Apple Stock Watch: What’s New in the Product Pipeline?

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Aug. 20 (Bloomberg) -- Avondale Partners Senior Research Analyst John Bright and IDC Research Chief Research Officer Crawford Del Prete look ahead to new Apple products such as bigger-screen iPhones and a wristwatch-like device. They speak on “Market Makers.” (Source: Bloomberg)

Research analyst for avondale.

You just recently raise your price target on apple to 100 $10 from $100. what changed?

Well, we are a market outperform on the stock now.

We had upgraded the stock and got quite lucky.

It is almost at the bottom of the stock price.

The financial engineering is behind us and we have a 110 dollar price target today.

Apple is being simplified and candidly, it's a matter of how they use their product to generate more usage versus android.

Financial engineering is behind this so is this just some carl icahn love?

He said he believed apple to be one of his no-brainers.

Its excitement about what the world believes is going to come.

Eddie cue's, that they never felt better about their product line -- if you have a pulse, you can figure out that the iphone is too small and there are bigger ones coming and they were talking about 4.7 inch and 5.5 inch.

If you leave out the 5s, there are 280 million units that can be upgraded.

Take out the iphone 5, you have wondered 85 million units to be installed and can be upgraded with the product we believe will be announced in september.

Really, this comes down to this massive excitement.

I don't think the company is doing a whole lot different.

It is just the mother of all companies.

Can we look at this as an endorsement of tim cook and the new leadership team?

He got a lot of blame for the downturn and now that is going back up, is this attributable to him?

Certainly.

Tim cook is a gifted executive who walked into a very difficult situation.

I think the question of whether apple can innovate in the long-term from my chair is still going to be open after this.

These products should have been out a while ago.

We should have seen larger iphones.

They have held or slightly grown or market share which means largely that they held off the onslaught of android throwing stuff against the wall over and over.

With the newer products, the faithful will come back.

They will come out and upgrade in droves.

The question of long-term innovation, of a new breakthrough category, that remains open outside the phones.

My point is that doesn't apple need more than awesome replacement cycles?

You are looking for 10% earnings growth for the company but compare that to tripled digits the company saw two years ago.

I agree.

Everything he just said is probably built into the valuation today.

We have heard about innovation.

Tv has been something that was nations -- that was mentioned but it is a matter of usage, using the devices more as a multiple expander for apple.

The service and software segment of the business is probably 15% and growing building corporate average.

That is very important particularly given the statistics that tim cook talks about on the conference call four times the usage of the android devices.

They ipad was really dominant in its category.

That's where you will see a that reoccurring revenue and multiple expansion apple needs to be a long-term core holding for most investors.

That has been very well telegraphed what is coming in the fall and the weeks and months ahead.

What kind of risk is there to the company of those new additions do not live up to the hype or there is no iwatch.

I think it's a matter of incremental improvements that they are trying to introduce.

What will you be using more of?

How is this device which is becoming a necessary device -- we like that if you don't charge too much.

Are they going to be able to improve some of those components , usage, and when we talk about new products, are they easing their way into tv?

They will have new announcements of additional channels.

I think they will continue quietly pushing that way.

Is it devices that of move the needle or is it the enterprise, getting into an entirely different market and relying on the upgrade cycle and relying on selling different assets to that?

What do you think?

The enterprise will be increasingly important for apple.

I would argue they are already there.

It is invisible and in plain sight.

They don't really have the services to be able to maintain their customers, right?

That's right but people have bought these things.

Apple will make bold moves in things like mobile device management and mobile device management and will buy these assets to be in those places.

They will expand their footprint in the enterprise but to the comments we have been making, it is the engagement model around ios and the iphone.

It's important.

What if apple's next prater product does not have a screen?

What if it is simply sensors and things that can be embedded to increase your engagement and ability to do mobile payments and increase your ability to track the things that are important in your life?

Those are the things that apple is looking at in order to drive that engagement on ios.

The other thing you don't want to miss is the actual good old school mac which continues to grow.

In a world where tablets are compressed, look for a world where people look to things like the mac book air and a 5.5 inch iphone as their goto solution.

I want to clarify one thing which is that apple is by no means a monopoly.

Android still has 79% of the share of smart phones.

It is still very much a two horse race.

Apple is what you see in the mature market for the people who can afford it.

We have talked about the financial engineering part of apple.

Looking at the stock price, how much does the buyback him how much the -- does the dividend play into the level we have had over the last 24 hours?

The stock is effectively doubled.

It's a little less than doubled.

Probably half of that move has been related to the dividend and the share repurchase and.

You also have a market that is a tailwinds to the stock as well.

But salsa remember that i think investors have realized thatduopoly is what these companies are becoming and they realize this is becoming a productivity tool, not only the iphone but the ipad.

Probably less so the macbooks.

Those two products account for 72% of the company today.

It's a matter of driving more usage of those products.

How can we use them more?

Can we consume additional content?

Can we use them from a health perspective or a commerce perspective?

That really drives valuation.

Really quick, what company does apple need to buy next?

I think they might take a look at nuance to medications.

What about you?

Yes, i think they could look at content and you may see them doing more content deals.

No sexy new product, thank you so much.

This text has been automatically generated. It may not be 100% accurate.

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