2 Growth Drivers That Could Save Apple

Analysts expect Apple (NASDAQ: AAPL  ) to report revenue of $35.02 billion for the company's third quarter, according to Fortune's preliminary survey. As Fortune's Philip Elmer-DeWitt points out, that's the exact same number Apple reported in the year-ago quarter. Is zero growth Apple's new norm? Or, even worse, is decline Apple's future? Possibly -- but there are still a few potential growth drivers left for Cupertino's tech giant.

1. China Mobile
As the smartphone and tablet market begins to mature and become more competitive, Apple will certainly have trouble growing its two highest-revenue product lines. But there still remains one substantial growth driver for Apple within the smartphone industry: China Mobile (NYSE: CHL  ) . As China's largest mobile carrier, it dwarfs its competitors with 735 million mobile subscribers, compared to China Unicom's 258 million, and China Telecom's 172 million.

As Morgan Stanley's Katy Huberty noted after a recent visit to Hong Kong and Taiwan, CEO Cook and company may strike a deal and launch phones by year end. The opportunity? She says that a China Mobile deal, combined with a cheaper iPhone, could potentially triple Apple's addressable smartphone market in China.

Source: Cult of Mac.

2. New categories
Raymond James analyst Tavis McCourt, who has issued a $600 price target for Apple stock, believes the stock is a strong buy. Though he does acknowledge China Mobile as a growth opportunity for Apple, he sees the company's major opportunity is in the expansion of iOS into televisions, automobiles, and other new areas.

Indeed, iOS in automobiles is already scheduled to debut in 2014.

iOS in the Car. Source: Apple.com.

Though it's just a small step, it's definitely a strong move in a direction that could open many opportunities for Apple.

Rumors of an Apple television set have mostly dwindled, but it remains a definite possibility.

What about wearables? At All Things Digital's D11 conference, Apple CEO Tim Cook sounded almost certain that Apple would eventually move into this category:

I think wearables is incredibly interesting, and I think it could be a profound area for technology. ... I think there's lots of things to solve in this space, but it's an area where it's ripe for exploration, it's ripe for us all getting excited about; I think there will be tons of companies playing in this.

And, answering Walt Mossberg's question as to whether or not Apple would be one of them, Cook said, "I don't want to answer that one, but, you know, I see it as something -- as another very key branch of the tree."

Does Apple need saving?
It's tough to gauge to what extent new categories and China Mobile will help boost Apple's bottom line. But, fortunately for investors, Apple doesn't need growth to reward investors. With a generous share repurchase program and a nice dividend yield, any upside would be a nice bonus for investors at today's price for Apple stock.

Can Apple surprise the world again?
Apple has a history of cranking out revolutionary products... and then creatively destroying them with something better. Read about the future of Apple in the free report, "Apple Will Destroy Its Greatest Product." Can Apple really disrupt its own iPhones and iPads? Find out by clicking here.


Read/Post Comments (1) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 12, 2013, at 6:34 AM, fauxscot wrote:

    Save Apple?

    From what?

    You wanna save something, perhaps HP, HTC, Dell, Acer, MICROSOFT (!!!!)... they need some serious saving.

    At Apple, saving is something you do at the bank. Often.

    Snark aside, Apple is still in better shape than just about any of those outfits. Lenovo is doing pretty well, in spite of shipping klunky laptops with modest battery life running Win 8.

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2532575, ~/Articles/ArticleHandler.aspx, 10/21/2014 3:13:45 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement