This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
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
TheStreet Open House

Palmisano Sees No Innovation Slowdown at Apple (Update 1)

Stocks in this article: IBM AAPL MSFT

This story has been updated with additional comments from Palmisano and HDS.

NEW YORK ( TheStreet) - Former IBM (IBM - Get Report) CEO Sam Palmisano says Apple (AAPL - Get Report) can continue to push the technology envelope despite recent concerns its innovation engine may be slowing.

"I don't think that Apple is less innovative," he said, during a lunch presentation in New York hosted by Hitachi as part of the World Business Forum event. "It's just the cycle, that's where they are at. You have got to go to the future - where's the next wave?"

Palmisano, who was responding to a question from TheStreet following his presentation, acknowledged the challenges faced by Apple CEO Tim Cook and his team.

"It's a little bit of a dilemma, but I have lived it - I ran the PC business at IBM before we sold it," he said. "Apple's dilemma happens to be the phones - the challenge is that when you're running that kind of innovation model you have got to constantly have hits."

"Apple has a wonderful business model around smartphones," he added. "But you have got to move really, really fast - you went from iPods, then you went to the iPhone and then you went to the iPad."

An Apple investor who bought the tech giant's stock when it went below $400, Palmisano noted that the company's shareholders are increasingly sensitive to the iPhone maker's margins.

The one-time IBM supremo cited, in particular, Apple's launch of cheaper iPhones in emerging markets as a surefire way to pressure margins. "It's impossible, it's mathematically impossible (not to have margin compression)," he said. "I have lived it - it's impossible."

Palmisano also speculated about Apple's future technology moves. "The next hit has got to be, I think, TV," he said. "I don't know what it is, you would have to ask Apple what it would be."

The 62-year old took IBM's reins in 2002 and successfully shifted the company's focus away from hardware to high-margin software and services. He stepped down at the start of 2012, to be replaced by current CEO Ginni Rometty.

Speaking on Wednesday, Palmisano cited data analytics as a key area of enterprise technology innovation.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link 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

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, 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
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,416.85 +225.48 1.31%
S&P 500 2,021.25 +19.09 0.95%
NASDAQ 4,683.4070 +45.4130 0.98%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs