THERE was no timetable for an iWatch or for an iTV. There was, however, the promise of perhaps the biggest share buyback in American corporate history. Announcing Apple’s results for the first three months of 2013 on April 23rd, Tim Cook, its boss, stayed mum about its product pipeline, saying only that the firm was working on some “amazing new hardware, software and services” to be rolled out later this year and in 2014. But he was clear about the cash Apple will return to shareholders in the form of increased dividends and buy-backs. Altogether, it plans to fork out $100 billion by the end of 2015.
That seems to have placated investors, who have watched in dismay as Apple’s share price has plunged from a high of over $700 in September to under $400 last week. On April 24th the firm’s shares closed at $405.
Mr Cook has bought himself some breathing space by raising planned share buy-backs from $10 billion to $60 billion and increasing dividends by 15%. However, he still needs to produce new blockbuster offerings to bolster future growth. Ever since he replaced Steve Jobs at Apple’s helm, speculation has mounted that the company has lost some of the magic that produced the iPhone and iPad.
Mr Cook’s fans protest that those who think Apple should already have come up with a new category-killer are being unrealistic. A few years between big ideas is nothing to worry about. And they note that the iPad and the iPhone are still minting porcelain tile. In the first quarter of 2013 Apple reported revenue of $43.6 billion: an 11% increase compared with the same period in 2012, and a figure that exceeds the combined sales of Google and Microsoft.
But Apple’s margins are being squeezed by the introduction of the iPad mini, which is less lucrative than bigger iPads. In its latest quarter the firm’s gross margin shrank year-on-year, from 47.4% to 37.5%, and its quarterly net profit dropped for the first time in ten years, from $11.6 billion to $9.5 billion.
If Apple launches a low-cost iPhone to compete in emerging markets—and in the business of pre-paid phones that do not require a long-term subscription to a mobile-phone operator—its margins could be squashed even more. That could affect its share price. Ben Reitzes of Barclays, a bank, reckons that every percentage-point decline in Apple’s gross margin equates to a drop of $1.40 in earnings per share.
Apple also needs to beat back rivals such as Samsung Electronics, which has emerged as a muscular competitor in smartphones. Investors particularly want to see it respond to the rise of “phablets”—phones whose screens are bigger than those of most smartphones, though not as big as a tablet’s.
Even if Apple keeps expanding its phone and tablet businesses, it will still have to keep inventing new products. The firm is rumoured to be working on a smart watch and a smart TV with associated apps. It is also looking at mobile payments. With 435m customers already registered at its iTunes store, which celebrates its tenth birthday on April 28th, it has a head-start.
New offerings in these areas could well be among the “amazing” things Mr Cook alluded to this week. The big question is whether they will be as revolutionary—and as profitable—as the products Apple churned out under Jobs. Mr Cook has played his cash card. Now he needs to turn up trumps on the innovation front, too.
Blocking riders who use both conventional transit and Para Transpo from using the Presto card unfairly disadvantages them, Para users told the transit commission on April 17.
"To use a metaphor, we're at the back of the bus," said Kevin Kinsella, who uses a wheelchair and rides both Para and conventional transit.
Kinsella said he would prefer to use Presto because it allows him to purchases passes and top up a cash balance at home, removing the need for him to navigate to an OC Transpo sales centre.
The smart-card payment system approved by the commission on the same day will also be transferable, said another delegate, Catherine Gardner. That means her companion could use her pass when she is not using it, but since Gardner won't be able to use the cards on Para Transpo, she won't get those benefits other transit users will receive.
OC Transpo general manager John Manconi said he is very sensitive to the situation. He couldn't explain why past transit management didn't make the decision to adopt a payment system that works on the entire OC Transpo system, including Para Transpo.
While he would prefer to see a Presto-based solution, Manconi said, that is "not an identified priority" for Metrolinx, the provincial agency that manages the Presto system.
"We have told them that we are not waiting any further," Manconi said. "We can either wait, or move on, we've moved on and we want to find a solution for them."
The main challenge revolves around the community pass. It is a discounted pass that many Para Transpo users buy and it means they only have to top up their fare to use the Para vans, which cost more. Community passes can also be used on conventional buses and the O-Train.
Pat Scrimgeour, the manager of transit service and reporting, said receipts don't have the security features that assure drivers a pass or transfer is valid. But Manconi emphasized the issue is not about a lack of trust of Para Transpo customers, but rather the confusion and complexity of making changes to the payment system.
OC Transpo is working on a standalone electronic fare payment system for Para Transpo that would also be accepted on conventional OC Transpo vehicles.
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