Apple Watch

Mark is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Recently there have been reports that claimed Apple (NASDAQ: AAPL) is in the process of developing a device with curved glass that can be worn on a person's wrist and that will have smartphone capabilities.

It reminds me of the 2-way wrist radio and the 2-way wrist TV used by the famous comic book detective Dick Tracy.

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Some analysts claim that a new product is just what the doctor ordered for Apple as its stock price has plunged from a high of $705 last year to around $480 recently. Without a new product the naysayers say Apple's earnings growth will slow and margins will continue to deteriorate. 

Other analysts claim that Apple is working on a new HDTV, the iTV, which supposedly will save the company from ruin when it is released either this year or next. The people in the know say that the sticking point lies with the content providers but the technology is viable.

Still others, including hedge fund manager David Einhorn, who has filed suit against the company, say Apple needs to do something with its huge cash pile, currently $137 billion and growing. Various suggestions, ranging from a dividend increase, more share buybacks or the issue of preferred stock, have been proposed. A complicating factor is that a sizable chunk of the cash is held overseas and the company would be subject to higher taxes if it is used domestically. Mr. Einhorn says that one way around that is for Apple to borrow against the foreign capital and issue the preferred shares. CEO Tim Cook calls the discussion about Apple's cash position a "sideshow" and the suit "bizarre."

Apple will hold its annual shareholder meeting in Cupertino, CA on Feb. 27. Will something be announced then or will investors, analysts and consumers have to wait until the Worldwide Developers Conference to be held in June?

In the recent past other high tech titans have been working on and releasing futuristic products.

Look ma, no hands

Google (NASDAQ: GOOG) has developed the Google Glasses and the driver-less car, both of which probably need some fine tuning before full scale manufacturing can begin. The Internet search engine pioneer probably does not need new products to save itself. It has a wide moat, controlling about two thirds of the U.S. market, around five times its nearest competitor. The phrase "Google It" is now a standard in popular lexicon.

Google's Android operating system software for smartphones dominates the market. However, Apple's iOS has made inroads and actually surpassed Android in U.S. market share for the first time in the 4th quarter last year.

Google's stock price has continued to soar and touched a record high of about $785 per share recently. Executive Chairman Eric E. Schmidt made headlines a few days ago by selling $2.5 billion worth of stock that he owned. He still controls 4.8 million shares.

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Elementary my dear Watson

International Business Machines (NYSE: IBM) was famous for the "IBM-compatible PC" that it produced in mass quantities for many years but lately has transitioned to more of a business services and cloud-based computing company. However, besides doing Big Data, Big Blue still found time to develop a computer, and dubbed it Watson after one of the company's founders, Thomas J. Watson.

The computer Watson was capable of defeating the all-time champions of the TV game show, Jeopardy, in a special head-to-head match in 2011. Nowadays the computer and its artifical intelligence and software capabilities are being utilized in cancer research, a very worthwhile cause. 

IBM has found good use for its cash over the last decade too. The company has managed to combat slowing revenue growth, averaging about 2% per year, by buying back about $100 billion of its own shares. Maybe Apple will embark on a similar effort.

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As an Apple user and a shareholder, I'll be looking for further news about the iWatch. I'll be keeping tabs out for the Google car and for Watson too.

 

 

 


Mathman6577 owns shares of Apple and International Business Machines.. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple, Google, and International Business Machines.. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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