How Apple Could Surprise Us in 2009

In the face of extremely low expectations for Apple's (AAPL - commentary - Cramer's Take) prospects, I present to you my 2009 predictions. You didn't think that $1.1 billion spent on fiscal 2008 R&D is going to waste, did you?

1. Apple TV will evolve into an actual TV. The current Apple TV box has not worked. Steve Jobs knows this and has referred to the product as a "hobby," allowing Apple to obtain the content it needs before the real Apple TV is launched. In accordance with the Apple way of doing things, I am going to predict that the new version of Apple TV will in fact be an Apple brand flat-screen television.

People laughed when Apple announced that it was actually going to make a phone, but they won't be laughing when Apple announces that it is actually going to make a television. By so doing, Apple will continue the trend of seamless integration of its iTunes platform into our lives. This is the product that will once and for all dominate the digital living room. With built-in WiFi and satellite provider connections, all digital movies, music, rentals, apps, pictures and family videos will magically appear on your television menu as soon as you take it out of the box. No instructions. No setup issues. Seamless integration. Digital domination.

2. Independent analyst Andy Zaky foretells the future Apple earnings blowout. Non-GAAP accounting will never be acceptable to the mainstream, so investors must wait for Apple's GAAP numbers to catch up. Apple is in the midst of historic growth for such a mature company, and the amazing thing is that it has accomplished this during a recession.

Interestingly enough, the very analysts who are paid to see through the accounting smoke and tell investors what is really happening are missing it. Zaky's research reports that Apple's fourth-quarter adjusted net income grew by about 124.6%, from $1.085 billion in the fourth quarter of 2007 to $2.437 billion in the fourth quarter of 2008 -- an extraordinary number when fully accounting for iPhone sales in both periods.

Just as impressive is Apple's 75.1% grow rate in sales. Apple's adjusted revenue grew from $6.673 billion in the fourth quarter of 2007 to a whopping $11.682 billion in the fourth quarter of 2008. Earnings per share grew 123.0%, from $1.21 in the fourth quarter of 2007 to $2.69 in the fourth quarter 2008. Because iPhone accounting is spread out over a 24-month period, Apple is building an expanding moat around its earnings announcements even as all analyst estimates are shrinking. A great recipe.

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At the time of publication, Schwarz was long Apple.

Jason Schwarz is the options strategist for Review Services Inc., an investment advisory firm for professional athletes located in Marina Del Rey, Calif. Specializing in option LEAPS, Schwarz has used this investment vehicle to successfully manage risk during bear markets and to exploit growth opportunities during bull markets.