Apple's (AAPL) Dark Sky Buyout to Boost iPhone Weather Data

Apple AAPL has acquired weather app provider Dark Sky, per the latter’s blog. The buyout is likely to help the company overhaul its weather app in iPhone. The company’s current iPhone weather app is supported by data from The Weather Channel.

Dark Sky’s iOS app, currently priced at $3.99, will continue to remain available on the App Store for iPhones and iPads. However, the Android and Wear OS app will no longer be available for download. The company will continue to serve these users until Jul 1, 2020

Moreover, Dark Sky will no longer accept new signups for its API. However, the API will continue to function through the end of 2021.

The deal also strengthens Apple’s Services portfolio, which currently has more than 480 million paid subscribers. App Store continues to draw the attention of prominent developers from around the world, helping the company offer appealing new apps that drive traffic.

Services & Non-iPhone Devices to Aid Apple

Apple’s Services portfolio that includes revenues from cloud services, such as App store, Apple Music, AppleCare, Apple Pay, and licensing and other services now became its cash cow.

The coronavirus pandemic that originated in China dented iPhone’s demand. While factories in the country resumed operations, Apple is facing weakening demand as the nations around the world enforce social distancing.

Apple is also now expected to defer the launch of its first 5G-supported iPhone device.

However, Apple’s expanding non-iPhone portfolio with the announcement of new iPad Pro and new MacBook Air upgrades is a key catalyst.

Moreover, the company recently received a waiver from the U.S. Trade Representative (USTR), which exempted its smartwatch from tariffs imposed on exports by China.

Notably, a solid uptake of Apple Watch also helped the company boost its presence in the personal health monitoring space. Moreover, Apple is currently dominating the wearables and hearables markets owing to a strong adoption of Watch and AirPods.

Although supply-chain disruption due to the coronavirus outbreak is expected to mar Apple’s prospects in the near term, we believe, non-iPhone portfolio strength and the growing Services business bode well for the long haul.

Zacks Rank & Other Stocks to Consider

Apple currently has a Zacks Rank #2 (Buy). Some other top-ranked stocks in the broader technology sector are Avid Technology AVID, OSI Systems OSIS and Ultra Clean Holdings UCTT, all three sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Avid Technology, OSI Systems and Ultra Clean Holdings is currently pegged at 15%, 12.5% and 14% each.

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