News / Economy

Apple Resets Clock as Investors Await Next Big Thing

The Apple logo is pictured on the front of a retail store in the Marina neighborhood in San Francisco, California, Apr. 23, 2014.
The Apple logo is pictured on the front of a retail store in the Marina neighborhood in San Francisco, California, Apr. 23, 2014.
Reuters
Apple Inc just bought itself some much-needed time.
 
On Wednesday, the company surprised Wall Street with news that it sold more iPhones in the March quarter than even the most bullish analysts had expected. It threw another $30 billion into an already sizeable stock buyback program and instituted an 8 percent quarterly dividend increase to boot. And profits rose by an unexpected 7 percent.
 
To top it all off, Apple unveiled a 7-for-1 stock split that should go down well with individuals who want a piece of a household name but could not afford to fork over $500 a share.
 
The litany of positive numbers sent Apple's long-stagnant shares up 8 percent. But it masked a more fundamental concern that has kept the company's once-unstoppable share price in check for over a year: when will, or can, Tim Cook pull another gadget out of Apple's hat?
 
“Most people will be talking about the split, increased dividend and buyback. But the real focus for the company and the stock is what and when is the new category” of product coming, argued Hudson Square analyst Daniel Ernst.
 
“Being an Apple investor in the last couple of years has required patience. And that's something investors in the last 10 years have not had to have.”
 
No one would argue that Apple has had a phenomenal run over the past decade - first with the iPod, then the iPhone in 2007, and finally the iPad in 2010. But now, as Google Inc  spends billions to buy up technology from robotics to artificial intelligence, and Samsung Electronics Co Ltd and other Android-device makers swallow chunks of Apple's market share, some are impatient to see what Apple can come up with next.
 
Many Apple observers are betting on another successful emerging from its secretive labs in Cupertino, California in the second half of this year. Wednesday's strong showing will appease investors who want to see some stock action in the meantime, given Apple's stock has been stuck largely just above $500 for months.
 
“Agree completely with [Apple's] increased buyback and extremely pleased with results. Believe we'll also be happy when we see new products,” tweeted billionaire activist Carl Icahn, who waged a Twitter campaign to get the iPhone maker to boost its buyback program.
 
For my next trick...
 
That's not to say investors on Wednesday did not applaud a much healthier outlook for the company than was apparent in January, when disappointing holiday iPhone sales and a revenue forecast that implied flat growth in smartphone shipments sent the stock below $500.
 
Apple reported sales of 43.7 million iPhones in the March quarter, far outpacing the 38 million Wall Street had predicted. That drove a 4.6 percent rise in revenue to $45.6 billion - a record for any non-holiday quarter - beating Wall Street's projections for about $43.5 billion.
 
Executives singled out greater China and Japan, where iPhone sales jumped by strong double-digits, boosted by the recent inclusion of NTT Docomo Inc and China Mobile Ltd as carrier partners.
 
But whether Apple can again devise a revolutionary new product remains the central question in the minds of investors and Silicon Valley executives. Many hope the next iPhone, which sources have said will sport a larger screen with new display technology, will provide a timely lift to the company's bottom line in September.
 
In the longer term, the company still needs a game-changer, not so much to end up being Apple's next “iPhone,” but because a truly successful new product will shore up Cook's stewardship. That would boost Wall Street's confidence in the post-Steve Jobs leadership while restoring Apple's reputation as a leading light of Silicon Valley innovation.
 
“Apple may never make a product that's as successful or generate as much revenue as the iPhone,” said Morningstar analyst Brian Colello. But “investors still want to see new innovation, new products under Cook's leadership.”
 
Cook has promised “new product categories” for 2014.
 
“We didn't ship the first MP3 player, nor the first smartphone, nor the first tablet,” Cook told analysts on Wednesday's post-results conference call.
 
“It means much more to us to get it right than to be first.”

You May Like

Brutality Eroding IS Financial Support

Director of National Intelligence James Clapper says IS's penchant for publicizing beheadings, other brutal forms of punishment hurts group’s bottom line More

Studies: Climate Change a Factor in Disasters in Syria, California

The studies point to the possibility of clear and present dangers from a threat often considered to be far in the future More

Video Afghan Refugees Complain of Harassment in Pakistan

Afghan officials and human rights organizations assert that Pakistani authorities are using deadly attack at school in Peshawar as pretext to push out Afghan refugees More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Kerry Seeks Assurances of Russian Non-Interference in Ukrainei
X
March 03, 2015 3:11 AM
U.S. Secretary of State John Kerry has told his Russian counterpart, Sergei Lavrov, that his country could face further consequences to what he called its “already strained economy” if Moscow does not fully comply with a cease-fire in Ukraine. The two met, on Monday, on the sidelines of a U.N. Human Rights Council meeting in Geneva, where Kerry outlined human rights violations in Russian-annexed Crimea and eastern Ukraine. VOA State Department correspondent Pam Dockins reports from Geneva.
Video

Video Kerry Seeks Assurances of Russian Non-Interference in Ukraine

U.S. Secretary of State John Kerry has told his Russian counterpart, Sergei Lavrov, that his country could face further consequences to what he called its “already strained economy” if Moscow does not fully comply with a cease-fire in Ukraine. The two met, on Monday, on the sidelines of a U.N. Human Rights Council meeting in Geneva, where Kerry outlined human rights violations in Russian-annexed Crimea and eastern Ukraine. VOA State Department correspondent Pam Dockins reports from Geneva.
Video

Video Smartphones May Help in Diagnosing HIV

Diagnosing infections such as HIV requires expensive clinical tests, making the procedure too costly for many poor patients or those living in remote areas. But a new technology called lab-on-a-chip may make the tests more accessible to many. VOA’s George Putic reports.
Video

Video Afghan Refugees Complain of Harassment in Pakistan

Afghan officials have expressed concern over reports of a crackdown on Afghan refugees in Pakistan following the Peshawar school attack in December. Reports of mass arrests and police harassment coupled with fear of an uncertain future are making life difficult for a population that fled its homeland to escape war. VOA’s Ayesha Tanzeem reports from Islamabad.
Video

Video Ukrainian Volunteers Prepare to Defend Mariupol

Despite the ongoing ceasefire in Ukraine, soldiers in the city of Mariupol fear that pro-Russian separatists may be getting ready to attack. The separatists must take or encircle the city if they wish to gain land access to Crimea, which was annexed by Russia early last year. But Ukrainian forces, many of them volunteers, say they are determined to defend it. Patrick Wells reports from Mariupol.
Video

Video Moscow Restaurants Suffer in Bad Economy, Look for Opportunity

As low oil prices and Western sanctions force Russia's economy into recession, thousands of Moscow restaurants are expected to close their doors. Restaurant owners face rents tied to foreign currency, while rising food prices mean Russians are spending less when they dine out. One entrepreneur in Moscow has started a dinner kit delivery service for those who want to cook at home to save money but not skimp on quality. VOA's Daniel Schearf reports.
Video

Video US, Cuba Report Progress in Latest Talks to Restore Ties

The United States and Cuba say they have made progress in the second round of talks on restoring diplomatic relations more than 50 years after breaking off ties. Delegations from both sides met in Washington on Friday to work on opening embassies in Havana and Washington and iron out key obstacles to historic change. VOA’s Mary Alice Salinas reports from the State Department.
Video

Video Presidential Hopefuls Battle for Conservative Hearts and Minds

One after another, presumptive Republican presidential contenders auditioned for conservative support this week at the Conservative Political Action Conference held outside Washington. The rhetoric was tough as a large field of potential candidates tried to woo conservative support with red-meat attacks on President Barack Obama and Democrats in Congress. VOA Political Columnist Jim Malone takes a look.
Video

Video NYC's Restaurant Week: An Economic Boom in Fine Dining

New Yorkers take pride in setting world trends — in fashion, the arts and fine dining. The city’s famous biannual Restaurant Week plays a significant role in a booming tourism industry that sustains 359,000 jobs and generates $61 billion in yearly revenue. VOA's Ramon Taylor reports.
Video

Video Brookhaven at Cutting Edge of US Energy Research

Issues like the Keystone XL pipeline, fracking and instability in the Middle East are driving debate in the U.S. about making America energy independent. Recently, the American Energy Innovation Council urged Congress and the White House to make expanded energy research a priority. One beneficiary of increased energy spending would be the Brookhaven National Lab, where clean, renewable, efficient energy is the goal. VOA's Bernard Shusman reports.
Video

Video Southern US Cities Preserve Civil Rights Heritage to Boost Tourism

There has been a surge of interest in the American civil rights movement of the 1950s and '60s, thanks in part to the Hollywood motion picture "Selma." Five decades later, communities in the South are embracing the dark chapters of their past with hopes of luring tourism dollars. VOA's Chris Simkins reports.
Video

Video Deep Under Antarctic Ice Sheet, Life!

With the end of summer in the Southern hemisphere, the Antarctic research season is over. Scientists from Northern Illinois University are back in their laboratory after a 3-month expedition on the Ross Ice Shelf, the world’s largest floating ice sheet. As VOA’s Rosanne Skirble reports, they hope to find clues to explain the dynamics of the rapidly melting ice and its impact on sea level rise.
Video

Video Lao Dam Project Runs Into Opposition

A Lao dam project on a section of the Mekong River is drawing opposition from local fishermen, international environmental groups and neighboring countries. VOA's Say Mony visited the region to investigate the concerns. Colin Lovett narrates.

All About America

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More

World Currencies

EUR
USD
0.8907
JPY
USD
119.77
GBP
USD
0.6496
CAD
USD
1.2492
INR
USD
61.941

Rates may not be current.