A Glimpse At Apple 40 Years

The tech giant has been in the industry for four decades and it still has a lot more to conquer.

Last Friday, Apple Inc. turned 40. Since the company is celebrating its big day by hanging a flag at the Cupertino headquarters, rolling out an inspirational video; dubbed as “40 Years in 40 Seconds,” and launching “special Apple 40” playlist which offers four decades worth song.

Back in 1976, Apple Inc. was established by Steve Jobs and Steve Wozniak with a passion to design a computer which can be conveniently used at homes. After few initial experiments, the company gained momentum and launched “Apple II” which revolutionized and popularized the personal computers. Later, the company launched “Mac” computers which blazed the trail of the graphical interface –for instance, the drop down menus. In this technological era, the graphical interface is taken as granted but back then it was a huge innovation in the field of computers. Later, Microsoft Corp. also adopted the same technology in their products.

The innovative and creative minds of the founders awed the world by launching an “iPod” in 2001 –a slim and sleek portable media player. The gadget laid down the strong foundation for the company which transformed it into a “highly innovative, hugely influential, and highly intriguing” technology company. In 2007, Steve Jobs launched the evolutionary smartphone –the iPhone. The smartphone revamped the mobile phone industry. It changed the way mobile carrier used to deal with the mobile phones makers; by shoving down their high demands because they were larger brand than a phone maker but Jobs had uncompromising nature. He built Apple to be a bigger brand than the carrier. Today, after 40 years of hard work, the company stood at over $600 million market capitalization and has been crowned as “the world’s most valuable company.”

Maybe because of these innovations and creativity, the investors and analysts have high hopes for the company whenever, it announces a product launch. It can be said that because of the revolution, iPhone brought in the mobile phone industry, the analysts couldn’t digest the “slowing growth of the tech giant’s prestigious and core product.” Therefore, many analysts, earlier this year, said that Apple had had reached its peak.

Many analysts opined that the company isn’t “revolutionizing” or “bringing innovation” to its products. The latest iPhone 6S/Plus didn’t have any exceptional features. The smartphone consumers are currently looking for more upgraded features and options. Moreover, the company’s launch event last month was not able to give a “blockbuster” product. 

Apple’s core product sales might decline but the company still has other sources of generating revenues. The “unlooked” area of the company is its continuous growth in the services offering. A long time after CEO, Tim Cook, justified why slowing growth in sales is not “concerning,” the analysts have finally seen the silver lining. Additionally, Apple’s co-founder, Steve Wozniak, during an exclusive interview to CNBC, expressed that computing power is not likely to increase at the similar pace as it had since the time he and Jobs established the company however there are certain “other areas” which hold great potential for the Apple’s growth. He cited that the areas like virtual reality, machine learning, and self-driving cars can potentially raise the growth prospects of the tech giant.

Naturally, the tech behemoth works relating to these areas are coveted for the time being. Rumors have it that the tech giant is working on secretive project of self-driving cars dubbed as “Project Titan.” However, the company’s likely transition to virtual and augmented reality is no secret. Therefore, it can be confidently said that the company who had revolutionized the work with its 40 years of operation will continue to appall the world in the next forty or more years to come.

Apple Stock Jumps Up

The highly anticipated less expensive iPhone is likely to be the beacon of light the tech giant needs for boosting the sales.

For past few months, the most valuable company has been repeatedly finding itself in the vortex of stock shrinking value. The pivotal reason of declining value of the stock was the slowing down of the company’s flagship product –the iPhone. Now, both the investors and the analysts have envisioned that the launch of the highly anticipated new iPhone is likely to be the much needed positive catalyst to boost the sales of the tech giant.

The environment of fear and uncertainty substantially hammered down the Apple’s stock which is now valued closer to IBM –whose declining revenues have been disappointing Wall Street analysts for a long time now –than to technology behemoths Alphabet Inc. and Tesla Motors.  

The Wall Street has expected that the less expensive iPhone which will hit the shelves later in March will be essential in improving sales in developing countries like China. Two weeks since the inception of the bet on the new smartphone, the Apple shares have witnessed a jump of 5%. Moreover, the strategy of bolstering sales in China is commendable as the consumers in U.S. are less likely to upgrade their smartphones more often.

The current stakeholders of the company provided the following rationales for owning the stock which includes, the tech giant’s reliable cash generation, wild card potential for future game-changing products, and beaten down valuation. Moreover, Senior Portfolio Manager at Synovus Trust Company, which tentatively holds more than a million shares of the tech titan, Daniel Morgan expressed the following: "This company has a history of doing better than expectations and surprising people.  Where else can I go and find a company trading at 10 or 11 times earnings that has had such a great history?"

On Wednesday, the Silicon-Valley iPhone maker’s share traded at $100.97. In the lens of finance, the tech giant has been selling the share at 10.7 times its expected earnings per share over the next 12 months. Similarly, over the past two years, Apple’s average forward price-earnings-ratio has been 13. In its comparison, Alphabet Inc. –whose Android competes with Apple’s iOS –trades at 20 times expected earnings and Elon Musk revolutionary Tesla Motors –at the age of only 13 years –trades at humungous 132 times earnings. Moreover the tech company IBM –which is fervently transitioning to cloud computing and like services has a P/E of 10.2, according to the data deduced from Thomson Reuters’.

Motley Fool Funds portfolio manager, David Meier said: "Unless something big happens, (Apple) doesn't deserve to trade at 20 to 25 times earnings anymore. It's just too big. But as a high-quality company, could it trade at 15 times earnings? Certainly."

Simona Jankowski, an analyst at Goldman Sachs reported on Monday that through the new smaller 4-inch screen iPhone, the company is likely to boost the sales volumes by around 5% this year. This increase has not yet been incorporated in the Street expectations.

Analysts have not been much pessimist regarding the stock of Cupertino, Calif. firm. According to Thomson Reuters data, ever since the Apple’s stock encountered a 20% drop one out of 41 analysts recommended selling of the stock while the remaining analysts reiterated “Buy” rating. As of now, 38 analysts recommend “buying the stock” while none has suggested to sell the stock as yet.