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 Looks to Juice Declining iPad Sales With IBM and Biz Apps

NEW YORK (TheStreet) -- Amid slowing iPad sales, Apple (AAPL - Get Report) will be looking to reinvigorate growth from its second-biggest product line, with the next iPad helping further the thesis that tablets will really overtake the PC.

In Apple's fiscal third-quarter, the company shipped just 13.2 million iPads, generating $5.89 billion in revenue. Both revenue and units shipped fell sharply, with revenue falling 23% sequentially and 8% year over year, and shipments falling 19% sequentially, and off 9% year over year. That marks the second quarter in a row of sharply lower iPad revenue and shipments, something CEO Timothy D. Cook pointed out on the earnings call.

On the call, Cook noted, "Our sales were gated in part by a reduction in channel inventory and in part by market softness in certain parts of the world. For example, IDC’s latest estimate indicates a 5% overall decline in the U.S. tablet market, as well as a decline in the Western European tablet market in the June quarter."

With iPad sales having slowed for a second straight quarter, to the point where the decline had to be addressed, Apple announced a deal with IBM (IBM), to help bring both the iPhone and iPad more prevalently into the enterprise. "I think they [Apple] need to discover and promote more enterprise-focused iPad applications so that is what the IBM partnership is all about," said Ironfire Capital co-founder Eric Jackson, an Apple shareholder, in an email. "It will take quarters to build it up."

Must Read: Here's What We Think We Know About the Next iPhone

On the earnings call, Cook stated that Apple's partnership with IBM, which will bring more than 100 industry-specific enterprise solutions including native apps, developed exclusively from the ground up, for iPhone and iPad, as well as IBM's cloud services and data analytics expertise, "will be one such catalyst for future iPad growth."

The concern about the tablet market has been that larger smartphones, particularly those known as "phablets," can do everything a tablet can, as well as make calls, providing little reason for consumers to keep purchasing them in droves.

Research firm IDC recently lowered its projections for the tablet market this year, as it now expects 245.4 million tablets (including 2-in-1 devices such as the Microsoft (MSFT - Get Report) Surface Pro) for 2014, down from a prior view of 260.9 million units, up just 12.1% year over year, citing the rise of tablets.

Following the successful branding of the iPad Air, Apple is expected to keep the iPad Air name, as it gets set to refresh the tablet line (Apple currently sells four iPad models), perhaps as soon as this fall. Here's what consumers and investors alike can expect to see from Apple, as it looks to build on the initial success of the iPad, and reinvigorate iPad revenue growth for shareholders.

1 of 3

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 $93.23 -1.70%
GOOG $692.37 0.20%
MSFT $50.06 0.32%
FB $116.79 0.05%
TSLA $245.50 -0.89%


Chart of I:DJI
DOW 17,750.91 -79.85 -0.45%
S&P 500 2,066.13 -9.68 -0.47%
NASDAQ 4,777.1220 -28.1690 -0.59%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs