yet another steve's Comments Stream Stats
- 22 Comments, 2
, 0 
- Total Comment Stream rating - = 2
- Free E-Newsletters
- About Seeking Alpha
- About Us
- Contact Us
- What's New
- Readers Feedback
- Advertise With Us
- Contributors
- Contribute an Article
- Feature Your Book
- Our Contributors
- Anonymous Contributions
- Dispute an Article?
- Legal
- Terms of Use
- Privacy
- Copyright
Why I'm Selling Apple and Google Today - and Holding Amazon
So much (business) momentum here and ridiculous cash flows and cash in bank to withstand any short term economic difficulties.
But I've learned just how much markets can overshoot on the down side. Not selling here, but waiting for another drop before buying more.
It's No Big Deal That Apple Is Pulling Out of Macworld
SJ: At first I was concerned. But SJ gives great keynote because he invests a lot in the presentation. Not worth it if there isn't big news. In fact, having SJ give a presentation without big news just sets everyone up for a letdown. And Apple really tries to underpromise.
For a typical CEO a 2 hour presentation takes 2 hours. For SJ, it is days of presentation.
And yeah, your #1 marketing guy ought to be able to give a keynote.
Now they can bring Steve out for emphasis... like pointing out that non-GAAP accounting (meaning iPhones booked as if a mac or an ipod) DOUBLED the GAAP results. It was stunning.... yet most of Wall St is still valuing AAPL on GAAP P/E. Totally misses the iPhone. Steve needs to come out and do the next earnings call as well.
Apple Analysts Reality Check: Bear Rally Is Over
If I have a $95 target on a stock, and it closes today at $95, am I right? Is it really that simple? C'mon... $70 next month and $300 in 3 years are not mutually exclusive events.
Zach, I respect your technical analysis, and you've been right short term. But that's a measure of investor psychology.
The Apple franchise... best measured by its ability to generate profits and cash flow... seems to be holding up really well. Now there's every reason to think Apple's business will get clobbered in this recession. There's just no evidence of that happening. Analysts are clinging to the "end of the ipod run" theme, while ignoring the far larger implications of the iphone and subscription accounting.
Honestly, I expect upside earnings surprises for the holiday quarter... and the stock to fail to rally much on the news. The psychology is that negative. But someday, the mountains of cash being printed in Cupertino is going to prevail.
I do think its a historic opportunity--to have a company doing so phenomenally well as a business during such a terrible market and economy. And there's no reason AAPL can't sell off more and become an even more amazing value.
Actually the analysts are amazingly conservative on Apple's business performance. They're still valuing on GAAP earnings, worrying about ipod units (not revenues), failing to consider that maybe Apple isn't cutting prices dramatically because... it doesn't have to (actually the new portable line has an implicit price cut as the $1299 MacBook is probably cannibalizing $1999 MB Pros.). Or the effect of the weak global economy on flash memory prices and thus Apple's margins.
This company has two major, growing, extremely profitable platforms, each creating a virtuous circle as a successful platform can. It has a ridiculous amount of cash and continues to generate it. It controls its own destiny as few companies ever do.
So I bought too early ($129). But if I get to add to that position at $70... bring it on. PCs and pocket sized mobile devices are going to be around for a long time and the Apple franchise has never been healthier. And this ain't some dot-bomb bubble... Apple has proven its ability to "monetize" its franchise into ridiculous amounts of cold hard cash.
Should We Really Bail Out the Big Three Automakers with $73.20 Per Hour Labor?
Now.... who makes better cars? Yeah, that's the problem.
Higher costs and inferior products... an important part of capitalism is letting the uncompetitive die. Or force them to be competitive to survive.
Unions? Well they have to be competitive too. If a union makes a company uncompetitive it and its members go down with the company.
The Woz Is Sounding Bearish on Apple
That's why there's an iPhone and an iPod Touch.
Part of the genius of the ipod has always been the way Apple keeps pushing it forward as technology allows. Apple isn't just aware of this--it's driving it. SanDisk can make music players, but now they need an OS. MS has an OS, yet has been so unsuccessful with it (in portable devices) that it did not base Zune on it.
No idea how far down the stock will go... or how much the recession will hurt sales in the short term. But long term Apple isn't threatened by this--it is leading it.
The Consumer Spending Slowdown Catches Apple
Technically, the stock has not found a bottom.
But it certainly seems like there is more upside risk than downside risk at an enterprise value of just $72/share.
And Apple buyers tend to simply delay purchases, not switch brands. Sooo.... the franchise is just as strong whenever consumer spending recovers.
A big slowdown in consumer electronic spending could also give Apple some help with margins. Which equals some serious operating flexibility. And while we're all just guessing what their numbers are, they certainly know.
If the world doesn't end, Apple is well positioned to emerge even stronger. But there's no limit to how much a stock can overshoot--upside or downside.
If the world does end, none of this will matter...
Steve Jobs' Fake Heart Attack, Courtesy of CNN
You will have your revenge.
No shorting == no violent short covering rallies.
Unlike the financials that were really hit, Apple doesn't need a cent of capital or cash (and won't ever.) The only effect a lower stock price has is that it improves recruiting by adding more upside to option grants.
Steve Jobs' Fake Heart Attack, Courtesy of CNN
If something really does happen to SJ, I will cherish the bottom as a buying opportunity. Especially from these levels. All the bright talented people in its many businesses won't quit coming to work just because Steve isn't there. iPhones won't suddenly stop working. Macs won't suddenly get viruses. It's a company with amazing growth for its size, rabid fans for its products, ridiculous cash flow and nearly $25/share in the bank.
It's a volatile stock and when it runs out of sellers, the snap back will be just as violent.
Apple has a ridiculous amount of cash, the only possible long term use of which is to return it to shareholders. It has no forseeable reason to need the capital markets, ever.
It's ALREADY trading at levels far lower than the loss of Jobs would justify.
So, everyone, keep spreading the rumors and shorting the stock. Just do look at me when you need to cover.
Steve Jobs' Fake Heart Attack, Courtesy of CNN
If something really does happen to SJ, I will cherish the bottom as a buying opportunity. Especially from these levels. All the bright talented people in its many businesses won't quit coming to work just because Steve isn't there. iPhones won't suddenly stop working. Macs won't suddenly get viruses. It's a company with amazing growth for its size, rabid fans for its products, ridiculous cash flow and nearly $25/share in the bank.
It's a volatile stock and when it runs out of sellers, the snap back will be just as violent.
Apple has a ridiculous amount of cash, the only possible long term use of which is to return it to shareholders. It has no forseeable reason to need the capital markets, ever.
It's ALREADY trading at levels far lower than the loss of Jobs would justify.
So, everyone, keep spreading the rumors and shorting the stock. Just do look at me when you need to cover.
Apple's Bountiful Revenues Are Bigger Than Ever
As for confusion--who can blame Apple for being conservative in its accounting in today's Sarbox environment (and does any company get sued more these days?) They made a customer decision first (upgrades will be free), and we'll just have to live with the math.
A Trip to 'Fantasyland' - Should Google Buy Apple?
And the reason it could have been a fun idea is because it is so blaringly stupid: How to destroy two very successful companies in one deal!
Apple's Deferred Revenues Revisited: This Was a Blow-Out Quarter
What does make sense, however, is to add iPhone revenues and units to the iPod numbers since it is really an extension of the same business.
Also missed, however, is that each of these phones that isn't unlocked generates cost-free revenue to Apple every month in revenue sharing.
Frankly Apple is at a major transition point as its ipod business goes from toy to serious platform. The street is clueless.. so clueless that we should just let 'em sell and get short. It's just like 2 years ago. Except 2 years ago, you had to have faith to see the continued growth. Now, to those of us who have noticed that iPhone/iPod touch are both iPods and OSX platforms, the source of that growth is obvious.
The Street is clueless, and given Apple's seasonality it may take until September until Apple generates such revenues, earnings, and cash flow that they'll have to come out of denial.
So, what the hell, let 'em drive the stock down to $90. Selling at $250 is a lot more profitable if you bought at $90 vs. $190.
Let every clueless doubter have his day.
Pay no attention to that $21/share in CASH... go short old men!
4 Million iPhones Sold? Really Steve?
I for one will ABSOLUTELY buy an iphone. When the price is $399, not $399 + early termination fee on my current contract.
The obvious answer is that a lot more phones have been bought for unlocking than estimated. The best evidence is Apple, restricting sales. That's what you do when you want your inventory to go to the most profitable customers (subscribers), not when you're stuffed with inventory. (And... duh... Apple is a major retailer of the iphone and its inventory counts as inventory NOT sales. Basic GAAP.)
And it is doubtful that Steve Jobs would have used the number if it wasn't true... basically committing securities fraud when he need not have said anything.
But enough of that... there's a bear raid on a company posting breathtaking results and growth. Let's the sellers reign. I'm not on margin and I ain't selling. Volatility is how 20% gains can become 100% gains.
Get short now!!!
Apple at $135: Low Hanging Fruit
Yes in the conference call they did not show any interest in a stock buyback. But that was at $155. I wouldn't be surprised if they wait for a nice oversold day and cut the press release authorizing the buyback. And they have the cash to really buy the shares and make it stick.
And when everyone expects it to still go lower in the short term... that's generally the bottom.
Apple Sitting on Excess Inventory?
Selling everyone on the planet a $29 throwaway device ins't nearly as lucrative as selling a whole lot of people a $300+ handheld wireless platform. Apple is turning the ipod into a computer. The important announcement isn't a new product... it's the SDK next month.
Meanwhile the company, largely through its mac business, is practically printing money.
This is a company whose earnings are growing north of 30%, who will make about $5.50 THIS year, who is building a subscription profit stream through the iphone business and who has $22/share in CASH. AAPL is NOT priced for perfection... it's cheap.
And a real inventory issue would show up on the balance sheet. Instead the balance sheet shows.... CASH.