Today: Apple (AAPL) CEO Tim Cook visits China to mark impending beginning of China Mobile's iPhone sales while company settles one lawsuit and prepares to fight another. Also: Intel (INTC) gains ahead of earnings as analysts present rosy view.
The Lead: iPhones on way to China Mobile, Apple on way to court
Apple CEO Tim Cook popped up in Beijing on Wednesday morning to celebrate the beginning of the iPhone's journey to the world's largest wireless carrier, but the Cupertino tech giant faced less jovial news on the home front, where Apple signed on for a second settlement stemming from kids' in-app purchases and girded for a class-action lawsuit from Silicon Valley tech workers.
Apple signed a long sought-after deal with China Mobile late in 2013 to offer iPhones to the company's 700 million subscribers, but Cook said that the partnership could grow from its original intent while announcing that iPhones would begin shipping to China Mobile this week.
"We've gotten to know each other ... today is a beginning, and I think there are lots more things our companies can do together in the future," Cook said, according to The Wall Street Journal.
Analysts predict the China Mobile deal could add up to 30 million iPhone sales to Apple's revenue total annually, but Cook said Wednesday that his plan to grow the hardware maker's presence in Asia has already shown fruit, revealing that Apple sold a record number of iPhones in the Greater China region in the final quarter of 2013. Cook did not reveal any more about Apple's results in the holiday shopping period, which are scheduled to be officially revealed on Jan. 27, instead focusing on future iPhone sales in the world's most populous nation.
"As of this weekend we will be selling iPhones in more than 3,000 additional locations. It's a monumental day and a watershed moment," Cook reportedly said.
Cook's counterpart at China Mobile, Xi Guohua, likewise did not reveal the metric observers are most anxious to discover in the deal, the subsidy his company will provide that will determine the final cost to Chinese consumers who wish to buy an iPhone. Xi did say China Mobile would subsidize the iPhone, but did not give an exact figure; unsubsidized, the most basic iPhone 5S would cost $870 in China, the Journal reported.
While Cook looked to the future in his travels abroad, Apple legal team was dealing with past transgressions Wednesday. Apple agreed to a $32.5 million settlement with the Federal Trade Commission for allowing children to ring up huge in-app purchases on their parents' Apple devices and agreed to change its billing practices by March 31.
The amount Apple pays in the settlement could grow as claims roll in from users, with Apple committing to full refunds, unlike an earlier settlement in a class-action lawsuit dealing with the same issue that capped cash refunds at $30. Cook said in a memo to employees Wednesday that the $100 million settlement in the earlier class-action suit led to 37,000 claims before Monday's deadline.
Cook wrote in that memo that, "It doesn't feel right for the FTC to sue over a case that had already been settled," but he said the company signed the deal "rather than take on a long and distracting legal fight."
Apple seems to have enough legal fights on its hands just in its global patent battle with Samsung, but another fight is about to begin: A judge has ruled that Apple and other tech giants Google (GOOG), Intel and Adobe (ADBE) must face a class-action lawsuit from Silicon Valley tech workers for allegedly negotiating a pact not to poach each other's employees.
The companies are accused of agreements between top executives, including late Apple founder Steve Jobs and former Google CEO Eric Schmidt, that hurt workers' chances of finding better-paying jobs in Silicon Valley. The companies reached a settlement with the Department of Justice on the allegations in 2010, and three other valley companies -- Intuit (INTU), Pixar and LucasFilm -- have already settled with the workers, a class estimated at 100,000 people.
The companies still involved in the class-action suit have repeatedly denied the allegations; a jury trial is set to begin in May in front of Judge Lucy Koh -- who also presides over the Apple-Samsung trial -- if the parties do not settle out of court.
Apple stock jumped 2 percent to $557.37 after Cook's declaration about strong sales in the Greater China region, its highest closing price of 2014.
SV150 market report: Intel gains as S&P 500 sets a new all-time high
Wall Street had its second straight positive day Wednesday, sending the Standard & Poor's 500 to a record closing high as Intel gained ahead of its scheduled Thursday earnings report.
Intel gained 0.6 percent to $26.67 as analysts continued to check in ahead of the Santa Clara chipmaker's kickoff to Silicon Valley earnings season. BMO Capital Markets analyst Ambrish Srivastava upgraded the stock to "Outperform" and boosted his price target from $21 to $31 Wednesday, writing that Intel seems to be "more willing to accept and address the challenges that the company faces." The note arrived after a wave of optimistic analyst notes on Tuesday, while the company expanded its "Intel Inside" marketing campaign from personal computers to its data-center services offering as it attempts to compete with Amazon in the cloud.
Netflix (NFLX) dropped 2.2 percent to $330.38 amid worries about the effects of Tuesday's ruling that struck down the Federal Communications Commission's attempt to ensure net neutrality. Google held relatively steady, dropping 0.1 percent to $1,148.62 after the European Union warned that the search giant had one "last opportunity" to avoid official antitrust charges and Canada accused the Mountain View company of subverting privacy laws in that country. SolarCity gained 4.5 percent to $68.50 after announcing a novel approach to allowing retail investors to plow money into the company, and Hewlett-Packard (HPQ) lost a penny to $28.84 after detailing its return to the smartphone business with a mobile device aimed at the Indian market. Tesla Motors (TSLA)' gains continued after Tuesday's announcement of record fourth-quarter profits, with the Palo Alto carmaker adding 1.8 percent to $164.13, and Twitter continued its recent history of large daily swings with a 5.8 percent gain to $61.57.
Riverbed Technology moved 1.6 percent higher to $20.11 after officially rejecting Eliot Management's unsolicited acquisition bid while announcing that the San Francisco company will top previous forecasts for fourth-quarter profits and revenues. Sunnyvale-based Juniper Networks, which is also in Elliott's cross hairs, gained 1.8 percent to $25.88 while the largest networking company in the world, San Jose's Cisco Systems (CSCO), moved 1.7 percent higher to $22.78. NetApp jumped to a 52-week high and gained 8.3 percent to $43.5, while Electronic Arts (ERTS) sank 2.4 percent to $21.93.
The SV150 index of Silicon Valley's largest tech companies: Up 15.54, or 1.02 percent, to 1,533.08
The tech-heavy Nasdaq composite index: Up 31.87, or 0.76 percent, to 4,214.88
The blue chip Dow Jones industrial average: Up 108.08, or 0.66 percent, to 16,481.94
And the widely watched Standard & Poor's 500 index: Up 9.5, or 0.52 percent, to 1,848.38
Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/jowens510.