Apple investors still lack a reason to get really excited about stock

on Feb2
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"Apple innovates like no other company on Earth, and we are not taking our foot off the gas," said Apple CEO Tim Cook on the company's earnings call Jan. 29, 2019.

Stephanie Keith | Getty Images

“Apple innovates like no other company on Earth, and we are not taking our foot off the gas,” said Apple CEO Tim Cook on the company’s earnings call Jan. 29, 2019.

“For Apple the question is, will they introduce exciting new products and services?” he said.

A new iPhone is expected in September, but “expectations are pretty modest and it won’t be all that different than this year’s,” Sacconaghi said.

“What drives excitement around the stock is new products,” the Bernstein analyst said, and he added that a new video content service would be the kind of idea that could help shape greater investor enthusiasm.

Apple CEO Tim Cook talked up the opportunity in video on the earnings call, telling analysts, “We see huge changes in customer behavior taking place now. And we think that it will accelerate as the year goes by to sort of breakdown of the cable bundle that’s been talked about for years. And I think that it’ll likely take place at a much faster pace this year. And so we’re going to participate in that in a variety of ways.”

There are reasons to be skeptical of Cook’s assessment, at least his rapid timeline for the change. And the Apple CEO didn’t reveal any breakthrough video idea.

He mentioned Apple TV, which “you’re well familiar with,” Cook said.

In addition, the company’s Wi-Fi streaming tech AirPlay 2 has support on a number of different third-party TVs. And third-party video subscriptions are available through Apple, and “that’s going to accelerate into the future as the bundle breaks down and people begin to buy likely multiple services in place of their current cable bundle,” the Apple CEO said.

Original content will increase beyond some marquee deals already announced (e.g. Oprah).

“But today I’m not really ready to extend that conversation beyond that point. We’ve hired some great people that I have a super amount of confidence in, and they’re working really hard, and we’ll have something to say more on that later,” the Apple CEO said.

Sacconaghi asked Cook on the earnings call about the all-important iPhone upgrade cycle — fact that efforts like Apple’s battery-replacement program and making the iOS operating system work with older models is changing the iPhone average replacement cycle and that it could stretch out even further in years to come.

“The cycles — the average cycle has extended,” Cook said. “There’s no doubt about that. We’ve said several times I think on this call and before that the upgrades for the quarter were less than we anticipated. … Where it goes in the future, I don’t know, but I’m convinced that making a great product that is high quality — that is the best thing for the customer, and we work for the user. And so that’s the way that we look at it.”

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