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TheStreet Open House

Apple's (AAPL) Siri Soon Talk Human Good

Stocks in this article: AAPL

NEW YORK (TheStreet) -- Siri could soon become a whole lot smarter after Apple (AAPL) submitted a filing with the U.S. Patent & Trademark Office on Thursday. Due for an upgrade, the artificially-intelligent iPhone assistant often produces irrelevant answers and other misunderstandings. As Google (GOOG) Glass muscles into the AI space, Apple's projects are under pressure to act smarter, faster.

One step towards that goal, Apple soon hopes to imbue its artificially-intelligent iPhone assistant with more smarts via crowd-sourced information. The development would be one of Apple's biggest leaps yet in creating a seamless anthropomorphic virtual assistant.

Siri currently scours Google, Wolfram AlphaMicrosoft's (MSFT) Bing and Yahoo! (YHOO) for answers to users' spoken directives. If the patent makes its way to product launch, should Siri fail in an initial Internet search, it will then parse user-submitted information, as sites such as Yahoo! Answers and ChaCha do. Satisfactory answers to difficult or unusual questions will also be stored in a crowd-sourced knowledge base accessible to Apple.

Or, as the Cupertino-based company puts it in its application:

"A failure to provide a satisfactory response to the user request is detected. In response to detection of the failure, information relevant to the user request is crowd-sourced by querying one or more crowd-sourcing information sources. One or more answers are received from the crowd-sourcing information sources, and the response to the user request is generated based on at least one of the one or more answers received from the one or more crowd sourcing information sources."

Apple shares climbed 1.3% to $527.20 by early afternoon, ahead of  the S&P 500's 0.37% gain.

TheStreet Ratings team rates Apple Inc as a Buy with a ratings score of A-. The team has this to say about its recommendation:

"We rate Apple Inc (AAPL) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • AAPL's revenue growth has slightly outpaced the industry average of 2.9%. Since the same quarter one year prior, revenues slightly increased by 4.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • AAPL's debt-to-equity ratio is very low at 0.14 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.40, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has slightly increased to $9,908 million or 8.45% when compared to the same quarter last year. In addition, Apple Inc has also modestly surpassed the industry average cash flow growth rate of 6.99%.
  • 41.78% is the gross profit margin for Apple Inc which we consider to be strong. Regardless of AAPL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, AAPL's net profit margin of 20.04% compares favorably to the industry average.
  • Apple Inc's earnings per share from the most recent quarter came in slightly below the year earlier quarter. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, Apple Inc reported lower earnings of $39.63 a share vs. $44.16 a share in the prior year. This year, the market expects an improvement in earnings ($43.49 vs. $39.63).

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