James Yardley

James Yardley
Contributor since: 2013
Agree with all the above. Also, management doesn't have anything to lose from the deal. There not losing their jobs. King is going to be kept as a separate entity. The CEO, COO and CCO have all been given long-term contracts.
You've extracted profit not revenues. King actually generates gross revenues of about $500mn per quarter. And ignore the profits it's the free cash flow which matters. King is on a ridiculous free cash flow yield when you strip out the $1bn it has in cash. People also don't give King any credit for how it has diversified away from Candy Crush since IPO. And actually the franchise has proved very durable. Yes King has issues but they are more than priced into its crazy valuation. Activision has a great deal. Very disappointed with the $18. I am long $King
As a $KING shareholder I'm very annoyed with this deal. King is massively profitable trading at a ridiculous FCF yield with a $1bn in cash on the balance sheet. Downside was always limited. Yes it has issues but since IPO it has done a good job to diversify away from candy crush. The trouble is know one can take a long term view and a few quarters of declining sales and a business model people don't instinctively like has destroyed sentiment. Very disappointed with the $18 price ATVI have got a great deal. This will pay for itself in next to no time.
Thanks for the article. I recently started a position in Ophir a few weeks ago so I'm glad I'm not the only one who was interested. This is not a sector I have any expertise in but with the Pavilion deal I thought this stock was too cheap to ignore.
I'd be interested to know of everyone's thoughts on the possible Salamander deal. The market seems to be taking it very negatively. I notice that Ophir's current CEO is the founder of Salamander, so he should know the business extremely well. At first glance it appears an excellent way to diversify the business and add the revenue streams Ophir currently lacks. Or is this a case of the ex-founder come to the rescue of his old business with little regard for shareholders? The market may also be worried about a bidding war for SMDR. But the timing looks to be good with sentiment on these stocks so depressed. Happy to own this for the long-term and wait for sentiment to reverse as it inevitably will.
Disclosure: I am long LON:OPHR
Also interested in peoples thoughts on Cairn (CNE) which I'm looking at.
Yes Apple doesn't recognise a sale until the phone is in the customers hands. iPhone launch numbers tell you more about supply than demand. When I went into the store to pick up my pre-order I overhead/saw them turning away at least 20 people in just a few minutes.
An excellent article with loads of information but I don't think you made your case.
The Citi research on cash costs is of particular concern, implying that all gold miners are now burning cash and destroying value. They may be trading at below NAV but they should be if they are destroying value like this. The Citi research also makes me very worried about the what happens if the price of gold falls further. What are these companies worth if we see $900/oz, not an impossibility, last time we had such a big run up in gold price it was followed by a 30 year bear market.
Production is at an all time high - which can only pressure prices further in the short term. As you say yields per ore have collapsed and exploration costs have soared exponentially. Miners are having to spend more and more to find less and less. This does not make for a long term sustainable business.
It might imply much lower production in the long term but even that is not guaranteed to push prices up. As we know gold's price is not entirely determined by a normal commercial demand/supply balance.
If anything I'm thinking the risk to reward for these companies is skewed to the negative. Is there an argument for going long gold and shorting miners given all the challenges they face? You could see bigger losses for miners with a gold price of $900 than upside with a price of $1500. Thoughts?.
Apple is a luxury brand and doesn't cater for the 'average Joe'
Agreed. The battery life is a worry and Apple conveniently didn't mention it during their presentation which doesn't bode well although otherwise it was very impressive.
This article is far too optimistic. I bought into Tesco after the big drop at the start of 2012. It looked incredibly cheap and I thought the improving UK economy would eventually filter through. The US operation was always going to have a positive impact on the stock one way or the other. Either it would it would improve or they would be forced to exit.
Alas since then almost everything has gone wrong, international operations have done very poorly. Tesco has retreated from the US and Japan. The rest of Asia and Europe have also been very poor. They are being crushed from the low and high end in the UK. Margins are collapsing. They have no pricing power.
I have no idea why the stock rose to 400p it had no business going there because nothing has gone right. I sold the majority of my holding last summer but I still hold a small position.
Management needs to get its act together. Clarke seems to think he's running a technology company. Tablets and smartphones are a major distraction. http://bit.ly/1nzsCLz
Blinkbox is not going to save Tesco, it needs to remember it is primarily a grocer. The stores and brand are not right at the moment. Tesco is perceived as an impersonal giant. Shopping in a Tesco is not a pleasant experience and the prices seem increasingly expensive and the quality of the food is declining. The whole brand needs a radical overhaul.
Contrast this to Waitrose. The store is beautifully designed. They pay particular attention to thinking about the customer experience and they use lighting very cleverly. It is a totally different experience and they are taking huge share gains as a result.
The same is true with Aldi and Lidl. They give customers what they want and there quality has increased dramatically in recent years whilst keeping costs low.
Another point. The majors have also been losing share to the pound stores. The pound stores are much more savvy with their marketing. For example they make products very slightly smaller to keep prices down. There was an interesting documentary on this which was supposed to expose the fact that the pound stores aren't really as cheap as they make it out. It really showed how the supermarkets have been totally outplayed. Only now is Tesco fighting back http://thetim.es/1nzsAU9
I still think Tesco has a lot of potential if it can get its act together but it needs to wake up fast.
Disclosure: I am long Tesco (LON:TSCO)
Looking closer at this deal it seems to make more sense. It's interesting to note that Universal owns 14% of Beats. Having Iovine as a special advisor seems like a very good idea. In one stroke Apple buys a music streaming service and solidifies it's relationships in the industry. Apple is also after the algos Beats has been working on. Hopefully the mediocre overpriced headphones are more of a bonus and Apple may believe they can improve them.
It is gutsy but it does make you feel a bit uncomfortable. This acquisition is all about the brand but it's dangerous to link yourself to something which is considered mediocre and overpriced by many. For now I'll trust Apple's management but I'll be watching this carefully.
I am long AAPL
You guys are missing the point. It has nothing to do with the product and everything to do with the brand. $3.2bn is really nothing to Apple. I don't see a lot of downside to this although the press will spin it as Apple not innovating.
It's totally wrong to write off all stocks with large buybacks. If management feels their stock is undervalued then they absolutely should buyback their stock. If they are correct and the share price subsequently rises this will create value for existing shareholders. It is inaccurate to imply that buybacks only benefit sellers and CEOs. And yes a buyback does 'return capital to existing shareholders', that is exactly what it does.
You fail to mention the major advantage of buybacks - they are much more tax efficient than dividend payments. Having your dividends paid out and then re-investing them is a lot less tax efficient than if the company had just bought back its stock for you.
This isn't to say that some CEO's don't undertake terrible buybacks when their share prices are overvalued. I wish CEOs would make more of an assessment of whether their stock is actually undervalued before initiating a buyback. There are many buybacks which shouldn't happen but don't tarnish them all with the same brush. Your article is inaccurate, misleading and totally fails to make a balanced assessment.
Apple building mobile-payments business
Thank you for an interesting article you make some good points. However I think you underestimate the power of technology. Your analysis doesn't consider that we are now more energy efficient (and getting more efficient). A car can run a lot further today on the same petrol versus 50 years ago. Even something as simple as insulating our homes better can save huge amounts of energy.
And the EROEI of renewable technologies such as solar is getting stronger by the day. There are also other options for cheaper energy such as the nuclear route. Morgans conclusion is far too pessimistic.
Thank you very much for a fantastic article
Interesting idea I hadn't even considered. It would be the largest acquisition Apple has ever made but its not inconceivable especially when you consider all the cash Cirrus has.
I think its unlikely but you might ask why is Apple not making this sort of acquisition? It would make a lot more sense than just leaving that cash on the balance sheet.
I disagree with Redrut I think reward outweighs the risk given how cheap the stock and its cash pile. Not losing the iPad mini was significant. http://seekingalpha.co...
I went with Ashraf on this one and bought the stock recently. I think both Cirrus and Apple will have a good Christmas quarter.
I am long AAPL and CRUS
Wow these allegations are just unbelievable. I felt sick reading this. Well done for putting everything together into a concise article. Is this a few isolated incidents or are there hundreds or thousands of cases? My guess is this is just the tip of the iceberg and we will see many more cases in the days to come.
I was amazed to see the stock closed up today. The initial financial impact may be negligible but if these allegations are even slightly true the political fallout could be devastating.
Apple may or may not lose market share versus the competition (Xiamoi etc) but the point is Apple is actually selling the new iPhones for the whole quarter in China this year where as last year it was not. A major positive.
The 5C was priced perfectly for launch. Apple didn't want developed market customers to abandon the 5S for the 5C. http://seekingalpha.co...
I expect Apple to drop the price of the 5C and 4S in emerging markets when it announces the China mobile deal (They have shown they are willing to do with other phones in India for example).
Regardless having a new product in the form of the 5C must be a positive versus the older products Apple was selling the previous year.
Discolsure: I am long $APPL
This article is full of holes. You have twisted facts to meet your own conclusions. For example the fact Apple is now selling the iPhone in China for the whole of Q1 is a major positive not a negative.
The YoY comparison should be much easier for Apple this year as I showed in my article. http://bit.ly/19pJbje
1) Apple is selling its latest iPhones in China for the entire quarter.
2) It is rolling out its latest phones to new countries faster than the previous year.
3) The 5S is an S cycle phone which should mean it's easier to build and supply.
4) Demand should be stronger for the 5S versus the 5, as evidenced by Apples record launch weekend and recent quarterly sales (up 25.6% YoY) Recent data has also backed this up
5) Apple does not have the negative publicity with its maps application which it suffered from last year.
6) The 5C is a new product Apple didn't have last year
7) The iphone 4 was heavily supply constrained last year and severely limited iphone sale (This shouldn't be the case with the 4S this year). This a fact that most people have forgotten.
8) DOCOMO deal
And yet consensus is for just 5% Revenue growth. I'm expecting Apple to sell just under 60 million iPhones.
Also you calculate that Apple will sell 57 million phones but then choose to ignore your own calculation. This article is worthless.
The article already exists
Thanks Redrut great points
Barratt delivered its interim statement today. http://bit.ly/172fhox
Private forward sales were up 47% to £1,127.4m for the first 19 weeks of the year. An even stronger number than the 44% increase we saw in September.
However Barratt stuck stubbornly to its completion guidance. (It said there was a little bit of upside potential). As I understood it they said they want to push some completions into FY 15. (I don't understand why they would want to do this). They also said 4,339 or 96% of the forward order book is due for completion in FY14. I wish I'd had the chance to ask a question about this.
Barratt gave good guidance on costs. It said it could probably hold costs flat for the current year, despite some recent worries. This should be good news for gross margins.
The stock has sold off quite heavily today. This is mainly down to the BoE's revision of its unemployment forecasts as well as the completion guidance
I think the market is too worried about interest rates. This revision is down to a stronger than expected UK economy, something which should after all be a major positive for the housing market. The report was actually quite dovish on inflation. I reiterate that I would be very surprised if we saw any interest rate rises before the next election in May 2015. This is a great chance to buy Barratt at a cheap price.
Yes but the marketing director in the video has a vested interest in making Sapphire appear as viable as possible. The author was right to dig deeper and give more weight to the independent analyst.
Thanks Jason
No my analysis does not currently include a China mobile deal. I should have mentioned this in the article. Given all the reasons I gave above I don't think 14% YoY revenue growth for iPhones is unreasonable, even without a deal.
And a deal is looking increasingly likely. It makes perfect sense for both companies.
If accurate it's interesting the focus the marketing places on the 'biggest discounts'. I predicted in an earlier article that Apple would drop prices and aggressively go after share when the China Mobile deal was announced.
This might be a reason for Apples low ASP guidance.
Full disclosure: I am long Apple AAPL and China Mobile CHL
Thanks HE. You're quite right I have omitted 3 weeks of sales for the iPad 4, a bad error on my part. That's probably another 500k-750k sales. Thanks for the correction.
Thanks Michael. I look forward to reading your next article.
I agree going below $300 makes the mini look a lot more affordable
Well said
I think BP is one of the few places you can find value in the market today. Although it's not without risk of course.
Disclosure: I am long BP
I can't agree with this article. Shareholders (who own the company after all) have every right to demand a return and contribute to how the company is run.
Apple has $150bn earning 1% a year well below the discount rate. By any measure this is an unnecessary amount of protection. It is unquestionably destroying shareholder value and we have every right to demand the capital be out to better use. Even if you don't agree with a buyback the cash should be put to better use.
As I've outlined in my article on this
Apple could very easily handle any debt and it would actually save cash from reduced taxation and dividend payments.
Disclosure: I am long AAPL