I’ve be doing a lot of work on Apple, including providing some analysis to other sites such as CMSwire.com, where you can check out my latest anaylsis of Wall Street’s reaction to Apple’s new product announcements here.
But there’s lots of things going on with Apple, and of course there is the nonstop chattering of pundits about what they will do next. And with Carl Icahn getting a lot more involved — he tweeted today that he has sent another letter to Apple CEO Tim Cook — one could see the “vaunted” catalyst that might moving Apple stock higher again.
It seems as if the company is at a key point in it’s history. Will it move forward or start to stagnate as it hits a new product slump? Investors are certainly looking for new spark.
Everybody seems to want new products and change. Of course, this is obvious, but the better question is, what’s realistic? Here is just a sampling of stuff that’s floating around:
Apple TV: Everybody seems to be crying for it, but we’re not even sure what it is. They are reportedly working on a mondo, high-end TV that everybody would want. But does Apple really want to be in the high-end TV business? It’s a famously commoditized area. I would file this under speculation and not something you will see soon.
More, better tablets: This was a big component of Apple’s product release this week. But was it enough? It’s no secret that Apple has been under assault in the tablet market — it’s been losing market share in the fastest growing market it’s in.
Personally I think Apple needs another product — something between the iPhone and the iPad mini 2, in the “phablet” market, to compete with the onslaught of various-sized phones from Samsung. Analysts point out that iPad margins and regaining market share in the tablet market are two of the most critical goals for Apple right now.
Tim Cook: They’re all asking — is he the right leader? Cook continues to manage well operationally, and Apple is throwing off a ton of cash, but all of the product announcements have been incremental in nature while everybody screams for something more. Maybe he has a trick up his sleeve, maybe he doesn’t. At any rate, he’s been at the helm for about two years, and I give him one more year before he comes up with something big or the Apple mob (investors and customers) becomes more vocal.
All that cash: What will Apple do with all that cash? Activist investors such as Carl Ican are screaming for Apple to release more of its cash stockpile, well over $100 billion in cash and long-term investments, while the company throws off nearly $50 billion in annual cash flow. There are many options such as increasing the dividend and share buybacks. I would expect more of both by the end of the year.
The stock price: Apple shares were famously week during 2012 and the earlier part of 2013, moving against the grain of a bullish stock market, but now they have stabilized and are starting a modest uptrend. Can this be sustained? I see two factors: Profit margins and activist moves. Apple’s share price has been hit the most by declining margins brought about by competition in the lower-end tablet market. The other factor is what it does with all its cash and how responds to activists cries of people like Car Icahn. If you see movement in either of these ares, watch Apple stock strengthen.
(Disclosure: Author is long Apple stock in a long-term retirement account, which could possibly become very long term.)