Investors who have been clamoring for the next
mega-product may not have to wait much longer after all. The
Reuters report on CNBC
, looks to be launching a watch-widely dubbed 'iWatch'-- at some
point in October.
Taiwan's Quanta Computer will start manufacturing of the
long-awaited device in July and the company will account for the
majority of the watch's final assembly as well. Sources cited in
the article claim that Apple's watch will have a 2.5 inch screen
that has both a touch interface and wireless charging abilities.
The real shocker is that the source said that Apple expects
shipments of 50 million units within the first year of the
product's release, though that is obviously subject to change. This
is especially true given that the company sold 71.1 million iPads
in the last fiscal year, suggesting that these initial predictions
for the watch are extremely optimistic to say the least.
Apple Stock in Focus
The news will take some heat off of Apple for the time being
though, as many investors were starting to wonder when the next new
product would come out from the tech giant. An Apple produced TV
was rumored for quite some time, but appears as if Apple is focused
on the wrist for the time being.
This shift to the watch may also go nicely with Apple's recent
focus on fitness and related apps. A watch, should it be able to
keep track of various health statistics, would be a nice complement
in this burgeoning slice of the market.
Additionally, the watch shows that Apple is finally moving beyond
various financial engineering tactics-such as share buybacks and
stock splits-and is getting back to its roots in order to grow its
share price once more. While investors don't really anticipate
these buybacks or dividends to slowdown, it is nice to see that
innovation is back in focus.
This innovation tilt is important right now because Apple's
earnings estimate revisions have been in rocky territory lately.
Yes, many earnings estimates have been going higher over the past
sixty days, but more recent estimates, such as those in the past
week, have been trending lower, at least for the current year time
As a result of this more mixed trend, Apple currently has a Zacks
Rank #3 (hold) though is still poised to grow earnings by over 10%
this year (year-over-year). it will be interesting to see if this
pattern shifts as more details are revealed about the iWatch-such
as the price point-and how many the company is realistically
expecting to sell this year.
Other Stocks to Watch
While this is big news for Apple, a variety of other stocks could
also be impacted by this news as well. Specifically companies in
the watch making space may be looking at this recent event with
After all, stocks in this space have survived the initial 'smart
watch' scare pretty much unscathed, but the looming presence of
Apple could change all that. This is especially true if millions of
units are projected to be sold, heating up competition for
consumers' wrists and putting the pressure on watch stocks.
Companies in this space include
Movado Group (
, two stocks that have seen pretty similar trending over the past
two years. Both of these stocks have surged in the trailing two
year time frame- up at least 42%-- but have really struggled
Investors in either one need to pay close attention to the iWatch
news and see how their stocks react to the developments. A good
barometer here will be the earnings estimate revisions should
analysts turn bearish on the prospects of either ahead of Apple's
foray into this already competitive space.
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