Apple (AAPL) is closer to a deal to sell its iPhone through China Mobile (CHL), the world’s biggest carrier with 600 million subscribers, writes Ticonderoga Securities analyst Brian White this morning. White was responding to comments made by chairman Wang Jianzhou this morning at China Mobile’s annual investor meeting.

According to a piece this morning by Bloomberg’s Young-Sam Cho, Wang told the assembled that Apple may produce a version of the iPhone that will work on a forthcoming 4G wireless network standard for China, dubbed “TD-LTE,” having decided to bypass the current “TD-SCDMA” that supports only 3G wireless connections, he said.

White writes, “Keep in mind, China Mobile has more wireless subscribers than any carrier in the world with 601 million at the end of March or 69% market share in the country, while China represents the largest mobile phone market on the planet with 876 million subscribers.” China Mobile has the TD-LTE standard up and running in trials in several cities, he notes, and should spread that throughout the country over the next year to a year and a half.

White notes that during a trip to China in December, he observed that 3 million China Mobile subscribers were already using the iPhone via a special SIM card that the carrier offers that can be inserted into the phone, and Wang today said that the total subs using the iPhone on its network is now 4 million.

White says the introduction of the iPad 2 and the white iPhone 4 in China in recent weeks were met with “Apple fever,” meaning long lines and even some “scuffles,” in some instances.

White reiterates a Buy rating on Apple shares and a $612 price target.

Apple shares today are up 64 cents at $340.51.

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Well, it’s not even a confirmed fact, but since there’s already a rumor of a delay: DigiTimes’s Irene Chen and Steve Shen this morning cite anonymous sources in the electronics supply chain as saying that Apple (AAPL) won’t introduce a modified version of the iPhone 4, which has been dubbed an “iPhone 4S,” this year, “as originally planned, because of problems that Qualcomm (QCOM) has had producing chips for 4G wireless, or “LTE,” networks.

The same article, nevertheless, says China is “expected to reach an agreement with Apple” for an iPhone 4S by September.

Hmm. Sounds like an unconfirmed bit of speculation has now become suddenly a rumored delay in the unconfirmed bit of speculation. People, help me to understand this.

Apple shares this morning are up 32 cents at $336.46.

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Folks, I must admit that in the debate over “mobile payments,” I’ve been out of touch, of late.

Today, for example, I neglected to mention a longish note — 29 pages — that came out late Monday from Morgan Keegan, assembled by Tavis McCourt, who follows Apple (AAPL), as well as some colleagues of his, Matt McKee, who follows communications technology, and Roberd Dodd and Robert Ladyman, who follow transaction processing.

The note’s interesting, so I thought I’d mention it, even though I missed my chance earlier.

The authors offer the view that there is “substantial” potential for near-field communications (NFC) chips embedded in a phone as a mobile “digital wallet.”

But the obstacle is that the status quo is likely to prevail, basically because of the risk of fraud.

Merchants are likely to take awhile before they will move to NFC. Why? Because the most likely method of funding a mobile wallet, by tapping into a bank account, called “ACH,” doesn’t actually clear the funds till an overnight update happens, unlike traditional debit cards, where money is cleared right away. Which means merchants can be left hanging when there are insufficient funds.

Unless the banks can underwrite/insure the funds to protect against fraud, in a cost-effective manner for merchants, than the status quo will prevail, which means digital wallets will just be a thin layer riding on top of the current payment system of the “networks” — Visa (V), MasterCard (MA), etc.

And in that system, Visa and MasterCard still make most of the money. Which means little actual direct share of profit for Apple, Google (GOOG), and other smartphone vendors.

“The mobile payment opportunity is more of a cost burden than a real benefit” to Apple and others, they write. Putting an NFC chip in a handset can cost $2 to 4$ per handset, they note. Apple and others might not get any share of the actual transaction dollar amount, they argue.

One real beneficiary of any NFC buildout might be VeriFone (PAY), which already sells terminals for credit-card processing. They’ll have to supply merchants with point-of-sale terminals for the buildout of NFC. Morgan Keegan rates VeriFone’s shares Outperform.

The Morgan Keegan note echoes a lot of skepticism voice Monday by Toni Sacconaghi with Sanford Bernstein, who follows Apple. Among his concerns is that putting those NFC terminals in retail locations could take five years or more to happen.

And then putting an NFC chip in the iPhone could add $450 million to $900 million to the cost of goods for the thing Apple’s 2012 fiscal year, which could lower Apple’s gross margin by 0.4 to 0.7 percentage points. Then, too, it’s unclear if Apple and others could command a meaningful cut of the transaction, as McCourt and company point out.

Sacconaghi concludes we won’t see NFC in Apple’s next iPhone: “We do not expect the iPhone 5 to feature an NFC-based payments solution, and instead expect Apple to evaluate and come to market with partners or a complete solution later, perhaps when NFC infrastructure is more established.”

Then again, BoyGeniusReport’s Jonathan Geller speculates today Apple might actually be planning already to implement NFC terminals in its own retail network.

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Creduit Suisse analyst Kulbinder Garcha this morning reiterates an Outperform rating on Apple (AAPL) shares and a $500 price target, addressing four pressing concerns he has heard from investors, and suggesting Apple could institute a 5% dividend and still have $100 billion in cash in five years from now.

Concerns Garcha outlines are that iPad may not have sufficient demand, the iPhone’s sales may be reaching saturation; the stock may be too broadly owned at this point to appreciate; and CEO Steve Jobs’s health is still a concern.

Nyet, says Garcha, to all that: iPad has “the mother of all backlogs,” as Apple COO Tim Cook said on the fiscal Q2 call a few weeks ago, and Apple may have 50% of a 300 million tablet market “longer term.” iPhone will ride the wave of smartphone growth of 50% this year and 32% next year, with additional carriers around the world picking up the device. And as for the shares, they are only 2.6% of the S&P 500′s total value, whereas 5% has traditionally been a “ceiling” to any stock, he writes.

He also notes that, “Apple is unique,” with still low market share in many product categories, allowing for growth. Moreover, not everyone owns Apple shares, he notes, as institutional ownership dropped in Q4. “Even though the breadth of Apple shareholder’s increased, institutional holders were underweight the company.”

As for Jobs, well, “this is a valid concern in the long term,” but he believes the company has a “deep bench” when it comes to management, and its proven “execution” on the business shows the company can add $10 of “extra EPS per year longer term.”

Garcha also addresses some product speculation: the Worldwide Developer Conference Apple will host next month (June 6th to 11th) in San Francisco might extend the use of Apple’s Objective-C development environment to “back-end services,” and that might play into any “cloud” computing offerings Apple makes, such as a streaming music service. That, in turn, might set the stage for a cheaper iPhone, with the capability on the server doing the heavy lifting.

As for a dividend, the bulging cash pile — $66 billion at the end of Q2 — is depressing the stock’s multiple, some would argue. The stock has only a 10% premium to the broader market, by forward P/E, down from 38%, on average, last year and way down from 296% back in 2003.

But that’s not warranted, Garcha argues: he sees some opportunities for M&A, something the company has alluded to in past, but the targets, in his view, are few and small, given Apple’s acquisition history, which included chip maker Intrinsity for $121 million, and PA Semiconductor for $278 million.

The cash could also be used for retail store additions, with the potential to add $19 billion in revenue, but that could probably be funded through the annual cash flow, given how “productive” the retail stores are, at $4,600 in revenue per square foot.

Garcha thinks a dividend will come one day…when growth slows: “Despite our optimism on Apple, there will come a day when the company has saturated its end market potential. We believe at that point the company may seek to make investment in the company attractive through a combination of share repurchase and/or dividends.”

Apple shares today are down $3.53, or 1%, at $336.97.

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Bloomberg’s Jonathan Browning writes that Vodafone Group PLC (VOD), which owns 45% of Verizon Communications’s (VZ) Verizon Wireless unit, will quantify tomorrow the cost of bringing the Apple (AAPL) iPhone to Verizon in the U.S. in February, a cost that at least one analyst pegs at $880 million.

Vodafone is expected to report preliminary results for its fiscal year ended in March tomorrow morning.

Browning cites one analyst, Steve Malcolm with Evolution Securities, as saying “The jury is out on whether these things [meaning, smartphones] create extra value for operators” given the high cost of subsidizing smartphones, including the iPhone.

Vodafone’s ordinary shares traded in London fell a fraction of a percent to 1.67 Great British pounds, while the American depository shares are down 9 cents at $27.26. Verizon shares were down 22 cents, or 0.6%, at $37.04.

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Frank Curzio with The Growth Stock Wire this morning writes that Apple (AAPL) is “one of the world’s best ‘bank accounts‘,” by which he means the recurring revenue stream from iTunes content that flows through to the company from rising sales of its iPhone, iPod and iPad.

Curzio notes that the company made “a whopping” $17 billion in free cash flow in the last 12 months, for a total cash position of $65 billion. Back out that cash, and the stock fetches 10 times projected earnings. “You could take the super-safe route, put your money in cash, and earn next to nothing in interest… But Apple is the better play.”

“To put this $65 billion in perspective, that’s larger than the market cap of Home Depot (HD) and Boeing (BA). It’s also bigger than the market caps of 90% of the companies listed in the S&P 500. And this cash position could easily grow to $100 billion over the next 18 months.”

Noting the words of CEO Steve Jobs that “one or more strategic opportunities may come along that we’re in a unique position to take advantage of because of our strong cash position,” Curzio concludes “Apple expects to use this cash to purchase other companies.” It has enough money to buy MGM Resorts (MGM), Las Vegas Sands (LVS), and Wynn Resorts (WYNN) “and have a near-monopoly on the gaming industry,” he observes.

Now that’s a thought: Apple dominating slots!

Apple shares today are down $1.60, or half a point, at $344.97.

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Microsoft (MSFT) shares are down 2 cents at $25.65 in early trading following yesterday’s 0.6% decline after the announcement the company will buy Internet calling firm Skype for $8.5 billion.

The day after stories, and the analyst notes seem largely to take a positive tone despite the sticker shock the Street experienced yesterday.

The Wall Street Journal’s Nick Wingfield writes this morning that Microsoft’s deal is a sign of the consumerization of technology, and makes passing reference to Cisco Systems’s (CSCO) failed effort with Flip video cameras. And Wingfield ends with a quote from Meg Whitman, who bought Skype when she was head of eBay (EBAY) in 2005. “Is Skype worth $8.5 billion? I don’t know, but it depends on how big the platform grows.” Wingfield notes that eBay will make a profit of about $1.4 billion on the deal.

Steve Lohr writes in The New York Times this morning, “by stitching Skype technology into Microsoft products, used by hundreds of millions of people, the software giant could hasten the mainstream adoption of video communications, especially in businesses.”

DealBook’s Evelyn Rusli writes that Microsoft settled on the $8.5 billion price in mid-April, after CFO Peter Klein travelled to private equity backer Silver Lake’s offices and the parties involved had discussions about valuation for several weeks.

A Reuters’s Breaking Views column by Richard Beales and Agnes Crane write this morning that, “the transaction is unlikely to pay off.” They note that past deals have floundered: the $6 billion purchase of aQuantive in 2007, “hasn’t borne any noticeable fruit in the battle with Google. Neither has the software giant’s search deal with Yahoo.”

Ann Winblad, a venture capitalist with Hummer Winblad, was on Bloomberg television last night, saying, “It’s the kind of bold move microsoft should be making … I think it’s a brilliant strategic move for Microsoft. It’s a chess move they need to remain competitive with Apple and Google, and it gives them an opportunity to partner further with Facebook, one of their core partners.”

And Bloomberg’s Dina Bass, Douglas MacMillan, and Joseph Galante this morning write that Skype refused to settle for less than $7 billion in its talks with Microsoft, citing anonymous sources.

The Financial Times’s Lex column writes that it’s all about Nokia: “If voice and video over the internet is going to become a big presence in mobile, it makes sense for Microsoft, desperate to differentiate its mobile operating system from Apple’s and Google’s, to buy the dominant brand. Will the network operators play along?”

And what of the analysts?

Walter Pritchard with Citigroup reiterates a Buy rating on Microsoft and a $35 price target. The deal “makes sense,” he thinks, and he lays out some possible “leverage”: the Kinect line becomes the “killer home video conference system / Win phone”; the business division, where it can integrate with Microsoft’s “Lync.” “Some of these integrations could potentially drive meaningful competitive advantage and augment existing Skype revenue that today is almost all based on calls to landline and mobile phones.”

Tavis McCourt with Morgan Keegan sees benefit to Nokia (NOK), Polycom (PLCM), Logitech (LOGI) and Plantronics (PLT) as “video and voice services will require more headsets and video bridging hardware. Nokia may benefit if Microsoft builds in any unique features not available on other handsets.” McCourt thinks Microsoft’s negotiations with telcos will become tougher as they view Skype as a threat, but, “Ultimately, we believe carriers will lose this battle.”

On that score, Craig Moffett with Sanford Bernstein this morning observes that Skype threatens the most valuable portion of the telco economy: basic connectivity. Voice service produces about $1 per megabyte in wireless services, whereas data service — Web browsing, etc. — commands only about 5 cents per megabyte. Undercutting that rich voice goldmine is an “arbitrage opportunity,” he writes, and tech companies love arbitrage. “Perhaps it was the threat of Facebook acquiring Skype that moved Microsoft to pay 10 times revenues,” writes Moffett. “Just don’t expect the carriers to be amused.”

Adam Holt with Morgan Stanley notes that while Microsoft has been developing unified communications with Lync and Xbox Live and Win Phone 7, Skype has 13 patents and over 400 patents pending “in areas from video delivery to data compression.” Moreover, though the valuation is rich, Skype’s metrics have been improving, the company is gaining more importance in social networking, and anyway, there are a lot more M&A deals being done in the $6 billion to $8 billion range, so what could Microsoft do? Use of foreign cash, he notes, is “found money.”

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Canaccord Genuity analyst Mike Walkley today writes that his “checks” of Apple’s (AAPL) business in April suggest iPhone 4 topped sales at AT&T (T) and Verizon Communications (VZ) last month. iPad 2 sales were also “very strong” in April.

Walkley predicts Apple customers will tend to stick with its “i” devices because of the Apple ecosystems’s “higher price points for tablet applications,” a phrase that is somewhat mysterious. I am assuming he is referring to the amount invested by consumers in amassing the various apps they have on the iPhone, etc.

Walkley is modeling Apple’s iOS device installed base to rise from 189 million currently to 246 million by the end of this fiscal year that wraps up in September, and 404 million by the end of next year.

Walkley thinks that the high stickiness, if you will, of Apple customers is complemented by the “higher-end markets” it is in, and that as result, replacement rate of iPhones should be about 40% per year, above the industry average of 35%. Walkley expects Apple “will maintain dominant value share of both the tablet and smartphone markets to drive healthy long-term earnings growth.”

Walkley maintains a Buy rating on Apple shares and a $480 price target.

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Barclays Capital hardware analyst Ben Reitzes today opines that PC makers need to rethink their business, because just taking market share or expanding profit margin through better component pricing will not be enough to improve their stock prices.

He’s really talking about Dell (DELL) and Hewlett-Packard (HPQ), which trade at 9 times and 8 times projected EPS, respectively.

What should they do? Reitzes offers some things to consider, without explicitly endorsing anything:

Shift from Intel (INTC) microprocessors to chips based on ARM Holdings (ARMH) designs. Those chips might cut processor cost by a third, which would save $25 per PC, 5% of the total cost of the machine, and would add 55 cents a share to HP’s annual profit and $0.45 to Dell’s profit, roughly 10% and 20%, respectively, of their total annual profit.

Switch from Windows to Chrome. Microsoft’s (MSFT) software is $75 per desktop and notebook, on average, for the vendor, and $50 for the average consumer PC. Switching to Google’s (GOOG) “Chrome” OS would save $45, 10% of the bill of materials. That would add $1 extra in profit per share per year for HP, and add 80 cents to Dell’s annual EPS.

HP has the added option of expanding its Web OS software to the PC from the smartphones and tablets it has announced, something it hinted at back in February.

Although Microsoft said at the Consumer Electronics Show in January that it will bring the next Windows (presumably version to ARM chips, this is more of a rearguard action on Microsoft’s part, Reitzes argues, a step that was only taken after the company had been “blindsided” by “the impact of the iPad, the ascent of [Apple's (AAPL)] iOS, and Android as de-facto mobile device platforms, and the inability of Intel to produce a low-cost, low-energy consuming processor.”

Hence, Windows on ARM faces issues, he thinks, even if it continues to dominate unit shipments: “There would be some question as to pricing and Microsoft’s ability to still command $50 per Windows license if overall costs of hardware were to come down by the savings of moving to an ARM processor.”

And, drum roll please …. “We believe that Apple will be the first in our sector to embrace ARM for some Macs, as early as C2H12,” writes Reitzes, with a nod to speculation last week Apple may ditch Intel chips for ARM chips.

We believe that Apple is already working hard on the software to accomplish this feat within the MacBook Air line-up. Through its own development of ARM-based processors and ARM-based iOS software, this migration would be rather natural for Apple. Apple is already moving toward enhanced battery life and ultra portability with its current MacBook Air line, which uses NAND instead of HDDs.

And since you’re probably wondering, no, there is no mention in the note of Intel’s momentous announcement last week of its “Tri-Gate” process technology, which even some bears on Intel stock think could give it an edge on ARM-based chips. A curious omission, on Reitze’s part, to be sure.

In any event, for a different perspective on Intel and Apple, see Piper Jaffray’s Gus Richard’s note this morning.

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TechCrunch’s MG Siegler this morning reports that Apple (AAPL) has been “negotiating a deal in recent months” with Nuance Communications (NUAN), the provider of voice-recognition software, citing multiple anonymous sources.

Siegler notes that Siri, a startup that Apple bought last year for “personal assistant” functions, uses Nuance’s technology. Siegler opines Nuance could be “a big part of iOS 5,” with numerous patents on voice technology. A Nuance founder, Mike Cohen, helped develop Google’s (GOOG) voice recognition technology, Siegler notes.

Siegler says a variety of possibilities are “on the table,” including an acquisition of Nuance by Apple, though he concludes that’s unlikely at the moment.

Nuance shares today are up $1.46, or 7.3%, at $21.56. Nuance has a market capitalization of $6.5 billion.

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