This Day On The Street
Continue to site
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

Apple Definitely Cares Less About an iWatch

NEW YORK (TheStreet) -- My Dec. 12 article, I Still Don't Understand the Smartwatch, was steered largely toward Samsung's Galaxy Gear -- which I find completely unattractive in many facets. 

Today's focus, however, is not on Samsung's potential flop of a smartwatch, but rather, Apple's (AAPL - Get Report) possible duplicate of such a product as I'm not buying into the concept that investors and analysts need to see an iWatch from Apple just to prove it can innovate.

We already know Apple can innovate. Though Apple didn't invent Smartphones, tablets and mp3 players, it was the first company to get them right and really make them into desirable products. Apple not only nailed the products, but it also nailed consumers' perception of them -- maybe I'm the only one feeling this way?

Apple shouldn't rush something to the market that's largely irrelevant. While compiling estimates on a product that has yet to exist seems rather meaningless and slightly idiotic, that hasn't stopped analysts from doing so. 

Piper Jaffray's Gene Munster suggested that if 2-to-4% of current iPhone users buy an iWatch, it will sell between 5 and 10 million units. Taking the best case scenario of 10 million units, that's good for about $3.5 billion in revenues -- based on a $350 price tag for the iWatch. 

Must Read: Why Dimon and Blankfein Should Envy Mikhail Khodorkovsky

If Munster's estimates for this nonexistent product are semi-accurate, the iWatch would hardly constitute as a needle-mover for a company the size of Apple. With fiscal 2013 revenues of $170 billion, the iWatch would have accounted for a minuscule 2%. 

Of course, this isn't accurate either, since it's based off of an estimate of something having a good chance of existing. See my point? We have no clue.

But at that rate, even 25 million units at the hefty cost of $350 would still have only accounted for 5% of revenue at the time. 

In actuality, an investor who is sitting on the sidelines -- ignoring Apple's valuation, current product line up, dividend and share repurchase -- and buys the stock because the company released an iWatch, has invested backwards. 

Apple can innovate, and releasing a product for the sole purpose of releasing a product is stupid. 

The Samsung Gear has reportedly shipped 800,000 units since its release in September. Analysts would be pounding Apple into dust if they saw a figure like that come from the Cupertino juggernaut. 


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
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
SYM TRADE IT LAST %CHG
AAPL $126.60 0.94%
FB $86.91 1.34%
GOOG $521.84 0.26%
TSLA $269.15 0.33%
YHOO $39.33 0.10%

Markets

DOW 17,757.91 +138.40 0.79%
S&P 500 2,077.42 +14.31 0.69%
NASDAQ 5,013.1230 +26.2560 0.53%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs