As 2014 winds down, investors are starting to look to next year. As someone who extensively covers the technology space, there are a number of key items I will be watching for in 2015. From new products and potential acquisitions to share splits, in this article, I cover the four key themes investors should focus on in the new year.
The Importance Of A Watch
In the first few months of 2015, everyone will be waiting for the release of the Apple (NASDAQ:AAPL) Watch. This is the tech giant's first major new product release in a couple of years, and there is a wide divide on its expected impact. This new device could add anywhere from $5 billion to $20 billion in revenues in the first year, helping push Apple's yearly revenue number over $200 billion.
The iPhone 6/6 Plus is off to a strong start, but some are worried that much of the phone's success is already priced in. Shares have recently pulled back, which provides an opportunity for those that still believe in the name. The good news is that the Apple Watch will reduce the seasonality of Apple's results, which are highly skewed toward the current December-ending holiday quarter. Perhaps an early 2015 launch of a larger screen iPad could help energize the struggling tablet line as well. Apple will have a large say in how the technology sector fares next year, and the new watch will certainly be on the mind of investors.
The True Share Split
While shares of Google (NASDAQ:GOOG) (NASDAQ:GOOGL) did start trading in two classes during 2014, it will be 2015 when the real "split" takes effect. Once shares hit the one year anniversary of two-class trading, the Class C shares lose protection. Class C shares don't contain any voting rights, so investors filed lawsuits against the tech giant to stop the company's proposed split. Google eventually settled, by offering some protection for Class C shares in the first twelve months of their trading. Based on the premium that Class A shares trade at after one year, Google will need to compensate holders of the Class C shares with either a cash or stock payment.
Once we hit that anniversary date around the start of the second quarter of 2015, all bets are off. It will be very interesting to see how Class C shares trade once they lose that financial protection. It is quite possible that the premium Class A shares trade at widens substantially. Recently, Google shares have not done well despite the market rally, falling below $500 at times for both classes. The company has struggled a bit in recent quarters, which is one reason why investors might be a little skeptical at this point. If Google continues to miss on the bottom line in 2015, it will be interesting to see if the Class A shares gain traction for those investors who want voting power to shake things up.
What Does Marissa Mayer Do?
As one of the most powerful women in the technology space, Yahoo (YHOO) CEO Marissa Mayer must make some key decisions in 2015. The company still has a large stake in Alibaba (NYSE:BABA), and what Yahoo does with those tens of billions will be key for shareholders. We've heard everything from Yahoo making large purchases to the company itself being acquired. If Mayer doesn't satisfy investors in the next couple of months, the end of March could mark a crucial time. March 27th is the deadline to nominate new directors, and I'm guessing Mayer does not want to engage in a messy proxy fight.
Shares of Alibaba have done quite well since the IPO, which has helped Yahoo shares jump as well. Yahoo must now figure out how to divest its stake in Alibaba as well as Yahoo Japan in the most tax-efficient manner. Yahoo has a strong buyback plan in place, which is significantly reducing the outstanding share count and helping boost earnings per share. But as 2015 gets going, Yahoo needs to think bigger, and the status quo needs to change.
Does The Social Media Split Continue?
There was a tremendous divide when it comes to the top two companies most people classify as social media names in 2014. Through Friday's close, Facebook (NASDAQ:FB) shares were up more than 46%, while Twitter (NYSE:TWTR) shares were down nearly 42%. Facebook is just a couple of bucks from its all-time high, while Twitter shares need to double to reach a new high.
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