One factor is that they sold nearly twice as many iPhones as Verizon in that quarter. It isn’t all bad news. Obviously they can monetize their long-term subscriber base. This is what they are banking on. But now, all the major phone networks have the iPhone and the smart phone has become more of a commodity. Will they be as willing to pay the subsidy of an iPhone when other devices require them to pay less?
6. The open platform offered by Google Inc (NASDAQ:GOOG) (Android) is more compelling for the phone makers. With Android, device makers like Samsung and HTC can customize the mobile operating system to be unique to their device. This ultimately fuels innovative features as each hardware maker attempts to one-up their competition while still remaining a Google product. When coupled with increased hardware specs from the device makers when compared to the iPhone, the Android system is compelling for both users and the hardware makers. That fact is certainly reflected in the dramatic market share increases Android has seen in only a few short years.
7. Apple raised the dividend by 15% and announced a $100 billion share buyback program (the buyback alone is bigger than over 90% of the companies on the market). Over the next three years, those are great things for investors, but over the next three months? I’m not so sure that moves the price of the stock much higher.
8. There are reports that Apple has delayed the iPhone 5S release due to fingerprint ID scanner issues (a feature to be incorporated on that phone) and rejected what 8 million devices (read a boatload of phones) from their supplier, Foxconn. That’s not going to help the stock rebound anytime soon.
9. Apple has about $150 billion on the balance sheet now, but most of that is overseas and would face stiff repatriation taxes. There is a possibility (I think a small one) that the U.S. government could announce a special rate for a limited time to flood the market with additional capital without printing money, but the administration has been mum on the issue to this point.
10. I think Apple Inc. (NASDAQ:AAPL) can hit a home run by incorporating near field communication (mobile payment) into the iPhone and the iWatch system (separate or together). I really don’t like the idea of a TV as the refresh cycles are too long (I’ve had my TV for five years now). That said, if Apple can make a good margin on it initially, it can be a growth driver for a couple of years (which then gives Apple the time to innovate even further — think of the original iPhone as compared to the iPhone 5).
I can argue both sides of the discussion here. I’m a long-term value investor. On that thesis, I want to hold Apple for at least the next year to let things play out. However, I think there are other great values in the market right now. If I don’t think Apple has much hope of gaining big in the short term, isn’t it better to deploy that capital somewhere it can be more effective? Weigh in below and let me know your thoughts.
The article 10 Thoughts After Apple’s Q2 2013 Earnings Release originally appeared on Fool.com.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
