Steve Alexander

5 Things to Consider Before Buying and Holding

How many straight traders are on the Forbes 400?


On Oct 18 02:50 PM VennData wrote:

> The idea that "For one, it is much easier to see and predict long-term
> business trends and advantages then it is to predict what is going
> to happen over the next few months or weeks." is comical.
>
> Prove it.
>
> This is just more Wall Street marketing (aka give me your money to
> invest for you.)

What Apple Is Doing Wrong and Why It Means Trouble

Apple has a lot of things it didn't have the last time the company almost dissolved. For one, iTunes is a massive lock-in mechanism, and even though it's moving to all MP3, it's still only accessible from Apple hardware. Secondly, the iPhone is a closed platform that has the potential to dominate much like Windows on PCs. Once a substantial investment is made in games, apps, music, movies, contacts, etc., a user is less likely to abandon the platform unless something else is significantly better. These lock-in benefits also drive demand for Mac computers, as they most easily integrate with iPods and iPhones.

Apple's computers fill the "BMW" niche - they are generally cache, but even an objective viewer would generally consider the build quality and experience superior to the Dell's and Acer's of the world. While this is not really a sustainable competitive advantage, it is a current one.

Jobs leaving, if it turns out to be permanent, it certainly a long term concern, but he's built a company that can sustain itself for many years without him. The bench here is strong too - Cook is a solid ops guy, Ive and Forestall are top notch hardware and software guys, respectively, and Schiller has overseen a very successful marketing operation. I wouldn't worry about Apple, especially at these prices.

Dell: No Angles Left?

Dell didn't dump resources into a retail division under Rollins - Dell himself started that initiative. And it's a necessary one if Dell wants to capture consumers instead of just business and government dollars. Also, Dell was never about technology. The company's edge was low cost manufacturing, allowing them to win business by being the low cost producer. Another faux pas here is equating market share to success. Less market share at better profitability leads to better profits and a higher stock price. A lot of misconceptions in this article.

Steve
magicdiligence.com

Dell: Market Pessimism Presents Buy Opportunity

Anybody who bought Dell when it was valued at 40x earnings deserves to sit on dead money for 10 years. It's quite amusing when shareholders that buy at these levels get angry when the stock price doesn't advance, even when companies are growing revenues and earnings like Dell has. Home Depot is an even more illustrative case.

At these levels, on the other hand, 8-10% revenue growth combined with slightly higher margins and share buybacks can deliver 15% earnings growth. This is about the level Dell is priced at these days. With better product design and good execution entering Asia, Dell could easily outperform low expectations going forward.

Steve
magicdiligence.com
The Best Magic Formula Stocks