Apple Inc. (NASDAQ:AAPL) is one of the leading companies in the technology sector. Ever since Steve Jobs’s revolutionary introduction of the iPhone in 2007, Apple has risen in stature for both investors and consumers. The company has enjoyed a lot of success after the release of its iPhone and iPad; however, Apple’s dominance started to fade away after competitors like Samsung Electronics Co., Ltd. (KRX:005935)came into the market, with Google Inc (NASDAQ:GOOG)‘s Android platform as their major strength.
The iPhone and iPad were definitely revolutionary products in the technology sector, with Apple gaining the first player advantage in next-generation touch-screen smartphones. Today’s Apple products are more evolutionary than revolutionary, which is one of the reasons why some consumers have had enough of Apple’s product line.
Hating Apple as a Consumer
A lot of Apple consumers will disagree with me, but Apple has not been the most innovative company this year. Yes, the company has released some brilliant products including its 5 generations of iPhones; however, innovation has not played a major part.
In the graph above (source: forbes.com), you can see that Apple’s innovation started to fade away after 2010. This is the time period when Apple’s iPhone line had already achieved success, and the iPad had already hit the stores. Apple’s latest tablets and smartphones are not based on new concepts; they’re based on that legendary 2007 event, along with a smattering of innovation.
Thorsten Heins, BlackBerry’s CEO, recently said that Apple Inc. (NASDAQ:AAPL) is “old.” He said that the company did a fantastic job in bringing touchscreen smartphones into the market, and he respected the company for its brilliant software. Heins also stated that Apple’s software is now five years old, and that Apple has not innovated in the same speed as it did five years ago. Even though BlackBerry might be going toward a slump of its own, I definitely agree with Heins’s speech. The innovation in the tech industry has been too quick, and failing to innovate at a similar speed can crush companies.
As of now, I’m not a fan of Apple products, mainly because I believe Apple’s next-generation products are just slightly modified versions of its first-generation products, like the iPhone and iPad.
A lot of analysts have been predicting, especially after the release of the Samsung’s Galaxy S IV, that the iPhone 5’s sales will fall below expectations. Basically, consumers want something unique, and if Apple’s next iPhone and iPad are modified versions of the iPhone 5 and iPad 4, then I just don’t see consumers buying Apple’s next-generation devices on account of a few software additions (like the previously introduced Siri and maps).
Loving Apple as an Investor
As an investor, I’m a big fan of Apple. Even though the company might not be the most innovative company in the world, it is a global brand.
Source: Nasdaq.com
After hitting the $700 mark, Apple’s shares are currently being traded between $445 to $460. Competition has been the major contributor to this decline of more than 50%. Apple currently has a market capital of more than $427 billion, with cash reserves exceeding $137 billion.
One of the reasons why Apple Inc. (NASDAQ:AAPL) will continue to get a major market share in the smartphone and tablet industry is that Apple is a well-known global brand. The company’s products are sticky, and millions of Apple users are loyal to the company. Even in the worst scenario, if Apple releases the iPhone 5 with a better camera and calls it the iPhone 6, I still think a lot of people will buy it — not because of the new camera, but because it would be a new Apple product.
Another thing to be optimistic about, for current and potential Apple shareholders, is that the company has massive cash reserves, which it will eventually use in order to give something back to the shareholders. Tim Cook, Apple’s CEO, recently announced that the company has some “great stuff” planned for its investors.
According to reports, Apple is planning to raise its dividend per share by more than 50%, which would increase per-share dividends to $4.14. The dividend yield, after such a decision, would make Apple one of the highest-dividend-paying companies in the technology sector, with a yearly payout of nearly $16 billion. Analysts also believe that the dividend per share could go as high as $5.30.
Even if huge dividend returns can’t catch the eyes of potential investors, Apple can offer a lot more in long-term capital gains. Word on Wall Street is that Apple is still a buy, with many observers confident the Apple will reach the $500 target soon. If the company can make effective use of its cash mountain and take the right paths, then I don’t see a reason why Apple can’t get back on top.
The thing with big tech companies is that they can somehow find their way back to greatness. Even Google has not been the best in terms of innovation; however, its share price has been growing since last year. Google’s next big project is the Google Glass, a set of augmented-reality glasses which will help the company become an innovative leader in the tech hardware sector.
It took some time, but Google finally had something unique to offer, which may explain why Google might hit the $1,000 mark very soon. The same case applies to Apple. The company will definitely unveil its “next big thing” or its next big project. It won’t be an iPhone or an iPad, but it will be something innovative, and it will have a long product cycle.
Conclusion
Right now, I hate Apple Inc. (NASDAQ:AAPL) as a consumer. However, as an investor, I’m still bullish on Apple, and I believe that the company will definitely hit the $500 mark soon. Even though Apple is currently struggling in the stock market, I still believe that there is little risk involved with buying Apple, mainly because a new dividend scheme is due next month, with possibilities of a very high dividend yield.
Apple might not give tremendous capital gains in upcoming months, and it might even take years for Apple to reach a point similar to Google’s valuation. However, Apple could well be the best long-term opportunity for patient investors.
The article Hating Apple as a Consumer – Loving Apple as an Investor originally appeared on Fool.com and is written by Yasir Idrees.
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