WWDC Confirms Apple's Shift From Growth To Income

Jun.11.13 | About: Apple Inc. (AAPL)

Apple (NASDAQ:AAPL) has been the most amazing company on the planet for the last decade or so. It has innovated, created, developed, and designed the way human beings communicate, interact, and learn. The company has an impeccable balance sheet that requires nothing more than knowing that they have more cash in the hopper than many small nations around the globe, and hardly any debt, aside from the rather slick maneuver of borrowing to buy back shares, so as not to have to pay taxes on cash held around the world.

As of now, the company's share price has fallen from grace, and has gone from an amazing growth engine stock, to a potentially solid dividend growth value stock, of which I happen to own shares of. Not for capital appreciation, but for dividend growth. I believe that Apple has gone from being the king of the hill, to the scrap heap of magnificent companies who now do just enough to keep enough revenues and profits flowing to keep people employed, and maintain an aura of greatness.

This is not an awful thing, it just is sad to see from my point of view.

Apple Underwhelms Just About Everyone

To be direct, Apple had a shot at regaining its "mojo" just by announcing the next amazing new product to come down the road today. Hopes of an iWatch, iTV, and a low-priced iPhone for the emerging markets, were dashed in one unimpressive display of face lifting, rather than innovation. You can read a blow by blow description of the Apple keynote presentation right here, but I have extrapolated the "meat" to make it easier to digest.

Let's run down the list of "new" and "improved" Apple non-products. I suppose I will use the wrap up by Tim Cook to highlight the big stuff:

  • OSX Mavericks; basically an updating of the Apple desktop operating system that will use new energy/power saving technology, improved Maps integration, and some sort of page saving technology for iBooks.
  • New "incredible" Mac Book Airs; not all that new, but it does have a new extended life battery that could last from 9-12 hours depending on the size of the Mac Book.
  • Next generation Mac Pro; it has "a central thermal core, (which I assume is a good thing), and superfast memory support," according to TechCrunch. I guess it is going to be very powerful.
  • iWork for iCloud; according to The Verge, Apple now has its version of Google Drive. (are you getting excited yet???)
  • iOS 7; as per Tim Cook's wrap up: "Amazing new features and a stunning new user interface." From my perspective, a new look to the existing iPhones and iPads. Oh please, be still my heart!
  • iTunes Radio; the last introduction and supposedly the crowd stopper since it was saved for last. Yep, it is a new music streaming app. Just what we need and I heard that Pandora and Spotify were having late night meetings to address this "breakthrough." (Just kidding, but maybe they are quaking in their boots?)

That's it everyone. The amazing new innovations from Apple, that had Marketing Chief, Phil Schiller state with joy, in front of the Apple minions: "Can't innovate any more, my ass" when the new Mac Pro was introduced. I can think of some more colorful words to describe the innovations, but I will save that for the commentary here.

Oh, I did leave one new "innovation" out. It really is earth shattering; a new male voice for Siri. Sorry not to highlight this "biggie" folks, but I prefer the female voice anyway.

Wait One Second, What About Some New Stuff?

I guess we will all have to wait to see if Apple has anything up their sleeve. Particularly in the bare bones, lower priced iPhone arena for the emerging markets. After all, Samsung was bracing for some competition in these markets, but none were to be announced. As noted in this article, the news that Apple did NOT even announce a larger screen for the iPhone had some folks commenting:

Samsung Galaxy S4 demand - before the Apple keynote we saw one of our readers state, "the new iPhone 5S will need to deliver a bigger screen size, if not my next phone will be the Galaxy S4.″ Another commenter explained, "If there's no iPhone 5S at WWDC, I will have no choice but to upgrade to the Galaxy S4 considering I'm up for an upgrade and don't want to wait."

I am not a technophile, nor am I a constant upgrader of my smartphone, but if I were to upgrade, the coolest phone around is the Samsung with the 7-inch screen.

As far as emerging markets, I guess we all know that most of them are buying the cheaper Samsung phones, simply because they are cheaper and work just fine. I assume that is why the smartphone operating system pie chart looks like this:

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The chart and the specifics can be viewed in this report by Venture Beat.

As far as price for emerging markets, you can read this article, to come up with a chart like this:

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We heard no mention of anything from Apple about the rumored low-priced iPhone, even if there is still speculation that the company will bring one out later in the year. As far as I am concerned, the issue should have been addressed to the captive audience, in some detail, at the WWDC Conference.

That announcement alone would have moved the stock higher, maybe even a lot higher, during the day. Instead, shares of Apple fell for the day. Perhaps a testament of how Apple "can't innovate any more, my ass"?

To sum it up; no iWatch, no low-priced iPhone, no iTV, nothing new and exciting to push the share price higher that many investors were hoping for.

What Should We Do With Apple Stock Now?

I own shares of Apple, but not for the growth aspect of the company. I own shares because the company might become a stellar dividend paying winner. Apple has increased dividends steadily since it began paying them and I believe that trend will continue.

My personal opinion is that the share price of Apple could be range bound until they decide to announce anything that might be up their other sleeve.

I am holding the stock and not selling. The share price might pop or drop, but now I am convinced that I own it for the right reasons for my needs.

Disclaimer: The opinions of the author is not a recommendation to either buy or sell any security. Please do your own research prior to making any investment decisions.

Disclosure: I am long AAPL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.