It's obvious that Apple is working on new products and services for 2014, with Cook hinting at mobile payments on Apple's most recent earnings call. "The mobile payments area in general is one that we've been intrigued with, and that was one of the thoughts behind Touch ID," Cook said, referring to the fingerprint sensor on the iPhone 5s. "But we're not limiting ourselves just to that."
There's also the increased speculation Apple is working on an iWatch, with 9to5Mac's Mark Gurman recently pointing out a job posting for a physiologist for help with health and fitness data.
Is Cook so confident that the iWatch and Apple's foray into mobile payments are going to generate enough revenue that Apple is confident in using its exorbitant free cash flow to buy back $14 billion worth of stock in two weeks? It sure looks that way.
JPMorgan analyst Mark Moskowitz notes that while capital-focused investors will "cheer the news of of Apple's buyback bonanza," there are more important issues at hand. The iPhone business is slowing down, with "[t]he last two iPhone launches have not resulted in multi-quarter sales growth spurts as previously seen." It's clear that Apple needs to do something to drive innovation and launch another product or three (whether that's the watch, a television or something that hasn't been speculated on) to drive sales growth.
Morgan Stanley analyst Katy Huberty has said the iWatch could generate $17.5 billion in revenue for Apple, assuming a $299 price point. "Our working assumption is that iWatch will largely be adopted as an accessory device and therefore sold into the existing customer base like the iPad rather than to new customers like the iPod or iPhone," Huberty wrote in a note. "Assuming an ASP of $299 and Apple customer base penetration rate similar to the iPad, we see up to $17.5B of revenue in the first 12 months compared to $12B for the iPad and $2.5B for the iPhone."
Aside from an iWatch, television set, or mobile payments, Apple does have one thing going for it now, according to Moskowtiz-- its recent deal with China Mobile (CHL) and what it means for the future. "The China Mobile launch stands to set the stage for a larger-sized iPhone rollout later this year, which could boost unit sales," Moskowitz wrote in the note. "Another silver lining is that we think Apple's crossover to 64-bit processors, ahead of the competition, could usher in new features, potentially jumpstarting growth in the next 12-18 months."
Investor sentiment surrounding Apple right now is seemingly at an all-time low, with TheStreet's Jim Cramer noting the "jitters are for naught." With Cook, Chief Financial Officer Peter Oppenheimer and his team acting so aggressive, it sends a message to markets that Apple is confident in its future products -- even if Wall Street isn't.
-- Written by Chris Ciaccia in New York
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