Apple Inc's Stock Buybacks Not Keeping Investors Happy for Long; Innovation Still Key in 2014

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By Reissa Su | February 10, 2014 6:36 PM EST

Apple Inc has bought back $14 billion of its stocks in the past two weeks. The recent move has increased Apple's total stock buyback to $40 billion shares in a span of 12 months. Apple's CEO, Tim Cook, remarked in an interview with the Wall Street Journal that it was a record-breaking buyback for a company in a similar period. He said Apple will reveal more updates on its stock buyback by March or April 2014.

REUTERS/Robert Galbraith
The Apple Inc. logo is displayed onstage before a product unveiling event last Oct. 4 at the company's headquarters in Cupertino, Calif.

Apple's recent stock buyback is reportedly part of the company's current buyback programme of $60 billion. However, various analysts' reports have surfaced that stock buybacks may not be enough for Apple to retain its investors.

According to some analysts, stock buybacks may not be the best way to use Apple Inc's vast resources despite helping the company deliver its first quarter of earnings-per-share (EPS) growth after four consecutive lows.  Stock buybacks may be perceived by some as reactive behaviour.

Stock buybacks not major drivers of Apple stock

Despite Carl Ichan's vocal statements and calling for Apple to announce more stock buybacks, repurchases were not major factors in keeping Apple's share price up. The current Apple Inc stock remains at 10 per cent below the price in March 2012 when the company revealed its first stock buyback and dividend.

Apple Inc.'s CEO, Tim Cook, has revealed Apple will introduce products in new categories in an interview. Like in any interview, he avoided getting into the specifics but only hinted that Apple is working on "really great stuff."

Innovation still key

The company has not released an innovative product since the iPad and investors want a new product to bring Apple's stocks back up. Apple investors continue to wait for the next "catalyst" product to be released hopefully within the year with the long-rumoured iWatch and a new iPhone with a bigger screen.

According to CNET, Apple is rumoured to be focusing on health and fitness in the latest version of its mobile OS, the iOS8. Based on reports, Apple may be developing a Healthbook app for iOS8 which may be the subject of the company's meeting with the FDA in January.

The Apple CEO has previously said in December that Apple will venture into new product categories in 2014. The recent interview may be perceived as a move to assure investors that Apple continues to be a "growth company." The Apple CEO said the company continues to explore significant opportunities in existing product lines and new product categories. Apple will focus on becoming the world's number one maker of smartphones, tablets and computers.

Whatever new products Apple will release in 2014, the company should hope they will "wow" investors to have a significant and long-lasting impact on stocks. 

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(Photo: REUTERS/Robert Galbraith / )
The Apple Inc. logo is displayed onstage before a product unveiling event last Oct. 4 at the company's headquarters in Cupertino, Calif.
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