John Paczkowski

Recent Posts by John Paczkowski

The Market’s Watching TV for Apple’s Next Big Thing

If Apple’s not working on some sort of television product — be it a set-top box or integrated 4K TV — perhaps it ought to be. Because the company’s slipping stock price could use a little bump right now. And a TV offering might be just the sort of “one more thing” that could improve investor sentiment toward its shares.

The issue here is not so much that investors worry that Apple might fail to meet the competitive threat posed by companies like Google and Samsung, though that is clearly a concern. It’s the fear that Apple may not have any more disruptive innovations left in it.

Barclays Capital analyst Ben Reitzes speaks to this disquiet in his latest research note, recounting a recent bull/bear debate he held on Apple. Of those attending, 30 percent said they felt Apple was suffering from a lapse in innovation.

“Many of the questions that we fielded were around what Apple could possibly do next to help improve sentiment,” Reitzes explains. “Apple’s multiple contraction to a forward P-E of 10.6x from almost 16x earlier this year at peak clearly seems to indicate that investors do not believe that there is a ‘next big thing’ and that iPhone growth is flattening out.”

Which is obviously a problem. Consider that Apple shares closed Tuesday at $541.39, well short of their September high of $705. This during a time when the company is headed into the holiday season with one of its strongest product lineups ever: A new iPhone, iPad, iPad mini, new iPods and refreshed Mac desktops and portables. If that’s not driving Apple shares skyward, what will?

Reitzes’s take? The long-rumored Apple television. “Apple needs the living room,” he writes. “To that end, we still believe that Apple is looking into a more thoughtful TV effort either in terms of a fully integrated television set, set-top box or home media hub — and we believe plans could be unleashed in [calendar] 2013.”

The operative word here, of course, is “could.” And there are many solid for/against arguments on either side of the Apple television question. That said, when has Apple ever built a product in reaction to investor sentiment? As CEO Tim Cook recently told Bloomberg, the company’s M.O. is to do only a few products and do them very well.

“Part of our base principle [is] that we will only do a few things,” Cook said. “And we’ll only do things where we can make a significant contribution. I don’t mean financially. I mean some significant contribution to the society at large. You know, we want to really enrich people’s lives at the end of the day, not just make money. Making money might be a byproduct, but it’s not our North Star.”

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The problem with the Billionaire Savior phase of the newspaper collapse has always been that billionaires don’t tend to like the kind of authority-questioning journalism that upsets the status quo.

— Ryan Chittum, writing in the Columbia Journalism Review about the promise of Pierre Omidyar’s new media venture with Glenn Greenwald