Silicon Valley Insights

Research analyst, tech, online retail, ecommerce
Silicon Valley Insights
Research analyst, tech, online retail, eCommerce
Contributor since: 2013
JPW2, my experience is like yours - recall the $100K+ Symbolics workstations with the first mouse-window interfaces in 1981/1982? That is one reason the use of the technology in self driving cars where the input of so many sensors needs to be processed in real time is an exceptional example of something that actually works. Cost is still an issue but at least on something as expensive as a car it has a better chance to be affordable.
In the GOOG self-driving cars they make the best use of AI I have seen in 30+ years of following AI. Using 12 cameras on a car they can look all of near, mid and far distances in all four directions continuously and then with enough computer processing power make better driving decisions than any human can. With that technology, Stanford/GOOG won a competition against the AI labs of several other universities and beat them easily.
I just sent you a replay
Yes, excellent article. Are you familiar with the joint AI work Google and Stanford University's AI lab have done together - including re self-driving cars?
Yes the Q4 results were OK compared to dismal expectations and don't mind EPS down 17%. For 2016, IBM management disappointed with earnings guidance of $13.50+, down up to 10% YTY and well below prior expectations for $15.00. Ugh!
And while IBM has some momentum in areas like cloud, social, analytics and mobile and together these businesses represent 35% of total sales. However, they are slower growing than the leaders in these sector and the currency impacts and weakness in its traditional areas that represent 65% of the business is more than offsetting that with revenue declines in all of software, services, hardware and even financing.
IBM shares hitting new lows - we suggest staying away.
Thanks Sunny. Yes the worst thing to do is buy momentum just after missing substantial gains and then suffer losses after not making the out-sized profits.
You must be kidding re the Bolt being a threat to TSLA. It is butt ugly, something a TSLA will never be. I am a car guy and would not drive it fo free. Meanwhile the Model S makes all other cars look old fashioned.
You have already been wrong by 7% over the last 2 weeks while harping on the Danish license plate issue. TSLA is a global business with cars in shipment all the time so each month and each quarter varies for each country and region. Building cars is challenging but Elon Musk is the creative Steve Jobs of today creatively in our opinion. That is reflected in the 7x gain in TSLA shares over the 3 years.
In most every sector there are winners and losers and PANW is one of the former. It has a platform to provide an increasingly complete range of cyber security protection and services based on next-gen technologies the competitors do not have. And it is the best managed, is the fastest growing and increasingly profitable like CHKP has been for years to build that cash pile. Please message us if you would like to see our research on PANW and other high quality, high growth technology leaders.
Why is a value hound like you opining on one of the highest quality and fastest growing companies that is THE leader in cyber security, the #1 enterprise IT spending priority? If high quality, higher-valuation stocks are not your cup of tea we suggest you focus elsewhere rather than trying to suggest money-losing ideas.
Grasping at straws you bears while TSLA shares rise 11X in the 5 years the company has been public. Why not go pick on a company with poor management and products?
Correct music composer. Or nearly 110x if owned since the IPO in 2002. Or 370x in AMZN over the 18 years since its IPO. Or 9x in TSLA since the IPO 5 years ago. Or 71x over the last 11 years in PCLN since new management went in to turn it around. Or 175x in AAPL from when Steve Jobs rejoined the company in 1997 to turn it around.
Owning the few greatest companies as investments that appreciate without ordinary taxes is a superior way to build wealth. All of these companies had and/or have high apparent valuations during their high growth years and often have been subject to short and sell recommendations by those wanting to use a DCF analysis to value them. For example, over the years Barron's ran many negative articles on AMZN saying it is overvalued and quoting short sellers. Fortunately for them they finally gave up on that.
Only the very best companies revolutionizing the world and typically run by visionary founders provide these kind of opportunities. Key is that they create more and more shareholder value with their ongoing creativeness that you cannot see and incorporate into a DCF model at any point in time.
DCF has never been a successful way to base investing in high growth companies. Especially ones managed by visionaries who keep creating incremental shareholder value from new offerings, markets and/or strategies that cannot been seen in advance. NFLX CEO Reed Hastings is that kind of creative genius as shown by what he has created thus far - disrupting the entire film and TV entertainment businesses.
One major plus often overlooked is that the NFLX plan that includes 4K Ultra HD programming is $12 per month, 50% above the $8 currently charged most subscribers. 4K TVs now carry very little price premium and are selling very well. Over the next few years we believe 4K will take over the entire streaming market and then the entire TV market. How many of the DCF models have a 50% price increase in them at the same time NFLX expands its markets from 50 to 200 countries over 2015 and 2016. In addition to talking to potential China partners, it will launch in Italy, Spain and Portugal in coming days.
If you are not comfortable with the higher valuations of high growth companies invest elsewhere. But we suggest shorting them is a great way to get killed.
Are those of you who are negative on TSLA shorting it (and mostly getting killed). If not, why not focus your time on some other idea that fits your comfort level and on which you can make money?
Investing in high-growth, higher-valuation stocks is not for everyone but can be very profitable for the right type of investor.
Technically, TSLA shares are holding their 10-day short-term support amd are staying nicely above their 50-day longer-term line
This UBS analyst initiated coverage of TSLA on March 26, 2014 at $212 with a Neutral rating. After missing the subsequent 33% gain through yesterday (more than twice the 15% rise for the S&P 500 Index), he now downgrades it to Sell. Not too impressive.
TSLA shares are up about 170% since initially shipping the Model S sedan two years ago. We have been strongly recommending TSLA most of that time with a couple short-term partial position trimming suggestions like in September 2013 (see our September 5, 2013 article here) after the stock nearly doubled in just a few months. We have a Focus Strong Buy rating and continue to encourage ownership of this highly innovative car and battery company headed by Elon Musk, the most creative person in Silicon Valley today. The correction on this UBS move presents an opportunity to build positions at a better price just in front of the Model X SUV formal pricing announcement and launch. Musk has said the Model X will be more superior to other luxury SUVs more greatly than the Model S is to other sedans.
Your first line should read Intel's Broxton could be delayed to H2 2016, not Intel's Broxton could be delayed to H2 2014?
I otherwise agree with your thesis, especially relative to what is happening in the ARMH-based world.
We greatly agree with your thoughts in this article. One additional thing that suggests a dim future for the Wintel world is that virtually all new software and especially app development is for AAPL's iOS or GOOG's Android platforms. Here in Silicon Valley, a start-up to create an app for any other platform would never get funding from the venture capital community. This has been true for years, but never more than today.
BBRY is on a February fiscal year and just reported its May FQ1. You could correct your March quarter...
If you would like my positive thoughts on GoPro and its key supplier AMBA, please give me your email address.
If you would like a more balanced and positive view of AMBA in light of its overall picture and GoPro's IPO filing, please send me your email address
TIME TO COVER ANY AMBA SHORTS
Almost all iPhones and iPads are built in China by Chinese companies
A number of you have asked about what companies are well positioned in AAPL's ecosystem. There are a number of component and manufacturing suppliers (JBL will report its November quarter results this afternoon and has about 20% of revenues coming from AAPL) but it is hard to find companies with a high enough portion coming from AAPL that is not offset by weakness elsewhere. ARMH is one that does not have that problem and is earning (up to 70%) higher royalties of the technology behind AAPL;s new 64-bit processors in its new top iPhones and iPads. And now other ARMH-based AAPL competitors like Samsung must move to 64-bit to compete with AAPL - a positive for ARMH.
OLED is the leader in OLED display technologies and materials to produce them. It is rumored to have AAPL as a new customer next year as AAPL introduces its first OLED display on a product with the iWatch.
Much of what makes up the AAPL ecosystem is the one million iOS apps which mostly come from private companies.
Deep tissue or Swedish on FB?
Good to see you on the right side on Arm. The Arm Cortex A-57 technology used by Apple in its 64-bit A7 processor generates 70% higher fees to Arm. All Apple iOS devices are Arm-based.
I agree with you Gumby, INTC now has to do what always has been tru in the semiconductor industry - to get OEMs to switch chip vendors they have to ofer a 30-50% advantage in price/performance/energy consumption, INTC and NVDA both face tough challenges in this regard, especailly against excellent ARMH-based chips from AAPL and QCOM. And in today's iOS/Android world you need the top OEMs to be able to sell high volumes at good prices.
Good question JR. And the free iPad personal productivity (word processing, spreadsheet, etc) apps are just augmenting the serious business apps from cloud SW companies like CRM. The iPad is their delivery platform of choice. The cloud-based apps are being written by SW companies or enterprises themselves and Wndows compatibility is little significance for most of them.
Having said that there will be some people who care about Windows compatibility so we can generously cede 10% of the market long-term to Windows tablets, up from less than 1% so far,
Ashraf, Ashraf:
1. The ARM Cortex-A57 is 64-bit and the basis for the 64-bit AAPL A7 processor already in the market. The ARM license was signed 2-3 years ago.
2. A number of other Cortex-A57 licenses have been signed and no doubt include QCOM, Samsung and others who may well be to market with 64-bit processors before MSFT moves to 64-bit Windows on tablets.
3. MSFT's tablet market share is less than 1% after a year on the market. And through the end of June, it had written off as much in Surface tablet inventories (about $900 million) as the sales value of all Surface tablet sales to that date and also about equal to what they have spent on surface tablet ads. I call that a Zune-like failure, so far. MSFT will no doubt keep trying but your assumed success of MSFT with enterprises seems to reflect a huge leap of faith and speculation. Most enterprise iPad applications are custom or from many enterprise SW companies like CRM so they are not that focused on running Windows apps.
4. For 3+ years most all of the tablet enterprise app development by SW companies has been for the iPad with some Android versions now being created. Very few are for Windows. Go to a Tech Crunch or other developers event and virtually all apps are being shown on and being developed for iPads with no MSFT Surface tablets or PC apps in sight.
darturtle, in addition, as evidenced by its new ARMH-based 64-bit A7 processor, AAPL has the ability to create custom ICs that integrate with its hardware and software designs to provide superior performance, battery life and value. Away from AAPL, even Samsung is increasingly using QCOM Snapdragon processors for its mobile devices. Most of the smartphone and tablet industry profits are going to AAPL, ARMH and Samsung. As investors, it makes sense for us to "follow the dollars" and invest in AAPL and ARMH.
CRaig, et al. How many more quarters do you want to have dead money in INTC before it might perform at some point down the road? Best case it faces the challenge of primarily being a declining business selling high priced processors into the declining PC market that any reasonable near-term modest success selling much lower priced chips into tablets cannot offset anywhere near fully. that is the big picture risk and challenge.
In addition to the point that AAPL and QCOM are really the competition to INTC, not ARMH, there is the decades long standard that it takes 30-50% better price/performance/power consumption to get most OEMS to switch from one IC company's technology to another. INTC is still well short of the moving target the ARMH-based world represents, led by AAPL and QCOM who dominate the smartphone and tablet processor market.
Here in Silicon Valley there are plenty of former INTC employees who acknowledge that INTC is a strategic mess with too much PC-think still dominating. However, it is too early to say if its new CEO will change that at some point.