Betting against Apple? Not so fast: Ex-CEO Sculley

Tuesday, 28 Jan 2014 | 12:55 PM ET
Sculley: China Mobile story yet to unfold
Tuesday, 28 Jan 2014 | 10:05 AM ET
"I'm watching for Apple mobile payments," says John Sculley, former Apple CEO and Sculley Brothers partner, discussing Apple's disappointing Q1 earnings. CNBC's Jon Fortt provides insight.

John Sculley is bullish on his former company.

The former CEO of Apple told CNBC on Tuesday he believes the giant tech company will rebound, but only if it masters mobile payments. Sculley's comments come as Apple shares were seeing their worst trading session in weeks, fresh off lackluster iPhone sales numbers that disappointed Wall Street analysts.

Its Passbook app, coupled with new beacon technology installed in stores, can help revolutionize mobile payments the way iTunes changed media consumption, Sculley said.

The app, which holds coupons, gift cards and tickets for movies and travel, comes with new iPhones and those with the latest software upgrades. Sculley believes the app can provide a framework for mobile payments. He said Passbook already has more than 600 million potential users, more accounts than offered by PayPal and Amazon combined.

John Sculley, former CEO, Apple
Adam Jeffery | CNBC
John Sculley, former CEO, Apple

Sculley called the mobile payment play a "blowup opportunity."

(Read more: Cramer: Apple's 'big schism')

"The real story ... [is]: Is Tim Cook still confirmed that they're going to have some big product announcements this year?" Sculley said on "Squawk on the Street." "The one I'm watching for is mobile payments, because that's where I think Apple could get a huge strategic advantage over PayPal, even Amazon."

Apple shares plunged more than 7 percent by midday Tuesday. But activist investor Carl Icahn bought more Apple shares as the stock plunged,

(Read more: Icahn: Apple buyback even more compelling now)

Sculley said investors should no longer treat Apple as a growth company because of its size.

What's more, the market has yet to see the full effect of Apple's blockbuster distribution deal with China Mobile, which opens iPhones to the world's largest wireless network, Sculley said. Apple should also see strong growth in India, he said.

"Apple doesn't trade like a growth stock," Sculley said. "It trade eight times cash. China Mobile is still a story that has yet to unfold."

Absent its former growth rates, Apple has to rely on bankable products or innovations to remain a strong investment, Sculley said, adding that mobile payments have more potential than any type of hardware development, such as an iWatch.

"I'll bet you that Apple recovers, and I bet you it goes way beyond where it's been once the end of 2014 is here," Sculley said.

—By CNBC's Jeff Morganteen. Follow him on Twitter at @jmorganteen and get the latest stories from "Squawk on the Street."

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  • Matt Hunter is the senior technology editor at CNBC.com.

  • Cadie Thompson is a tech reporter for the Enterprise Team for CNBC.com.

  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.

  • Jon Fortt is an on-air editor. He covers the companies, start-ups, and trends that are driving innovation in the industry.

  • Lipton is CNBC's technology correspondent, working from CNBC's Silicon Valley bureau.

  • Mark is CNBC's Silicon Valley/San Francisco Bureau Chief covering technology and digital media.