Comments on Daniel Agramonte's articles RSS Syndication from SeekingAlpha.com http://seekingalpha.com/author/daniel-agramonte/articles http://seekingalpha.com/article/64369-cisco-intel-microsoft-hewlett-packard-technology-value-stocks?source=feed#comment-116342 116342 Microsoft: Estimated intrinsic value is $28.56/share, about 61% above current levels.< MSFT is quoted at $28.54 as we speak. Am I missing something?]]> Thu, 14 Feb 2008 15:17:19 -0500 Microsoft: Estimated intrinsic value is $28.56/share, about 61% above current levels.<

MSFT is quoted at $28.54 as we speak. Am I missing something?]]> http://seekingalpha.com/article/64005-apple-on-an-innovation-treadmill?source=feed#comment-115963 115963 Tue, 12 Feb 2008 15:31:55 -0500
Basically, Gates bought the original DOS from its developers (there is debate as to who the genuine developer was, Tim Peterson or Gary Kildall) after IBM had expressed interest but failed to secure the OS.

Teaming with the Deep Pockets of Deep Blue and its large sales force allowed his MS-DOS to become known far beyond the realms of geekdom. His remarkably astute decision to license DOS to anyone who'd pay the price, combined with his cut-throat marketing and business practices, gained him another large swath of the market, so that he eventually surpassed Apple (then the "Big Dog" of personal computing).

However, DOS and its successor, Windows (a poorly crafted knock-off of the Mac desktop), were (and remain) inferior platforms, even before Apple came out with OS X, which blows Windows out of the water. This is not just Mac Addict hype - I actually started with and used DOS from 3.0 forward, Windows through XP, and UNIX, and worked as a systems administrator.

As to expansion - more and more people are realizing Windows is a dead-end, and switching to Mac - now that it is possible to run both, why not? (FYI: XP loads and runs faster, better, and more smoothly on my Mac - for reasons I have yet to decipher. I haven't tried Vista, and have no intention of even getting it.)

Likewise, many life-long DOS / Windows users - incl. IT pros - are switching as they find the benefits of the Apple OS - and yes, I have heard engineers and others saying; "I wish I had switched 20 years ago." or (re; Vista) "I waited six years for THIS?" and have switched.

Small businesses and even larger ones are either switching or introducing Macs as Net servers - they play nicely with the Windows machines and are easy to network to both - and they serve as a much more secure, stable, and smooth device to link to the Net, among other things.

That said, Mr. Jobs is something of an aloof control freak - however, he is also a visionary and has taken home computing to a new level.

From a strictly market POV, it is going to be a long, rough ride for all businesses and there will definitely be some shaking out. Whether even the best companies can weather the storm remains to be seen - but Apple's large cash horde makes it a better bet - if the dollar doesn't collapse completely...






]]> http://seekingalpha.com/article/64005-apple-on-an-innovation-treadmill?source=feed#comment-115911 115911 Tue, 12 Feb 2008 12:12:44 -0500
Brewer, I am sorry for your friend-Al Gore. He should have minimum won his home state of Tennessee and Bill Clinton's home state of Arkansas. In that case Republicans would not have bothered about Florida votes. Bill Clinton literally left Gore high and dry in 2000 and just compare the Republican machinery which worked during the same period. Al Gore paid a high price for his association with the Democratic party which remained silent during the recounting days of Dec. 2000. ]]> http://seekingalpha.com/article/64005-apple-on-an-innovation-treadmill?source=feed#comment-115851 115851 Tue, 12 Feb 2008 09:29:18 -0500
I agree. But, they can do a LOT better than 3% global market share. And growth could come fast, once DOS-cultists in Enterprise start retiring.]]> http://seekingalpha.com/article/64005-apple-on-an-innovation-treadmill?source=feed#comment-115801 115801 Tue, 12 Feb 2008 01:29:36 -0500 http://seekingalpha.com/article/64005-apple-on-an-innovation-treadmill?source=feed#comment-115797 115797 Tue, 12 Feb 2008 00:29:23 -0500
You are living in a dream world. All the Microsoft techs are running scared to death of Apple. They are literally freaking out in total FUD mode, but it's not working, Apple is rapidly gaining marketshare. Just last summer, no one would believe it, now already no one will deny it. Real people (including the bosses in charge) are waking up to realize what a total and utter sham Microsoft has pulled. Microsoft has always been devoid of ethics, they have screwed their 'channel partners' time and time again. No one likes Microsoft. No one.

Apple has totally eclipsed any OS that Microsoft could ever produce. They have also been quietly building their own Office replacement. Every application on the Mac can read any of the proprietary MS Office formats, even the new formats that Microsoft has so desperately shoe- horned into Office 2008. Microsoft programmers are dullards that only ever COPIED (badly) the work of others. That was enough before, but it's not enough now.

The other shoe is about to drop. The only reason the Apple stock has dropped is because it's a great time to reload. I think the reloading began today on myriad new rumors each of which holds far greater potential than Microsoft's old routine. Time for Ballmer to do another 'Monkey Dance' and throw some more chairs.



]]> http://seekingalpha.com/article/64005-apple-on-an-innovation-treadmill?source=feed#comment-115775 115775 Mon, 11 Feb 2008 20:03:32 -0500
Apple is entering two markets that are huge and still largely untapped: handheld mobile personal devices, and home digital entertainment devices. If done right, these two markets will grow in the same way that the PC market grew over the last 2 decades. Again if done right, there's no doubt that they can grow 20% a year for the next decade. And that's not even including the fact that they have just a small part of the PC market and there's lots of room to grow there.

]]> http://seekingalpha.com/article/64005-apple-on-an-innovation-treadmill?source=feed#comment-115768 115768 Mon, 11 Feb 2008 19:11:06 -0500
What sustains Apple is the unknown and unexpected. it is called breakthrough. What is not in the equations or in this discussion is the power to invent products that create undeniable power and appeal, and the existence of a company/team that can do that. if there is even a small chance that Jobs and his partners can come up with breakthrough products, it is worth investing in.

To judge a company that is dedicated to innovation and breakthrough value to its customers by the life cycle of its current products is so narrow. The question to ask is: In the age of knowledge (use, accumulation, distribution,) as an engine of evolutionary import and wealth creation, what products and services could leap out and totally surprise and delight 500 million customers. Jobs, and others are out to explore and answer that question and perhaps they have the capability to do it. That's why I own aapl; not because their ipods are famous.

Tom Jackson ]]> http://seekingalpha.com/article/64005-apple-on-an-innovation-treadmill?source=feed#comment-115750 115750 Mon, 11 Feb 2008 17:05:02 -0500 http://seekingalpha.com/article/64005-apple-on-an-innovation-treadmill?source=feed#comment-115736 115736 Mon, 11 Feb 2008 15:47:34 -0500 seekingalpha.com/artic...). Facts and numbers speak louder than words.

Coming to your point, Apple and Google are both scrambling for growth in coming years. Google's core IP is Search technology and they are better off doing that and making money. Google will not power the universe with super-duper computer, lest developing an Operating System. Yahoo's core strength is web portal and they do it well. But the analysts always compare Yahoo and Google and managed to drive down Yahoo's stock price. There are areas where Yahoo excels and Google has faltered and vice-versa. Coming back to Daniel's analysis - can Apple grow? My target price for Apple is below $90 by end of 2008 - Seriously.]]> http://seekingalpha.com/article/64005-apple-on-an-innovation-treadmill?source=feed#comment-115727 115727 Mon, 11 Feb 2008 15:07:09 -0500
Ok, yes I am def an apple fan, but I would also like to think I bought the stock because they, along w/ google will continue to eat Microsoft. Not just because I think the hardware is better.
( remember whose on both company's board of directors )

"Hence the entire foundation of a company is hinging on a single individual who has an aversion towards building an ecosystem around Apple products. You have to compare this strategy against Microsoft which has built a strong channel partnership and ecosystem around Windows software"

Sorry, dead wrong here. Jobs does control apple very tightly, but they are also fairly strategic with Google for obvious reasons. Steve Jobs has all but said at various macworlds that, yes, he too ( like any good CEO ) wants Apple to dominate every piece of technology you own.
If you need any evidence, just ask yourself why Apple moved to Intel Chips and all but encourages its users to run windows along with Leopard, and really doesn't care how many times you install their operating system.
Have you seen/used the new features in Leopard ? They are alot of things that are potentially very damaging to MCRST control of the business space and all but killing the need for your local networking IT man, because I hate to break it to you, but you aren't needed if the software always works and remains very simple to use. No more frustrated fun calls from the secretary.

Jobs hasn't been loud about it yet, but remember we are only talking about OSX 10.5 here, not 11.0.
What do you think all of the one-click screen/file sharing features are for ? Graphic designers and hipsters ? I don't think so. Once small business find out how easy apple makes networking they will be wondering why they ever used windows in the first place. Do you not think this will propagate into bigger and bigger businesses as more and more people use apple computers?

But, besides this , the reason you are dead wrong is that Microsoft got where it was because THEIR strategy hinged on a single individual named Bill Gates and he was very good and they made alot of money.

Now he is gone and Mr. Ballmer seems determined to run the company into the ground.
It's pretty clear he has no idea what to do, all he knows is that Microsoft is going to be the industry's " first n-trick pony " , well that sounds nice and profitable, but I am pretty sure you have to fight an n-front war to do that.

Is the X-box 360 beating Nintendo ? ( the first X-box was a loss-leader...) How is the Zune doing ? Is Microsoft gaining any ground against Google ? They can't even buy a small dying search engine - Yahoo. Do I need to mention Vista ?
Google bought Youtube for what 1 billion ?... I think that is working out quite well for them. Google seems to have a near monopoly on this whole internet thing anyway, why else would Microsoft be so desperate to buy Yahoo? They could and should use that cash to build server farms/infrastructure and hire better engineers.

I understand that in terms of cash Microsoft may still be the 800-lb gorilla, but a fool and his money are soon parted ( even that much ), It seems to me the current CEO is a bit of a desperate fool, especially if he thinks he can even afford to fight an "n-front" war in the technology space. Especially when Google and Apple are involved. Nevermind ALL the other startups and the nature of the business in general, Microsoft can't exactly just go and kill netscape like they did before ( also now working with google BTW ...ever heard of firefox or seen their "homepage" ? )

Microsoft's past strategy worked because the internet was not nearly as important as it used to be and Gates knew exactly what he was doing, even when he did have to rely on DOS ( UNIX IS BETTER/MORE MODERN/BUILT FOR MULTIPLE USERS/ ETC... anyone willing to argue with that ? )

I don't think Microsoft even understands how to defeat google, let alone do it. don't forget geo-politics either... If you were a tech company would you rather be in the bay area or seattle ?



]]> http://seekingalpha.com/article/64005-apple-on-an-innovation-treadmill?source=feed#comment-115711 115711 Mon, 11 Feb 2008 13:41:01 -0500
I still do not fathom how liking a product and buying their stock are the same thing. Being in love with a stock only clouds your judgement, thinking it's so wonderful that it will grow quickly forever when in fact it's just a company , like all other companies and it's sole purpose is to make money.

Come to think of it, when I buy a stock my sole purpose is to make money too.]]> http://seekingalpha.com/article/64005-apple-on-an-innovation-treadmill?source=feed#comment-115701 115701 Mon, 11 Feb 2008 12:23:00 -0500 http://seekingalpha.com/article/64005-apple-on-an-innovation-treadmill?source=feed#comment-115697 115697 Mon, 11 Feb 2008 11:51:07 -0500 http://seekingalpha.com/article/64005-apple-on-an-innovation-treadmill?source=feed#comment-115689 115689 Mon, 11 Feb 2008 11:22:16 -0500 http://seekingalpha.com/article/64005-apple-on-an-innovation-treadmill?source=feed#comment-115684 115684 Mon, 11 Feb 2008 11:02:54 -0500
It's obvious you understand little about the business when you refer to iTunes and Videos as "high margin". Apple has to pay out most of the revenues from that to the content creators and they have said they run iTunes at just above break-even. It's simply a conduit to get consumers to buy more hardware. ]]> http://seekingalpha.com/article/64005-apple-on-an-innovation-treadmill?source=feed#comment-115671 115671 Mon, 11 Feb 2008 10:00:02 -0500 http://seekingalpha.com/article/64005-apple-on-an-innovation-treadmill?source=feed#comment-115666 115666 Mon, 11 Feb 2008 09:34:02 -0500
I'm not saying you don't have good points, and I haven't drunk the Kool-Aid (yet :)). I'm just wary of situations like this, where prior performance is NOT, in my view, indicative of future profits.]]> http://seekingalpha.com/article/64005-apple-on-an-innovation-treadmill?source=feed#comment-115653 115653 Mon, 11 Feb 2008 08:28:28 -0500 http://seekingalpha.com/article/64005-apple-on-an-innovation-treadmill?source=feed#comment-115642 115642 Mon, 11 Feb 2008 07:14:43 -0500
Apple can easily continue to grow at 20% over the next 10 years. In fact, Apple's growth rate is INCREASING.

Your comments and concerns about growth are quite valid. However, you have the wrong company. You confused Microsoft and GE, mature companies, with Apple]]> http://seekingalpha.com/article/63549-air-t-vs-apple-not-even-close?source=feed#comment-115364 115364 Fri, 08 Feb 2008 21:51:53 -0500
I agree with what you are saying, but I'm not necessarily advocating projecting a growth rate after year 10. Just the value in perpetuity. So, let's just assume that AAPL continue to earn 28.11 every year after 10, hence zero growth.

So...
The PV of EPS for 1-10 is 101.74

Then the PV for 28.11 in years 11,12,13,14,......... 49,50,....
=28.11/.05=562.21
discount back from year 10-- 345.15

The total value of AAPL would be $446.89

I agree with your qualitative points. Spot on.

]]> http://seekingalpha.com/article/63549-air-t-vs-apple-not-even-close?source=feed#comment-115362 115362 Fri, 08 Feb 2008 21:32:13 -0500 Many companies use 8-10% as an internal hurdle rate--I was generous in discounting at 5% for years 1-10, as this is typically a risk-free rate. As such, discounting at 9.5% in the first 10 years, still assuming 20% earnings growth gives an Intrinsic Value of about $80/share (about 50% below current prices).

After that, I guess it's fair to grow earnings at 5% (who knows, we might have a depression at that point?). I really struggle after year 15--in practical terms, where was AAPL 15 years ago, and where will they be 15 years from now? Who knows? Regardless, growing revenue at 5% during years 10-15 gives us a valuation of about $117/share. While fraught with execution risk, this may be achievable. I haven't screened it lately, but I suspect VERY FEW companies have had 20% earnings growth for 10 years. Think about it--with compounding, etc., it would only take one flat year to mess things up.

That's where it starts to get inplausible. How many companies can keep from having a bad year or two during a 10 year stretch? As I recall, AAPL was losing money in 1999. Their phenomenal growth in 2005, 2006 and 2007 enabled them to overcome the drag at the beginning of the decade. Bottom line: while the constant growth model is good from a theoretical standpoint, and my mathematical brain wants to add something to cover earnings in perpetuity, I struggle to comprehend what might be going on beyond year 10, let alone year 15. The changes in the technology alone due to Moore's Law would be enough to boggle the mind after year 10. Lots of food for thought and even more risk and uncertainty. In short, plenty of moving parts for a company that, despite a good four year run, hasn't yet proven its ability to grow consistently for a decade. In fact, I can only think of a handful of companies that have shown an ability to grow a large enterprise for a decade, and many of them are already held by Berkshire Hathaway: GE, P&G, American Express and perhaps a couple of oil companies.]]> http://seekingalpha.com/article/63549-air-t-vs-apple-not-even-close?source=feed#comment-115344 115344 Fri, 08 Feb 2008 18:31:57 -0500
What you could is assume that sales don't grow after year 10, or grow at the rate of inflation. just need a continuing value. The constant growth model is used.

EPS(10) * g (inflation) / (Ke - g)

Or 28.11 /.05 and then discount to present.

I would probably use a higher discount rate than 5% for the first 10 years since the growth is uncertain and volatile, hence risky. Yet, for the continuing value or mature phase, I would use 5% there.

Just my opinion

]]> http://seekingalpha.com/article/63549-air-t-vs-apple-not-even-close?source=feed#comment-115337 115337 Fri, 08 Feb 2008 17:44:17 -0500 http://seekingalpha.com/article/63549-air-t-vs-apple-not-even-close?source=feed#comment-115325 115325 Fri, 08 Feb 2008 16:44:24 -0500 http://seekingalpha.com/article/63549-air-t-vs-apple-not-even-close?source=feed#comment-115303 115303 Fri, 08 Feb 2008 14:05:16 -0500 You are exactly right. Taking EPS growth at 20% annually out to 20 years gives about $590/share. I used 10 years for a very practical reason: I suspect Steve Jobs will be sipping Mai Tais in Miami in less than 20 years (Bill Gates is already bowing out and Andy Grove is long gone, but John Chambers is still going strong at 58). In other words, 20 years is a long time and Apple may not even exist as we know it today. It was certainly a mess before Jobs came back--who knows what'll happen after he leaves. Then again, maybe in 20 years Warren Buffett will still be around (at 97) and Berkshire Hathaway's A shares could be trading at $1 million? Thanks for the comment.]]> http://seekingalpha.com/article/63549-air-t-vs-apple-not-even-close?source=feed#comment-115277 115277 Fri, 08 Feb 2008 12:14:58 -0500



]]> http://seekingalpha.com/article/63549-air-t-vs-apple-not-even-close?source=feed#comment-115180 115180 Fri, 08 Feb 2008 00:20:20 -0500
I'm going to sell all my stocks and buy APPL and GOOG]]> http://seekingalpha.com/article/63549-air-t-vs-apple-not-even-close?source=feed#comment-115170 115170 Thu, 07 Feb 2008 22:09:02 -0500
But what are the odds of that happening? Do you think the market is really that inefficient and stupid?

Thus your comparison is bogus. If you want to illustrate the virtue of low P/E stocks, Coach and Starbucks are far better candidates.]]> http://seekingalpha.com/article/63549-air-t-vs-apple-not-even-close?source=feed#comment-115157 115157 Thu, 07 Feb 2008 20:17:21 -0500