Apple Basks in Bullish Reviews From Wall Street Media Giants
Everybody is still waiting for the next iWhatever, but in the meantime Apple has received some positive news from two longtime financial media outlets, Barron's and Fortune. Apple is the top company on Barron's 500 list, and ranks sixth on Fortune's roundup of top U.S. revenue earners. The best review yet? The firm of rogue investor David Einhorn, leader of the recent shareholder insurrection, actually bought more Apple stock.
May 8, 2013 5:00 AM PT
Apple's fall from grace on the stock market over the past six months has been well documented, but investor confidence seems to have taken a turn for the better over the past week.
The company worked its way onto two high-profile lists. It was the top company on Barron's 500 list, up from its second-place finish in 2012 and fourth in 2011. Barron's said Apple, like many other companies on the list, exudes a successful "blend of vision, creativity, judgment and circumstance," and its "terrific sales growth and wisely deployed cash flow" was enough to earn it the top spot.
Apple also snagged the sixth spot in the Fortune 500 list of top U.S. revenue earners, the first time it cracked the top 10. It was in the seventeenth spot last year.
The company got another bump from previously disgruntled investor David Einhorn. In the weeks before Apple's annual shareholder meeting, Einhorn publicly protested Apple's cash hoard, encouraging investors to demand that the company start giving some of it back to its shareholders. Apple largely ignored Einhorn's specific demands, but it did announce a US$100 billion share repurchase and dividend program during its most recent earnings report.
Einhorn seemed encouraged by the move, noting that his firm, Greenlight Capital, added to its investment position with Apple, but was still waiting for the company's next "blockbuster product."
That's an underlying issue with many investors, said Trip Chowdhry, senior analyst for Global Equities Research -- even the ones who believe Barron's and Fortune are right to recognize Apple's dominance in the industry.
"More investors are realizing that Apple is a company with a lasting impact on the industry," he told MacNewsWorld. "They're not going anywhere, but they do need to show they're going to continue to be innovative going forward if they don't want to risk becoming the next Microsoft."
Foxconn Prepares for Life Beyond Cupertino
Without any brand new Apple product releases for 2013, and none officially on the horizon, the company's main manufacturing partner is reportedly looking elsewhere for business, according to a report from The New York Times.
Besides being a primary spot for Apple manufacturing operations, Foxconn came into the spotlight over the past few years following investigations into working conditions at some of the company's plants. Both Apple and Foxconn vowed to change their practices after reports of worker suicides, unfair wages and long hours at the factories.
Foxconn's latest issues are apparently with Apple's lack of business, however. The supply chain giant, like many of Apple's investors, is questioning whether the company can remain a reliable business partner without the release of another innovative product, said Shad Dowlatshahi, professor of operations and supply chain management at the University of Missouri-Kansas City.
"Foxconn is smart to look elsewhere to diversify its business," he told MacNewsWorld. "Apple has had some negative publicity with Samsung. Its shares have taken a nosedive recently as well."
Apple TV to Renew Partnership?
The company isn't just looking to manufacture the consumer devices for some of its other customers in the tech industry, such as HP and Dell. It reportedly wants to try its own hand at designing and producing its own models of flat-screen TVs. That's an unusual move for a company that has made its name churning out designs from other companies, and it might not be a smart one, said Dowlatshahi.
"Making your own design is a big deal," he noted. "It requires lots of expertise and cost. Foxconn is better off to stick to its knitting and produce other companies' designs."
If Foxconn does decide to produce televisions, though, the experience could make the Taiwan-based company a prime contender to manufacture Apple's potential TV set. As of now, the TV is officially nothing more than rumors. However, if Apple really is working on such a device, it would need a supply chain partner like Foxconn to help make it happen, said Dowlatshahi.
Business relationships aren't always broken and mended so easily, but in a partnership that has the potential to be game-changing for both parties, Apple and Foxconn would find a way to team up again, he said.
"If there is a mutually beneficial relationship, they will work together again," Dowlatshahi said. "They have previous experience and the TV might be the thing to start cooperating again."
Apple did not respond to our request to comment for this story.