Apple Should Break Out of Its Comfort Zone With Bold M&A
Apple Inc., the iconic company whose products have transformed daily life, has done what was once unthinkable: It has become humdrum.
On Thursday, Apple reported revenue of $124 billion for the December quarter, beating the $119 billion median estimate of analysts surveyed by Bloomberg. Net profit for the quarter also came in above the consensus.
Yet underneath those solid results are hints of stagnation. Growth is slowing markedly. Sales growth decelerated from a 29% year-over-year jump in the three months ended in September to 11% for the December period. On the earnings call, Apple told investors to expect a further softening in the current quarter. And for now, there don't seem to be exciting products in the pipeline that could reverse the trend.
At the moment, the company's biggest anticipated innovation is a design change on the next iPhone that replaces the ugly notch on top of the display with a smaller hole-punch or pill-shaped form. Not exactly earth-shattering stuff, especially because Android phones such as the Samsung Galaxy already have this feature.
Apple at its core still relies heavily on its smartphone business, with the iPhone accounting for just more than half of the company's revenue. Services from the App Store to Apple Music also depend on vibrant hardware sales. Meanwhile, game-changing projects such as the development of a self-driving car and an augmented reality headset are continually being pushed back. Apple's last significant product release, the Apple Watch, came out nearly seven years ago.
Fortunately for Apple, there is a way out of these doldrums. With the $34.6 billion net profit in its latest quarter, it now has about $200 billion in cash, more than any other publicly traded U.S. company.
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