CHICAGO, May 31, 2013 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog includeApple (Nasdaq:AAPL), Google (Nasdaq:GOOG), Microsoft (Nasdaq:MSFT), Amazon (Nasdaq:AMZN) and SLM Corporation (Nasdaq:SLM).
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Here are highlights from Thursday's Analyst Blog:
Is Apple Falling Behind?
In a recent interview at All Things D's D11 Conference, Apple's (Nasdaq:AAPL) Chief Executive Officer Tim Cook tried to offer some solace to the company's increasingly skeptical investor base. In the annual event, Tim Cook highlighted Apple's innovative approach and said that the company has a few "game-changers" under its sleeve.
Although Tim Cook did not divulge any specific information about Apple's upcoming innovations, he said that the wrist-wearable computing products can be an interesting market. He also said that Apple TV continues to hold great importance for the company. However, Tim Cook refused to give details about the product and an imminent launch date.
So what could be these game-changers? A cheaper iPhone, long awaited overhaul of the iTV, an Apple Watch or a combination of any of these?
The most important question that arises in each and every Apple enthusiast's mind: "Is Apple Falling Behind" in terms of innovation and competition versus its peers.
This is primarily due to the fact that since the launch of iPad (Apr 2010), Apple did not release any product that can be called an innovation. Additionally, Apple's botched mapping effort and problems with the voice-enabled application Siri raised questions about its technical expertise in each and every aspect of mobile computing.
On the other hand, arch rival Google (Nasdaq:GOOG) came up with Google Glass. Although its mainstream adoption will take some time, we believe that Google's effort may be seriously challenging Apple's "leading innovator" image in the technology sector.
Apple's closest hardware competitor, Samsung, continues to frequently update its entire product portfolio, which has increased its penetration in all segments of buyers (both high income and low income level) over the last year.
In comparison, Apple's strategy of launching a yearly update of iPhone and iPad has not helped the stock much. Additionally, Apple's dilly-dallying over a cheaper iPhone has not helped its cause either in recent times.
Further, in the wrist-wearable computing product segment, Apple is expected to face competition from both Samsung and Google, who have already shown keen interest in developing these products.
The tremendous growth opportunity from this emerging market can also attract other major companies such as Microsoft (Nasdaq:MSFT) and Amazon (Nasdaq:AMZN).
Conclusion
Traditionally, Apple has refused to divulge details about its product pipeline. Although this secrecy has helped Apple to gain significant attention in the past (which also helped the stock price), we believe that investors are likely to be cautious this time, which will not help the stock price much in the near term.
Moreover, we believe that it is high time for Apple to launch a new product or at least give a time line for the launch, which will calm the nerves of jittery investors.
Currently, Apple has a Zacks Rank #4 (Sell).
Sallie Mae to Split: A Better Future Ahead?
In order to counter regulatory upheavals, leading student lender SLM Corporation (Nasdaq:SLM), popularly known as Sallie Mae, announced its board of directors' decision to split the company's present business into 2 parts.
The separated units will operate as standalone publicly traded companies. One of them will be in education loan management business while the other will function as a consumer banking business. Sallie Mae expects the division to be completed within a year.
Both newly formed companies will be initially owned by Sallie Mae's existing shareholders. Moreover, the current executives managing the unit will be at the helm even after the split.
Following the necessary approvals, the split will be made through a tax-free distribution of common shares to the company's stockholders.
The education loan management business will consist of Sallie Mae's federally guaranteed (FFELP) and private education loan portfolios, as well as its servicing and collection activities. Mr. Remondi will continue as the chief executive officer of this business.
The education loan management business' principal assets are expected to constitute about $118.1 billion in FFELP Loans, $31.6 billion in private education loans and $7.9 billion of additional interest-earning assets.
Moreover, it will also constitute a leading education loan servicing platform that services loans for approximately 10 million federal education loan customers, including 4.8 million customer accounts serviced under the Sallie Mae's agreement with the U.S. Department of Education. On an aggregate, this company will own approximately 95% of Sallie Mae's current assets.
The other business shall comprise private education loan origination and servicing operations – including Sallie Mae Bank and the private education loans that the company presently holds – which will operate separately under Sallie Mae. Joseph DePaulo, the current executive vice-president, banking and finance, will lead this business as chief executive officer.
The consumer banking business is expected to include approximately $9.9 billion of total assets, including mainly private education loans and related origination and servicing platforms, cash and other investments as well as Sallie Mae Upromise Rewards program.
The decision to separate Sallie Mae's operations comes after the suspension of new federal student loan origination, in compliance with the legislation passed by both the House and the Senate in 2012. This legislation effectively removed federal subsidy to the company.
Further, defaulting student loans, in the face of persistent unemployment and a sluggish economy, worsened the situation. We believe that Sallie Mae's decision to split the 2 businesses was in order to separate its flourishing private student loan business from its shrinking government-backed loan servicing counterpart.
The newly created companies will be able to navigate the challenging operating environment because of Sallie Mae's leading position in the student lending market, diversifying efforts and steadily increasing private student loan originations. Moreover, by creating a separate bank, the company can look forward to finance new streams of loans.
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