Apple Inc. (NASDAQ:AAPL) has its day of reckoning fast approaching. Tim Cook has turned out to be a game manager for AAPL stock. That’s not a slight against him, but a game manager comes in when your first-string QB is out for a quarter or two. The problem is that Apple needs a visionary. There’s no replacing Steve Jobs, and being a game manager in a sector that moves like lightning is not what the company needs.
AAPL stock generates almost 70% of revenue from the iPhone, and that product is seeing increasing competition.
The good news is that Apple has well over $200 billion in cash and investments. It can literally do anything it wants. The problem is that most of that cash is stuck overseas — although that may change under Trump — and what Cook might do with that cash is a mystery.
Without a vision, Apple would probably have to make acquisitions in rapidly growing companies. However, there is one other area that AAPL stock can venture into, one that I’ve been saying it must get into: original content.
News has surfaced that AAPL is finally looking seriously at creating original TV and film content. For years, Apple has begged off of this direction. It seemed content to play around with music streaming, and licensing content from other providers for iTunes.
The WSJ reported:
“The technology giant has been in talks with veteran producers in recent months about buying rights to scripted television programs. It also has approached experienced marketing executives at studios and networks to discuss hiring them to promote its content, said people with knowledge of the discussions. In addition to TV, Apple indicated to these people that it is considering offering original movies, though those plans are more preliminary. Executives at Apple have told people in Hollywood they hope to start offering original scripted content by the end of 2017.”
The apple is ripe for AAPL to get involved, and in a very big way. We’ve seen that Netflix, Inc. (NASDAQ:NFLX) has shifted its model toward original programming and is producing really great stuff. So is Amazon.com, Inc. (NASDAQ:AMZN). YouTube Red, though, is kind of floundering right now.
One thing people want is not only more content, but good content. Because Apple is so flush with cash, it can literally do anything in this arena. There is a ton of talent out there, and so many models to play with for AAPL stock.
Obviously, Apple would want to create high quality TV and film, and could do so across all genres. It wouldn’t even have to be an issue of streaming content alone. If Apple wanted, it could produce feature films, and buy out any of the existing movie theatre chains and rebrand it as an Apple Theatre experience, and drop in all manner of synergies like this.
The concept of the “long tail” is still very much in play, so creating independent work for a price, or returning to a version of the old studio system might also yield rewards. Yet there are other models, such as mining new talent from film schools and user-generated genius that’s all over the place.
The emerging technology of VR is another place to stretch. The ability to curate fully engaging experiences via VR, and developing technology that allows players to wear bodysuits permitting them to actually experience touch in these games is the next frontier.
And Apple has the money for it. It could become a multi-platform creator of content, and be able to engage people from all over the world.
Is this is a blockbuster revenue generator for Apple stock? It’s way too early to tell. However, having a vision that extends the concept of “content” to things like VR and more “experiential” content, could mean becoming the first mover in a whole new generation of entertainment. That is priceless.
Lawrence Meyers is the CEO of PDL Capital, and manager of the forthcoming Liberty Portfolio stock newsletter. As of this writing, has no position in any stock mentioned. He has 22 years’ experience in the stock market, and has written more than 1,600 articles on investing. Lawrence Meyers can be reached at TheLibertyPortfolio@gmail.com.
