“Apple Inc’s multi-hundred billion cash stockpile and stalling growth in services such as iCloud present an opportunity and a concern that some investors hope will be addressed in the company’s quarterly earnings report on Tuesday,” Stephen Nellis reports for Reuters.
“‘When people asked what Apple’s next big product was, we kept saying it was services for several years, but then last quarter it stalled. Apple is like an A student with a bad report card. We’re not going to throw them out of the house just yet, but we want to see that number pick back up,’ said Trip Miller, managing partner at Gullane Capital Partners,” Nellis reports. “In February, Apple said that segment grew 18 percent to $8.4 billion, missing analyst expectations of $8.6 billion and down slightly from $8.5 billion the quarter before. Wall Street expects $8.4 billion in services revenue this quarter, according to a Thomson Reuters average of 17 analyst estimates.”
“Tom Plumb, founder of Wisconsin Capital Management and an Apple shareholder, said Apple should seek out recurring revenue in areas such as financial services. Apple could use the cash to bolster its Apple Pay product by buying a company like American Express Co. or making other investments to make consistent revenue off transactions,” Nellis reports. “Hal Eddins, chief economist at Apple shareholder Capital Investment Counsel, said that many of the massive acquisition targets often tossed around as possibilities for Apple, such as Netflix Inc. or Tesla Inc., do not make sense from a valuation standpoint… His request: an increase in Apple’s dividend.”
Read more in the full article here.
MacDailyNews Take: As we wrote back in January:
Yes, yes, yes to buybacks! (And healthy annual dividend bumps.)
When shares are undervalued, as Apple’s are, it makes sense for Apple to buy them back.
A reminder that we’ll bring your the results as soon as they are available (simply check our home page at 4:30pm EDT today).
We also plan to cover today’s conference call with live notes as usual. That link will appear on our home page around 4:45pm EDT today.
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