Apple Inc. (NASDAQ:AAPL) kicks off its WWDC conference in California on Monday June 10 with a keynote scheduled for 1 pm ET. Expectations are low for the company to announce any major new products or categories during the keynote. Colin W. Gillis of BGC partners is out with a new report on the company titled “APPLE WWDC: WE WANT DAZZLING CREATIVITY!.” Colin sees the conference as having more upside potential than downside risk given the low expectations.

Apple inc.


Collin looks to see if Apple’s industrial design head Jony Ive can port the talent he and his team have in hardware design to software design. The upcoming iOS7 is the first version of the software to fall under his control. The question he looks to see answered is if the new iOS look is visually stunning enough to accelerate demand for the iPhone.


Apple’s weakness in building a meaningful advertising platform to assist in monetizing its user base may become more glaring as the smartphone market continues to mature. He expects the market is going to continue to tilt towards subsidized or noprofit hardware with an eye to the total lifetime value of a customer. This benefits companies that can generate meaningful advertising, subscription and commerce revenue from its users, and could hurt companies such as Apple that generate the majority of their profits from the initial sale of hardware.


The need for a lower cost iPhone increases given the recent International Trade Commission (ITC) ruling that bans sales of Apple’s iPhone 4 on the AT&T network. While he remains positive on the stock near-term ahead of the next product cycle, he looks to the developer conference and expected product announcements in the early fall to show signs that Apple is going to pick up its pace of innovation. The vacuum of product news to date in 2013 is a disappointment.

Apple Inc. (NASDAQ:AAPL) Stock

Shares are 14% away from BGC’s  price target and they expect that the pending refresh cycle move the stock close to $500. Looking beyond the upcoming refresh cycle there are several questions looming for Apple such as 1) the ability to enter new categories successfully such as wearable computing or television, 2) the ability to adjust to changes in the smartphone landscape towards lower cost or subsidized hardware and 3) the ability to innovate in a way that pleases its customer base. If Apple Inc. (NASDAQ:AAPL) fails in any of these areas it could result in a meaningful downward adjustment of BGC’s longer-term forward estimates.