Apple Back in the News with ‘Beats by Dre’ Purchase

By Richard Cox
Richard Cox
Richard Cox
July 20, 2014 Updated: April 23, 2016

Over the last few years, Apple, Inc. (NASDAQ:AAPL) has fallen out of favor — and the change in sentiment has been largely reflected in the company’s stock price. It is difficult to argue with the fact that media attention has waned significantly since the passing of Steve Jobs and the heydey that followed the innovative promotions for the iPhone, iPod, and iPad. But there is good reason to believe that many of these negative trends could be changing as we head into the second half of the year. Well-covered acquisition deals, new product launches, and solid earnings performances have the combined potential to start changing the tone and giving new CEO Tim Cook the green light to introduce new product innovations at the world’s most valuable company.

Increased Presents in Online Retail

When we look at most of the coverage surrounding Apple’s proposal to buy luxury headphone-maker, a good deal of the commentary has centered on the fact that the purchase will give Apple access to better sales revenues when compared to FaceBook’s (NASDAQ:FB) decision to buy WhatsApp, a social networking mobile application. But the real story here lies in the ways Apple is looking to capitalize on new consumer demographics and to challenge the dominance of Pandora within the streaming music space. Apple’s own iTunes offering seems to garner enough of the markets attention in these types of areas, so the decision to strategically influence buyer activity will be something to watch in coming quarters.

Impressive Earnings

The next area investors should be watching is company earnings, and Apple has made waves here in recent weeks, as well. “Overall results during the second quarter showed that net incomes at Apple increased to $10.22 billion, well above the $9.55 billion that was seen last year,” said Vlad Karpel, options strategist at TradeSpoon. “Per-share earnings rose to $11.62, which was another improvement from the $10.09 that was posted during the same period last year.” These latter numbers came in part as a result of Apple’s stock repurchase program, which lowered the total number of available shares. On the revenue side, quarterly figures came in at $45.6 billion. This number was highly impressive, given the fact that last year’s numbers were seen at $43.60 billion.

The biggest surprises came when looking at the relatively low expectations that were originally surveyed. The consensus estimates showed that analysts were looking for earnings to come in at $10.18 per share along with revenues that were closer to $43 billion. The distance between the market expectation and the actual result here is impressive by any measure. So it now looks as though the baseline strategies at Apple have put the company in a position to win back some of its lost attention in the market spotlight.

Tim Cook Looks To Gain Favor

As Apple’s stock price dropped from its all-time highs near $700 per share, most of the negative attention was focused on Tim Cook himself. Whether or not Cook deserved all of the poor press is a question of its own. But what is clear is that a lack of investor in the confidence in the company bought stock prices all the way down to the sub-$400 region. These latest earnings results, product strategies, and acquisition deals should give Tim Cook the extra time the needs to unveil Apple’s next line of product offerings.

Some analysts have suggested that this could come as early as June, and this could prove to be Cook’s opportunity to hold off some of the unwarranted criticism that the has encountered over the last few years. Either way, Apple is clearly looking to position itself more strongly in new markets, and the second half of this year should bring some interesting changes in both market positioning and the majority consumer sentiment that is centered on the company.

Richard Cox
Richard Cox