What to Expect From Apple in the Second Half of 2012

Apple (NAS: AAPL) has endured a wild ride so far this year. By now you're probably aware that the tech giant missed analyst estimates on Tuesday, when it reported third-quarter earnings. Shares tumbled more than 5% on the news. However traumatic this may seem for current shareholders (myself included), investors should consider the handful of key growth catalysts in this name before joining the bears in a rush to sell.

Tracking where a company has been can offer valuable insights into the future. Now that we're midway through fiscal 2012, let's take a closer look at where the Mac maker was six months ago and where it's headed in the second half of the year.

Keep 'em guessing
Shares of Apple kicked off the year trading around $400 a pop. Today, those same shares are worth about $585 apiece, down from a 52-week high of $644. Yet even off its recent high, the stock is up nearly 45% year to date -- that's not bad for the world's most valuable company. But how has the stock performed thus far compared with industry rivals?


AAPL Total Return Price Chart

AAPL Total Return Price data by YCharts

Apple is undoubtedly on a tear this year, despite its recent earnings disappointment, perhaps because many bulls understand that the tech titan is in the process of a product transition as it readies for the upcoming debut of its iPhone 5, as well as a smaller and cheaper iPad device. Of course, there's also the rumored Apple TV on the horizon. With so much to look forward to in the coming months, it's hard for me to justify being disappointed over one less-than-stellar quarter.

Outsized expectations
Obvious as it may seem, many consumers are postponing the purchase of a new smartphone until the iPhone 5 hits shelves this fall. I have no doubt this consumption delay contributed to the recent weakness in iPhone sales. Apple sold 26 million iPhones in the quarter, while the street was expecting unit sales north of 28 million.  

Today, iPhone sales generate a significant portion of Apple's revenue. Yet it's more important than ever that the company's next-generation device live up to the hype. Competition in the space is nothing to take lightly. Consider how quickly Research In Motion (NAS: RIMM) went from being the leader in smartphones to an outdated and technical mess.

In fact, the BlackBerry maker is at the bottom of the barrel in terms of market share. Even mobile-handset maker Nokia (NYS: NOK) looks to have a better shot at a recovery than RIM. In the second quarter, the Finnish company sold more than 10 million smartphones. Meanwhile, Samsung took home the gold with 50.2 million in the three-month period, followed by Apple's 26 million.

Not to worry. There's plenty of growth left in Apple's future, despite Samsung's current lead in the smartphone space.

Innovative product lineup
What really matters for investors is that the iDevice maker's profit climbed $1.5 billion from the same period a year ago, not to mention that the 17 million iPad sales in the June quarter were indeed a new record for the Mac maker. That's an 84% increase in iPad deliveries over the year-ago period.

The most powerful companies in the world all share in their ability to keep people guessing. This is a trait that remains ingrained in Apple's blood, even now, without Steve Jobs' visionary leadership. In the quarters ahead, Apple should continue to dominate the tablet segment with newer and more affordable versions of its popular iPad.

Tablet talk
The company is said to be working on a new touch technology for an October launch of an iPad Mini. If the rumors are true, it's good timing for Apple, as the competition is moving in on its tablet turf. New arrivals from big names such as Amazon.com (NAS: AMZN) , Google, and Microsoft (NAS: MSFT) offer proof of the growing demand for mobile devices.  

Amazon plans to release a newer version of its Kindle Fire device before the holiday season later this year. It will be interesting to see how the e-tailer's improved Kindle will compare in price and performance if Apple launches a smaller and cheaper iPad.

Google and Microsoft are two other big tech names that are getting in on the action. Google's Nexus 7 is said to be most similar to the Kindle Fire in terms of screen size and pricing. Of course, Google's product will run on its Android platform. That could pressure Microsoft as it attempts to grab market share, given the popularity of Android-powered devices.

The software giant recently entered the market with the debut of its Surface PC tablet. In the past, Microsoft has struggled to gain traction in the mobile market, which means it has a lot riding on the success of the Surface.

An Apple a day
Even with added competition in the space, Apple has an enormous head start. Throw in Apple's rich media ecosystem, network of loyal developers, and content providers, and you have a winning formula. New product launches scheduled for later this year should also help grow Apple's bottom line. Given these catalysts, I expect Apple to gain momentum during the holiday season that will carry it into a successful start in 2013.

Whether or not you're a Mac enthusiast, one thing is certain: You don't want to miss this free premium research report on the future of Apple. In it, The Motley Fool's leading analysts uncover key opportunities and risks facing Apple. The free report also includes a full year of updates, so learn more.

The article What to Expect From Apple in the Second Half of 2012 originally appeared on Fool.com.

Fool contributor Tamara Rutter owns shares of Apple, Amazon, and Microsoft. Follow her on Twitter, where she uses the handle @TamaraRutter, for more Foolish insights and investing advice. The Motley Fool owns shares of Google, Microsoft, and Apple. Motley Fool newsletter services have recommended buying shares of Amazon.com, Google, Apple, and Microsoft and creating bull call spread positions in Apple and Microsoft. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.

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