More on Einhorn and Apple (AAPL): The company needs to use the same level of creativity with its balance sheet as it does to produce products, writes Einhorn. Every $50B of perpetual preferred stock distributed would unlock about $32/share of value, he says, and Apple has the capacity to distribute several hundred billion. "Greenlight is alarmed that Apple is attempting to eliminate preferred stock from its corporate charter." Shares +0.7% premarket. [View news story]
It's funny how markets react to non-events. Basically 2 things happened today. (1) Einhorn made public a proposal to Apple to offer preferred shares and w/ some fuzzy math, each $50 billion of preferred issuance will somehow be worth $32 in additional shareholder value. (2) Apple said that they would evaluate Mr. Einhorn's proposal. Translation: We have no intention of doing what this guy says, but we have to say something.
Naturally investors go diving for the buy button, although nothing that Einhorn proposed will change whatever Apple had planned to do anyway. He did coax an admission by Apple that discussions are taking place.
More on Einhorn and Apple (AAPL): The company needs to use the same level of creativity with its balance sheet as it does to produce products, writes Einhorn. Every $50B of perpetual preferred stock distributed would unlock about $32/share of value, he says, and Apple has the capacity to distribute several hundred billion. "Greenlight is alarmed that Apple is attempting to eliminate preferred stock from its corporate charter." Shares +0.7% premarket. [View news story]
Einhorn's on point that Apple's management of its balance sheet is almost comically bad and that they've done almost nothing to unleash the enormous potential stored in their huge cash position. His fund holds about a million shares of Apple (which is trivial compared w/ some of the heavy hitter funds in the stock), so unless he's able to rally the Fidelities and the Vanguards and other huge stakeholders , he'll get nothing done except get occasional share price pops every time he flaps his gums on CNBC.
Apple is the most analyzed, traded and owned stock in the world. There is no such thing as a stock being 'dirt cheap' or expensive. A stock price is a constantly moving equilibrium price between buyers and sellers. Whether anyone thinks a stock is overvalued, undervalued or just right is irrelevant. All that matters is whether more buyers or sellers agree w/ you. People were making the same argument that Apple was cheap all the way up to $700 and what happened?
Is Apple's Threat Real In The Living Room? [View article]
The article jumped the shark into an impossible fantasy world when it referenced the potential that an Apple TV could sell 156 million units in a year. Unless the TVs are about 14 inches and weigh 2 pounds (which no one would want), it's likely not logistically possible to assemble, distribute and deliver anywhere close to that volume of TVs in a 12 month time frame.
Amazon: When Will This Bubble Burst? [View article]
According to some, the world is 6000 years old. If you bought all of Amazon's outstanding stock and made the company private, it would take more than half of the time that the universe has been in existence to double the book value of your shares.
How about if we all agree to not use the term 'law of large numbers' and replace it w/ the 'law of competition' which states that effective competition in a market tends to reduce the profits that any one member in that market is able to achieve?
Apple Ousts Samsung As No.1 Mobile Maker In U.S. In Q4 2012, Taking Record 34% Market Share [View article]
One analyst predicts that Apple is ripe for a pop and some investors start buying the stock this afternoon just on that one opinion. No wonder so many people lose money in the market. It's the blind leading the blind.
"Apple absolutely has to make an iPhone with a bigger screen," iPhone 5 owner Henry Blodget declares. While Apple (AAPL +0.1%) insists on using relatively small display sizes to guarantee effective one-handed iPhone use, devices such as Samsung's Galaxy S III (4.8" display) make the iPhone 5 look "puny and sad in comparison." The iPhone 5's display size doesn't seem to be affecting its U.S. position much, as Strategy Analytics' numbers demonstrate, but international markets appear to be a different story. [View news story]
Apple does make an iPhone w/ a larger screen, it's called an iPad. Who wants to carry a bulky phone around in the office when you can carry a more compact one?
A Long-Term Focus Justifies Amazon's Valuation [View article]
Apple practically prints money, has huge brand loyalty and its stock has been sinking like a stone in a strong market. Amazon, which has been in business for almost 2 decades and has no brand loyalty to speak of and LOST money last year, is the darling of Wall Street. It doesn't matter what they report for a quarter, they're INVESTING FOR THE FUTURE. Maybe those are the magic words to stock value. Just say that you're INVESTING FOR THE FUTURE.
Why Apple's Margins Will Continue To Decline [View article]
There's absolutely nothing wrong w/ Apple as a company. They practically print money, profiting more than $100 million a day. The stock has become a casino and is by far the most traded in the world. The company's fundamentals haven't changed very much in the last 12 months except perhaps they've grown stronger. They just had the most profitable quarter any tech company has ever had and one of the most profitable of any company in history. Mr. Market could say that the stock is worth $350 or $950 and there's not much any of us can do about it either way.
Why Apple's Margins Will Continue To Decline [View article]
What few analysts seem to want to talk about is AAPL's expanding customer base. Does this not have any value? All we hear about is declining margins, lower ASP, etc. Amazon makes no money, but is expanding its customer footprint, which investors seem to love. Apple is doing the same thing WITH big profits and everyone just shrugs.
Can The Apple Tree Continue To Grow? [View article]
Anyone who has been paying close attention to AAPL over the last 4 months knows precisely what is going on. The negative attacks on the stock have been unrelenting and have gone essentially unchallenged. Fundamentally not much has changed w/ the company, but the share price has plummeted. There has been talk of margin compression for years and w/ the refresh of most of their products in the last quarter, some compression was inevitable. Last quarter was one of the most profitable in history and share prices have continued sinking like a rock. It's all about the narrative. The difference between Amazon and Apple is in managing investors. Amazon has somehow convinced its investors that its growing for the future, while every quarter making no money. Apple's a money machine w/ a huge customer base that isn't going anywhere and somehow investors have been hoodwinked to believe that the company's on a slippery slope. If Apple isn't better able to manage the investment community, it's time for its senior management to exit stage left.
How I Plan To Buy Apple To Limit Panic [View article]
Unless Apple has the next big thing in their product pipeline, I'm afraid that its days as a strong growth stock have ended. It remains a great company, one of the best in the world. The problem is that the high margins that it's enjoyed aren't sustainable. The company's P/E ratio has been well below the S&P average for quite some time now. That hasn't been by accident. Competition ultimately erodes profitability and Apple can't escape from that basic reality of economics in a free market.
This article would've been much more profound if written when AAPL was trading at $650 or so. Everyone has the answers looking in the rear view mirror.
More on Einhorn and Apple (AAPL): The company needs to use the same level of creativity with its balance sheet as it does to produce products, writes Einhorn. Every $50B of perpetual preferred stock distributed would unlock about $32/share of value, he says, and Apple has the capacity to distribute several hundred billion. "Greenlight is alarmed that Apple is attempting to eliminate preferred stock from its corporate charter." Shares +0.7% premarket. [View news story]
Naturally investors go diving for the buy button, although nothing that Einhorn proposed will change whatever Apple had planned to do anyway. He did coax an admission by Apple that discussions are taking place.
More on Einhorn and Apple (AAPL): The company needs to use the same level of creativity with its balance sheet as it does to produce products, writes Einhorn. Every $50B of perpetual preferred stock distributed would unlock about $32/share of value, he says, and Apple has the capacity to distribute several hundred billion. "Greenlight is alarmed that Apple is attempting to eliminate preferred stock from its corporate charter." Shares +0.7% premarket. [View news story]
Apple: Premium Company, Dirt-Cheap Stock [View article]
Is Apple's Threat Real In The Living Room? [View article]
Amazon: When Will This Bubble Burst? [View article]
Amazon: When Will This Bubble Burst? [View article]
The Problem With Apple Is Apple [View article]
Apple Ousts Samsung As No.1 Mobile Maker In U.S. In Q4 2012, Taking Record 34% Market Share [View article]
"Apple absolutely has to make an iPhone with a bigger screen," iPhone 5 owner Henry Blodget declares. While Apple (AAPL +0.1%) insists on using relatively small display sizes to guarantee effective one-handed iPhone use, devices such as Samsung's Galaxy S III (4.8" display) make the iPhone 5 look "puny and sad in comparison." The iPhone 5's display size doesn't seem to be affecting its U.S. position much, as Strategy Analytics' numbers demonstrate, but international markets appear to be a different story. [View news story]
A Long-Term Focus Justifies Amazon's Valuation [View article]
Why Apple's Margins Will Continue To Decline [View article]
Why Apple's Margins Will Continue To Decline [View article]
Can The Apple Tree Continue To Grow? [View article]
How I Plan To Buy Apple To Limit Panic [View article]
How Much Should You Pay For Apple? [View article]