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  • How Much Should You Pay For Apple? [View article]
    Interesting points, although clearly most high school students and undergraduates will depend on someone else (parents) buying a phone for them and one assumes that most or all of the kids at your son's school will be from affluent families. Also California is a very high wage state and Apple is the "home team" in the sense that the company is located in that state and must be a source of considerable local pride.

    However the nugget of fact to the effect that these affluent young Americans are likely to be Apple customers for a long time to come is not without value, as this demographic will be the leaders and decision makers of the future when it comes to purchasing decisions in the enterprise.
    Feb 2, 2013. 02:56 PM | 1 Like Like |Link to Comment
  • Why Apple's Margins Will Continue To Decline [View article]
    "If this is how the Stock Market values companies, incredibly high PEs for virtually no earnings and no positive cash-flow AMZN, then AAPL stock will soar if its margins go down."

    Yes,but the next question is how much of your net worth you are prepared to stake to make money out of this theory of yours.

    You can't really compare the two business models.

    Amazon is like a department store that provides a free bus ride from the suburbs to downtown, so that customers will buy their merchandise and not that of rival retailers. It hopes that in the long run the competitors will go out of business, leaving the field clear.

    Apple discovered an absolutely killer combination--a first class brand new product, the iPhone--combining a touch screen tablet computer with a cell phone--with an amazingly effective way of having retailers in the form of cell phone networks providing installment plans to mass market consumers in such a way that consumers are hardly aware of the true price of the device.

    But the question about Apple how long they can continue to make abnormally large profits. It seems unlikely that their next phone will be a quantum leap over what rival manufacturers are offering for less money or that the size of the market for $700 devices in the developing world can continue to provide the same rate of growth that Apple has experienced since 2007.

    My biggest question is whether Apple can simply continue to make the same profits as it is making now. If this is reasonably certain, then the p/e of the stock is quite cheap and a LOT of money can be made if the cards are played right.
    Feb 2, 2013. 11:50 AM | Likes Like |Link to Comment
  • Why Apple's Margins Will Continue To Decline [View article]
    The question is really where will the chart lines of increasing numbers of devices sold intersect with falling margins.

    For example they sell more tablet computers, but since the mini iPads sell for less than the big guys and at less profit, what is the final outcome?

    They sell lots of music, but if the same music can be bought cheaper on Amazon and downloaded onto the Amazon app/player on an iPhone how does this affect the bottom line, and how much money does Apple get from the Amazon app to compensate for loss of music sales?

    If the phone companies can get similar, equal, or better smart phones from Nokia, Blackberry, Samsung, or LG for less money, how willing will they be to go the extra mile to sell iPhone contracts? If they show every potential iPhone customer another type of phone what percentage success will they have?

    No one really knows the answers to these questions, so there is room for a lot of wiggle room.

    Yes, if you plan to retire in 25 years, it would do no harm to buy a few Apple shares now for your retirement account, but if your financial well being could depend on accurately predicting where Apple stock might be in a year or two years from now, then that is a much tougher proposition.

    I think in another couple of quarters, we will start to get a better idea.
    Feb 2, 2013. 09:07 AM | 2 Likes Like |Link to Comment
  • How Much Should You Pay For Apple? [View article]
    "I love to use, my Mac, iPhone, iPad and I am very happy to pay a premium to have the privilege to be an Apple (AAPL) customer)."

    It might be better to cover other stocks that you don't have a personal interest in, because if you think that it is a privilege to pay over the odds to be an Apple customer, you might overestimate the degree to which others share your sense of privilege.
    Feb 2, 2013. 08:18 AM | Likes Like |Link to Comment
  • How Much Should You Pay For Apple? [View article]
    Not really, as you can, for example, sell a 2015 $350/$340 spread for $3000 and only need $7000 to put on the trade cash secured in an IRA. $7000 would buy you about 15 shares.

    This trade would make you almost 50% in 2 years if the stock just holds $350. The downside is that you would lose $7,000 if it doesn't. Now if you owned 100 shares and the price went down to $350, you would be $10,000 in the hole.

    These numbers are just for illustration and really the amount that you want to invest in Apple can be as small as you like. For example you could buy the October $400/$410 bull call spread for $700 and make $300 profit if the stock just holds $410 in October.

    Now compare the risk/reward to owning 20 shares. If the stock goes down to $400 in October you would be $1000 in the hole, or more if it goes lower.

    The chief difference with options is that you must be right about the timing. Suppose, using the above example, the stock dips to $350 in October and then goes up to $600 in November, then the options player is right out of luck, but the stock holder is in clover.
    Feb 2, 2013. 07:11 AM | 1 Like Like |Link to Comment
  • How Much Should You Pay For Apple? [View article]
    Excellent points. I too like a full sized keyboard for my full-sized hands so that I can type accurately at a modest 40 or 50 words per minute, which I certainly will never be able to do on an iPhone.

    I have an iPod touch--same thing, basically as iPhone--and although I have used it, for example when in hospital, as an Internet and Kindle reader it is not ideal, especially for anyone senior enough to use bifocals.

    The device I would like to see would be in between the iPhone and the iPad mini in size , but with the screen aspect ratio of the iPad mini which is better for reading.

    It would have a folding stand to make it sit up on a table to use as a speaker phone or alarm clock, and would be easily mountable on a car dashboard to use as a speaker phone, or possibly for maps or as a music player or Internet radio tuner.

    It would be chargeable by a mini USB cord and would have a memory card slot for music, etc. and a full size USB slot to allow a full size external keyboard if necessary or connect an external disc drive.

    Come on, Mr. Cook, get busy in your kitchen and cook up my dream Apple pie.
    Jan 31, 2013. 05:34 PM | 2 Likes Like |Link to Comment
  • How Much Should You Pay For Apple? [View article]
    ".... none of your old stuff will work with the new iPhone without an expensive adapter...."

    One has to wonder to what extent this has stopped people upgrading to iPhone 5, or to buy the older versions of the phone. Could be an impact on profit margins.

    "I still believe Apple stock will drop to the 3's as first quarter earnings will uppercut investors like Mike Tyson."

    I did not know Tyson was long AAPL.
    Jan 31, 2013. 12:26 PM | 3 Likes Like |Link to Comment
  • How Much Should You Pay For Apple? [View article]
    "In the medium run (2013), I expect Apple to introduce many new derivatives of existing products that will be better than the completion."

    Don't understand this. I wondered if "completion" was a bad typographical error for "competition", but that doesn't make much sense either. Do you mean better than the original product?
    Jan 31, 2013. 11:50 AM | 1 Like Like |Link to Comment
  • In Defense Of Apple: Battling The Mounting Hysteria [View article]
    Surely what would be more relevant would be how many pay checks consumers received during the quarter in question. Most people in the US are paid ever 2 weeks, so they may get either 6 or 7 pay checks in any given quarter.
    Jan 31, 2013. 09:51 AM | Likes Like |Link to Comment
  • In Defense Of Apple: Battling The Mounting Hysteria [View article]
    "Yes, Tim Cook is the supply chain expert. The disappointing transition in the iMac line is difficult to comprehend."

    Perhaps most of his time is now taken up with administrative responsibilities? Being a supply chain expert does not necessarily make someone a successful CEO. A CEO needs to have a global perspective and see the big picture.

    It always beat me how Dick Cheney was able to move from politics to being an apparently successful CEO of Halliburton without any prior business experience, but I have to assume that he was concerned with the big picture and delegated the nitty-gritty to subordinates.
    Jan 31, 2013. 09:48 AM | Likes Like |Link to Comment
  • In Defense Of Apple: Battling The Mounting Hysteria [View article]
    I carry a $10 cell phone for calls plus an iPod for applications. Possibly a slight inconvenience, but considering it saves about $100 per month it is cost effective.

    We will know that margins are bottoming when the iPhone sells for the same as an iPod, which is really an iPhone without the GSM calling, which must cost all of another $10 to add to the device.
    Jan 30, 2013. 07:28 PM | 1 Like Like |Link to Comment
  • Why Apple's Profits Are At Risk [View article]
    There were two main reasons for falling margins:

    1. iPad minis which are cheaper and have lower margins taking sales from full size iPads.

    2. More people buying older models of the iPhone instead of the most expensive new edition.

    Whether this trend will continue in the future or whether it will be countered by new product lines or expansion into new markets remains to be seen. Clearly there are a limited number of people on the planet who can pay $700 for a new phone (even if the true price is somewhat hidden in contracts).

    On the other hand, possibly Apple will expand more into the enterprise market, something that Cook talked about in the conference call.

    I think we see profit growth slowing down, but I'm not sure it has peaked yet.
    Jan 29, 2013. 10:06 PM | Likes Like |Link to Comment
  • In Defense Of Apple: Battling The Mounting Hysteria [View article]
    Fine, but what percentage of your net worth are you prepared to stake on that proposition? That is the question.
    Jan 29, 2013. 08:57 PM | Likes Like |Link to Comment
  • Is Apple A Bargain? A DCF Analysis [View article]
    If you currently hold AAPL stock, you could sell it for the current $458 per share and then sell the January 2015 $400 puts for the same number of shares for $50 per share cash secured and make more than 10% in 2 years if the stock just holds $400 in two years.

    That is completely without leverage. If you also buy the $200 calls to complete the spread, then you only need half the money, so the return would be 20% in 2 years and you could also use the other half of the money for some other investment, or you could double the Apple play, so your return would actually be potentially 40% in two years if the stock remained above $400.

    But let's say the stock goes down to $300 in two years. If you just hold onto your stock you lose 1/3 of your money. With the leveraged options play above, you lose 1/2 your money.

    How about if you are ABSOLUTELY certain and willing to bet the store on AAPL holding $400 in 2 years when it may have $200 per share in cash if it doesn't do something else with it? Using more leverage, you could easily get a 60% return on your money if AAPL just holds $400.

    Knowing what the stock is really worth enables one to plan for the future according to one's tolerance for risk and one's lust for profits.
    Jan 29, 2013. 07:27 PM | 4 Likes Like |Link to Comment
  • Is Apple A Bargain? A DCF Analysis [View article]
    "...the new Nokia catwalk will together kill iPhone..."

    Not very likely but "catwalk" is a very intriguing and potentially catchy name. I wonder what it means? The characteristic of how cats walk is that they move both legs on the same side together, in contrast to most animals which move front left together with rear right. I wonder how this translates into what a phone does.
    Jan 29, 2013. 04:56 PM | Likes Like |Link to Comment
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