Analyst: There May Be Hope for Apple and Cook Yet

Lots of analysts, investors, and media outlets are giving Apple (NASDAQ:AAPL) grief over its falling stock, lack of new products, failure to increase its dividend and share buybacks, and even grief about Chief Executive Officer Tim Cook. But, there may be a few good signs for Apple.

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UBS’s Steve Milunovich had a lot to say about Apple, and he mixed the good and the bad for a rather even-handed analysis. He holds a Buy rating on the stock and a price target of $560, which is a long ways away from the $398.67 where Apple closed at on Monday.

A lot of the negativity around Apple’s stock comes from the lack of new products. The iPhone 5 helped the company’s shares soar to their highest levels ever, last September, but they began the steep decline shortly thereafter. The iPad Mini didn’t help turn around the declines, and there has been a lack of hot new products since then. Further driving the shares downward currently is the expectation that the Apple products that had been forecast for release this summer could be delayed a couple months…

Many have been expecting an update to the iPhone 5 to launch around June along with a new iPad Mini, an iPad 5, and potentially a low-cost iPhone. But, KGI Securities analyst Ming-chi Kuo suggested that there would be delays on most of those items based on supply chain information. While people were already negative about Apple’s second quarter, news that the next devices from Apple could be delayed until the fourth quarter could mean that the negativity could bleed over into the third quarter as well.

However, Milunovich saw some points to be positive about Apple in lieu of new products. For one, The mix of 16-gigabyte iPhone purchases has decreased slightly, meaning there have been more purchases of phones with higher memory capacities, and for Apple — which drives high margins on memory — that shift can quickly boost margins.

In addition, people are still slowly switching over to the iPhone 5, though maybe at a rate slower than had been hoped. The low prices of the iPhone 4 and 4S might be keeping consumers away from the iPhone 5, especially considering the 4S is quite similar to the iPhone 5. This fact suggests there could be a problem for Apple if each new device doesn’t have particularly hot features that hook consumers…

In talks with CNBC, Milunovich described Apple as a “battleship that’s being fired on and not firing back,” because of all the criticism Apple has been received and the lack of a product being fired back. Until Apple has a response, the stock is unlikely to turn around. Of course, that response could come at the end of the day Tuesday, when Apple announces its earnings for the second quarter, as results above consensus expectations could give shares a boost.

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He described the iPhone 5 as “not a killer product,” suggesting that Apple is going to need a bit more in the next device to really wow investors and consumers alike. Milunovich suggested that, in the meantime, Apple think about a way to monetize the “500 million credit cards in iTunes.” Also, on comments about the company ousting Tim Cook, he said “that’s fiction,” and that it was too early for that sort of speculation now, but that “if in nine to twelve months all products have bombed, then it’s a possibility.”

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