Wim Lewi

Wim Lewi
Contributor since: 2012
Company: ValueScan.be
I agree, sometimes the most obvious conclusion is the hardest one to reach. I believe that this common sense is well known to the politicians and central bankers. They thrive on self-interest. The horizon is however getting shorter and the interventions bolder in order to get an effect. Abe wants his victory already in July. After 2000 and 2008, we are gearing up for another 50% gyration, while we could have risen 20-30% in equity markets on a normal economic recovery over the next 2-3 years.
The worst of all is that rich people get richer with their equity exposure while the poor people stand most to loose as the government disintegrates in its pool of debt.
Hi Ashraf, it would be very unlike AAPL do to do that and almost feels like desperation. I dont believe they have to leave that much margin on the foundry table as they could use older and slower technology for the production of the chips. The margin will be dramatically lower anyway. But they need to get these emerging customers into the iOS realm and sell them iPhones when they move up the ladder a couple of years down the road.
How is that Intel chip performing vs. Qcom ?
I am confused that there is so much AAPL pessimism on the board. When the stock quadruples in a straight line to 700, comments were bullish and the stock was set for 1000 USD. Smart people on Wall Street that are paid as if they have a rare talent were unanimous about this. Now, the stock has come back to earth and the bashers come out of their holes and cool their saved up anger a little too late. I am a fundamental investor and that takes a lot of patience. I am probably too early with my change of opinion, but I believe that method of investing works best for me. This does not mean that I go to sleep in the meantime. If Apple makes mistakes and loses its grip on the market completely, I can still chance my opinion again. But at this price, the company is a much better investment than all government bonds or any other fixed income vehicle. They still generate a hell of a lot of cash. Sentiment will calm down or even reverse on the blink of an eye.
Matthew,
Can you give some numbers on where the growth will come from ?
Something like tools x ASP x profit margin.
Why is 20% growth optimistic and 5% pessimistic ?
I don't believe that EUV tools x ASP will be higher than current ArF sales, simply because they are so much more productive.
The ArF tools are only just beginning to pay back the investments on immersion and double patterning. Intc wants to start in 450mm wafers at the same time = 100% yield gain = 50% fewer tools.
I am curious for your forecasts. What about the stock overhang from the Cymer deal ?
I underestimated the short squeeze power. There are a couple of factors that explain the current upswing. ASML has raised capital in a dubious transaction with INtel, Samsung and TSMC. They get 23% in the company, while ASML does a reverse share split to compensate. Normally this effect should have worn off. ASML CFO hates shorts and might have kept some of that money on the side for a Buyback. The 23% in now locked up for 2.5 yrs.The bid for Cymer has also created a lot of hedging strategies. The bid is a large part in stock. This also restricts the free float as Cymer shareholders get a 25% bonus on the original price. They will not receive 80 USD, but more than 100 USD. This also limits the current free-float. The Intel news that they will spend 13bn in Capex has fooled some analysts into believing that this will boost INTC tool orders. On the contrary, the ASML investment on ArF will suffer as the pay-back time is dramatically shortened by accelerating to EUV. I still believe the numbers will look terrible as soon as the smoke disappears. This market gives the benefit of the doubt and the bolder the claims, the higher the stocks go. I keep my short right where it is for a target of 50 USD. The strong Euro is irrelevant as they sell in USD and this will hit the Euro result anyway. ASML produces 100% in Holland.
ASML flat now, short squeeze seems over, let fundamentals take over.
Intel 13bn capex is not a disaster for my ASML short.
2bn is dedicated to a new fab. It is clear that capacity utilization is still too low to increase the current immersion base. US was only 9% of ASML sales, so INTC is buying nothing at the moment. The capex goes into reasearch grants to ASML and IMEC center for EUV development. ASML has 11 EUV orders, that equals the same amount of 22 ArF tools, which is a bit more than a normal quarter sales. The margin on EUV will horrible, unless you write off the R&D costs over 10 years. ASML, INTC, TSMC and samsung are finding new ways of hiding R&D costs. ASML raised capital to these guys and IMEC acts as a non-rofit research center that swallows hundreds of millions in R&D. Lets first see how many ArF tools bring in the butter this year for ASML.
McKalip,
I couldn't agree more, but what are the numbers.
32nm to 22nm was expensive, but 14nm is going off the scale,
Intc now spends around 6bln on maintenace and 7 bln on growth.
The new iteration will cost more than replacing the current capacity.
The power gain is a linear function, but brings other side effects like noise and material instability. The costs of shrinkage are exponential. You will have to sell more chips in order to get your investment back. Each step has been justified by a new application. Can you calculate how many chips at what price INTC, samsung and TSMC have to sell ?
Thanks for the complement, I believe in working the numbers and discover the short term exaggerations, takes more time and patience, but this is the market to do it in, lots of noise and too much money.
ASML trending down from a peak of 69.60 at 2PM to 68.05 at 3PM.
That is 2.5% since I sent in the article. 17.5% to go, that could take a bit longer. Intel Capex announcement at 5pm needs to pour some cold water on this hot stock. Short squeezes are very tough to judge. The downside of a short has no limit and margin calls can make stocks go into hypersphere. I hope that fundamentals will prevail. By the way, I live about 80km from the ASML headquarters. I have visited them many times. Impressive site that reminds of a lunar base. Soon coming back to earth.
I believe that the relief comes from TSMC, stating they will spend 9bln capex this year up from 8.2bln. I address this in my article as a shift from samsung to TSMC. That doesn't say anything about the overall spending, Samsung could cut back by more than the increase and INTC is on tap later today. ASML results were negative and the increase started before the US open. I believe a lot is due to the short squeeze. I do not believe the consumer will be a happy bunny this year and buy more technology than last year. There is enough capacity installed.
Nice work, I agree that a good technology sells itself without acquisitions. The accounting afterwards keeps the figures and the share price high. They need that to avoid dilution. I never believed that 3-D would become a manufacturing technology. Printing guns, etc... I just don't dare to short it, you never know how many fools are out there believing there will be a 3D car printer outside the Walmart soon.
Hi,
I agree that investing is tough in this environment, but your 4 stock picks are suicidal. I have just written 3 short notes on AAPL, AMZN and CRM. One of those recently lost his shirt and the other 2 will soon. In fact CRM might start today with the peck and feather treatment. check my SA reports on AAPL, CRM and AMZN.
Let's stop doing financial research alltogether, because stocks only need growth to rise ? Just get a market quote and offer free services, like cleaning or laundry. Like AMZN helps you by offering free shipping and pays away the retail margin and cost advantages to UPS. You dont have to do any shopping anymore. Just sit at home and wait till the UPS man brings your durables. According to Morgan Stanley, sales will rise 6-fold by 2020 and still grow 5% annually after that. The simple explanation is that now AMZN is 1% of durable retail and 6% is still a very small number for such a great company. Can the US road system actually hold that many UPS vans at the same time ? That is what financial research has become. OMG This will be the AAPL correction on an exponential scale, not -30%, but -60%. Please read further than the first line of the results report, it will pay off in the end.
Indeed, the buy high, sell low market is in full swing. Analysts upgrade stocks like AMZN because they go up and downgrade Dell because it goes down. Initially there is a fundamental catalyst, but the trend is extrapolated into ridiculous territory. The million dollar question still is when and why will it reverse. When it does, it usually hurts. Like AAPL, all the sheep are now on the wrong side of the fence. Anyway, it pays to be patient. I could have waited 12 months for Dell to go up 30%, but 1 month is also fine. Today, DELL is hot because it is going up, the article is now also trending much better than the first one. Stocks have to go up, before they can rally. I blame that on quant funds, structured products, trading programs and ETF clowns. The market is trading the noise that twitter and blogs pour into the market. FB press meeting was another great exemple of the hot air market. Sooner or later, a bigger portion of investors will realize that it makes sense to build a valuation case and be patient. Hopefully the market will become more rational and fundamental.
I dont really agree
Data server is the new name for mainframe and they are alive and kicking,
Power tablets will become the new notebooks, they will be closer to the PC than the mobile phone,
Tablet are smartphones with a bigger screen, the iPad mini is the best example. OK to check the weather. Most people probably dont need more than that and thats why they sell 200 million of them in a year.
Analysts are lagging indicators. The fair value is 500 USD, but they missed the correction and are now panicking. The exaggeration happens at both sides up and down. I explain the analyst panic :
http://seekingalpha.co...
My analysis is rubbish ?
What about that bet that you will double ?
Easy money if you ask me.
Simple spreadsheet math shows that everybody is following the herd into the abyss. AMZN is up next.
The numbers dont lie, DELL is cheap.
I short CRM naked as part of a hedge against my deep-value longs, type Nokia, Vestas, Alcatel, etc... So I elimate the market risk. I entered what I consider half a position at 164. Since then CRM has just performed in line with the market, so I am not bothered. I save some cash up to hit the short button again around 180. I would never bet the house against CRM, because at a market cap of bln 24 USD and cheap money there is still the very small outside chance of a bid if Larry is bored on his yacht and wants some headlines. I will bet the house against AMZN if it gets to 325, or AAPL if it gets 1000 USD,
on 3/10 sell AAPL +25% profit
http://seekingalpha.co...
on 17/10 buy Nokia
http://seekingalpha.co...
+ 93%
I am doing fine, thank you very much
I Agree, I predicted this event in my article of 3 November, that was originally titled 'iPhone mini is biggest risk for Apple sales'. The editor changed the title as it might suggest that this was a confirmed idea.
http://seekingalpha.co...
last alinea :
"I expect Apple to decrease iPhone ASP's in order to defend its market share. An inevitable iPhone Mini will have a much bigger negative impact on the bottom line."
Medguy, thanks for the constructive comment. It is true that I was nimble player in the CSFB tech research group. Nevertheless, I staid true to my beliefs and refused to peddle silly IPO's in 2001 when the wheels came off the wagon. I saw some high flying and overpriced analysts leave for hedge funds to blow up a year later. I might be traumatised by that period 2000-2002, but I never believed the hype would continue. On the other hand, I recognize some patterns that remind me of those time. It could still roll on for a couple of quarters, but sooner or later, profits will matter again. I do not believe that CRM or AMZN will ever get to that stage that will explain their current valuation. They are surely taking share, but they are destroying the profitability at the same time. Simply because it is not game-changing technology. Selling below cost and getting sales is easy. I remember Miracle holding, a Swiss company that invented XRP, a 'new' version of SAP ERP system in 2000. They had 1 order of a large hotel group. They floated at 1,5 bln USD. The management cashed out. The hotel group sued them for 100 mln after 3 months as the program did't function and paralyzed the hotels for weeks. 6 months after the IPO, the company bankrupted.
Maybe, I became too old and cynical, but I have learnt to focus on all the numbers and not just the topline party.
Thanks for the comment. What I meant was that the decline of 100bln from 600 to 500bln in the Apple market cap equals to 4x salesforce market cap. I agree that I could have written that a bit more clear. Apple's decline shows that growth has to be proven every year in and out. As people are selling Apple, they have to look for new 'growth stocks' in a no growth economy. I wanted to illustrate that if 100bln left Apple and invested everything in CRM, then they needed to buy 4 times the market cap. I know that isn't exact science, but the market is not scientific at all. Smoke, mirror and hype artists is the name of the game. CRM and AMZN are some of the biggest players in town. Growth is overpriced, value is underpriced, that is the theme of recommendations.
You could have read it 20% cheaper here :
http://seekingalpha.co...
Content supply chain
Apple also had a free ride on the back of the App developers that upgraded the iPhone to a free software store. Rovi (ROVI) probably sold trillions of games, but is only valued at USD 1.5 billion. Instead, the attraction of free applications made billions for Apple without lifting a finger. However, the App market is not an iPhone exclusive. Google also captured the App-market train with its Android OS. Digitaltrends shows it is now taking market share from everybody including Apple. Google has now booted out the Apple ecosystem as it also overstepped the supplier border with the Motorola acquisition. Replacing the Google maps content was done in a hurry. A bid for the TomTom (TOM2) map know-how will cost Apple only a couple of billions, but it all adds to the bill of making its own content. Apple will have to invest more capex in its iOS and come up with some dramatically new features. Its resistance to acquisitions to gain content will have to change. The Windows 8 platform has to make up a lot of lost ground, but is not dead in the water yet. The asymco graphs show the Android gains and also remind investors that Symbian had a 41% market share at the start of 2010.
Stephen, I would like to see a bit more detail on your calulations that show AWS becoming the biggest revenue and profit generator that will balance out the current loss-making business model. AWS is 2.6 bln in sales on a total of 62 bln. The 100% gross margin is fiction, because there is no free spare capacity. Every extra server instruction costs money. AMZN is not the only company with server capacity. If you anticipate more losses from the traditional e-commerce which is 2/3 of the core business, you need a hell of a margin on the third party sales. There is nothing in that service that Fedex or UPS could get into as they deliver the critical last miles in the e-commerce model. Please provise some more backbone to your claim that 15 USD in EPS is a sure thing by 2017. You could be responsable for a lot of unknowing investors to loose a lot of their money. I personnaly think that AMZN is worth 50 USD on realistic assumptions that I explain step by step. http://seekingalpha.co...
Indeed, but I am patient, the sales from this Xmass will be great, but the the LT profit expectations that are baked in the price will not materialize. When the market will adjust to that is still the million USD question, the value of a stock is what a fool will pay for it. After good returns on AAPL, NOK and also recently DELL (only 1000 hits), I have had a great run, it is rarely that easy. I am also looking to short CRM, lots of insider selling, vague business model and Cramer going hot about the stock, calling it the FB of the enterprise, are all very encouraging, but again I am looking for a catalyst.
Anthony, you could have written the same article about Nokia when it stood at 40 USD in 2009 and was hit because there were rumours of a new product coming. You could have thrown in a bit more margin decline, but in fact you should have assumed that at 40 USD, the whole product range was broken, etc... AAPL cash position is untaxed and still has to pay 28 billion to its suppliers. In fact, 70 bln is my guess of the overstatement after capex costs. Anyway, the iPhone is 75% of the restvalue of about 425 bn. That is the Achilles heel. By the end 2013, it will be a common product and gross margin will be closer to the 20% of the PC market than the current 62%. I have a target of 500 USD, but the over-loved state of this stock, could push it down to 360 USD. http://seekingalpha.co...
I agree, the regulation attempts like SOX have only made things worse for the private investor. Professional analysts and Investors are driven by bonuses on their actions. This is quite different from private investors that have a symmetric gain/loss ratio. If analyst gets it 30% wrong on Apple, he will not get sacked, because everybody was bullish. If he got it right and the stock goes to 1000, a nice bonus will be his share, like it was the last 2 years in a row. This assymetry in reward has stimulated investors and analysts to take irresponsable risks with other pepole's money. New bonus rules that performance has to be measured over 3 years might change these excesses. I believe that private investors should start doing their own homework and completely ignore the noise from Wall Street or use the noise to their adavantage. I once heard this metaphore on ice skating on open lakes, like is custom in Holland. You should never skate where there are large groups skating, because when you hit a weak spot in the ice you get sucked in with group. If and when AAPL really reports a weak set of results, who will be able to upgrade their recommendation in support ? Most analysts will be up to their neck in the ice cold water.
In 1.5 years, the iPhone will be a product closer to what the iPod is now. Nowhere near a 650 USD price tag and Asian copy-cats will bake smartphones faster than corn flakes. International market share is already declining. iOS will not become the WW mobile standard like Windows was a couple of years ago. The iPad can grow in volume and should, because it is a lower margin product. I do not know for sure wether AAPL will not make the next big innovation, but I think it is unlikely. This article wants to warn retail investors that they will not get a timely warning from sell-side analysts as they have other things to worry about. Just because AAPL is up up 40% since last year, that doesn't make it a good investment.
You are right that the fiscal uncertainty has accelerated the recent selling pressure. Despite the correction, the stock is still up 30% ytd.
With the sentiment now deflating and if the December quarter is OK, the stock could recover above 600 again. Dividend speculation can also help sentiment, but in fact that does not add any value to the share price. My forecast of 500 USD is a 12 month target and the share can reach a 30% range around that level, based on the sentiment and market machinations.
I guess money is cheap, so anything goes, but unlikely that Michael will agree.