Not Sure About Apple? Buy Qualcomm Instead [View article]
I own both companies in the form of stock as well as long term options called LEAPS. QCOM is a very well run company with solid technology including 3G and 4G LTE patents. It has great business prospects and solid financials. QCOM in key high end chip supplier strongly benefiting from the mobile web buildout. They are not only designed into Google Android and Apple but provide the high end processor and communications control chips in Windows 8 phones. They will gain from the success of all key mobile web players including mobile phones and tablets. QCOM does have some jeopardy with Apple as Apple takes on more responsibility for its own processor and chip design as well as manufacturing -- this should not be ignored. And then there is of course the Intel Atom but so far this has not been a real threat.
My bigger bet however is on Apple by a very large factor, especially at this point in time. Apple may finally be about to split the stock and issue a dividend after the next BoD meeting which occurs just before the Feb 23 Sharteholders meeting.
Why now? Obviously Apple's unprecedented and durable financial performance and the $100B in cash and cash equivalents in the bank are strong driving forces that make these totally appropriate and if not obligatory to the shareholder actions. There is also the likelihood that Apple will double iPhone sales in 2012 due to the addition of China with a huge customer base and more than small possibility that Apple will introduce the Apple "TV" or digital living room as it is now being more appropriately called:
A big factor will be Steve Jobs absence. The empirical evidence shows that he opposed dividend, buy back and split actions due to his perception of a potential negative effect on employee hard work as they achieved enhanced financial enrichment via stock option gains. He actually resisted stock option additions for some key employees. Obviously there is validity to the concern but I believe he was overly paranoid on this count as demonstrated by the successful examples at many other highly Silicon Valley companies. Steve Jobs also made it quite clear he was not doing what he was doing for additional financial gain, the exception to the rule.
Apple now has a new BoD member, Bob Igor Chairman and CEO of Disney. He has demonstrated that he favors stock dividends and stock buybacks.
If these factors were not enough, a lot of money management firms holding Apple stock are at their limits for a single position. If Apple were a dividend paying stock there are many additional money managers who could add positions and possibly increase the positions they have. I would also assume some ETF'S and other investment vehicles would be allowed to start or add to existing postions as well.
Finally there is the small investor and some big ones, who take one look at the current stock price and suffer sticker shock. They come to the incorrect conclusion that Apple is too expensive! I have had many friends and associates tell me this amazingly as these are all well education and knowledgeable people. Ma and Pa just aren't comfortable putting up $10,000 and only getting 20 something shares.
My bet is that Apple will announce something like a 5:1 split and a 1-2% dividend by the end of the month. They may alsoor alternatively do a stock buyback but that usually has no benefit to shareholders (witness MSFT and CSCO). Let's hope wiser heads prevail on the latter.
I plan to remain fully invested in my current Apple position until at least after the shareholders meeting and probably beyond. I do not think we are going to have the big flat spot in Apple valuation that lasted from February to July of last year. This flat spot was largely due to worry over the Eurozone, and failing some equivalent problem, I am a firm believer that we are on our way to $50/share in earnings and a $650 share price (pre-split valuation) by the end of 2013 or even sooner.
Amazon: Determined To Continue Its Assault On Apple [View article]
I think you are stretching to make points which are inaccurate and misleading. There is lots of evidence you do not understand the real differences between the Kindle Fire and the iPad and I am not about to try to educate you here. I also note that you are not being forthcoming about Amazon's outrageous valuation and are ignoring the risk of holding this stock. A responsible analyst highlights the downside possibilities as well as the good points. The risk reward ratio in holding Amazon is way out of line vs. many other investments. The stock price is way too high just as it was for Netflix leading up to its recent peak and then when bust.
'Let's Talk' iPhone 5 Is A Game Changer [View article]
As the APPLE iCloud becomes a more dominant feature on the mobile we, as it may be on the iPhone 5, quick file download will be more important It is will also be very useful to gamers and video watchers. Other than these utilities, LTE is a nice to have but not a "game changer". Right now it is more of a sales gimmick that a useful freature.
Apple Bears Come Out of the Woodwork [View article]
I really do not like what the market manipulating analysts do but since they are there the savvy investor will be up to speed on his prime stocks and reputable sources of information plus the other type, of which Apple is one for me, and have a sense when things are being driven down inappropriately. This is a great time to add to Apple holdings.
In the 80's and 90's there used to be this guy named Joe Kurlak, an analyst on the payroll of Merrill Lynch, who for some reason had become the analyst to listen to on Intel. I suspect this happened because this was one of the louder voices and we did not have Internet source like Seeking Alpha or Fortune and Barron tech blogs to help sort the noise. I bought Intel LEAPs on many occasions when he was pounding the stock and made a nice bit of money on his pronouncements.
I am convinced that the savvy individual investor who can sort the truer signal from the noise greater than 70% of the time, has a very good chance of beating most investment managers of all types with the possible exception of some very savvy hedge funds.
For those who have the time to do the prerequisite research, the playing field is much more level it has ever has been
TiVo: Quite an Attractive Short Candidate [View article]
Why wouldn't AAPL want to buy TIVO? Their software and patents would appear to be a shoe in for use in Apple's entertainment center that must be in the pipeline. It makes a lot more sense than buying NETFLIX at its current 77:1 P/E. If anyone knows the answer, please pipe up for the benefit of everyone reading this thread..
Where is the "the most original content and intuitive thinking on the Street" that you two say you deliver? What is your opinion on Apple? Is this just a way to troll SA readers for information that you can give your clients or is this just a way to get people over to your fee for service web site?
Earnings Preview: Citigroup, Charles Schwab, IBM and Apple [View article]
I would estimate that Apple's December quarter earnings could be as high as $6.50/share, or 20-30% above what the professional market analysts are currently saying. My calculation is based on using the simple assumption that Q1 will be up at least 40% vs. Q4 2010. This is a conservative estimate versus the Q1 2010 to Q4 2009 comparison in which earnings per share were up 37%. Why is this estimate conservative? The Q1 '09 to Q1 '10 quarter to quarter gain did not have the iPAD contribution, the many worldwide product roll outs that have occurred since then nor does it allow for increasing enterprise sales (business vs. consumer) success.
Using a forward average run rate of $6.50 per quarter and a very conservative price to earnings ratio of 20 to 1, the stock just might go to $520 per share in the next 12 months, or $100 or about 25% above the current Goldman Sachs estimate. This of course ignores the likelihood that Apple will continue to grow its earnings over Fiscal 2011 at a rate that it has in the last couple of years.
2011 growth engines with significantly increasing momentum include the Verizon iPhone, the totally new IPAD product that everyone is trying to emulate, Apple's penetration into the enterprise and it's increasing sales worldwide, particularly in Asia. This ignores the new North Carolina server farm and possible new cloud computing initiatives that you have to believe that Apple must be thinking about.
Intel has a fundamental problem. Intel's moat and unique core competence is in the manufacture of high ASP (average selling price), high margin, complex X86 microprocessers with 500 million plus transistors. The Atom processor that runs mobile and tablet devices only has 47 million transistors and cannot be sold at these kinds of prices and margins. The ARM processor has a similar transistor count. In other words the ARM chips, with a factor of 10 less complexity than X86 processors, can be manufactured by many semiconductor companies and are sold with a correspondingly low ASP. The Atom chip competition is ARM and cannot be sold at high prices for this reason. Every Atom that Intel sells competes with or undercuts X86 sales and is a significant potential earnings loss to Intel. This is not a good situation l and it remains to be seen how Intel will deal with this problem.
25 U.S. Stocks With High Emerging Market Exposure [View article]
GE has a long way to go before it can re-establish itself as a good investment. They played right along with the Financials in making bad financial investment decisions that cost all of its shareholders dearly both in terms of stock price and dividend payouts. Up to and including this time period they also took their eye off of their technical and manufacturing core competencies and are now behind foreign competition. Siemen's for example cleaned up their house over the last several years and is now making major inroads in the emerging markets unlike GE. GE also recently lost a major nuclear power station contract in Dubai to the Koreans. GE has a new opportunity as part of China's plan to build an unprecedented number of nuclear power plants along its coastline over the next decade. If GE can get a decent share of that business this is one way they can prove that they are a good investment again.
The on-going cry for Apple to pay dividends continues unabated. I am glad that the company does not have to patronize its stockholders by paying dividends vs. giving stock holders real long term value.
For one, I would imagine Apple will start up a lot of server farms around the world using their own cash funds vs. taking out option limiting debt. They will be able to do this without breaking a sweat unlike some of their competitors This would be a much better investment for stockholders than paying a dividend.
I also have full confidence that Apple has business plans in place that will make these server farms pay off handsomel. The first one in North Carolina starts up by year end. The tools are now in place with some pretty good ones provided by Apple (see below), to begin a major migration of many computing needs as well adding new applications that are either optimized or enabled by the cloud.
I submit that the Apple Macbook Aire is the first Laptop PC designed for cloud computing since it is offered with no on board hard drive. The full power of the Apple iPAD Tablet , a revolutionary “computing” device, is also enabled by the cloud. CITRIX took out a full page ad today in the local San Jose Newspaper announcing that a “Citrix Receiver" that will enable the iPAD to run Windows! They have just done the same for the just announced Google Chrome Laptop. This is the second Laptop PC, if you can call it that (these things used to be called smart terminals) that is designed for the cloud and in this case it is totally cloud dependent.
I have to believe that there are many other ways that Apple can spend its cash to provide great returns for investors. Their efforts in revolutioning the home entertainment experience for example have started. I have to believe they might be thinking of a one box does everything except the video display and the speakers.
Thinking out of the box, how about an Apple spin off, engineered to minimally tax the energies of the existing management, that exploits Apple’s design methodologies and manufacturing skills in other potential high profit areas. Beyond home entertainment this might include green home control systems, home appliances or fully automated automobile control systems with dashboards that display and do all the relevant things in the easiest, most user friendly, most efficient, safest way. The possibilities are endless.
Apple is one of the best managed companies I know of and their capabilities beyond entertainment and computing remain untested . Let’s let them decide how to best deploy their cash and lets hope they look at some of the outside of the box opportunities that might be possible. I have every reason to believe that the stock holders will come out ahead if they pursue such opportunities.
My Contrarian Bones Are Still Attracted to Bank Stocks [View article]
Just because the government cannot let the big banks fail doesn't mean they are going to be allowed to go back to the business models that produced all the high earnings and bonuses that they used to have. At least let's hope not.
These business models should never have been tolerated in the first place. Yes there are lots of reasons for the meltdown but one of the traditional jobs of banking in the past has been to provide adult supervision in the lending marketplace (no one gets a mortgage who does not have proof that they can pay for it). Their abuse of their corporate charters wiped out millions of dollars in American 401K valuations and at the same time depressed home valuations well below where they would have been. The excessive bubble produced by all the money that was made available wiped out many homeowners that otherwise might have been able to keep their home -- it would be interesting to see the numbers if anyone has them.
All banks including big ones are currently on life support or government welfare or whatever else you want to call it. The Fed loans them money at next to zero interest and they re-loan it out at interest rates from 5 to 30% (the current range for home loans to credit cards). How else are they going to pay for all the undeclared losses unless they float more stock or sell off assets that may have some value?
Foreclosures have not peaked nor have liabilities and bad debt been accounted for. Unless you can reconcile that the off the balance sheet potentially toxic assets the large banks are holding will not affect future earnings or force dilution of their stock I would stay away from their stocks.
A Huge Rally for Equities Coming in 2011 [View article]
We are nowhere near the frothy levels of the dot.com bust of 2000. AAPL and GOOG for example are still trading at a PE of 20:1 on forward earnings and they not only have real earnings, they are growing their revenues and earnings in double digits. They also have durable business models that have been demonstrated to work quite successfully. As if that is not good enough they are successfully adding new elements to these business models as they go forward. Those who think this market is too expensive can stand aside but you do so at your own risk. The rest of us will benefit that much more when the naysayers finally realize that they must get back in the market or be left behind.
What We'll Do After Apple Announces Blowout Quarter [View article]
You are forgetting that AAPL has a huge opportunity as it starts to capture more and more of MSFT's PC business and to expand the IPAD business as a new innovative computer product. That momentum has only just begun.
Will Financials Be Joining the Party Anytime Soon? [View article]
One final comment. We need to stay aware of the fact that America's difficulties are not shared in the same way by the rest of the world and it is easy to overfocus on this. America no longer dominates world economic activity and its success. There are lots of good reasons to invest in US stocks with large international exposure, except financials, and to invest in places like Asia and India, see for example the performance of the Matthews Asian funds. If you overfocus on what is going on in the US, you will miss out on great offshore investment opportunities where some of the safest investment vehicles include US multinationals.
Not Sure About Apple? Buy Qualcomm Instead [View article]
My bigger bet however is on Apple by a very large factor, especially at this point in time. Apple may finally be about to split the stock and issue a dividend after the next BoD meeting which occurs just before the Feb 23 Sharteholders meeting.
Why now? Obviously Apple's unprecedented and durable financial performance and the $100B in cash and cash equivalents in the bank are strong driving forces that make these totally appropriate and if not obligatory to the shareholder actions. There is also the likelihood that Apple will double iPhone sales in 2012 due to the addition of China with a huge customer base and more than small possibility that Apple will introduce the Apple "TV" or digital living room as it is now being more appropriately called:
http://bit.ly/u1v9Tz
A big factor will be Steve Jobs absence. The empirical evidence shows that he opposed dividend, buy back and split actions due to his perception of a potential negative effect on employee hard work as they achieved enhanced financial enrichment via stock option gains. He actually resisted stock option additions for some key employees. Obviously there is validity to the concern but I believe he was overly paranoid on this count as demonstrated by the successful examples at many other highly Silicon Valley companies. Steve Jobs also made it quite clear he was not doing what he was doing for additional financial gain, the exception to the rule.
Apple now has a new BoD member, Bob Igor Chairman and CEO of Disney. He has demonstrated that he favors stock dividends and stock buybacks.
If these factors were not enough, a lot of money management firms holding Apple stock are at their limits for a single position. If Apple were a dividend paying stock there are many additional money managers who could add positions and possibly increase the positions they have. I would also assume some ETF'S and other investment vehicles would be allowed to start or add to existing postions as well.
Finally there is the small investor and some big ones, who take one look at the current stock price and suffer sticker shock. They come to the incorrect conclusion that Apple is too expensive! I have had many friends and associates tell me this amazingly as these are all well education and knowledgeable people. Ma and Pa just aren't comfortable putting up $10,000 and only getting 20 something shares.
My bet is that Apple will announce something like a 5:1 split and a 1-2% dividend by the end of the month. They may alsoor alternatively do a stock buyback but that usually has no benefit to shareholders (witness MSFT and CSCO). Let's hope wiser heads prevail on the latter.
I plan to remain fully invested in my current Apple position until at least after the shareholders meeting and probably beyond. I do not think we are going to have the big flat spot in Apple valuation that lasted from February to July of last year. This flat spot was largely due to worry over the Eurozone, and failing some equivalent problem, I am a firm believer that we are on our way to $50/share in earnings and a $650 share price (pre-split valuation) by the end of 2013 or even sooner.
Amazon: Determined To Continue Its Assault On Apple [View article]
'Let's Talk' iPhone 5 Is A Game Changer [View article]
Apple Bears Come Out of the Woodwork [View article]
In the 80's and 90's there used to be this guy named Joe Kurlak, an analyst on the payroll of Merrill Lynch, who for some reason had become the analyst to listen to on Intel. I suspect this happened because this was one of the louder voices and we did not have Internet source like Seeking Alpha or Fortune and Barron tech blogs to help sort the noise. I bought Intel LEAPs on many occasions when he was pounding the stock and made a nice bit of money on his pronouncements.
I am convinced that the savvy individual investor who can sort the truer signal from the noise greater than 70% of the time, has a very good chance of beating most investment managers of all types with the possible exception of some very savvy hedge funds.
For those who have the time to do the prerequisite research, the playing field is much more level it has ever has been
TiVo: Quite an Attractive Short Candidate [View article]
Louis Navellier's Market-Beating Stock Picks [View article]
Apple: Buy or Sell? [View article]
Earnings Preview: Citigroup, Charles Schwab, IBM and Apple [View article]
Using a forward average run rate of $6.50 per quarter and a very conservative price to earnings ratio of 20 to 1, the stock just might go to $520 per share in the next 12 months, or $100 or about 25% above the current Goldman Sachs estimate. This of course ignores the likelihood that Apple will continue to grow its earnings over Fiscal 2011 at a rate that it has in the last couple of years.
2011 growth engines with significantly increasing momentum include the Verizon iPhone, the totally new IPAD product that everyone is trying to emulate, Apple's penetration into the enterprise and it's increasing sales worldwide, particularly in Asia. This ignores the new North Carolina server farm and possible new cloud computing initiatives that you have to believe that Apple must be thinking about.
Disclosure: I am long AAPL
So Long Wintel, Hello GARM? [View article]
25 U.S. Stocks With High Emerging Market Exposure [View article]
Stars Continue to Align for Apple [View article]
For one, I would imagine Apple will start up a lot of server farms around the world using their own cash funds vs. taking out option limiting debt. They will be able to do this without breaking a sweat unlike some of their competitors This would be a much better investment for stockholders than paying a dividend.
I also have full confidence that Apple has business plans in place that will make these server farms pay off handsomel. The first one in North Carolina starts up by year end. The tools are now in place with some pretty good ones provided by Apple (see below), to begin a major migration of many computing needs as well adding new applications that are either optimized or enabled by the cloud.
I submit that the Apple Macbook Aire is the first Laptop PC designed for cloud computing since it is offered with no on board hard drive. The full power of the Apple iPAD Tablet , a revolutionary “computing” device, is also enabled by the cloud. CITRIX took out a full page ad today in the local San Jose Newspaper announcing that a “Citrix Receiver" that will enable the iPAD to run Windows! They have just done the same for the just announced Google Chrome Laptop. This is the second Laptop PC, if you can call it that (these things used to be called smart terminals) that is designed for the cloud and in this case it is totally cloud dependent.
I have to believe that there are many other ways that Apple can spend its cash to provide great returns for investors. Their efforts in revolutioning the home entertainment experience for example have started. I have to believe they might be thinking of a one box does everything except the video display and the speakers.
Thinking out of the box, how about an Apple spin off, engineered to minimally tax the energies of the existing management, that exploits Apple’s design methodologies and manufacturing skills in other potential high profit areas. Beyond home entertainment this might include green home control systems, home appliances or fully automated automobile control systems with dashboards that display and do all the relevant things in the easiest, most user friendly, most efficient, safest way. The possibilities are endless.
Apple is one of the best managed companies I know of and their capabilities beyond entertainment and computing remain untested . Let’s let them decide how to best deploy their cash and lets hope they look at some of the outside of the box opportunities that might be possible. I have every reason to believe that the stock holders will come out ahead if they pursue such opportunities.
My Contrarian Bones Are Still Attracted to Bank Stocks [View article]
These business models should never have been tolerated in the first place. Yes there are lots of reasons for the meltdown but one of the traditional jobs of banking in the past has been to provide adult supervision in the lending marketplace (no one gets a mortgage who does not have proof that they can pay for it). Their abuse of their corporate charters wiped out millions of dollars in American 401K valuations and at the same time depressed home valuations well below where they would have been. The excessive bubble produced by all the money that was made available wiped out many homeowners that otherwise might have been able to keep their home -- it would be interesting to see the numbers if anyone has them.
All banks including big ones are currently on life support or government welfare or whatever else you want to call it. The Fed loans them money at next to zero interest and they re-loan it out at interest rates from 5 to 30% (the current range for home loans to credit cards). How else are they going to pay for all the undeclared losses unless they float more stock or sell off assets that may have some value?
Foreclosures have not peaked nor have liabilities and bad debt been accounted for. Unless you can reconcile that the off the balance sheet potentially toxic assets the large banks are holding will not affect future earnings or force dilution of their stock I would stay away from their stocks.
A Huge Rally for Equities Coming in 2011 [View article]
What We'll Do After Apple Announces Blowout Quarter [View article]
Will Financials Be Joining the Party Anytime Soon? [View article]