MorningWord 1/6/14: What Happens in Vegas? $AAPL

by Dan January 6, 2014 9:32 am • Commentary

The annual Consumer Electronics Show this week in Las Vegas will be something that resembles a cross between a Star Trek convention and Mark Zuckerburg’s upcoming 30th birthday bash. A lot of geeks and little excitement.  The financial press has been all over what they think the hot trends will be, so what should we expect?

1) In-Car Connectivity: last week the WSJ ran a story on the fertile yet nascent battleground of in-car entertainment/connectivity (here, and our thoughts here) and how companies like AAPL and GOOG will be duking it out for your eyeballs and earbuds at high speeds.

2) Internet of Things:  Another hot buzz phrase, that became slightly mainstream last year was the “internet of things”, used to express how ordinary devices will be wired and work seamlessly with a lot of other stuff, think Jetsons.  The WSJ ran a story yesterday (here) discussing the trend which was short on anything very exciting, many of the devices a redo of the 1980s timesaver “The Clapper“, without all that clapping.

3) 3-D Printing: As Barron’s noted this past weekend, “7,000 Square Feet Dedicated to 3-D Printing

4) Wearable Computing: Again, 2014 will be the year the “smartwatch”.  Still waiting and just like Google Glass I don’t know anyone who won’t be at Zuck’s birthday bash who will be in the market for a wearable cancer inducer anytime soon.

And lastly

5) The Connected Living Room:  What the hell happened to this one? The promise of AAPL or GOOG revolutionizing the way we consume and stream media from connected devices in a seamless manner still never came to be (to be fair AAPL did do this once before since the advent of iTunes and iPod).  I am still piecing this together through Samsung, AppleTV, Sonos, Jambone, Marantz and Spotify and frankly i feel a bit like MacGyver.  There is such a massive opportunity here for one or at most 2 devices/services.

So what gives?  None of the above are likely to improve your lives greatly in 2014, at least not to see a meaningful improvement as to what was on display at last year’s CES.


As it relates to AAPL though, a company that has not introduced a new category since the spring of 2010 with the iPad, I see tons of opportunities.  And just like MP3 players, smartphones, netbooks and tablets existed before AAPL’s intro to the market, it didn’t take them long to redefine the respective categories.  Last month in a letter to AAPL employees, CEO Tim Cook stated, “We have a lot to look forward to in 2014, including some big plans that we think customers are going to love.”  Now this sounds like the usual CEO-speak, but with a potential proxy fight looming and a stock that, despite being up substantially from the 52 week lows, still sorely lags the broad market and sits 23% from the all time highs in Sept 2012, the company better hit on those big plans.  With iPhone selling at China Mobile in the next couple weeks, the potential for AAPL to redefine the watch category, the deliverance of the long rumored TV and some sort of home server to connect anything with a transmitter could all be catalysts for a stock that long traded on product intros.

Devoid of fundamental news, and considering how poorly AAPL responded to the China Mobile announcement last month, one guidepost can be the technical set up.  On a long term basis it doesn’t exactly look pretty.

The five year chart below shows the stock’s inability to get through resistance that is the uptrend line off of the 2009 lows, and traders are now very focused on the psychologically important $500 support line to the downside.

AAPL 5 yr chart from Bloomberg
AAPL 5 yr chart from Bloomberg

Until the stock can establish a new range above $600, it remains a broken chart to me.

Lastly I would mention that the next fundamental catalyst for the stock will be the company’s fiscal Q1 report and Q2 guidance that should come the week of Jan 20th (likely Jan 23rd).  But over the weekend smartphone maker HTC released Q4 results that were worse than expected, and there are fears that Samsung will disappoint when it releases it’s preliminary Q4 results tomorrow.  The theme of smartphone saturation has been on the table for the entire industry for more than a year now.  If AAPL confirms that trend, management better have more than an iWatch up its sleeve for 2014 if stock investors are going to see some real returns.