Apple Numbers Show New Hardware Incoming
Apple Inc. (NASDAQ:AAPL) won’t release its earnings numbers for the first quarter of 2014 until later on today, but analysts and commentators are already spouting their opinions about where the company should go in the future. After a disappointing couple of years, the company’s shareholders are hurting. They’re willing to accept any theory that hypothetically saves the company. Luckily for them, the answers are in the company’s numbers, and their likely to be confirmed this evening.
There is no chance of Apple announcing a product alongside its earnings report. The release of Apple hardware has become a ceremony of its own, and the earnings report is not the right place to show it off. If you know where to look, however, Apple cannot keep new hardware out of sight. The firm’s earnings reports clearly show new hardware on the way, and this afternoon’s release is bound to be the same.
Apple Research Hits Highs
Research and development has always been a huge focus at Cupertino. Apple has one of the largest R&D budgets in the world, and the company is constantly patenting new technologies. That’s par for the course at any tech company, but recent movements at Cupertino have been a little bit over par.
According to its annual reports, Apple research costs have close to doubled since 2011, That year saw the company spend around $2.5 billion in research, 2012 costs rose to $3.4 billion, and 2013 spending hit $4.5 billion. The massive year on year increase in R&D is not an issue for the company’s cost base, but it is a clue for those trying to figure out the company’s intentions.
The company’s 2013 filing on the cost increase said the increase was “directly related to timely development of new and enhanced products that are central to the Company’s core business strategy.” Software has never cost that much to develop at Apple. There is but one explanation for the increased spending.
Apple Builds On Falling Momentum
Another patently obvious factor in Apple earnings that points toward new hardware is the company’s headline numbers. Earnings and revenue are no longer growing, and Apple cannot support its current share price if it is not set to grow at all in the coming years. The trend is clear from the company’s numbers, and it needs to do something to jolt itself into growth.
Whether it’s an iWatch or an Apple television, Apple needs to release something to bring growth back to the company. Assuming management isn’t oblivious to its own earnings, which seems a fair assumption, the company is compelled to release something new. Earnings reports for the last three years have shown just that, and this afternoon’s release will not be any different.
Disclosure: Author represents that he has no position in any stocks mentioned in this article at the time this article was submitted.