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Gary Morton

 
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  • Apple's Still A Better Value Than Google [View article]
    It is refreshing to see a look at some actual facts. Here are some more interesting numbers. Google (GOOG) grew earnings per share about 9.7% over the trailing twelve months with an actual decline in the latest reported quarter. Apple delivered 61% earnings growth in the trailing twelve months. However, the market seems to believe Google's future is somehow brighter as GOOG has been able to maintain a multiple in the low 20s. While Apple, with dramatically better actual results, only merits an 11 PE. To compound the confusion, with a share of Google you get: No dividend, no say in how the company is run, no ability to influence the board (Brin, Page, and Schmidt together have controlling interest). If you believe the unfocused, undisciplined Google can turn-around and deliver market beating financial results in the future, you can buy a share at a 33% premium to the market PE. If you believe that Apple might be able to squeak out earnings growth at one third of their five year average (that would still be double Google's current growth), AAPL might be worth a look. At an 11 PE, Apple might be attractive for those who invest on facts and demonstrated performance.
    Dec 31 08:34 AM | 13 Likes Like |Link to Comment
  • Betting On Apple's Operations Team And Gross Margins [View article]
    Yes, it is very strange how the market views future prospects for Apple and Google, granting one a multiple of only 12 recently and the other a multiple of 21+. Although, over the long term, financial results tell the real story. If you investigate the relative performance of Google since the introduction of the iPhone at MacWorld in January 2007 vs. the performance of Apple, it will give you a clear understanding of which company is actually winning the smartphone wars based on delivered financial results. Despite its short term distortions, the market has rewarded Apple's success over the long term.
    Dec 13 10:32 AM | 12 Likes Like |Link to Comment
  • Apple's EPS And All-Time High Are Higher Than You Think [View article]
    The buyback does not increase the value of the company, but if the value remained constant, it affects the share price. Mathematically for the market cap to remain constant on a smaller total share count, the individual share price must increase. More importantly, if value investors liked AAPL at $95 per share thinking that the PE was 15.35 would you agree that they would like it even more at a14.67 PE?
    Aug 9 10:05 PM | 8 Likes Like |Link to Comment
  • Apple's EPS And All-Time High Are Higher Than You Think [View article]
    Thanks, I am sure that Michael would find something negative in Apple's up to date EPS and PE which are more favorable than commonly thought.
    Aug 9 06:14 PM | 8 Likes Like |Link to Comment
  • Apple's EPS And All-Time High Are Higher Than You Think [View article]
    Constable, It is often difficult to predict investor sentiment. A three year review of today's darling Netflix (NASDAQ:NFLX) serves as an example. After some missteps in the third quarter of 2011, the share price of Netflix started to fall precipitously from around $300 per share to $55 per share by September of 2012. It seemed the Netflix story was over. Sentiment for NFLX was highly negative. Nonetheless, after a few smart moves by the company and some positive results, positive sentiment returned. In this case, it returned with a fury as NFLX is now approaching $500 per share. I am not claiming that same scenario will happen with Apple, but sentiment is a fickle thing. If the investment community does get excited by this "best in 25 years" pipeline that Apple is about to unveil, the institutional underweighting in AAPL ownership vs. the S&P and other indexes could lead to some very interesting scenarios for Apple stock.
    Aug 11 01:09 PM | 5 Likes Like |Link to Comment
  • Apple's EPS And All-Time High Are Higher Than You Think [View article]
    I am not really making an argument about the effect of buy backs on market capitalization. I am simply stating the mathematical fact that for Apple to reach it's all time high in market capitalization with the current number of shares outstanding, it would have to trade north of $110.0 per share vs. the $100 per share that many think.
    Aug 10 12:02 PM | 5 Likes Like |Link to Comment
  • Betting On Apple's Operations Team And Gross Margins [View article]
    Thank you for your insightful and well delivered comments. The economies of scale part is of particular note. Tracking unit volumes relative to margins over Apple's history yields a strong correlation. The nuances of burden absorption and standard cost accounting also point to significant gross margin guidance "beats" when production volumes are significantly higher than guidance.
    Dec 13 11:18 AM | 5 Likes Like |Link to Comment
  • Betting On Apple's Operations Team And Gross Margins [View article]
    I can remember accessing the app store for the first time years ago and thinking, "Oh my God, they have this all figured out." Will we have similar experiences when the rumored reinvention of the TV experience comes out? Again, my bet would be on Apple. Tigers have stripes and they can't avoid them. The innovation stripes are deeply ingrained in Apple's DNA. They'll WOW us again.
    Dec 13 11:22 AM | 4 Likes Like |Link to Comment
  • The Real Truth About Apple's Q4 Results [View article]
    I couldn't agree more with the contrast on the investor reaction for Apple vs Amazon. Apple is reporting real growth in earnings and real growth in revenue. Amazon has not genuinely demonstrated that they have a business model that can generate earnings. "Making it up in Volume" does not work if your margins are zero.
    Nov 15 02:58 AM | 4 Likes Like |Link to Comment
  • Google's Phony Beat [View article]
    One of the most objective measures of a company's financial results for a quarter is its cash flow from operations. Company management can't hide things in the cash flow statement as easily as they can in an earnings statement. Moreover, free cash flow is typically the metric fundamentalists use to calculate the "real" valuation of a company. How did GOOG do in cash flow for Q1 2013? Well, Cash Flow from Operations fell by $61 million from $3.694M to $3.633M. The largest difference was in taxes where they couldn't hide the over-reported income from their artificially low Q12013 tax rate.

    It would seem that GOOG is cooking the books a bit, but with the generally positive sentiment the market currently has for the stock, this may not impact their stock price for a while.
    Apr 19 01:55 PM | 3 Likes Like |Link to Comment
  • The Real Truth About Apple's Q4 Results [View article]
    If the run rate on OI&E holds and the 75% to 25% split is accurate, Apple will report an extra $0.19 per share in fiscal Q113 and $0.06 per share in fiscal Q213. This will actually be an over-reporting contrasting with the Q412 under-reporting. The $380M forecast from Oppenheimer is consistent with the $0.19 for Q113.
    Nov 15 02:58 AM | 3 Likes Like |Link to Comment
  • Apple's EPS And All-Time High Are Higher Than You Think [View article]
    Interesting point, Apple makes about $200M per quarter in OI&E on about $150B in cash and equivalents. If we attribute that all to income to interest on the cash, that would mean that on $51B more in cash, they would have delivered an extra $68 Million in the Mar-June quarter, about $.01 per share more. In that light, the buyback seems like a much more shareholder friendly use of funds.
    Aug 9 10:28 PM | 2 Likes Like |Link to Comment
  • Apple's EPS And All-Time High Are Higher Than You Think [View article]
    I would be glad to see Cramer tout a similar analysis whether he credited me or not. He is, in many cases, able to articulate simple facts that many overlook.
    Aug 9 10:14 PM | 2 Likes Like |Link to Comment
  • Apple's EPS And All-Time High Are Higher Than You Think [View article]
    Thank you for the insightful comments. It often becomes interesting when the math for an outlier does not fit into widely regarded financial metrics. We are likely to see much of that for Apple in the upcoming quarters.
    Aug 9 10:09 PM | 2 Likes Like |Link to Comment
  • Report: Amazon plans to become a major game developer [View news story]
    Another chance for Amazon to alienate their suppliers on the electronics and merchandise side. Will Sony, Microsoft, and Nintendo sit idly by while Amazon invades these game company's home turf using cash that Amazon borrowed from the game companies by extending out their accounts payables? What an amazing business model. When will Amazon's suppliers wake up and realize they need non-compete agreements before getting into bed with Amazon?
    Mar 10 04:35 PM | 2 Likes Like |Link to Comment
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