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  • Will Apple Exist 3 Years From Now? How Much Will It Be Worth? [View article]
    This is a good article and makes some excellent points to get started with. Hopefully future articles could consider where Apple might go in the future.

    The article so far makes the argument that Apple does not have much of a moat, but is this really true?

    The history of computer operating systems, especially for portable devices suggests that only huge multinationals like Google, MSFT, and AAPL can ever develop and maintain operating systems over the long term due to the immense complexity of such an undertaking--so it will be very hard for any newbie to break in and develop a rival to Android, Windows, or iOS.

    The future of Apple might therefore lie in the direction of expanding the reach of its operating systems to licensing its use in the products of other original equipment manufacturers. Since AAPL already bears the cost of maintaining its operating systems for its own devices, margins would be astronomical though limited only by the need to compete with the free-to-manufacturers, though erratic Android.

    The other obvious area for Apple expansion is into the area of business and enterprise (education, government, military, healthcare) computing.
    Feb 22, 2013. 10:58 AM | 2 Likes Like |Link to Comment
  • Apple: Is Tim Cook The Next Steve Ballmer? [View article]
    Bit of a difference. Ballmer was a college pal of Gates at Harvard and was employee #30 when he joined MSFT in 1980 as business manager. He dropped out of an MBA program to join MSFT at the age of 24.

    When Microsoft was incorporated in 1981, Ballmer owned 8 percent of the company.

    So he was more or less one of the founders of the company. No he wasn't a programing wiz like Gates, but for all we know a lot of the business strategy of the company may have come from Ballmer as much as from Gates and he may have played a large part in getting the company from a small start up to a huge multinational.

    Cook got his MBA at Duke and spent 12 years at IBM, presumably at the part located down the road from Duke, near Durham, N.C.

    One gets the impression that Ballmer is more of an all around intellect than Cook who comes across as very "focused" on business.

    Cook was first hired at Apple as with a mandate to clean up the atrocious state of Apple's manufacturing, distribution, and supply apparatus.

    Cook is credited with pulling Apple out of manufacturing by closing factories and warehouses around the world. This helped the company reduce inventory levels and streamline its supply chain to match the efficiency of Dell Inc., dramatically increasing margins. Cook has been quoted as saying "You kind of want to manage it like you're in the dairy business. If it gets past its freshness date, you have a problem". [Wikipedia].

    So Cook is the business efficiency guy, yes, but not much to suggest that he is a creative genius or leader of men. (Maybe he is, but there isn't much in the public forum to suggest this is so.)

    Ballmer was there from the start, but his strategic decision making as CEO has been suspect.

    I do agree that Cook's leadership ability may be suspect. He may have great critical ability to see what is wrong with a process and how to improve it, but this doesn't necessarily parlay into any visionary qualities regarding products.

    Jobs' greatest ability was probably that he could visualize products that he would like for himself and inspire other people to get them made so they might be enjoyed by others. His ability to run a large corporation on a day to day basis may have been overestimated, and had he not been a founder of the company, I doubt whether he would have risen in the corporate structure.
    Feb 20, 2013. 10:29 AM | 8 Likes Like |Link to Comment
  • What Will Apple Do With That Cash? [View article]
    It might well be in Apple's interest to use some of the cash to set up subsidiaries that make loans to consumers to buy Apple products, said loans to be repaid in installments.

    General Motors had or has a wing called General Motors Acceptance Corporation (GMAC) that did/does the same thing for their cars.

    Of course the big problem in developing markets would be determining the credit worthiness of customers and having viable enforcement methods of dealing with defaulters and fraudsters.

    However there is already some infrastructure in place in India for getting car loans, described at the link below and something similar could be used for phones, the only problem being that cars are probably easier to repossess.

    http://bit.ly/XICqDq

    Perhaps Apple should sell iPhones and computers at car dealerships. As long as the return on cash outlay was better than 2%, it could not be said to be a loser, and the products could be sold at high margins to compensate for defaults.
    Feb 18, 2013. 08:30 AM | 1 Like Like |Link to Comment
  • Apple - Why We Are Changing Our Stance From Bearish To Bullish [View article]
    Apple is a great company that makes great products and is efficiently run, so what is not to like?

    I think the great fear is that Apple has succeeded in making abnormal profits by selling its iPhone in North America and in some other developed markets via two-year contracts with the financing provided to the end consumer by the carriers in a manner that partially conceals the true price of the device.

    This has been possible because public demand for the iPhone has been so great that the carriers have been forced to provide them at a greatly subsidized price, albeit at the cost of making monthly payments for phone calls and data in the US, Apple's primary market, much higher than in most countries, and higher than most middle class customers in most world markets would or could afford to pay.

    When the iPhone market expanded from just AT&T to include Verizon and then Sprint, sales at these massive margins exploded, generating billions in profits, while at the same time selling in huge numbers to the most affluent few percent of customers in overseas markets.

    The question now is whether the explosion can continue to explode or whether cheaper competition plus market saturation for $700 devices will slow down growth in profits, or even move into negative growth and if so, by how much. No one can really answer these questions, so there is a great deal of uncertainty at the moment.

    It is not inconceivable that when quarterly earnings are announced again in April, that if they are at all disappointing, there will be a further slump in the stock price, though if the report is good or exciting news is released, the stock could easily burst through the $500 level and move up towards $600.

    At the present time I am very happy to sell $400 puts and put spreads, because even if the stock goes below $400 and these trades lose me money, I would be delighted to roll them forward to lower prices at longer dates, and if that fails, to load up on the stock at substantially less than $400.

    However I don't think that will happen. My prediction, for what it is worth is that we will see AAPL at $500 before we see it at $400. If this is correct, I will make a lot of money, and if I am wrong, I will be delighted to load up on AAPL stock and go overweight at less than $400.

    Looks like win-win to me.
    Feb 15, 2013. 12:25 PM | 6 Likes Like |Link to Comment
  • What Will Apple Do With That Cash? [View article]
    Presumably Apple uses the same dodges as other multinationals, nominally basing its operations in ultra low tax domiciles like Ireland and Luxembourg, and thus avoids taxes in higher taxed places like the UK.
    Feb 14, 2013. 05:17 PM | Likes Like |Link to Comment
  • What Will Apple Do With That Cash? [View article]
    "If you are not happy with what Apple is doing, you could always sell your shares. Nobody is forcing you to hold them."

    I don't think that is really the issue. The greatest fear of investors is that margins will continue to decline and that the stock price will continue to go down.

    The question everyone wants to know is whether AAPL can't get a better return on the cash, which is almost dead money. Even if 2/3 of it is held in tax havens, it could be used for foreign acquisitions that would be more profitable than cash. This in turn would give the stock price additional support.

    Should interest rates increase at some point in the future, this, presumably, would be a massive boost for AAPL. Perhaps like Virgin, originally selling LP records, but latterly airlines, banks, and cell phones, the company could diversify into products like the iMortgage and iVacations where you are always connected.
    Feb 14, 2013. 09:20 AM | 1 Like Like |Link to Comment
  • Could Apple Be Working On The 'iBank'? [View article]
    Sounds like PayPal has beaten Apple to the mark by a distance in creating a payment system fueled by access to one's credit card information.
    Feb 13, 2013. 07:37 PM | Likes Like |Link to Comment
  • Why Apple Is Still A Buy Despite Its New Industry Classification [View article]
    There have been rumors over the past few months that the Pope’s health has been failing and that he was struggling to read texts.

    Maybe this will be the turning point for an iPhone with a larger screen.
    Feb 11, 2013. 07:52 AM | Likes Like |Link to Comment
  • Why Apple Is Still A Buy Despite Its New Industry Classification [View article]
    Well, yes, you could say the same of Cook being overweight in AAPL, but such is his wealth that even a 75% fall in the value of AAPL stock would in no way affect his retirement plans, so he isn't really in the same boat as typical AAPL investors or pension plan managers like Calpers.
    Feb 9, 2013. 07:38 AM | Likes Like |Link to Comment
  • Why Apple Is Still A Buy Despite Its New Industry Classification [View article]
    "Cook was granted one million shares of Apple's stock that vest over ten years when he became CEO. So, a decline in Apple's stock hurts the company's leader, Tim Cook, just as much as it does any other shareholder."

    Not really, because even if the stock price goes down to $10, Cook is still a member of the 1%.

    In reality, he is already immensely wealthy, and could easily retire today, and if he survives the pressures of the job for 10 years even if the stock only trades at cash-in-hand (highly improbable) that should ensure that his entire family will live in comfort for several generations to come even if the stock performs very poorly.

    So there is no way that a decline in Apple's stock will affect him personally in any meaningful way.

    On the other hand, for example, someone who owns 1000 shares of AAPL in a retirement account and sees the stock lose 2/3 of its value might well have to defer planned retirement for several years. Who will hurt the most?
    Feb 8, 2013. 05:10 PM | 4 Likes Like |Link to Comment
  • Can The Apple Tree Continue To Grow? [View article]
    "The enterprise values flexibility over elegance."

    I think so too. On SA you find a plethora of posters who say stuff like "Given me a tablet with this, that, and the other, and I will be in clover" without really explaining what they want to do with the device as the principal part of their business.

    My view is that there is an almost infinite diversity in what people might want to do with a device. Even in medicine a radiologist might use a tablet device or laptop very differently from a cardiologist or a psychiatrist, depending on what softwares were available in their speciality and how their device linked with other machines that produce images and data, professional databases, and so on, as well as whether their device is to be used mainly on the go or at a desk.
    Feb 7, 2013. 08:03 PM | Likes Like |Link to Comment
  • Why Apple's Margins Will Continue To Decline [View article]
    http://reut.rs/VK3Z4C
    Feb 7, 2013. 01:22 PM | Likes Like |Link to Comment
  • Why Apple's Margins Will Continue To Decline [View article]
    That's interesting. I would have thought this would represent a rather affluent section of the student population since Starbucks is a rather expensive place to get a snack.

    The real question is whether academic use of Apple computers vs Windows machines in likely to grow or accelerate from where it is now.

    Of course, if affluent students buy Macs and it saves the institution from having to employ tech guys, then that is win-win all around.

    But if schools and colleges are moving over from buying Windows machines in bulk to buying Apple devices on their own account, then the math is a bit more complex. If you pay double the price for a terminal, every x years, then how large do your orders have to be to cover the cost by cutting back on techs?

    I have no particular theory on this, but would be interested to hear from someone in that field.
    Feb 5, 2013. 10:38 AM | Likes Like |Link to Comment
  • How Much Should You Pay For Apple? [View article]
    This is all true, but it MIGHT just be a psychological factor for some consumers. People make decisions about how to spend their money all the time, and they forgo some things in favor of others.

    Consider the hard pressed parent who has gifted their student child an iPhone. Might they not opt for the iPhone 4 or iPhone 4S instead of the iPhone 5 to save a bit of money and ALSO note that they won't have to buy new adapters for the stereos at college and at home either.

    These differences in consumer behavior always take place at the edges, but they can affect overall profit margins.
    Feb 5, 2013. 09:40 AM | Likes Like |Link to Comment
  • Apple's Starting To Look Attractive Again [View article]
    You could.

    Really you can name your own price at which you would like to buy Apple stock.

    With the $400/$390 spread, you only have $500 at risk initially, and would make a very nice profit of something like $25 per share on the sale of the $390 put if the stock drops to around $390 at next earnings.

    [Note that the fiscal cliff issues will be upon us again soon, and god knows what that will do to stock prices in the short term, and with new highs on the indexes, a correction is not out of the question. Neither of these will necessarily affect AAPL stock, which is already in the doldrums, but they MIGHT. If the stock market has a really bad day or two, it is certainly not unimaginable that AAPL might drop a few more percent on the day.]

    You would then have to be prepared to be assigned 100 shares at $400 per share in 2015. That result would definitely beat buying 100 shares now for $440 in the event of the stock deteriorating further in the short term.

    Of course, if you believe that AAPL can only go up from here, then this is not for you. But if you want to try to get into AAPL at a once in a lifetime bargain price, it might be worth a shot.
    Feb 5, 2013. 09:26 AM | Likes Like |Link to Comment
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