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Robert McDonald  

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  • The GT Advanced Technologies Debacle: Where Does Apple Go From Here? [View article]
    GTAT took on a state of the art problem making defect free iPhone 6/6+ size totally transparent sapphire (single crystal high purity Aluminum Oxide, Al203) at what must have been, by any earlier standard, bargain basement prices. This was a very high risk project and well beyond what had been the current state of the art. It's pretty obvious that GTAT failed to meet the milestones that they had signed up for and therefore they missed the funding deadlines required. This money was needed to pay their bills and led to the bankruptcy filing. I would imagine that they were not ready for a manufacturing ramp.

    By way of due disclosure: I ignored all the exhortations to buy GTAT as a lucrative new Apple suppliers because of the potential problems involved. At least I was right on this decision. Not all are so slam dunk.

    I do not hear analysts, other pundits and what may be naïve investors discussing what probably happened here. I doubt if many, if any, of these understand the extent of the state of the art the material science problems involved. I have a Ph.D. in Materials Science and over 25 years of experience in semiconductor manufacturing and R&D. I have some sensitivity as to what may have happened here.

    It's quite possible that the GTAT and Apple relationship was doomed to fail from the outset. This should have been done as a research project without commercial production deadlines. No one could have accurately assessed how long it might take to deal with the high volume manufacturing problems associated with large sizes of this exotic material. The difficulty of producing defect free material goes up exponentially as the size increases. Its one thing to make relatively small camera and fingerprint lenses. Its another to make watch size crystals and much more difficult to make the iPhone 6/6+ size aluminium oxide single crystal sheets required to replace the work horse Gorilla glass covering the display screen. Both sides should have been heads up to these issues.

    I suspect Apple did not understand the potential difficulties with manufacturing this state of the art material, at least at these sizes, and took a flying leap thinking they could squeeze the problem solutions out of GTAT. Apple was most likely mislead by GTAT management and scientists as the project advanced as so often happens on industrial problems like this. The difficulties and downside involved was probably minimized in GTAT presentations. Apple's no mercy business relationships with suppliers that are having trouble delivering components probably did not help.
    Oct 10, 2014. 05:03 PM | 20 Likes Like |Link to Comment
  • Apple Will Do A Television Set [View article]
    Thanks for your comments. TIVO is now going to be severely challenged by Comcast's Infinity X1 DVR with their iPhone and iPad Aps which provide well lighted remote that provides sophisticated search and voice command functionality. The DVR provides all of the other usual TIVO functions and even better has 500Gb of free on line cloud storage for all of the programs that you select to record and watch later or keep available for future repeat viewing. And even better than that you have instant world wide access to the stored programming replayed on your Apple devices using the Comcast Aps. I am having the X-1 system with DVR installed this afternoon and if it works as promised I will soon be retiring my 3 TIVO systems. Now Apple should be able to buy TIVO at a lower price as this new competition hits the bottom line.

    Too bad Comcast is such a poorly managed stupid company. It took two days and 3 hours of phone tree torture and endless holds to place an Comcast Infinity X-1 DVR order to upgrade my existing Comcast installation. In the process I received incorrect information from two different agents who were adamant that my existing TIVO would not work with the Infinity upgrade (WRONG AGAINST FCC REGULATIONS) and quotations that kept moving all over the map.
    Oct 7, 2014. 11:50 AM | Likes Like |Link to Comment
  • iPhone 6 Selling Poorly On China's Gray Market: Are Xiaomi, Lenovo Hurting Apple? [View article]
    This is all totally predictable. Scalpers took a chance as they only had guesses as to when the iPhone 6 would be cleared for legal sale in China. The amazing good news is that they are still at this point able to clear on their iPhone 6 inventory at a profit, or at least not lose gobs of money.

    The conclusions drawn by the author here are the only surprising part of this discussion. Take a few data points, extrapolate to the misleading, unfounded and ridiculous, and you have an SA article, just like an authentic Michael Blair copycat.
    Oct 6, 2014. 11:38 AM | 3 Likes Like |Link to Comment
  • Apple Will Do A Television Set [View article]
    PS: What I did say is that streaming is far from ready to meet routine viewer needs. I did not say Apple should solve that problem. What I did say was that if Apple has a successful home entertainment device that is going into millions of homes, the content owners will want to work with Apple to provide the content on a free or fee for service basis as it meets their needs. Apple is all set up to process any fees with the entry of a password or fingerprint tap.
    Sep 30, 2014. 04:57 PM | Likes Like |Link to Comment
  • Apple Will Do A Television Set [View article]
    You can't and that is one of my frustrations with streaming. Its not ready for prime time! You just can't get what you want .
    Sep 30, 2014. 04:53 PM | Likes Like |Link to Comment
  • Apple Will Do A Television Set [View article]
    Please read what I say carefully. I said nothing about Apple getting into the streaming business on its own or going into competition with Netflix. I am talking about a TIVO like hardware-software-video storage device that has access to cable TV and streaming content of all types. Apple provides the search and video programming functions (what to capture of the available sources including streaming and cable) as well as user friendly record and storage functions. They also can easily provide a back lit hand held control interface (iPhone, iPad, etc)
    Sep 30, 2014. 04:51 PM | Likes Like |Link to Comment
  • Michael Blair's Analysis Of Apple's 10 Million First Weekend Sales Is Way Off Base [View article]
    Michael Blair, the statement about management stock compensation is an unbelievably ignorant statement. If a company performs well, the stock goes up and the value of employee stock option grants and stock holdings goes up. Silicon Valley is a place where stock compensation is used to drive extraordinary employee. Maybe they did not know that at GE, or were you really a GE VP?

    Have you considered writing for a publication more appropriate for your musings? This is not the place to cast your FUD unless you enjoy all the negative feedback you receive.
    Sep 30, 2014. 03:19 PM | 3 Likes Like |Link to Comment
  • Apple's About To Release The Kraken And It Has A Very Long Tail [View article]
    Insightful article. Many authors miss the business reality you present. The fact so few people really understand or grasp the overall Apple business model is what keeps the trailing P/E at 15 or below vs. a more normal 20 for a successful Fortune 500 company. And given the 2.5% dividend, this makes Apple an unequaled long term growth and value stock opportunity.

    What is happening here is that Apple is building out on-going new secure user friendly capabilities of the internet that respect privacy and are being greatly enhanced by wireless accessibility. These capabilities are being enhanced by ability to store, search and easily handle terabits of data for pennies, local as (Bluetooth, NFC) as well as global communications and the addition of cheap local smart computerized analysis and control capabilities everywhere (the internet of things). The result is exponential growth given that there will be a few bounces here and there due to the dynamism of the market and its growth.

    What is happening here is that Apple is gaining monopoly share in a market that is growing at exponential rate while yesterday's companies like Google, Microsoft, Samsung, Intel (I have to say it being an alumnus), Oracle etc are just standing around with very few clues as to what is going on let alone know how or have the skills to do what Apple is doing. By the way, I see Facebook as complementary to Apple in its usage of the internet and the wireless web as the leading social media company. Both will enhance the growth of the other going foward.

    No competitor is even close to Apple in exploiting this huge opportunity and Apple is maintaining if not extending its multiyear lead.

    Of course there will be blips that will send ignorant investors or day traders scurrying. For example when Google Android and Samsung shamelessly copied the iPhone, and temporarily short-circuited Apple's lead in the device sales we now see that the limitations of their narrow focus and lack of focus on the customer experience we will inevitably see that thrust fall by the wayside as it is now. In the long term the high profit market share has been and will continue to be Apple's, so much so that they have been making the majority of available industry profits since the very first iPhone introduction with more than half the companies selling smart phones, selling them at a loss and leaving disappointed customers in their wake.

    Samsung did leave Apple a major blessing, a bipolar driven unbelievably rapid expansion of customer awareness and purchase interest exanding the market size much more rapidly than it would have expanded other wise. Now Apple has an even bigger worldwide market to expand within.

    All the unbelievers and naysayers create huge profit opportunity for folks like me who like to use longer term options as investment leverage. Returns of 50%-200% since 2009 market bottom have been routine with the exception of the irrational Sept 2012 to Mar 2013 selloff. However that yet again provided a great buying opportunity for many investors who were paying attention.
    Sep 29, 2014. 08:41 PM | 31 Likes Like |Link to Comment
  • Apple Will Do A Television Set [View article]
    The reality you say is here does not exist yet, far from it. I know I have an Apple TV, iPad and Macbook Air owner and a Netflix customer. I would love to go to full streaming as soon as possible but that is far from possible today, and I am constantly checking. Apple TV is a streaming device and not a sophisticated search, program and storage device. DVD's are far from dead. Netflix would love to have customers move to 100% streaming and has been trying to get that to happen for several years now. Why is have they failed? If you check you will find that there is all kind of material that is not yet available by on demand streaming via Netflix, via iTunes, or via any other source and may never be. And if and when it does come we will still be living in a hybrid world where the old way co-exists with the new for many years to come.
    Sep 29, 2014. 10:39 AM | Likes Like |Link to Comment
  • Apple Will Do A Television Set [View article]
    Apple has no need to make a "TV Set." All they need to do is to make a sophisticated set top box with video server and DVD player/recorder. After having multiple hard drive crashes with TIVO's losing months of stored content, I believe that Apple can easily sell an optional high margin backup device like they already have for Mac PC's. Combine Siri, the TIVO idea and make it a whole lot smarter with iPad equivalent control. Why you can even read the lighted iPad or iPhone screen in the dark unlike every remote control I have ever seen. And you could even use extra optional large fonts for the hard of seeing baby boomers like myself. Why you can even have Apple provide optional blue tooth hearing aid devices so you do not drive you wife crazy turning the volume up.

    Let other people run the high competitive video monitor low profit margin part of the business. That eliminates the objection most so called "analysts" have about Apple being in this business. Apple can be a reseller for the monitors without diluting margins or distraction. Apple can also be a reseller for the audio need including high mark up "designer" amps people like to waste their money on, just like they do on inferior Beats headphones that provides the "ompah" they like.

    Once they are in enough Apple TV control and storage systems in homes and it becomes even more obvious that the "Comcast model" is not even close to meeting peoples needs and is totally over priced, and plagued with problems (try their phone tree), then important content owners that have not come around will then do so.

    It is really very simple and Apple has all the off shelf technology it needs. Why it could even buy TIVO with small change to avoid patent problems and make the transition easier.
    Sep 27, 2014. 01:41 PM | Likes Like |Link to Comment
  • Apple: A Low-Risk Bet On $130B Of Earnings Within 10 Years [View article]
    Gregg,

    Great article. Thanks. Nice to see a well balanced analysis of Apple's prospects. Such articles are hard to find.

    Bob
    Jul 18, 2014. 05:15 PM | 17 Likes Like |Link to Comment
  • Weak Smartphone Markets May Disappoint The Apple Bulls [View article]
    I would make the statement a lot stronger. Anyone shorting Apple at this point for whatever reason they may come up with is not using sound analytics nor are they using good judgement. Short Michael Blair. Don't even give him the benefit of a click. If enough people stop clicking on his misleading articles the motivation for his postings will go away.
    Jul 13, 2014. 03:24 PM | 3 Likes Like |Link to Comment
  • Weak Smartphone Markets May Disappoint The Apple Bulls [View article]
    It is very simple Mr. Blair. The mobile market is highly dependent on new product launches. Superimposed on this are seasonal spikes in Dec and March quarters. Hello!

    On an overall worldwide scale, perceived softness at the high end is due to anticipation of Apple's Phone 6. Anticipation of Apple's new products has always caused marketplace slowdowns.

    Contributing to the perceived softness is the fact that the number one player up to now, Samsung, and their latest product, the S5, are failing in the market place. The S5 is failing because of a lack of innovation, ongoing dependence on Android crapware and as noted, the anticipation of Apple iPhone 6. Samsung's perceived softness in the marketplace is also due to their inability to compete at the low end and midrange in China due to highly competitive products made by companies like Xoami which even you have commented on.

    As to subsidies, the world will go on as it is with or without them. In the final analysis the customer either pays for the phone as part of his monthly plan he has with his service provider, full price upfront, or by some sort of financing plan. Any disruption due to changes in these policies is temporary. There has never been a free lunch.

    After all this time Mr. Blair, if you haven't learned the fundamentals of the mobile phone marketplace any better than you display in the above articel, I recommend you move your endeavors to another venue and stop burdening SA readers with your sensationalist headlines and misleading articles. And if you really are shorting Apple as many of us doubt, you deserve what you get.
    Jul 13, 2014. 11:29 AM | 12 Likes Like |Link to Comment
  • Myths Of Apple's iPhone Market Share [View article]
    The reality is that the majority of developers develop for Apple iPhone first and then for Android and there is no sign this is changing. To this day many very useful Tablet Aps have only been developed for Apple iPad and not for Android Tablets.

    Mark makes the same mistake Michael Blair makes. Over focus on market share numbers leads to incorrect unfounded conclusions time and time again.
    Jun 24, 2014. 02:22 PM | 7 Likes Like |Link to Comment
  • I Was Wrong About Apple [View article]
    Mr. Blair, What you don't understand is the power of Apple's devices in capturing customers. The iPhone 4S is a very expensive device in emerging markets, yet people will scrape up the money to purchase this 3 year old product rather than purchase a much cheaper phone powered by Android crapware. You also don't understand the power the Apple ecosystem brings to the iPhone user and power the ecosystem has in locking customers in while getting them to buy other Apple products like iPads and MACs. Once customers opt in they do not typically opt out.

    So many of the customers that purchased the 4S, many of whom are first time smart phone buyers, can be expected to buy more Apple products for the indefinite future. It is amazing how you try to turn good news into bad news by use of a bunch of fancy graphics you borrow from somewhere else. I have yet to see the collections of graphics that you like to use properly support the conclusions you try to make.

    There is a good reason many are predicting unprecedented sales for the iPhone 6 and a great year for Apple overall. I wonder what graphics you will be using then in efforts to support some new dire predictions for Apple.

    PS: How are your Apple "shorts" doing? If you really have the holdings you describe I think you are losing more than your shirt on your money losing shorts.
    Jun 9, 2014. 02:17 AM | 29 Likes Like |Link to Comment
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