BAN FOR GOVERNMENT OFFICIALS. THAT STOCK IS SUFFERING ITS WORST BACK-TO-BACK DAYS IN ROUGHLY THREE YEARS. MY NEXT GUEST, THOUGH, THINKS THE SETBACK IN CHINA AMONG OTHER HEADWINDS ARE OVERBLOWN. JOINING US LIVE AT POST NINE IS WEDBUSH'S DAN IVES. GOOD TO SEE YOU. LET'S TAKE THE MOVEMENT IN THE STOCK, IN AND OF ITSELF. WHAT IS HAPPENING? >> I THINK THE BIGGEST FEAR FOR APPLE HAS BEEN THE CHINA EXPOSURE. I THINK THE WORRY IS THAT THEY WERE ULTIMATELY GO TO BE CAUGHT IN THIS COLD TECH WAR BETWEEN U.S. AND CHINA. I THINK WHEN YOU LOOK AT THESE REPORTS, NOW IT IS 20% OF iPHONE SALES, 98% OF ACTUAL PRODUCTION, COULD THIS DISRUPT THE GOLDEN JEWEL OF THE CUPERTINO GROWTH STORY. >> COULD IT? >> IN MY OPINION, BASED ON THE WORK WE HAVE DONE, I BELIEVE THIS IS -- WOULD I QUANTIFY IT IN TERMS OF WHAT IT COULD BE, I THINK WORSE CASE, WE'RE TALKING ABOUT 500,000 UNITS. RELATIVE TO WHAT'S GOING TO BE 45 MILLION UNITS SOLD IN CHINA. WE HAVE BEEN HERE BEFORE. I THINK YEAR AFTER YEAR THERE IS ALWAYS THE WORRIES HERE, BUT ALL THE WORK THAT WE HAVE DONE BEING IN AND OUT OF ASIA AND CHINA, I THINK RIGHT NOW CHINA IS GOING TO BE UP IN TERMS OF YEAR OVER YEAR AND I THINK THAT MARKET SHARE GAINS CONTINUES TO BE SOME OF THE HEARTS AND LUNGS OF APPLE. >> DOESN'T IT HAVE THE POSSIBILITY OF JUST REVEALING A MORE HOSTILE ENVIRONMENT IN A REAL CRITICAL MARKET WHERE WE JUST SAID 20% OF REVENUES COME FROM CHINA. >> LOOK, THIS IS PUTTING GASOLINE ON THE FIRE IN TERMS OF THE WORRIES. COULD THIS BE THE MOMENT THAT THE BEARS, MANY THAT HAVE BEEN FEARING FOR APPLE AND CHINA, I DON'T BELIEVE SO. I THINK YOU LOOK AT IT, FOXCONN, TALKING ABOUT ONE OF THE BIGGEST EMPLOYERS IN CHINA, COOK HAS BEEN SOMETHING WHERE I THINK THIS IS WITHIN BEIJING IT HAS BEEN A BIG PART OF HIS STRATEGY IN TERMS OF THE SUCCESS, AND I THINK MOST IMPORTANTLY, YOU LOOK AT THE HUAWEI PHONE AND YOU LOOK AT CAN THIS BE A RISK, WE'RE STILL TALKING ABOUT THE B TEAM. WHEN YOU LOOK AT FROM AN ACTUAL NANOMETER, TECHNOLOGY PERSPECTIVE, THE CHINESE CONSUMER CONTINUES TO WANT iPHONES AND WE BELIEVE YOU HAVE THAT 80, 90 MILLION OF THEM IN AN UPGRADE OPPORTUNITY. >> WE ASKED OUR QUESTION OF THE DAY TO OUR VIEWERS ABOUT THE MULTIPLE. 29 TIMES FORWARD. NOW IT WAS OVER 30 NOT THAT LONG AGO. EVEN NOW IT IS FAR ABOVE ITS HISTORICAL TEN-YEAR AVERAGE, OKAY? CAN YOU JUSTIFY THAT? IF SO, HOW? >> SO I HAVE ALWAYS VIEWED IT YOU HAVE TO VIEW THE SERVICES BUSINESS AS ALMOST A SASS BUSINESS. 100 BILLION OF REVENUE NEXT YEAR, GROWING NOW LOW DOUBLE DIGITS. I BELIEVE THAT IS 1.4 TO 1.5 TRILLION, THE SERVICES BUSINESS. THE REST OF THE BUSINESS, 1.4 TO 1.5 TRILLION, WE THINK MORE, HOW WE HAVE A $230 PRICE TARGET, I BELIEVE IF YOU LOOK AT IT ON A STRAIGHT PE, YOU UNDERESTIMATE WHAT I VIEW THE VALUE OF THE SERVICES PIECE, WHICH IS A KEY PART OF THE RERATING THAT WE HAVE SEEN IN APPLE THE LAST FEW YEARS. >> I UNDERSTAND THAT. BUT HOW CAN YOU HAVE AN EXPANDING MULTIPLE AT A TIME WHERE YOU HAD A DECREASING SALES GROWTH? >> SURE. >> TELL ME HOW THAT MAKES SENSE. >> I THINK, FIRST OFF, YOU TAKE OUT FX, YOU LOOK AT WHAT iPHONE SALES ARE, I THINK WHEN YOU LOOK INTO IT NEXT YEAR, YOU HAVE MIDSINGLE DIGIT iPHONE GROWTH FROM A UNIT PERSPECTIVE, BASED ON ALL OUR CHECKS OUT OF ASIA, YOU HAVE AN ASP, WHICH IS LIFTING. THAT'S THE BIG THING NEXT WEEK WITH -- >> THEY'LL RAISE IT. >> AND WE BELIEVE $100 PRICE INCREASE FOR THE FIRST TIME IN YEARS, BUT THAT'S IMPORTANT FOR AN ASP LIFT. >> YOU THINK THAT'S GOING TO HAPPEN? THERE IS CHATTER, WELL, IT IS JUST RUMOR AND THIS, THAT AND THE OTHER. YOU THINK IT IS GOING TO HAPPEN? >> I THINK NFL STARTS THIS WEEKEND AND APPLE RAISES BY $100. >> YOU THINK THAT'S A GOOD THING. >> I THINK IT IS A GREAT THING BECAUSE ULTIMATELY WHEN YOU LOOK AT THE PROMOTION ACTIVITY, THAT'S GOING TO HAPPEN FROM A CARRIER PERSPECTIVE WITHIN THE U.S., IT IS GOING TO TAKE AWAY A LOT OF THE STING AND THE MOST IMPORTANT THING RIGHT NOW IS 25% OF APPLE'S INSTALL BASE THERE IS ONE NUMBER THAT IS IMPORTANT. 25% UPGRADE IN FOUR PLUS YEARS. THAT'S WHY WE BELIEVE THE BARK IS WORSE THAN THE BITE. CHINA IS GOING TO CONTINUE TO BE A GROWTH ENGINE AND I THINK WE SIT HERE, GOING TO HOLIDAYS, WE VIEW THIS MORE AS A GOLDEN BUYING OPPORTUNITY, NOT TO TIME IT STRUCTURALLY IT FELL APART. >> I'LL SEE YOU IN CALIFORNIA AT FUTURE PROOF AND WE'LL BE THERE TOGETHER AS APPLE DOES REVEAL THAT PHONE. >> IT IS SUCH AN IMPORTANT TIME, NOT JUST BECAUSE OF EVERY YEAR, BUT BECAUSE NO
