Will Apple Disappoint Again?

06/02/2014 12:01 am EST

Focus: STOCKS

Jim Jubak

Founder and Editor, JubakPicks.com

The annual Apple developer's conference is in early June, which typically gets Wall Street excited and MoneyShow's Jim Jubak shares his thoughts on how the market may react.

It's all, well, so predictable. Every year in June, Apple (AAPL) holds its worldwide developers conference. This year, it is June 2 to 6 in San Francisco. Every year, Wall Street tries to build up some excitement about it and you see analysts raising their target prices and talking about the wonderful things that Apple is going to produce, and that's what we're seeing right now. We've had a rally of about 20% in Apple since, say, early March. The thing that is also predictable is that Wall Street is almost always disappointed. They see the products that come out of this, they see what's announced, and the next day then either, they may not cut their estimates, but certainly, the stock seems to fall back. I think that's exactly what we're going to see this time but watch what comes out of the conference and you make up your own mind. We're going to see announcements of upgrades to the operating system for both the mobile iPhones and the desktop computers and that will be some nifty stuff there. I think you're going to see a big improvement to Siri, for example, and the way it works with other applications. There is probably going to be some news about the larger screen size for the iPhone 6 due to be introduced in the fall. There will be some upgrades for things like the MacBook and maybe we'll get some more hype on Apple's entrance into the internet of things, the idea of using your phone to control your intelligent refrigerator, to be able to turn lights on and off, to do garage doors, all of that stuff. Apple is not going to make the hardware. Apple will make the software controller and be sort of the manager of the network because it will basically sort of debt these things and they'll come with a little sticker that says, you know, iPhone compatible or whatever. That might be enough excitement but I doubt it. The real problem that we've still got with Apple is that people are going okay, so, high end smartphone sales, the sales aren't falling but the rate of increase is falling so we had numbers from one of the major market watchers, it was IGC I think, saying well, you know, after this year and next year, looking at growth going down to about 6%, so Wall Street is saying, I think logically, where is the next big product, where is the growth going to come from to drive Apple up from here, so every year, we're getting this pattern, excitement going into these conferences, disappointment coming after, and I think what we have to do is to wait for Apple to actually come around and introduce something that could move the needle on this, I think that's Apple TV, and it looks like Apple TV is not coming out until the end of 2014 at the earliest so it's certainly not going to move anything out of this conference.

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