Buyback: Apple’s Diversion from Innovation Slump

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April 24 (Bloomberg) -- Hudson Square Research Analyst Daniel Ernst and BGC Partners Senior Tech Analyst Colin Gillis examine Apple’s stock split and their quarterly sales surge. They speak with Bloomberg Television’s “Street Smart." (Source: Bloomberg)

Tings out of the company?

I think the thing to look at is in 2012, earnings grew 60%. last year, they declined 60% and a year ago committee declined 18%. if you look for one reason why apple stock climbed, earnings did not just slow, they declined.

Going from here, the only way you will really move the needle is with a new product category.

Apple has a 30 year track record.

There's a lot of tech companies that have that.

They have to report them as separate segments in their earnings.

The share buyback is great.

They returned $21 billion.

It is something he has been pounding the table for.

He is extremely happy about all of it.

But they are spending $4.5 billion year on research and development will stop when will that translate into something we all want and we all use?

Wax investors look at the cycle for apple and we just have this vague vacancy that happens every spring for the first two quarters.

That is a high-margin business, the ipad.

Even the watch, if it's priced at $299, you've got to sell 50 million of them to add to 10% of revenue.

Exactly will stop so what have they got?

You also have to be concerned about the overall changes in the fund little smart phone industry.

You are able to get much that her phones and the functionality gap is narrowing.

The price gap is widening, which means you can get phones close to an iphone for significantly lower.

You've got to open up new categories.

There are new things just like we were talking about with amazon that apple could be pursuing.

They have 800 million accounts on itunes.

They should be monetizing that across a number of different ways.

Itunes almost feels like it's a thing of the past.

Who wants to own them?

I just want to stream them.

You heard:'s point.

What's a 290 nine dollar watch going to do for them?

The next category trying to figure out how to move the deal is difficult.

My point is that's not my job.

My job is to look at the track record and 11 times earnings at 2.5% dividend yield, you are not paying a lot.

You are paying for the prospect.

We have a buy rating and we think they will deliver but it's hard.

No one predicted what the iphone is going to be.

No one had a tablet before.

Tablets were on people's horizons.

After the iphone, they certainly were.

I don't spend a lot of time trying to figure out what the product is but trying to understand what the product will be and how they can do it.

It is the most valuable company on a u.s. list of exchange.

What are the cash flows going to be in 30 years?

We don't know what anybody's cash flow will be in ready years.

It looks inexpensive on a ratio but it's close to half $1 trillion.

Let me ask you guys about this.

They are doing the 721 stock split.

You can be part of the dow jones industrial average.

Will that get more retail investors interested if it is a cheaper price point?

It's just math all stop inclusion on the dow would also be a positive.

I agree with: on that point.

The increased buyback and doesn't move the needle in the same way ipod, ipad and the app store have done so far.

Thank you, jill and.

I will see you in a little bit.

Coming up, aaron out economist

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

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