Apple Investors: The iWatch Won't Save You (Now)

Following the best week for U.S. stocks since January, stocks are flat this morning, with the S&P 500 (SNPINDEX: ^GSPC  ) up less than a point and the narrower, price-weighted Dow Jones Industrial Average (DJINDICES: ^DJI  ) up 11 points as of 10:10 a.m. EDT. Investors will no doubt be cheered by Citigroup's (NYSE: C  ) second-quarter results, released this morning. Citi is the third major bank (following JPMorgan and Wells Fargo on Friday) to convincingly beat Wall Street estimates, with adjusted earnings per share of $1.25 versus a forecast of $1.17. Lower credit losses and a reversal of loan-loss reserves in the amount of $784 million are more indications that the U.S. economy continues to heal.

Watching for the iWatch
It's coming -- but it could be longer than expected.

At the beginning of the month, I asked, "Is Apple's next "game-changer" on the way?" I concluded: "The evidence suggests the iWatch is on its way. If that is the case, it'll be very interesting to see what kind of market Apple can carve out/create."

In a story posted on its website yesterday, the Financial Times is reporting that Apple (NASDAQ: AAPL  ) has, over the last few weeks, begun an aggressive hiring campaign to fill out the team that will develop the iWatch. According to the report, the project is now past the exploratory phase and has "several dozen employees dedicated to its development." However, the report also suggests that the timing of these new hires is inconsistent with a launch this year, and the second half of 2014 is the likely time frame.

If that is the case, the iWatch is unlikely to be the near-term catalyst for a rebound in Apple shares, which are not much above their 52-week low -- and roughly 40% below their 52-week high:

AAPL Chart

AAPL data by YCharts.

Nevertheless, it will be interesting to see what kind of design magic Apple can weave into this "wearable technology." Although the company has not confirmed that it is developing an iWatch, I believe it is essentially inevitable at this stage. Apple's nearest rival in smartphones, Samsung, has confirmed it is developing a smart watch, and I don't see Apple simply ceding the market to Samsung without a fight. In the meantime, Apple shareholers will have to look to other product upgrades and releases for a lift in the shares.

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.


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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 15, 2013, at 11:02 AM, Elkjs wrote:

    You know guys I don't get it. You write articles not based on any facts. But rumors. How does the hiring of more engineers affect the release date? Do you know that for a fact? Or do you just want to make headlines. Historically, time has proven that a large number of these types of rumors turns out to be false. Or is this just a way to either manipulate the stock or to get folks to subscribe to your paid service.

    One more thing, can you change your trailer comment? Apple has a history of creating new products and then. .... It's getting Old

    Respectfully.

    Sam

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