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

India PM Modi's Party Distances Itself From Religious Conversions

BJP under fire for being slow to rein in hardline affiliate groups allegedly trying to promote Hindu-dominant agenda by luring Muslims and Christians to convert More

Anti-Whaling Group Found in Contempt of Court

Radical environmentalists who threw acid and smoke bombs at Japanese whalers in the waters off Antarctica continue their campaign to disrupt Japan's annual whale hunt More

UN's Ban Urges End to Discrimination Against Ebola Workers

Ban was speaking in Guinea on the second day of a whistle-stop tour aimed at thanking healthcare workers of the countries at the heart of the epidemic More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
US Decision on Cuba Underscores Divisions Among Miami Cubansi
X
Sharon Behn
December 19, 2014 9:34 PM
For decades, older, more conservative Cubans have been gathering at Café Versailles on the corner of Calle Ocho to eat Cuban food and talk politics. After hearing of President Barack Obama’s decision, a number of them gathered in front of the café with posters to protest. VOA's Sharon Behn reports on the situation.
Video

Video US Decision on Cuba Underscores Divisions Among Miami Cubans

For decades, older, more conservative Cubans have been gathering at Café Versailles on the corner of Calle Ocho to eat Cuban food and talk politics. After hearing of President Barack Obama’s decision, a number of them gathered in front of the café with posters to protest. VOA's Sharon Behn reports on the situation.
Video

Video Three Cities Bid for Future Obama Presidential Library

President Barack Obama still has two years left in his term in office, but the effort to establish his post-presidential library is already underway. The bid for the Obama Presidential Library is down to four locations in three states -- New York, Hawaii, and Illinois. As VOA’s Kane Farabaugh reports, each of them played an important part in the president’s life before he reached the White House.
Video

Video Cuba Deal is Major Victory for Pope’s Diplomatic Initiatives

Pope Francis played a key role in brokering the US-Cuba deal that was made public earlier this week. It is the most stunning success so far in a series of peacemaking efforts by the pontiff. VOA religion reporter Jerome Socolovsky has more.
Video

Video Fears of More Political Gridlock in 2015

2014 proved to be a difficult year politically for President Barack Obama and a very good year for the U.S. Republican Party. Republican gains in the November midterm elections gave them control of the Senate and House of Representatives for the next two years -- setting the stage for more confrontation and gridlock in the final two years of the Obama presidency. VOA National Correspondent Jim Malone has a preview from Washington.
Video

Video Sudan School Becomes Target of Aerial Attacks

The school dropout rate is at an all-time high in Sudan's South Kordofan state because many schools have been destroyed during the three-year civil war between the government and SPLA-N rebel forces. Adam Bailes visited Sudan's Nuba Mountains' region and reports many children are simply too scared to go to school
Video

Video VOA Reporter Tours Devastated Peshawar School

Islamist militants wearing military uniforms and strapped with explosives attacked a military run school Tuesday in the northwestern Pakistani city of Peshawar. At least 141 people were killed in the horrific attack, most of them young students. VOA reporter Ayaz Gul visited the devastated school and attended the funeral of the principal who courageously tried to save her students from the deadly attack.
Video

Video Nigerians Fleeing Boko Haram Languish in Camp Near Capital

In its five-year effort to impose Islamic law in northeastern Nigeria, the Boko Haram extremist group has killed thousands of people and forced hundreds of thousands to flee. Some of those who ran for their lives now live in squalor on the edges of the capital, Abuja. Chris Stein reports for VOA.
Video

Video Aceh Rebuilt Decade After Tsunami, But Scars Remain

On December 26, 2004 there was an earthquake in the Indian Ocean so powerful it caused the Earth’s axis to wobble a few centimeters. Onshore on the island of Sumatra, the resulting tsunami was devastating. A decade later, VOA Correspondent Steve Herman reports from Banda Aceh, Indonesia, where although there is little remaining evidence of the physical devastation, the psychological scars among survivors remain.

All About America

AppleAndroid

World Currencies

EUR
USD
0.8143
JPY
USD
119.23
GBP
USD
0.6390
CAD
USD
1.1596
INR
USD
63.304

Rates may not be current.