How Long Can Apple Afford To Stay Complacent?
Apple’s (NASDAQ:AAPL) second quarter earnings report comes out today, and analysts expect the numbers to reinforce widespread belief that the iPhone maker’s stock will continue to slide. The company is expected to report Q2 earnings of $10.12 per share on revenue of $42.6 billion — according to Thomson Reuters — which falls within the expected revenue of $41 to $43 billion. However, the company is expected to downgrade Q3 earnings.
There are of course a plethora of explanations for Apple’s dismal performance of late, with multiple analysts weighing in. The company is widely expected to issue a bigger dividend or a share buyback program to help ease their stock’s dip, but Trip Chowdry, co-founder of Global Equities Research, doesn’t believe it will stem the flow enough.
“Apple is just like the movie business. Basically, you have to come up with one hit right after another hit,” Chowdry said. “Apple needs a breakthrough product. A dividend, or a share buyback, that is just a Band-Aid. A new product could push stock up by $200 in less than a week.”
This opinion is of course highlighted by the fact that Google (NASDAQ:GOOG) has picked up steam with its upcoming release of Glass. Analysts believe that the time is ripe for Apple to announce its long-rumored iWatch, or Apple TV.
Complacency with its iPads and iPhones, analysts say, have caused Apple to lose out on more niche markets to the likes of Samsung. A release of a cheaper iPhone could help silence these particular critics. Still, there are differing opinions, like those who believe Apple has a premium brand name to uphold.
“Certain things have value because they are aspirational and are difficult to get,” Chowdhry said. “You don’t want to be another Dell (NASDAQ:DELL). Think of it, have you seen anyone bragging that they have a Dell computer? It’s not good anymore.”
Although the analysts may differ on whether Apple should sacrifice its brand name to sell products, one thing is indisputable: Apple needs to come out with a new, innovative product. And soon.