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Michael Comeau is a writer based in Brooklyn, NY. Michael spent 2004 through 2008 at TheStreet.com, starting out as a member of Jim Cramer's research team. Before long, he became a featured columnist across the company's network of sites, and managed a highly-successful investment newsletter... More
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  • 3 Reasons Apple Will Survive the PC Industry Downturn
    Scenes From an Apple Store

    The PC industry saw two very important things happen this week:

    1) IDC said that tablets like the Apple (AAPLiPad will drag hard-drive demand down by 2-3% this year.

    2) Both Samsung and Micron (MU) noted weak DRAM memory pricing trends, which are dragging on both company's earnings.

    Now remember, back on July 14th when PC's were still hot, Intel (INTC) CEO Paul Otellini said the following about his company's Q2 performance:

    "In Q2, Intel posted its best quarterly results ever as the economics of the world continue to reflect renewed economic momentum."

    Fast forward six weeks to the company's August 27th mid-quarter update, and Intel was forced to lower its Q3 revenue and gross-margin guidance due to “weaker than expected demand for consumer PCs in mature markets.” AMD (AMD) made similar comments on September 23rd.

    The memory makers confirm the trend - the PC downturn that basically came out of nowhere in August is still in effect.

    Now here's how Gartner pegged PC industry growth in recent quarters:

    Q3 2009 +0.5%
    Q4 2000 +22%
    Q1 2010 +27%
    Q2 2010 +21%
    Q3 2010 ??? (but looking like crap)
    Q4 2010 ??? (lapping +22% number)

    Now we know that Q3 of this year is looking like crap - but look at how quickly industry growth surged from Q3 to Q4 in 2009.

    That means the PC industry is right about to lap three quarters of 20%+ growth during an economic slowdown, precisely when more interesting and disruptive mobile devices like the Apple (AAPLiPad and Amazon (AMZNKindle are taking off, taking consumer mindshare along with them.

    If the PC industry slowed so much during the key back-to-school period, how's it going to do in the all-important holiday season? The numbers are bound to look like crap relative to Q4 of last year.

    However, Apple seems well-positioned to weather the storm:

    1) The iPad's better-than-expected sales gives Apple something a cushion when it comes to hitting the numbers.

    2) College students are rapidly switching to Apple, which will offset some of the broader industry weakness.

    3) Those weak memory prices will boost Apple's gross margins. Remember, Apple doesn't regularly cut prices the way commodity makers like Dell (DELL) and Hewlett-Packard (HPQ) do. . That entry-level Macbook will be $999 no matter how cheap the guts inside get.



    Disclosure: long AAPL
    Oct 08 11:20 AM | Link | Comment!
  • PC's Still Stink While the iPad Soars

    If you’ve been reading my stuff on Minyanville, then you know that I’ve been very bearish on the PC industry.

    Here are some of my recent headines:

    July 7 – Why It’s Time to Dump PC Stocks

    August 20 – Six Reasons PC Stocks Haven’t Bottomed Yet

    September 1 – Why Merger Mania is Bearish for PC Stocks

    And here’s what AMD (AMD) said in a press release yesterday afternoon:

    AMD today announced that it expects revenue for the quarter ending September 25, 2010 to be in the range of down one to four percent as compared to revenue of $1.65 billion for the quarter ended June 26, 2010. The sequential decrease is due to weaker than expected demand, particularly in the consumer notebook market in Western Europe and North America.

    AMD actually traded up fractionally after hours – indicating that this revelation wasn’t exactly a surprise to the market.

    On August 27, Intel (INTC) said third-quarter revenues would come in at $10.8 to $11.2 billion, just a month after giving exceedingly bullish guidance of $11.2 to $12 billion — a reduction of 13% at the midpoint.

    So needless to say, AMD cutting guidance isn’t a surprise – we’ve known for a while that back-to-school PC sales aren’t going so well.

    But even though the market is pricing in at least some of the slowdown in PC’s, the market is likely to deteriorate even more.

    In the third quarter of 2009, Gartner said that global PC unit growth was 0.5%. Over the next three quarters, growth was 22%, 27%, and 21% — much better than Gartner had expected.

    And now all of a sudden, PC demand is deteriorating at exactly when the year-over-year comps start to get tough.

    Plus, no one can deny that the Apple (AAPL) iPad is having an impact on PC demand.

    Best Buy (BBY) CEO Brian Dunn said last week that the iPad was cannibalizing notebook demand by up to 50%. I assume Dunn’s revelation ticked off Best Buy vendors – so that statement was quickly retracted.

    Plus, iPads continue to sell at a big premium on Amazon, and PiperJaffray analyst Gene Munster just raised his 2011 iPad sales forecast by 50% to 21 million units.

    The Takeaway?

    PC’s stink, iPad rules.

    disclosure: long AAPL



    Disclosure: long AAPL
    Sep 24 8:06 AM | Link | Comment!
  • iPads Selling for $100 Premium on Amazon.com
    The so-called war between Adobe (ADBE) and Apple (AAPL) over the latter's refusal to integrate flash technology on its iPhone and iPad products is still heating up - but there's no indication that the battle is taking a toll on the sales of Apple products.

    In Apple's fiscal fourth quarter, which ended in March, it smashed analysts' expectations by selling a whopping 8.7 million iPhone units, up 131% year-over-year.

    The iPad has also seen its star rise, having moved over 1 million units in its first 28 days of sales.

    What's more is that iPad demand is so hot that they are actually selling for a premium on Amazon.com.

    Amazon itself does not stock the iPad. However, third-party sellers do, possibly as a result of buying iPads directly from Apple stores to resell them at a profit.

    This isn't uncommon for hot consumer electronics products. For example, the Nintendo Wii was selling at a huge premium on eBay (EBAY) and Craig's List after its 2006 launch.

    As of the time I'm writing this, the 16 gigabyte Wifi-only model is selling for $599 and up while the 64 gigabyte version starts at $799.99.

    These are $100 premiums over Apple's own selling prices, even though it is unclear whether Apple will honor the warranties on devices sold through nontraditional channels.

    That doesn't seem to matter to anyone though - both the 16 and 64-gigabyte iPads are clocking in the top 15 position on Amazon's computer and accessories best-seller list.

    The verdict - Apple's marketing and product positioning are so strong that consumers just don't care about the lack of Flash capabilities in Apple's mobile devices. The proof is in the pudding, and the pudding looks like a big fat pile of cash for Steve Jobs & Co.

    Disclosure: long AAPL



    Disclosure: long AAPL
    May 14 8:48 PM | Link | Comment!
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