Apple, newfangled iWatches and becoming a mature company
Apple is
reportedly looking into wearable devices such as next-gen watches, but
the development is just one more sign that the company is maturing and
needs some new tricks.The big news
Sunday into Monday---and rumored before---is that Apple is testing a
smart watch. This smart watch would apparently go nicely with Apple's
television set that has been rumored to change the world.These new markets for Apple illustrate what has Wall Street a bit worried these days: What can Apple do as its next trick?
Here's why answering that question is such a big deal: Apple is
projected to report fiscal 2013 net income of $42.2 billion on revenue
of $183.1 billion. In fiscal 2014, analysts currently expect Apple to
report net income of $48.1 billion on revenue of $207.2 billion. In
2015, Wall Street analysts project Apple to report net income of $52.45
billion on revenue of $235.76 billion. For what it's worth, IBM is
projected to report net income of $20 billion on revenue of $111.2
billion in 2015.
Apple shares over the last five years.
Apple's 2015 estimates are apparently from analysts ballsy enough to
think they can really see the future. In any case, you get the idea.
Apple is expected to always be perfect, always find new markets and
always manage market transitions well. Some of these expectations are
earned since Apple's iPod begat the iPhone, which begat the iPad.
Nevertheless, these expectations might just border on ridiculous.
So what's Apple going to do? The short answer is that it will have to
play Wall Street's game somewhat. Apple will have to hone its message.
It will also have to dish out more cash to keep investors interested.
Why? The reality is that it may be impossible for Apple to meet
expectations.
In a research note Monday, Barclays analyst Ben Reitzes pondered what
would Apple say if it held an analyst day. Apple last had an analyst
day in 2003 and having another would signal that the company has reached
maturity. After all, mature companies tell Wall Street what's going to
happen so analysts don't go crazy.
Reitzes noted that investors need guidance from Apple about its business model and steady returns. He said:
Over time other great American companies, like IBM, have come to
realize this fact as well – leadership in the stock market creates an
aura around the company. IBM perhaps spends the most time in our sector
honing its message and asking shareholders what they want to see – and
actually listening. The company has constructed a board of mostly
industrial company heavyweights and seems to get the most it possibly
can out of its business model.
In reality, the IBM as we know it today took several years to create –
even after the departure of Lou Gerstner. Investors won’t be so patient
with Apple in our opinion. No company has accumulated this kind of cash
or garnered this much attention in history. We know it is not Apple’s
style to conduct itself like IBM. However, we believe that Apple can
convey a philosophy and guidance that maintains its secrecy and
mystique.
I agree that Apple is in a tough pickle. Sans some uber product
categories Apple won't be able to keep its pace up enough to satisfy
everyone who bought shares. Frankly, it's a shame, but we've all seen
this set-up before.
What would Reitzes want to hear from Apple's analyst day? He said the
first topic would be the plan to be a platform company. That question
is huge given Google is a platform and cloud play. Apple's cloud history
could be better.
Reitzes said:
One could argue that Apple’s shares hit an inflection point to the
downside in September 2012 when investors realized that the Apple Maps
endeavor was a significant mistake. The maps debacle showed investors
how valuable Google’s technology was – how hard it was to replicate –
and how Apple may struggle as the world moves beyond iTunes toward cloud
based services. In short, we believe Apple needs to up its game in this
arena.
Reitzes added that Apple should outline its total addressable market.
Would Apple make cars? Smart clothes? What could the Apple brand really
do?
The other items on Reitzes list are standard fare. Naturally, he
wants to hear about gross margins, views on distributing cash and how
Apple sees its competition.
Luckily for Apple, CEO Tim Cook appears to know the game he has to
play regarding expectations. First, Cook is open to distributing Apple's
pile of cash. And second, Cook came from IBM so gets the Wall Street
jig. Finally, Cook gets the enterprise game, which can provide another
leg of growth while the masses are pondering low margin gear like
watches and TVs.
In the end, Apple's next great feat may have nothing to do with new
products. Should the company be able to navigate lofty expectations---or
even top them. Summary: News of Apple potentially
chasing smart watches highlights how the company needs big hits in big
markets just to keep up with increasingly ridiculous expectations. Apple will be a business case study for the ages.
A Google Docs glitch reminds users that the cloud's convenience can come at the expense of privacy and control. Google has fixed a glitch in Docs that triggered panic for some who could no longer access or share files because Google's systems had ruled they violated its terms of service. The problem left affected Google Docs users baffled when attempting to open files only to be told by Google that the item had been "flagged as inappropriate and can no longer be shared". Others were told they couldn't access the file, while some reported deleted files. Around 100 users reported the issue on the Google Docs help forum and for several hours were anxiously awaiting a response and fix from Google. National Geographic reporter Rachel Bale was surprised that her draft of a story about wildlife crime would be locked for a violation of Google's terms of service. After hearing that others experienced the same problem, she figured it was a glitch -- ra...
Workday will enter the PaaS game as it hatches plans to open its cloud platform and court developers. Workday plans to open up its platform to developers, partners and third party software vendors. In a blog post , CEO Aneel Bhusri said the move will settle a long-running question for Workday. Bhusri added that Workday chose to focus on reliability and scalability as it built out its cloud service before opening up. Meanwhile, customers have been asking for "a more open Workday platform." These customers "want to use Workday as a cloud backbone that supports cohesive, digital workflows across multiple business applications." With the move, Workday enters the platform-as-a-service game and can better counter rivals. Oracle offers PaaS; SAP Cloud Platform is focused on connecting its apps; Salesforce has its formidable ecosystem; and companies like ServiceNow have opened up to expand into new enterprise areas including human resources. Here's the PaaS la...
Microsoft is joining the 300-member LOT Network in a move meant to advance the company's campaign against patent trolls. Last year, Microsoft created the Azure IP Advantage program , which was designed to defend and indemnify developers against claims of intellectual property infringement. On October 4 this year, Microsoft took another step toward combating patent trolls by joining the LOT Network . The LOT Network is a nonprofit community working to fight trolls. The group has nearly 300 members, covering approximately 1.35 million patents, Microsoft officials said. Members include Amazon, Canon, Cisco, Lenovo, Red Hat Google, Lyft, Oracle, Salesforce, SAP and Tesla, to name a few. Members are free to cross-license, assert, sell or do nothing with their patents. But if any member of the LOT Network sells a patent to a troll, all LOT members automatically get a free license to that patent. According to the LOT Network officials, the average cost to defen...
Comments
Post a Comment