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Investors and Analysts Have Mixed Feelings About Apple Inc.'s New Offerings

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Updates and redesigns from Apple fall short of pleasing shareholders.

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With a major redesign of iOS, a Mac OS X update, iTunes Radio, and new MacBook Air and Mac Pro products on their way, Apple Inc. (NASDAQ:AAPL) had a strong line-up at its Worldwide Developers Conference (WWDC) this week, but some investors still feel grumpy about prospects for the Cupertino-based company.

Apple stock fell 0.66% ($2.92) yesterday, and kept moving down after hours, but rebounded soon after markets opened today.

While the product line-up looks exciting (no potential failures spotted so far), shareholders seem to expect new groundbreaking products (like the iPad) from Apple at each event, and analysts are concerned about profit dynamics. In its most recent quarterly results, Apple reported its first year-to-year profit decline in a decade.

Analysts are mostly upbeat about the stock, however, with ratings of with ratings ranging from "Buy" to "Overweight," as Fortune reports.

"The tech improvements appear to be suitably impressive, but we do not expect them to move the needle in the model in the near to mid term… The bigger story remains whether or not Apple can jumpstart its revenue growth profile," said Mark Moskowitz of JPMorgan Chase, whose recommendation was "Overweight."

Goldman Sachs and Merrill Lynch analysts delivered similar statements with "Buy" recommendations. However, Stuart Jeffrey at Nomura Holdings is more skeptical on the stock, according to Forbes's round-up. "Our interpretation of Cook's comments is that he is signaling that investors and media should not look for Apple to cut corners to cut prices in a bid to drive unit market share," he said, supposing that even the cheaper iPhone will likely still cost around $400, undermining market share on emerging markets and limiting the company's growth. Nomura's analyst rated Apple stock "Neutral."

Peter Misek with Jefferies reiterated his "Hold" rating for Apple. "We believe Apple's innovation is largely alive but view the high-end market as saturated and see the stock being range bound," he said.

"Apple's announcements seemed to lack their prior sparkle," said Jon Markman with Markman Capital Insight in a comment published by InvestorPlace. "The company that kicked off the smartphone and mobile communications revolution has not been able to keep up with the innovation wildfire that it sparked."



Press reviews and developers seem more concerned with the customer experience of the newly announced products, with most debate centered on the iOS redesign. The Verge's Editor-in-Chief Joshua Topolsky calls the redesign "simply confusing." He also writes, "[T]here are some extremely beautiful aspects of iOS 7 - aspects that lead me to believe that the raw materials for a more cohesive and useful OS are there, if perhaps a little buried."

Ina Fried with All Things D has said that "Apple's changes with iOS 7 are more than skin-deep," and implied that users and developers will be able to fully assess the changes later on.

"Apple is suffering from the same problem that Google (NASDAQ:GOOG) once suffered from," said Ryan Katkov, a developer and designer. The problem? Design by committee. All of the signs are there. Unnecessary complexity, inconsistency, logical flaws, banality, and above all, no unifying vision."

"With iOS7 redesign, honestly, the visuals look 'terrible' to me. Although I find some of the interactions pretty interesting (borrowed or not), most of the visual looks sparingly mundane and blunt," adds Pritam Pebam, user experience designer at Google. On the flipside, he notes that new developer iOS 7 features could result in lots of interesting apps.

Robert Scoble, a massively popular tech blogger with Rackspace, summarized the WWDC announcements this way: "Apple's profits are safe. If you have an iPhone, this makes you feel good and you aren't likely to dump over and get an Android. Apple's influencers are safe. I spoke to lots of audiences lately and the tech passionates are HEAVILY iPhone, even in Europe."
No positions in stocks mentioned.
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