Seeking Alpha

Robert McDonald

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  • Key Learnings From The Icahn Effect [View article]
    What we need is for Tim Cook to take lessons from Elon Musk and his ability to keep Tesla stock on an upward trajectory even a PE that many call outrageous and unstable. Nary a day, and never a week go by without some kind of output that keeps the stock pumped up or at least limits the extent of any sell offs.

    For example today TSLA got added to the MSCI World index which stemmed the recent fall. I have to believe that Elon might have made a suggestion or two as to why this should happen sometime ago.
    Aug 15 09:12 PM | 1 Like Like |Link to Comment
  • Key Learnings From The Icahn Effect [View article]
    I believe you are way off in the conclusion you have drawn. I doubt Cook revealed any information to Ichan that he did not already know.

    There is plenty of public information that says Apple's stock price is severely depressed. Indeed a more appropriate valuation, even as a just a plain old value stock would be a PE 15 which translates $600. And that is a conservative suggestion given the new product lineup expected in the next six and new product areas that are emerging including auto dashboard systems, wearables and expansion into entertainment including TV,movie and video streaming.

    Many investors simply do not understand the company and the businesses it is in and therefore think of it as having declining revenue and earnings like a Blackberry. Quarterly fluctuations yes but not declining overall.

    Apple is a very diversified company and goes beyond iDevces into a mobile web ecosystem including Aps, state of the art PC's, software, retail and entertainment.

    Apple is no Blackberry, Nokia, Samsung or Microsoft. The total available market to Blackberry and Nokia is much smaller than it is for the combined businesses Apple is in. Samsung is also limited in the areas where it overlaps wtih Apple as users become more educated on the limitations of Android in the Tablet market and for all devices in the enterprise and educational markets. Microsoft has the same problem due to its narrow view of what it takes to operate in the same businesses as Apple and they are not even close.
    Aug 15 09:01 PM | 12 Likes Like |Link to Comment
  • September 10 May Be A Great Time To Put On An Apple Short [View article]
    PS: By way of due disclosure, I remain long Apple stock and in long term call options
    Aug 14 04:19 PM | 2 Likes Like |Link to Comment
  • September 10 May Be A Great Time To Put On An Apple Short [View article]
    Market share changes by themselves are far from the right metric for measuring success, particularly in a rapidly growing and seasonal market, and where huge market share changes occur every few quarters depending on who has the latest device in the field.

    At this moment in time smartphone market share growth is dominated by low end. Apple does not play at the low end for very good reason and probably will never play due to the permanence of those reasons. Market share changes at the high end would be a more appropriate measure but are still complicated by the market growth factor, product introduction cycles and seasonality.

    Since successful investment strategies normally include who is making the most money and in particular earnings, market share growth, by itself, is a misleading at best metric. I know it seems to be the popular thing to do but popularity does not make it right in making a successful investment decision.

    The more appropriate measures in this case are total sales sales volume and revenue growth with earnings growth obviously a big added plus. Follow the money, not the unit volume vs. others or market share. That is off the mark. Even with reduced market share, Apple is still taking home more revenues and earnings than anyone else in the smartphone, tablet or PC market.

    Yes Apple has had what is like to be small temporary shrinkage in earnings on q-q basis but that can be attributed the fact that they are currently in product transition mode on all of their key products. With new software and a fully new product line up coming over the next six months, including a likely mid range iPhone, I do not think shorting Apple anytime soon is a very good idea.

    No matter how you slice it shorting Apple on Sept 10 is a very risky strategy but if you are going to do at least use the best metrics for making your decision. If you want to make the decision ignoring the full set of facts, fine, your loss. But I would not recommend it to others.
    Aug 14 04:08 PM | 6 Likes Like |Link to Comment
  • Carl Icahn Spells The End Of An Era At Apple [View article]
    The good news is that even "iCahn" cannot afford to buy enough stock to cause trouble. His words however are delivering a golden egg a little sooner than might be expected for the astute and patient investor.
    Aug 13 04:42 PM | 10 Likes Like |Link to Comment
  • Carl Icahn Spells The End Of An Era At Apple [View article]
    All he did was call attention to Apple's depressed valuation, something any astute investor should know. It was only a matter of timing.
    Aug 13 04:39 PM | 12 Likes Like |Link to Comment
  • Carl Icahn Spells The End Of An Era At Apple [View article]
    Yes and no we will not see Samdung or Android on the dashboard unless it has Google autodrive and maybe not even then.
    Aug 13 04:38 PM | 1 Like Like |Link to Comment
  • Apple: Some Momentum Before Earnings [View article]
    I fully agree with your observations and conclusions. Smart investors will be focused on the new products that will be delivered starting in September. Any hint of what those might be and a more definitive statement of when they might be available should help the stock. I'd say the latter is unlikely given recent history. A small June quarter beat will put a firmer $425 floor under stock valuation and a Sept quarter forecast that is lower than analyst expectations should already be baked in.

    Of course any surprises like China Mobile, an iWatch or second generation Apple TV would knock the ball out of the park. This kind of surprise is however very unlikely.
    Jul 22 01:53 PM | 2 Likes Like |Link to Comment
  • Apple Earnings Preview: It's Time To Deliver [View article]
    Apple's market share as measured by earnings is huge as compared to the competition. Ditto on Aps (where a lot of PC usage is going), internet traffic and commerce occuring over iDevices. Ads are just beginning as major revenue area, starting with iRadio.

    Android remains way behind Aps for tablets and will stay that way (talk to the developers). Andorid is also way behind on user privacy and malware protection. MSFT mobile and Blackberry are toast. Nokia only has the low end. No one else even comes close to Apple when it comes to the Ecosystem glue which will hold existing customers and grow new ones in the future.

    Folks buying an i4, i4S and soon lower cost iPhone will be net ads to the ecosystem.

    Apple will remain the high end king and now move into mid range. Market share by numbers by percentage has limited clout, especially since the smart phone market is still growing by leaps and bounds.

    Be aware or miss out. Nothing is as simple as % market share.
    Jul 22 11:53 AM | 3 Likes Like |Link to Comment
  • Apple To Stop Buying Processors From Samsung, But TSMC Might Not Deliver [View article]
    There is no sign Samsung is adopting Intel mobile chips on a widespread basis. Don't jump to conclusions. So far there is only one tablet design based on Intel. Everyone tries something at least once or twice usually. if for no other reason than to learn more about a competitor product. That is one of copycat Samsung's strong suits.
    Jul 2 08:35 PM | Likes Like |Link to Comment
  • Apple To Stop Buying Processors From Samsung, But TSMC Might Not Deliver [View article]
    Joelkatz, I see no basis for your statement.
    Jul 2 08:31 PM | 1 Like Like |Link to Comment
  • Apple To Stop Buying Processors From Samsung, But TSMC Might Not Deliver [View article]
    TSMC could not be more motivated to succeed in this contract. Intel was obviously not willing to make the necessary compromises and this is why they are still below 2% market share in mobile.

    There is no way Apple would make a blind bet on TSMC. You know that Apple would be fully aware of past TSMC process startup problems. You know they would have proof that the magnitude of earlier stumbles is not likely to be repeated, especially under Apple's watch. You know Apple has had total access to TSMC R&D efforts, process development status as well as wafer fabrication plants, both new and old. Apple would have required many credible demonstrations of capability before signing this agreement.

    Intel has just lost one big customer and is left with Samsung being the only other dominant player to sell its mobile devices to. Samsung has Finfet equivalent and 14 nm in development.and will never allow itself to be dependent on Intel for its mobile web processors and devices. Intel cannot cost effectively compete with Samsung's internal production costs and the lower cost of its engineering design staff.

    Samsung has fabs capable of meeting current and immediate future mobile device needs. These fabs will become underutilized as Apple moves out. By the time 14nm and Finfet are required for competitive reasons, Samsung will have their own internal production. They can also tap TSMC who will have a lot of their cost structure subsidized by the new Apple high volume requirements as well as ongoing ARM based device production with QCOM, BRCM Nvida and other customers.
    Jul 2 01:15 PM | Likes Like |Link to Comment
  • What iPhone 5 Discounts Could Mean [View article]
    There is always a big drop off in phone sales as new models are anticipated. Discounting the iP5 at this point makes all the sense in the world, is a good business strategy and is not a big deal. In fact since margins on this model will now be back to Apple's record highs it makes sense to maintain market share and to add new ecosystem members while raking in more earnings. The folks who buy now at discounted prices are not the ones holding out for the iP5S.
    Jun 25 01:14 PM | 16 Likes Like |Link to Comment
  • Apple's Phase 2A Is Complete [View article]
    WWDC was full of significant Apple innovations some of which many do not understand yet. I submit that this is a big factor in why the stock is down as result. This will course correct as we go forward.

    "What WWDC 2013 tells us about Apple"
    http://bit.ly/16ECOKe

    In addition to new products, new emphasis on iAd coupled with iRadio and other opportunities will drive earnings in a new high leverage way. Aren't well placed ads how Google makes most of its bucks? Isn't that what Facebook is trying to do? Isn't Apple well positioned to insert ads at strategic points in the iDevice user information stream? Aren't Apple Ap makers similarly positioned to capitalize on ads with Apple getting a cut? How about the use of in store and in city location information and iAds to provide useful high leverage ads to opt in iDevice users?

    “Apple's iPad dominates online shopping traffic & revenue generation”
    http://bit.ly/16ECNGj

    From the above article "Despite growing competition from other tablets, Apple's iPad still accounts for a whopping 89.28 percent of e-commerce website traffic, and also rakes in more money on a per-user basis than any other platform"

    Many do not understand that Apple is fully in control of its destiny and will soon resume its growth.

    “Editorial: Apple's billions are building an empire for the future”
    http://bit.ly/16ECOKp
    Jun 18 11:30 AM | 4 Likes Like |Link to Comment
  • Tim Cook's Tipping Point Boosting Apple Shares [View article]
    Thanks Jason for your continuing insights on Apple on SA and in particular in your newsletter on Apple and Tesla.

    If you saw Tim Cook up close and personal at the shareholders meeting as he spoke the words he spoke you knew he is a great CEO and Apple is lucky to have him. He is the durable CEO for the times Apple is now in.

    Tim Cook is not a Steve Jobs, but Jobs knowledge and management style were as unique and innovative as his products. His style was spot on for the times, but we are beyond those times now. Apple needs to be run like the more durable conventional large corporation it is and Tim Cook is the man.

    If you take the recent congressional hearings for example, Steve Jobs might have been a bit of a lose cannon and said some unpredictable and not necessarily the best things. Tim Cook was calm as a cucumber, well prepared and spot on in his commentary. The end result has been widely acclaimed by Apple critics as well as fans.

    Comment for Jason: Why do you always use short term options in your trading strategies with all the inherent risk and no room for recovery if something goes wrong? The short term trading problem plus some bad decisions on spread strategies was what took Zaky down. I was a subscriber to his newsletter and watched the whole process unfold. I could not believe a smart knowledgeable guy like Zaky lost his discipline so badly.

    Note that you can buy Jan 2014 and 2015 LEAPs on TSLA and APPL for a little more money, approximately 20% of stock value for the 2015's. If you feel you need to trade them on a short term basis as you usually do based on limited visibility stock prognosis, the extra premium is fairly well preserved and you get your money back. If you have a little patience you will make more money in the long term by trading on a somewhat longer term basis.

    And of course all bets are off on any long strategy in something like the recent Wall Street/hedge fund induced crash Apple experienced starting in Oct. The stock became way oversold and remains oversold. Any Apple investor needs to have learned that you have to watch these guys very closely in the future. No strategy works when these guys have large holdings and try to drive the stock one way or the other unless you second guess what they are doing.

    The other suggestion is to add a way to give you commentary and feedback on your web site or via feedback to your newsletter vs. in a forum like this. I for one could have helped you with some additional insights on more than one occasion. I think you might find a few of my comments as well as those of other readers useful.
    May 24 12:15 PM | Likes Like |Link to Comment
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