Andy Zaky

How Stocks Perform After Being Added to the Dow

Ok. I cannot comprehend for the life of me why people think Google should be added to the dow rather than any of these other companies you've listed? In fact, none of those companies ought to be added because they're all high beta stocks. High beta stocks would keep volatility high in the index and thus drive away potential investors who see it as uncertainty in the market. But why Google in particular? Google is small beans compared to some of the other companies you mention. Apple is a far more viable candidate than Google as Apple's financial are far superior on nearly every front. See for yourself:

Apple
Cash: $28 Billion
2009 Expected Revenue: $35.4 Billion
2010 Expected Revenue: $40.9 Billion

Google
Cash: $17 Billion
2009 Expected Revenue: $16.79 Billion
2010 Expected Revenue: $19.07 Billion

As you can see. Google is small beans compared to Apple. To be a potential dow component, you've got to be reining in the revenue. Sales, beta and cash are the key metrices that determine whether a company is dow viable. And the key reason that revenue and net cash are central is because a company can always figure out a way to strengthen margins but its easy to produce $50 billion in sales. Cash is also key because it tells a story about the strength of the company's balance sheet. Apple does more in revenue, has a similar growth rate as google on net income, has more 50% more in net cash and is generally a larger company than Google. And both are high beta stocks. Google shouldn't be even mentioned at all.

How the iPhone and Poor Management Contribute to Apple's Downfall

No. Its you that missing the point of the article. This article stands for the proposition that subscription accounting has CONTRIBUTED to the downfall. Not the cause. Just a mere contributor. As a matter of fact, this article speaks to why Apple is undervalued relative to others in the sector. RELATIVE. R-E-L-A-T-I-V-E. Learn the freaking word. Its undervalued relative to others in the sector due in part to the market overlooking adjusted earnings. What is the main argument in support of this...

The fact that Apple's adjusted P/E ratio is far below that of its peers. The market is discounting nearly 40% of Apple's recorded revenue this past quarter. Just like almost everyone else commenting on this article, you need to read before you criticize. This goes to everyone else who feels a need to comment before reading the article.

Once again. I never said that this accounting treatment was the cause of the collapse in share value from $200 to $80. What I am saying here is that relative to others in the sectors, Apple should be trading closer to $120 a share post collapse. Read the freaking article. There's no need for me to just sit here and repeat myself. Seriously.


On Jan 20 06:34 PM JW.PhD wrote:

> Sorry but this article misses the forest for the trees. The current
> price of AAPL stock has nothing to do with "poor management" regarding
> how iPhone revenue is realized. In case the author somehow missed
> it, we're in the midst of the biggest economic downturn since the
> Great Depression, and that, combined with constant drumbeat of rumor
> and speculation about the health of Apple's CEO, is what has taken
> the stock down from ~$200 to under $80. If the company has managed
> anything poorly, it is the PR campaign concerning Steve Jobs, not
> the introduction and growth of one of the most successful products
> in history. Apple wasn't going to be able to swim against the current
> in this financial market anymore than any other company, no matter
> what their fundamentals might be.

Stocks Will Continue to Erode In This Busted Economy

Adding to my comment above, I could understand how this can be overlooked. Sites such as yahoo finance sometimes incorrectly state their variables. This can be result of lag time in updating the variables. Apple was trading at about 3.5 times their book value when they were trading closer to $110.00.

Stocks Will Continue to Erode In This Busted Economy

Just thought I would point out that your book value for Apple is incorrect. How can their "tangible book value" be 3.6 when Apple currently trades at only 3.007 times its cash position. Apple has 24.5 billion in cash, and no debt. Unless their real estate holdings have negative value, then your book value is understated. Apple is probably trading closer to 2.2 times its book value right now.

Smartphone Makers May Actually Strengthen Through the Recession

Nice commentary. Short and to the point.

Exploiting the Downside of the Markets

LOL. This article is late to the game man. The S&P500 is getting close to the previous bear market lows and the NASDAQ is approaches rock bottom prices that we haven't seen since the tech bubble collapse. The risk reward for shorting here is way off balance. There's maybe a case to short AMZN here with a P/E that is twice that of AAPL, GOOG and RIMM. But shorting AAPL and RIMM here is a dangerous game. GOOG might make for a good short as the market is laboring under the belief that on-line advertising has disappeared. How long this could be kept up is anyone's guess. GOOG and AMZN are maybe shorts if you're in for a very quick trade. But I wouldn't even think about shorting AAPL or RIMM. That's just stupid. AAPL has been steadily outperforming the market over the past few weeks and while the NASDAQ continues to make new lows, AAPL has yet to break its low set in the first week of October. RIMM has been on fire as of late. Shorting these stocks would have been advisable during the first week of October, but doing so now is a disaster waiting to happen. If history has taught us anything, bear markets end with inverted head and shoulders and when the market rebounds, it does it fast and furious.

Here's how the S&P, NASDAQ and DJIA bottomed in the 2001-2003 bear market:

stockcharts.com/h-sc/u...=$SPX&p=D&st=2...

stockcharts.com/h-sc/u...=$INDU&p=D&st=...

stockcharts.com/h-sc/u...=$COMPQ&p=D&st...

Notice how each of them ended their respective downtrends with an inverted head & shoulders. Also, the 74' bear market ended in the same manner. Inverted head and shoulders.

Now take a look at this bear market. I see a distincted left shoulder, and a head in progress.

stockcharts.com/h-sc/u...=$COMPQ&p=D&yr...

Shoulder at 1,542.45; head being made right now; and I imagine we see a massive rally in December as hedge funds try to cut their losses on the year. I could see the NASDAQ testing the neck line at 1700. Then sometime in January, I see the NASDAQ putting in a right shoulder. If the economic data starts look positive, this bear market will be over by March. And you want to short here? You're playing with fire.

Will Apple Beat 2009 Revenue Consensus?

Man. You always give me great compliments and kind words. Thank you for that. It makes my day.


On Nov 15 04:40 PM dr. anthony wrote:

> Zaky is THE analyst to watch. He is always ahead of the curve and
> brings to any problem: intelligence, scholarship and thoughtful
> analysis. He is a pleasure to read and a real treasure to the investing
> community.
>
> dr.a

Reading Apple: iPhone Sales Slightly Off, MacBook OK

Nice rundown of Munster's estimates. Notice, that even Munster's estimates are conservative. His estimates get moderately beat every single quarter, and I'm personally expecting some pretty big upside on the quarter. Here are my estimates published at bullishcross.com:

Unit Sales:
2.8 Million Macs
8 Million iPhones
22 Million iPods

Earnings Estimates:
$11.29 Billion in Revenue
$1.96 in EPS

This is probably the most realistic outlook investors are going to receive from any analyst. I'm brutally honest at a time where some want me to keep my mouth shut. ;)

I simply cannot do that.

Will Apple Beat 2009 Revenue Consensus?

Its current deferred revenue. So its recognized over 2009. There's two categories of deferred revenue. Current and noncurrent. Current is recognized in 2009 and noncurrent in 2010.

Chinese Paper Reports Reduced Apple Notebook Orders

Now go back and take a look at how accurate digitimes has been with their reporting on Apple. The media is not a source in and of itself. Digitimes is not a research group. And as a media source, it has had quite an unreliable track record.

Chinese Paper Reports Reduced Apple Notebook Orders

Now go back and take a look at how accurate digitimes has been with their reporting on Apple. The media is not a source in and of itself. Digitimes is not a research group. And as a media source, it has had quite an unreliable track record.

Will Apple's Q1 2009 Revenue Estimates Be a Blowout?

Jumping from 6.9 million to 8 million in Q1 isn't that big of a jump. It's a 1.1 million unit increase. Remember, that all of these very same arguments were made in Q4 of last year. The same exact points. These points were also made in Q2. Yet, in both Q1 and Q2 of 2008, Apple sold more iPhones than they did in their debut quarter. Apple sold 1,119,000 iPhones in Q4 2007 (debut of the iPhone) while selling 2,315,000 in Q1 2008 and 1,703,000 in Q2 2008 - this despite Sacconaghi's missing iPhone debacle and all of the same arguments regarding channel fill. They have to replensh the channel if the demand is there. Plain and simple. Just because you fill the channel with inventory, doesn't mean the buck stops there. How fast the channel clears is the important part of the puzzle.

I think people get too preoccupied with one part of a financial puzzle that they miss the important big picture. For example, the market is always preoccupied with Gorss Margin percentage. The market gets too overly concerned with the issue of whether Gross Margins will be sustainable in the future. Yet, gorss margins are only 1 part of the puzzle. If OpEx as a percentage of total revenue is droppin, and if overall contribution i.e. gross margin itself is rising, then who gives a shit abot gross margin percentage? It doesn't matter at that point. Yet, no one every talks in these terms. They just look at gross margin percentage and think that's the end all and be all of whether the company will be profitable. It makes no sense.

I see the same thing going on with the iPhone. Channel fill is only one element of the equation. For all we know, Apple could sell 12 million iPhones this quarter because Apple might have to constantly replensh the channel due to high demand. Channel fill is not an indication of demand--its inventory turnover that one needs to look at.

I am repsonding to your question because a lot people constantly seem to be raising the same concern regarding channel fill. Well Apple could very easily refill that channel twice over in Q1.

My sales estimates for Q1 are based on the fact that it takes time to penetrate the market. No matter how popular a device may be, it still takes time to grow in large numbers. I think too many people believe that Apple blew their load all in one quarter due to pent up demand.

However, that did not happen last year. The demand couldn't have been more pent up then with the original version of the iPhone. People had to wait six months from the time it was announced until it was released. And event then, Q1 sales more than doubled the debut quarter's sales. We'll see as the quarter progresses, but my intuition tells me that we've only scratched the surface of the 3G's potential penetration into the market place.


On Nov 10 10:06 PM howmany wrote:

> nice job...but where is the defense of those huge iPhone numbers.
> Given the 2million channel fill last q, pent up demand due the emptying
> of first gen iPhones from the channel, and the usual apple early
> adopters, the terrible consumer environment, and the reduced rollout
> to new countries, the fact that the new countries are smaller, leads
> me to suggest a sequential drop to very moderate increase in iPhones
> is in order. How do you justify your number overcoming these factors?

Is Apple More Undervalued Than Other Tech Sector Stocks?

To Grouch:

Actually it will. That is current deferred revenue. Current in that it will be recognized within 1 of the date of the statement of deferred revenue. It will be recognized from September 28, 2008 to September 27, 2009.

Is Apple More Undervalued Than Other Tech Sector Stocks?

To Grouch:

Actually it will. That is current deferred revenue. Current in that it will be recognized within 1 of the date of the statement of deferred revenue. It will be recognized from September 28, 2008 to September 27, 2009.

iPod Sales Only 14.2% of Apple's Q4 Total Revenue

@jakw

So I guess you believe Apple is going to lose that 14.2% of sales? Even if iPod sales contracted, they wouldn't go to zero as you seem to imply by such a post.

Call Apple a fad all you like. How do you explain that Apple has a larger cash position than almost every other tech company including MSFT? How do you explain the fact that Apple's earnings on a non-GAAP basis put it in the 20 twenty most profitable companies in America? Hmmm. Do you think perhaps this bullshit "fad argument" that you bears seem to advocated is far run its course yet? Or are you a monkey whose hand is stuck between two bars because he doesn't release that if he just let go of the banana, his hand would become loose?