New Technology Approaches and Apple Detains The iPhone 6?
Tyler is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Did companies plan around the rumored apocalypse of Dec. 21, 2012? Possibly, but I doubt it. Now that we are all still alive, the world didn't blow up, and we are looking forward to the next big thing, several tech companies are looking to impress consumers with just that - the next big thing.
Apple (NASDAQ: AAPL) seems to release a new product, design, or update every few months. Starting in 2001 Apple has updated its devices (iPhones, iPads, and iPods (except for 2011)) annually. People have become accustomed to this, but Apple is planning to wait a while on the iPhone 6. In 2012 Apple derived 53% of its revenue from iPhones. With the stock recently dropping from around $700/share to currently float around $460-$470/share, many people have concerns for the company.
Apple fans should not be worried about the company's new releases--there will be plenty in 2013. Although there is a lot of speculation, Apple could be releasing the new iPhone 5S or a low-cost iPhone in the summer, along with a new iPad 5, iPad Mini 2, and maybe even an iTV in the fall months. The iPhone 6 isn't expected until the summer of 2014.
As for shareholders, there shouldn't be much concern. With earnings per share increasing the past five years to the tune of 823%, and revenues increasing 507% in the same time frame, the company appears to be rising. Apple's largest fear should be the expectations others put on them. The company just had its best quarter and yet many people were disappointed with the results. The company shows a P/E of 10.62 and a market cap of nearly half a trillion dollars.
Google (NASDAQ: GOOG) seems to want a piece of everything, and why not? In recent years the company has grown from a simple page with a logo to a company boasting products and services ranging from Gmail, a social network, Android phones, Android tablets, and even Android TV's. So what's next for the tech giant? Google goggles.
The company wants to place a tiny screen in front of customers eyes as they go about their every day life. The screen will present an augmented reality overlay as the user goes about his or her everyday activities. Google never seems to do anything small, as its current market cap nears $258 billion. Although search ads accounted for nearly 74% of Google's revenue in 2012, this new device could be a big hit. Reports show Google Glass including a camera, 4G with GPS technology, and a Bluetooth connection to Android-based phones.
Google currently has a P/E of 24.08, an FCF yield of 5.1%, and a 231% increase in earnings per share over the past five years. The company's stock has increased 46% in the past five years, minimal compared to Apple's 263% increase. This still doesn't lead me to think that it is a bad buy - in fact I recommend both of these companies.
Google might not seem glorified by some metrics in comparison to Apple, but Microsoft's (NASDAQ: MSFT) stock has decreased in the past five years by 3.5%. Xbox only accounts for 10.6% of Microsoft's nearly $74 billion revenue, but they are still focused on keeping gamers happy. Not much has been released about the new version of the device, including an announced name. Some people suggest Xbox Loop, the Durango, or possibly Xbox Infinity. We will call it the Durango.
The only things that are certain about the Durango right now are that the graphics will be done by AMD, and that it will be released at E3 (Electronic Entertainment Expo - an annual video game conference and show at the Los Angeles Convention Center) in 2013. Users should be thrilled to know that AMD claims the graphic details will be at the same level as those of Avatar.
With a P/E of 15.33 and a market cap of $234 billion, Microsoft has approximately $12 billion of debt, 5.1% of market cap. Microsoft also boasts an 11.8% FCF yield. Looking at these numbers, Microsoft actually seems to be more discounted than either Google or Apple.
The Foolish Conclusion...
So, we know tech companies will always be coming out with new gadgets and devices, but these are three companies releasing products that should be exciting for users. Apple may hold off on its iPhone 6 release, but that doesn't mean they won't release at least a couple new devices in 2013. Microsoft and Google are releasing new items that could drive sales and their stocks upward. Any of these companies should present investors with opportunities to experience compound interest, which Albert Einstein described as "the most powerful force in the universe."
tlwofford has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple, Google, and Microsoft. 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!