the second mobile carrier in the country to offer the iPhone 4S under a contract with Apple, ending more than two years of exclusivity enjoyed by rival China Unicom (CHU). The iPhone will help boost the appeal of China Telecom's CDMA network among higher-end smartphone users."
2. OmniVision Technologies (OVTI)
Company profile: OmniVision, with a market value of $958 million, is a provider of CMOS image sensor semiconductors used in a broad range of electronic devices. The chips are used to electronically capture images in gadgets such as phone cameras and digital-still cameras. Most of its revenue comes from handset manufacturers.
Investor takeaway: Its shares are up 44% this year and have a three-year, average annual return of 24%. Analysts give its shares three "buy" ratings, two "buy/holds," and seven "holds," according to a survey of analysts by S&P.
S&P says the company "has what we see as an impressive portfolio of quality and feature-rich products, and we think sales for new offerings will expand with the fast-growing smartphone and tablet markets over the long term."
1. Cirrus Logic (CRUS)
Company profile: Cirrus, with a market value of $1.4 billion, develops integrated circuits for specialized applications that find applications in mobile phones. They include graphics-accelerator chips, CD-ROM circuits, chips for advanced disk drives, encoders, switches, controllers and analog-to-digital converters.
Investor takeaway: Its shares are up 31% this year and have a three-year, average annual return of 71%. Analysts give its shares four "buy" ratings, and one "buy/hold," according to a survey of analysts by S&P.
Apple is the company's largest customer at 70% of its revenue last quarter, up from 54% a year ago. Its scheduled to report earnings Wednesday after the market's close.
More: Other stocks likely to ride Apple's wave
--Written by Frank Byrt for The Street.
