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Cramer: Beginning of Apple’s Next Move?

Tuesday, 23 Apr 2013 | 6:05 PM ET
Cramer Talks Earnings Season
Tuesday, 23 Apr 2013 | 6:00 PM ET
The stock market headed higher today following strong earnings, with Mad Money host Jim Cramer.

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As investors began to digest Apple's earnings report on Tuesday after the bell, some started to wonder if the relatively strong release might ignite the next leg higher.

Shares of Apple have fallen over 30% in the last 6 months, and they're well below their all-time high of $700.

Considering Apple announced better-than-expected earnings for the second quarter and doubled the amount of cash it will return to shareholders, will this relatively strong earnings release mark the bottom and more important drive shares appreciably higher?

Apple CEO Tim Cook
Getty Images
Apple CEO Tim Cook

As investors grapple with the issue, Cramer thinks there are three influences that must be examined before drawing a conclusion and they all involve why Apple fell so hard to being with.

"The first had to do with an earnings progression that was one of the worst out there, with three missed quarters and a host of questions about slowing growth," Cramer said. It would seem this latest earnings report ends the negative progression.

"Second, until, now, Apple didn't seem inclined to boost the dividend in any aggressive way," Cramer added. However, in the earnings release Apple said it would increase its dividend 15 percent to $3.05 a share and also said it would expand its share repurchase program to $60 billion from the $10 billion level announced last year.

Taken in tandem, the Mad Money host sees relatively positive developments.

And in his opinion these developments should have a bullish impact – that is, he thinks they stop Apple's rapid descent. "Both developments are terrific news and should create a floor," he said.

However, stopping the descent and starting a rally are hardly the same thing. And Cramer's not so sure the earnings report eliminated what he considered a very negative catalyst.

"There's a lack of innovation right now at Apple," Cramer explained. And that he thinks could be the proverbial thorn in the side of Apple bulls.

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"It is true that Tim Cook said the iPhone and iPad continued to have strong performance, but Wall Street doesn't regard strong performance from existing gadgets as reason enough to propel the stock higher," Cramer revealed. "What we need to see are new products that knock our socks off not incremental twists on older models."

Cramer conceded that new products are not entirely out of the equation – "Cooke did say 'our teams are hard at work on some amazing new hardware, software and services and we are very excited about the products in our pipeline.'"

However, until specifics about those new products surface Cramer remains cautious.

"There continues to be a lack of innovation at Apple, and I have to be honest – that worries me," Cramer concluded. To answer the question raised at the top - is this the beginning of Apple's next move? "Ahhhh - not so fast," Cramer said. "Until they develop an exciting new gadget, I don't see the stock recapturing its glory days."

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