One Analyst With Wildly Optimistic Expectations for Apple, Inc.'s iWatch

Apple (NASDAQ: AAPL  ) CEO Tim Cook has managed to keep the details of its alleged iWatch secret. But the one analyst who is likely to have some knowledge of Apple's plans seems to think the smartwatch will be wildly successful in the market place. Well-connected Apple analyst Ming Chi Kuo says (via MacRumors) that he believes Apple could sell as many as 50 million units in 2015.

iWatch details
Based out of Taiwan, Ming Chi Kuo "often provides reliable information on Apple's product lineup," according to MacRumors. With that said, let's explore Kuo's expectations.

iWatch Feature

Description

Display

Two different display sizes, 1.3 and 1.5 inches. This display will be "flexible" and use sapphire crystal to protect the glass from scratches.

Pricing

Multiple price points, with the high-end model priced in the thousands of dollars.

Battery

At least one day of battery life and technology that enables wireless charging.

Functionality

Biometric sensors, integration with iPhone, iPad, and Mac, and an aim to serve as a fashion item.

The impact on Apple's business
Most notable among Kuo's predictions, however, are his thoughts on the product's potential. Expecting Apple to role out the iWatch in the third calendar quarter of 2014, he thinks Apple can sell 5.5 million units this year and 30 million to 50 million units in 2015. This would be quite an achievement for a product Kuo says could have a high-end model priced upwards of $1,000.

With Apple stock literally going nowhere for more than two years, shareholders are hoping Apple CEO Tim Cook's promised "new categories" will serve as a catalyst for the stock. As revenue growth slows and net income growth rates have flattened out, Apple will need to move the bottom line to get the market excited about the stock again. Could the iWatch serve that purpose?

While investors shouldn't be certain yet that the iWatch can deliver the growth required to move get Apple's bottom line ticking upward again, Cook's proclamation that Apple will launch new categories in 2014 at least helps limits downside risk given Apple's history of successfully entering new product categories.

But the upside potential is definitely significant. Assuming an average selling price of $640 (equal to the iPhone's ASP) for the iWatch, Kuo's median estimate of 40 million iWatch shipments in 2015 could boost the company's 2015 top line by $25.5 billion over today's levels, or by about 14.5%.

Beyond scouring the implications on Apple's financials, the market will also be looking for clues that Apple can innovate as successfully in new categories as it did in the past when famed Steve Jobs was still at the helm. Can Apple revolutionize another new category in the post-Jobs era?

Though there are still many uncertainties regarding Apple's alleged iWatch, one thing is certain: It's Apple's most important product launch in years.

Beyond 2015
The rumored iWatch will almost certainly have huge implications for investors. One hundred of Apple's top engineers are said to be busy building it in a secret lab. And Kuo's projections for 2015 are just the beginning. An ABI Research report predicts 485 million iWatch-like wearable devices could be sold over the next decade. Fortunately there's a way for you to invest in this revolution today... for just a fraction of the price of AAPL stock. Click here to get the full story in this eye-opening new report.


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Comments from our Foolish Readers

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  • Report this Comment On April 10, 2014, at 7:49 PM, Chiam wrote:

    I am not even going to get into the detail but to say that there will not be any watch. Never. There will be no TV.

    I am almost ready to predict there will never be an upgrade to the iPhone.

    Why? Because the way Tim Cook is acting, nothing is going on at the company. Nothing. No news, no products, nothing. He said new things all across 2014. So far we got China Mobile and sales? Nothing .. bad.

    Apple stock? Down. Soon to be under 500 and heading there fast. As Barclays said today, with 3 more quarters that will have declining revenue and EPS Apple will do more buy backs to counter it. iBuy Backs. That is their only product now. At least until the cash runs out.

    The next product show be iResign. By Tim Cook. Now that would be a home run! The stock would soar. Cook is an absolute failure. A disgrace.

    Apple dropped $6.84 today and now is down over $ 2.00 overnight. It is flirting with the 520 level and should breach it tomorrow. We should be down to 500 by next week and after a major earnings miss this month with terrible guidance, we shall hit 440 in May. After a miss in July we should be at 385. And with a miss in October, 325. After we get no new phone this year due to problems and mismanagement, we hit 270.

  • Report this Comment On April 10, 2014, at 9:48 PM, iphonerulez wrote:

    I'm definitely starting to think Tim Cook is a scam artist. He seems like Ed Zander of Motorola back in 2003 or so. I'd heard he was just using all of Apple's services and doing nothing at the company except collecting a big paycheck. He ruined Motorola and was telling shareholders nothing but lies. So far, Tim Cook has shown shareholders nothing but definitely collected a huge paycheck recently. Apple's share price sucks. It sucks horribly. Apple is sitting on $160 billion and can't manage to boost revenue even a tiny bit. I'm practically certain Apple is going to miss expectations this quarter and the share price will be down below $500.

    Apple management must not care about anything if they can hoard that much money and get beaten apart by Wall Street. Everyone keeps saying the buybacks are going to prop up Apple's stock. Prop it up from what level. Even the stocks that plummeted today haven't even close to given up gains they made in 2013 and 2014. Only Apple didn't do anything in 2013 and it's still getting clobbered, or should I say shareholders are getting clobbered. I just hope there are at least a couple of products in Tim Cook's mythical pipeline or Apple stock is a goner.

  • Report this Comment On April 10, 2014, at 11:38 PM, nealdoughty wrote:

    I think Cook is intentionally holding back products until Samsung goes broke from the lack of anything to copy. It's working already.

  • Report this Comment On April 11, 2014, at 9:03 AM, garysund wrote:

    I have to laugh at all the negative comments people have about a Company like Apple just because the stock does not perform the way they think it should. In a normal world it does not make sense why Apple stock isn't a $1000 stock. But it is not a normal world and Apple stock is just doing its thing at the moment. People are making some good money with the stock right now by playing options and shorting. But the buy and hold investors will have their day and that say will be soon. You just have to ignore all this negative noise and look to the future. I think the new products that Apple will be coming out with will be huge winners. Won't be long before they will have more than 200 billion in cash and counting. The day will come for the longs who have had their faith in Apple and their products. If you have been a long term investor like me you have already made a lot of money. If you are a new investor you just have to hang on and let it ride. Three years from now you will be a happy camper.

  • Report this Comment On April 11, 2014, at 12:49 PM, mcsandberg wrote:

    @chiam

    If you are correct about the stock price, it would be the greatest buying opportunity <i>EVER</i>. We would be buying <i>cash</i> for less than 1$ per $.

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