Biz Break: Apple Watch outlook may be dimming

Top Of The Order:  

Watch This: Gauging the success of the Apple Watch is really just a guessing game because Apple doesn’t give us exact sales figures for the smartwatch.

When Apple reports its quarterly results, it lumps the Apple Watch sales into the creatively titled group of “Other Products” along with the Apple TV, Beats electronics gear, iPods (yes, Apple still makes iPods) and assorted accessories from both Apple and other parties. When Apple says the Apple Watch is doing well, we just have to take Tim Cook & Co. on faith.

There’s at least one person whose faith in the Apple Watch seems to have been shaken, if not completely broken. Rod Hall, an analyst with J.P. Morgan, on Thursday sliced his estimates for Apple Watch sales this year nearly in half, to 11.9 million units from 23.5 million. Hall also cut his price target on Apple’s stock to $105 a share from $125.

Hall made his feelings known in research note Thursday in which he also said he thinks the Apple Watch will penetrate just 7 percent of its total market base, as opposed to an earlier estimate of 15 percent by the end of 2017. The main reasons for Hall’s views were the same that many industry, uh, watchers have had about the market for wearables like smartwatches.

“We think it’s a great product,” Hall said in an interview on CNBC. “It’s just that the traction for these watches, people still haven’t figured out what they want to use them for.”

Hall’s comments came on the heels of Apple unveiling watchOS 3, the latest version of its Apple Watch operating system, at the company’s annual developers conference on Monday. Apple officials promised that the new operating system will make the Apple Watch run faster and easier to use.

Middle Innings:

Up In The Clouds, Man: Oracle reported its fiscal fourth-quarter results after the close of trading Thursday, and the business-software giant says its move toward the cloud is paying off.

Oracle said revenue from its cloud services rose 49 percent from the same period a year ago to $859 million. The company also earned 81 cents a share on total $10.59 billion in sales. Wall Street analysts had forecast Oracle to earn 81 cents a share on revenue of $10.47 billion.

It’s Getting Smoky In Here: In another sign that much of the stigma surrounding marijuana is, well, going up in smoke, Microsoft is, in a roundabout way, getting into the pot business.

Microsoft is partnering with Los Angeles-based Kind Financial, a software company that calls itself “the leader in technology for cannabis compliance”, to help Kind sell its software to governmental agencies that monitor and regulate legal marijuana growers and sellers. One of the most-common arguments for legalizing pot is it’s a potential goldmine for states that levy taxes on marijuana sales. Kind and Microsoft will work on the software that state and local governments use to track pot sales, ensure dealers are following state rules on weed sales and distribution and taxes are properly collected.

It’s part of what Kind calls “seed to sale tracking”. No word, yet, about customers getting a free, Costco-sized box of Fritos to go along with their software purchase.

Bottom Of The Lineup:

Here’s a look at how some leading Silicon Valley stocks did Thursday…

Movin’ On Up: Gainers included Advanced Micro Devices, Lending Club, Aemetis, FireEye and Accuray.

In The Red: Cavium shares fell more than 17 percent, to close at $39.60. Late Wednesday, Cavium said it would acquire networking-technology company QLogic in a deal worth $1.36 billion. Losses also came from Zynga, Sigma Designs, QuinStreet and InvenSense.

 

The tech-focused Nasdaq Composite Index rose 0.2 percent to 4,884.

The blue chip Dow Jones Industrial Average added 0.5 percent to close at 17,733.

And the broad-based Standard & Poor’s 500 Index edged up by 0.3 percent to 2,077.

Quote Of The Day: “I just want to come out and be solid, be who I am with this team — nothing more, nothing less.” — Golden State Warriors forward Draymond Green, who rejoins the team for Game 6 of the NBA Finals in Cleveland on Thursday. Green was suspended for Game 5. A Warriors win on Thursday will make the team back-to-back NBA champions.

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Photo: Apple Watches are seen on display during an Apple media event at the Yerba Buena Center for the Arts in San Francisco in March 2015. (Josh Edelson/AFP/Getty Images)

 

 

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  • Walking Fool

    Walk into an Apple store. The watch section is mostly empty.

    It’s Tim Cook’s dud product.

 
 
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