Watch Live: Apple Unveils Latest iPhone From Spaceship Campus

Update: This seemed to sum things up in Cupertino perfectly - Steve Wozniak is wandering around. He said he is excited to see the new iPhone features, especially the facial recognition. He likes the feature a lot on his Samsung phone.

1001ET BLACKBERRY ENTERPRISE UPDATED TO AAPL IOS 11 MOBILE OPER SYSTEM

The stock ran up excitedly into the event...

1007ET APPLE TURNS POSITIVE AS PRODUCT EVENT BEGINS

1019ET Apple Watch - *FOSSIL SHARES DIP AS APPLE CLAIMS TOP POSITION IN WATCHES

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As we detailed earlier, anticipation is sky high as CEO Tim Cook prepares to unveil Apple"s latest iPhones (and "one more things") from The Steve Jobs Theater at the new Apple "spaceship" Campus.

As CNET reports, for the past eight months, we"ve watched a parade of flagship phone launches, from power players like Samsung with the Galaxy S8 to scrappy players like Motorola with its family of Moto phones. Premium phones with not-so-premium prices like the OnePlus 5 have also competed for our attention.

Meanwhile, rumors about the next iPhone kept trickling out thanks to leakers and established publications alike.

Apple is set to cut through all the noise with the official unveiling of at least one new iPhone (and maybe more), as well as the rumored release of updates to the Apple Watch and Apple TV. There"s also a chance we get more details on the forthcoming HomePod smart speaker.

Watch live here (if you"re on a Mac with Safari).

Live Feed (via CNET):

What are we expecting...

 A weekend leak of some unreleased iOS 11 code may have spoiled all the surprises Apple had in store for tech fiends at tomorrow’s big iPhone event, with John Gruber of Daring Fireball calling the leaker “the least-popular person in Cupertino.”

There is expected to be three new phones. Two will at least be modest upgrades to the iPhone 7, getting beefier chips and the like.

The phone people really care about -- in imagination, if not necessarily spending plans (yet) -- is the 10th anniversary version of the phone.

While Apple was typically quiet about its plans, by now the world has a pretty good sense of the feature set.

The phone is expected to be Apple’s first with an organic light-emitting diode, OLED, display, which will be larger at 5.8 inches, and sharper, than the previous LCD displays.

Hold on to your hats: Apple ditched the home button in the phone, which is expected to now be unlocked through facial-recognition technology.

The phone is also expected to offer wireless charging and 3D sensors that enhance the performance of coming augmented-reality apps.

What will the stock do?

UBS technology analyst Steven Milunovich says there’s a distinct pattern in how Apple’s stock price reacts to these product launches.

“Based on the last five iPhone announcements, the stock has a reasonably consistent pattern: down in the two weeks preceding the event; up/down 1-2% the day of the event; up between the event and launch (phone availability about two weeks later); weak in the two weeks post launch; and then up going into earnings,” he wrote in a note out Tuesday morning.

“We think there is somewhat greater near-term downside risk this time though we expect the stock to outperform over the next 6-12 months.”

Here"s how the stock has moved before, during, and after previous iPhone announcements, relative to the S&P 500:

New iPhones are not enough to keep Apple’s stock going, it needs a new category

It is hard to find a bigger Apple stock cheerleader than me. I’ve been writing Apple stock love poems for years. For a long time, it was easy to love the shares because they were unloved by others and it was cheap.

Until recently, when Apple stock was still trading in the low $100s and at single-digit multiples, we were buying current product categories at a discount and were not paying for future product categories.

At today’s price that is not the case anymore. That is true with any company – the more expensive the stock gets, the more clairvoyance investors need to discern the company’s future growth.

At Apple’s size it is very hard for the company to increase its earnings significantly. Macs, iPads, and even iPhones are mature products.

The iPhone may have a few growth spurts left, but not many. It is facing an unavoidable headwind: the elongation of its replacement cycle. The iPhone improved substantially over the years, but as the i-marvels piled up, the incremental improvements that motivated people to buy a new phone every two years or so became less and less significant.

At some point the iPhone will face the fate of the iPad – its replacement cycle long in the tooth and sales stagnant and declining.

Will the iPhone’s sales stop growing in 2018, or 2020? I don’t know, but from a long-term perspective of the company’s valuation, a few years don’t make that much difference.

(A new iPhone is expected to be unveiled next week. The stock fell slightly Wednesday on concern supply disruptions could cause shipping delays with the new phone.)

Services is the only segment that can grow at a double-digit rate for a considerable period of time, but it only represents 13 percent of revenue. Even the Apple Watch doesn’t really move the needle.

They need another genius

But can Apple come up with new product categories? Let’s ponder on this question in the context of the following quote:

“Talent hits a target no one else can hit; Genius hits a target no one else can see.” – Arthur Schopenhauer

Apple has a lot of talented people designing and redesigning products in the categories that Apple already dominates. They are hitting a lot of targets no else can hit. Apple’s brand is as healthy as ever, and so is product satisfaction.

However, to create a new category of products Apple needs to “hit targets no one else can see,” and this requires a genius. But in an organization of this size with a lot of bright and talented people, it also requires a benevolent dictator – someone able to make bold, unconventional decisions (and own them), someone who in addition to everything else is able to inspire others to create what they may think is impossible. Yes, I am referring to the one and only Steve Jobs, he of the “reality distortion field.”

Here is an instance that comes to mind: Jobs asked his engineers to come up with a touchscreen computer – a tablet. They did. It looked like a bulky version of today’s iPad. Steve looked at and said “Let’s put the tablet on ice,” then refocused the company on miniaturizing that tablet and making a phone instead.

It is important to remember that at the time, though Apple was financially healthy, it was not swimming in cash the way it does today. Jobs made a benevolent dictator-like decision: He diverted engineers who were working on the MacOS to work on what would become the iPhone OS, causing the late release of some Mac products. And only years later, after the iPhone was a raging success, Apple brought the iPad back to life. That was Jobs’ Apple.

Now let’s visit Tim Cook’s Apple. The New York Times ran an in-depth article unearthing why Apple has (so far) failed to come up with an electric self-driving car. These few sentences jumped out at me:

“But the car project ran into trouble, said the five people familiar with it, dogged by its size and by the lack of a clearly defined vision of what Apple wanted in a vehicle. Team members complained of shifting priorities and arbitrary or unrealistic deadlines.”

Nokia spent a lot on R&D too

Even Jobs admitted that Cook is not a “product man.” Cook doesn’t have “the vision,” and thus he doesn’t have the authority to be a benevolent dictator. Nor does he have the charisma to project and maintain a reality distortion field.

Today Apple spends almost $12 billion on R&D – double what it spent just a few years ago. But as outside observers, we really don’t know where this money is going. Or more importantly, how productively it is being spent. I vividly remember how Nokia was increasing its R&D spend every year during the last years of its dumb-phone dominance, but all that R&D did not bring forth new products that would have saved the company from its eventual demise. Apple is not facing Nokia-like collapse, but the R&D argument still stands: R&D spend doesn’t always equal great new products.

The NY Times article said that Apple curtailed its ambition to make a car and is now focusing solely on self-driving technology. In other words, Apple is basically pulling out of the electric car space (at least for now).

If Apple develops and licenses its self-driving technology, it will recover some of its losses on investments made to date. But it will not be able to take advantage of the significant competitive advantage that comes with its incredible brand, its distribution network – hundreds of stores (potential car dealerships) sprinkled all over the world – its know-how in battery management, its design prowess, and its i-ecosystem.

We still own a little bit of Apple stock but have sold most of what we owned at current prices. Maybe Apple’s augmented reality products will become a huge success, or maybe the company is working on a brand new category of products that we have not even imagined. It is all possible.

In making investment decisions you never have perfect information. Apple is no exception. At today’s valuation we are paying for genius – Apple’s ability to successfully create and dominate a new, large product category. While the company is run by very talented people who will do a great job getting us excited about the categories of products they are already in, the company’s genius died with Steve Jobs.

Read addition thoughts on Apple, here.

I am the CIO at Investment Management Associates, which is anything but your average investment firm. (Seriously, take a look.)

I wrote two books on investing, which were published by John Wiley & Sons and have been translated into eight languages. (Even in Polish!)

In a brief moment of senility, Forbes magazine called me “the new Benjamin Graham.” (They must have been impressed by the eloquence of the Polish translation.)

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Apple Stock Soars Above Record Closing High

Despite declining earnings expectations, AAPL"s share price just broke above its record closing high (from Feb 2015).

As WSJ notes, the tech giant’s shares–among the most widely held and actively traded in the world–hit $133.42 moments ago, trading above their record close of $133 from February 2015. And they’re inches away from their all-time intraday high of $134.54, set in April 2015.

Shares of the $700 billion company are up about 41% in the past 12 months, and more than 9% since Apple pulled back the curtain on its latest earnings report on Jan. 31 to reveal an end to a three-quarter streak of declining revenue.

As the stock prices has soared, volume has slid...

Monday’s trading is the capstone of a recovery in the shares after a prolonged downturn from July 2015 to May 2016, when the stock fell 30% as investor concern mounted over the pace of iPhone sales, soft demand from China, and speculation about whether the company will ever again come up with a product with even a fraction of the impact of the iPhone. In that span, the Apple Watch failed to catch on as quickly as some had hoped, and sales of the company’s iPad tablet swooned.

Near the end of that stretch, Apple momentarily lost its crown as the world’s largest company by market capitalization to Google’s parent company, Alphabet.

Apple regained the mantle, and the gap between the two began to widen again when Warren Buffett"s Berkshire Hathaway revealed that it had taken a stake worth nearly $1 billion in Apple.

But earnings expectations have done anything but rise...

But don"t let that worry you...