Analysts: Apple’s innovation will pay off… eventually

“Despite a third straight quarter of lower year-over-year sales, Apple is looking ahead to some of its longer-term ventures as future growth drivers, Steve Milunovich of UBS said Wednesday,” Elizabeth Gurdus reports for CNBC. “The IT hardware analyst said that as technologies for things like self-driving cars and virtual reality continue to improve, he believes Apple will thrive, especially considering the tech giant’s significant spending on research and development last quarter.”

Gurdus reports, “Milunovich said in a Squawk Box interview that he sees the company inching closer toward producing and distributing its own content.”

“‘Apple’s been super focused, and it appears that they believe that they want to be the ones to display the content, to manage the content,'” Milunovich said, noting that some investors believe that to effectively break into content, Apple should have acquired Time Warner or Netflix,” Gurdus reports. “‘I’m probably not so much on that side of things,’ he said, ‘but to believe that they shouldn’t be [acquiring new companies], you have to believe that the innovation is coming and that there will be some major new products over time, and I think the R&D budget suggests that that’s likely.'”

Read more in the full article here.

MacDailyNews Take: If Apple’s massive R&D spend doesn’t intrigue, nothing will.

We have the strongest pipeline that we’ve ever had and we’re really confident about the things in it. But as usual, we’re not going to talk about what’s ahead.Apple CEO Tim Cook, October 25, 2016

SEE ALSO:
A radically different Apple looms; R&D reveals the company’s largest pivot yet is coming – May 11, 2016
Apple’s massive R&D expenditure indicates myriad projects in the pipeline – April 27, 2016
Apple gets much more bang for its R&D buck than Google and other tech companies – November 30, 2015
Massive R&D increase suggests Apple is working on something huge – May 4, 2015

13 Comments

  1. Apple should have acquired Time Warner or Netflix…

    Nah. Not in Apple’s realm of expertise. And Apple will have a piece of those pies anyway through sales and rental of TW & NF in-house productions via the iTunes Store. 🍰🍥🍪

      1. Every quarter after Apple is completely embarrased by FANG’s tremendous share gains, Tim Cook comes out and says things will look a lot better NEXT quarter and how his dream is intact. This quarter is no different. It’s like the story of the boy who cried ‘wolf’ one too many times. Tim Cook’s excuses are getting old and absolutely no one believes he’s telling the truth. Even Microsoft is making Apple look pathetic as investors happily pay twice as much for Microsoft stock as they’d pay for Apple. Apple is nothing but a joke on Wall Street. The little engine that could and now it can’t. The 800 lb. gorilla turned into a capuchin monkey. Very, very disappointing for loyal Apple shareholders.

        1. Some people have more patience than others. Karma (and reality) took a bite out of Samsung . Sooner or later it will bite speculators who chase growth or potential profits over a profit machine like Apple.

          Fiscal year 2016 was actually quite good for Apple. Apple’s recent performance is only “disappointing” in comparison to the revenues and profits generated by the massive iPhone 6 surge. The iPhone 7 will generate a similar, but smaller bump relative to the iPhone 6s. And I expect to see a reasonable surge in Mac sales as the new models are released. Those bumps will be quite modest relative to the 37% iPhone 6 surge, but they will help maintain Apple’s long term growth trend.

  2. Analysts on the conference call asked Cook about how is it possible that Apple has been spending MORE on R & D and at the same time, sales continue to fall. Tim Cook stuttered, hemmed and hawed, and evaded the question.

    No wonder investors are punishing Apple today HARD.

    One day Apple’s board will get the message and recognize Tim Cook for the hapless sock puppet of a CEO that he truly is.

    For Apple’s sake that day can’t come soon enough.

    1. I checked out the link…interesting iMac derivative. Essentially a giant Surface pad on an articulated base with way too many springs. Given Microsoft engineering, that base seems likely to break quickly.

      The article touts the pixel count advantage ver a 4K display, but the iMac went to 5K a couple of years ago. And this new Microsoft device starts at $3,000 with a core I5 processor. With that kind of pricing, who can criticize Apple?!

      The sole advantage that Microsoft and other Wintel vendors have been promoting hard in recent advertising campaigns is a touch/pen sensitive display. For a subset of people, that does appear to be a useful feature if the computing platform is adjustable to a tablet-like orientation. Apple clearly has the stylus advantage with its iPad Pro pencil (another *shipping* product!), and can easily apply its pencil technology to the Mac lineup, should the company choose to do so.

      A Mac killer? You are either jesting or delusional!

  3. Massive R&D doesn’t pan out for all companies in terms of revenue or profits. I don’t think there are any guarantees at all. Some companies just get lucky. I keep thinking back at Xerox when they had all those cool things developed at PARC and no one at corporate headquarters even recognized what they had. If it didn’t relate to a copier, it might as well be non-existent. Steve Jobs was able to recognize it and used it at Apple.

    1. Exactly! Analysts are overly enamored with large R&D budgets. Many companies used to outspend Apple in R&D, but look what happened in the 2000s…OS X, iPod, iPhone, iPad, etc. Apple accomplished far more with far less investment.

      Analysts are also overly enamored with massive mergers and acquisitions. But I would far rather have Apples’s retained profits “gathering dust” than seeing them wasted on large, high risk acquisitions. Few of them pay off. Apple is better off building its capabilities from the ground up with smaller acquisitions, as appropriate.

      Apple did not advance to its current state of preeminence by listening th Wall Street and analysts.

  4. In this day an age of instant gratification Apple should be given the benefit of the doubt. Look at the ghost companies of technology like RCA, Sony, Toshiba, Motorolla, Blackberry etc. They failed to innovate and are out of business or are shells of what they used to be. Look at the ones that innovate too quickly like Samsung: Their mobile unit managed an anemic 100 billion won in operating profit, down from 2.4 trillion won in the year ago quarter. That’s a culling.

    Most of us tech minded people want the next thing NOW because it’s in our blood, and so it seems Apple is resting on their laurels. Others see their innovation as refinement at a well-balanced pace, which doesn’t jeopardize their customers’ safety. As a result, they continue to sell millions and millions of devices to very satisfied customers.

  5. Growth rate was 8% compounded annually since the 5S last quarter, so Apple is still growing, and since smartphones probably didn’t grow 8% last year, Apple is taking share. They should only be getting more market share as we speak given Samsung brand dragged thru poop.

    Also have to laugh at all the “buy American” men who refuse to own a Toyota Truck in spite of massive superiority to US trucks, but have an Android and speaking badly of America’s #1 company. What a joke those guys are. iOS is superior in every way, and next year’s WWDC will prove this, as Apple will roll out their cloud platform to end all cloud platforms. They properly started from the ground up, with Swift the world’s best programming language which is now in a good enough state to allow enterprise/server-side apps to be developed, and will only get stronger as the younger generations take the developer reigns. Apple will continue “up-stack” on developer and cloud, and this will be the nail in the coffin for Android which is already a nightmare for developers and corporate budgets as we speak thanks to awful fragmentation problem.

    https://www.cnet.com/news/hiroshi-lockheimer-android-google-alphabet/

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