Apple Inc. (
is planning to launch iPhones with larger screens in 2014.
According to The Wall Street Journal, Apple will launch two
iPhones, one with 4.5-inch screen while the other one will sport
a screen of more than 5 inches.
Per the report, Apple will also stop selling its mid-priced
plastic based iPhone 5C, which has failed to gain any traction
compared to iPhone 5S in the U.S. and rest of the World. The
company is also rumored to build curved iPhones. However, Apple
is not expected to launch this type of device in 2014.
The increase in screen size will help Apple to fight competition
in the markets of Asia-Pacific, where large screen smartphones
are much more popular than in the U.S. Current iPhones feature
4-inch screens, which was increased from 3.5 inches in 2012.
Meanwhile, activist investor Carl Icahn continues to put pressure
on Apple's management to approve a new $50.0 billion (over $100.0
billion existing program) share buyback program. Most recently,
Carl Icahn bought another $500.0 million Apple share, which took
his investment to $3.6 billion.
In a letter to Apple shareholders, Mr. Icahn argued against
Apple's policy of preserving cash. He urged shareholders to vote
in favor of his share buyback proposal, which in his opinion will
boost the company's overall value.
Apple's ongoing share buyback and dividend program will return
$100.0 billion to shareholders. However, management under Chief
Executive Officer (CEO) Tim Cook has vehemently protested against
Carl Icahn's proposal.
As per management, cash preservation is of utmost importance to
fund Apple's research and development in order to compete in the
fast-evolving mobile market. However, this policy is attracting
increasing criticism from investors as Apple has failed to launch
any new product, for a considerable length of time.
In such a scenario, Mr. Icahn's aggressive demands will further
increase pressure on Apple's management in the near term. We
believe that successful launch of new large screen iPhones as
well as the much anticipated wearable devices in the near future
will provide management some room, going forward.
Apple is set report first-quarter fiscal 2014 results on Jan 27.
We believe that strong holiday season sales and the deal with
China Mobile (
will help Apple to post solid results.
However, Apple's iOS continues to face significant competition
Android operating system in most of the other markets. The
significant decline in revenues in the U.S. and Rest of Asia
suggests market share loss to low cost smartphones and tablets
produced by Samsung, HTC, LG, Huawei and
. This remains a major headwind, going forward.
Currently, Apple has a Zacks Rank #2 (Buy).
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