This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Apple iWatch: Perception Is Reality (Update 1)

Updated from 9:57 a.m. EST to provide analyst comments regarding CEO in the ninth paragraph.

NEW YORK ( TheStreet) -- "Can't innovate anymore, my ass."

Those were the words of Apple (AAPL - Get Report) Senior Vice President of Worldwide Marketing Phil Schiller during Apple's developer conference last week, when talking about the new Mac Pro Apple was showing off. Clearly, the perception that Apple can't innovate anymore is not only bothering investors, but the company as well. A new product, such as the iWatch, would go along way toward changing that perception, even if it isn't likely to have a major impact on the company's business.

Jefferies analyst Peter Misek notes that the iWatch "will more likely be a hobby for Apple than a major new product line." Misek, who rates, Apple shares "hold," notes that "Apple would need to redefine the watch market for it to have a substantial impact on our estimates."

Morgan Stanley analyst Katy Huberty estimates the watch could be worth as much as $10 billion to $15 billion in annual revenue for Apple. Piper Jaffray's Gene Munster has thrown out similar numbers, as have others who've speculated on the yet-to-be-announced device.

A product that does between $10 billion and $15 billion in annual sales isn't going to drastically move the needle for a company that is projected $171.4 billion in fiscal 2013, and $187 billion in fiscal 2014, per Thomson Reuters. It's about changing the perception that Apple has a pipeline left, and can still make products that people want to buy, even if they don't necessarily need them.

Innovation is the heart of technology, and perhaps part of the reason Google shareholders have rewarded the company this year. Shares are up 25.3% year-to-date, as investors get excited about Google Glass, driverless cars, and other projects. Apple has not shown that to investors, and likely never will, as the company, led by CEO Tim Cook, likes keeping its product pipeline a secret.

Misek isn't the first analyst to say Apple needs to redefine the watch market. Currently no one dominates the space, despite attempts by Nike (NKE) and others, and reports that Google (GOOG - Get Report) and Microsoft (MSFT - Get Report) are planning similar devices. The market is still relatively small, especially when compared to Apple's other products.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $95.18 1.64%
GOOG $692.36 -0.84%
MSFT $49.78 -1.64%
FB $117.43 -0.96%
TSLA $232.32 -3.92%


Chart of I:DJI
DOW 17,750.91 -140.25 -0.78%
S&P 500 2,063.37 -18.06 -0.87%
NASDAQ 4,763.2240 -54.37 -1.13%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs