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

Video Drug Use Rises in Afghanistan

Ninety percent of world’s heroin comes from Afghanistan More

Here's Your Chance to Live in a Deserted Shopping Mall

About one-third of the 1200 enclosed malls in the US are dead or dying. Here's what's being done with them. More

Video NASA: Big Antarctica Ice Shelf Is Disintegrating

US space agency’s new study indicates Larsen B shelf could break up in just a few years More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Poverty, Ignorance Force Underage Girls Into Marriagei
X
May 21, 2015 4:14 AM
The recent marriage of a 17-year old Chechen girl to a local police chief who was 30 years older and already had a wife caused an outcry in Russia and beyond. The bride was reportedly forced to marry and her parents were intimidated into giving their consent. The union spotlighted yet again the plight of many underage girls in developing countries. Zlatica Hoke reports poverty, ignorance and fear are behind the practice, especially in Asia and Africa.
Video

Video Poverty, Ignorance Force Underage Girls Into Marriage

The recent marriage of a 17-year old Chechen girl to a local police chief who was 30 years older and already had a wife caused an outcry in Russia and beyond. The bride was reportedly forced to marry and her parents were intimidated into giving their consent. The union spotlighted yet again the plight of many underage girls in developing countries. Zlatica Hoke reports poverty, ignorance and fear are behind the practice, especially in Asia and Africa.
Video

Video South Korea Marks Gwangju Uprising Anniversary

South Korea this week marked the 35th anniversary of a protest that turned deadly. The Gwangju Uprising is credited with starting the country’s democratic revolution after it was violently quelled by South Korea’s former military rulers. But as Jason Strother reports, some observers worry that democracy has recently been eroded.
Video

Video California’s Water System Not Created To Handle Current Drought

The drought in California is moving into its fourth year. While the state's governor is mandating a reduction in urban water use, most of the water used in California is for agriculture. But both city dwellers and farmers are feeling the impact of the drought. Some experts say the state’s water system was not created to handle long periods of drought. Elizabeth Lee reports from Ventura County, an agricultural region just northwest of Los Angeles.
Video

Video How to Clone a Mammoth: The Science of De-Extinction

An international team of scientists has sequenced the complete genome of the woolly mammoth. Led by the Swedish Museum of Natural History in Stockholm, the work opens the door to recreate the huge herbivore, which last roamed the Earth 4,000 years ago. VOA’s Rosanne Skirble considers the science of de-extinction and its place on the planet
Video

Video Blind Boy Defines His Life with Music

Cole Moran was born blind. He also has cognitive delays and other birth defects. He has to learn everything by ear. Nevertheless, the 12-year-old has had an insatiable love for music since he was born. VOA’s June Soh introduces us to the young phenomenal harmonica player.
Video

Video Women to March for Peace Between Koreas

Prominent female activists from around the world plan to march through the demilitarized zone dividing North and South Korea to call for peace between the two neighbors, divided for more than 60 years. The event, taking place May 24, marks the International Women's Day for Peace and Disarmament and has been approved by both Koreas. Zlatica Hoke has more.
Video

Video Drug Use Rises in Afghanistan Following Record High Poppy Crops

Afghanistan has seen record high poppy crops during the last few years - and the result has been an alarming rise in illegal drug use and addiction in the war-torn country. VOA's Ayesha Tanzeem has this report from Kabul.
Video

Video America’s Front Lawn Gets Overhaul

America’s front yard is getting a much-needed overhaul. Almost two kilometers of lawn stretch from the U.S. Capitol to the Washington Monument. But the expanse of grass known as the National Mall has taken a beating over the years. Now workers are in the middle of restoring the lush, green carpet that fronts some of Washington’s best-known sights. VOA’s Steve Baragona took a look.

VOA Blogs

World Currencies

EUR
USD
0.8982
JPY
USD
121.07
GBP
USD
0.6376
CAD
USD
1.2215
INR
USD
63.612

Rates may not be current.