Apple Musings: Disappointing Disappointment

by: BlindReason

I haven't had time to have super deep thoughts yet on the conference today but here are a couple of reactions:

  • First of all the Apple (NASDAQ:AAPL) conference today as expected was a bit worse than I expected. I had tweeted about not expecting any big product releases but no front facing camera on the IPod Touch is pretty weak. Also, Steve Jobs looked as unhealthy as I have ever seen. What makes me even grumpier? I sold call spread at the start of the day (175/180) on Apple expecting the performance would be lackluster. It really has not done well despite the nice pull back especially given the stock is excessively popular. The 180 side pulled back a little bit more than I thought it would. I plan to close the 175 on Friday and I may or may not roll forward the long 180 call depending on how cheaply it's trading as a way to add exposure.

  • There wasn't even any new screens. How does a Microsoft (NASDAQ:MSFT) Zune have an OLED screen but an IPod Touch doesn't. Samsung (OTC:SSNLF) has OLED and many others are adding it. Could this be a separation of the IPod touch line (which is really a computer). i.e. We get a new event that launches the IPod Touch line starting at 3.5 inches, expanding to the tablet up to 10 inches and higher? That would make some sense. Perhaps this comes in December - January. There is no way they get us OLED at 10 inches but 3.5 to 7 is quite possible. OLED is just far too expensive still despite being incredibly thin and power efficient.

  • No forward facing IPod Touch Video Camera for video conferencing? Come on--there is just no excuse for this other than a nearer term upgrade right around the corner. Some have talked about some technical problems with the camera but I don't think that's the full story.

  • I would kill for a foldable OLED that gives me a form factor at 4 inches expandable to 10 inches. Imagine an IPhone that turns into a kindle size book reader with a much thinner screen that folds out.

  • Apple finally introduced FM radio tuners -- just in time for the medium to die.

  • There HAS TO BE another product some time in December. This space is too competitive for Apple to sit back for too long. Right now it's milking margins and share gains but at some point the market is going to need something more.

The net? Waiting a bit for things to settle down with the stock and using spreads to expand long on a pullback. Positioning for new product introductions in Macbook Pro Line, Tablet in Dec/Jan.

Just for disclosure: Long Apple. Long Calendar spread. Short Septmber -Vertical Spread.