KenC's Comments

How Apple's Market Share Will Propel Stock to $500, Part 1

Sat, 24 Oct 2009 13:15:46 -0400

Alot of the revenue increase is due to the decline in the USD. I would love to see Apple become a $500 stock, and be worth double MS, but it's going to take alot of hard work on Apple's part. We all know enBallmer is an idiot.

Apple Income Statement Analysis for September 2009 Quarter

Tue, 20 Oct 2009 13:07:36 -0400

The only logical possibility of the two you cite is #2. #1 would indicate poor planning on Apple's part, and that is not the case. Cook mentioned in the conference call it was not a seasonal increase, ie rushing out holiday product, but that it was an atypical increase, that would indicate a new product.

Android, iPhone Ride Rising Tide

Sun, 04 Oct 2009 23:08:48 -0400

You wrote, "The US carriers will eventually run out of people who want to permanently increase their phone bills $600 a month"

Strangely, noone so far has commented upon your math. Presumably, above, you meant year, but even the, you are implying that data plans are $50 a month, which they are not. They are $20 to $30 a month.

I have an iPhone 3G, and my data plan is $20 a month. Why? I live in an EDGE area, with 3G 100 miles away. I pay the EDGE rate even though when I'm in 3G-land, I get 3G speeds.

So, data plans are not as outrageous as you seem to believe.

The End of Exclusive: How Apple Plans to Grow Market Share

Thu, 01 Oct 2009 21:55:20 -0400

So, Donald, you think allowing iPhone users to move to T-Mobile is somehow going to alleviate the burden on AT&T's network? Or, did you mean that iPhone users should be allowed to go to Verizon and Sprint which both use incompatible standards? Who is going to pay to get Apple to build a new iPhone for a networking standard that is being phased out?

You write as if AT&T were Ma Bell, pre-splitup! AT&T is actually changing quite quickly, and I doubt any wireless company could have dealt with the order of magnitude increase in data usage that the iPhone brought any better.

Microsoft vs. Apple - Which Is Worth More?

Tue, 08 Sep 2009 23:14:35 -0400

You're long MS and short Apple? Justice is served.

Customer Survey Notes Microsoft's Brand Revival

Wed, 19 Aug 2009 22:52:18 -0400

You wrote, "The Windows brand revival story is a pretty clear one". Hmmm...for $300M you'd think they'd have gotten more bang for their buck.

AT&T, Apple Can't Win Fight Against VoIP

Mon, 03 Aug 2009 12:33:44 -0400

Google Voice, aka Grandcentral, is NOT VoIP.

My New iPhone 3GS: Beyond Awesome

Mon, 03 Aug 2009 12:03:05 -0400

If you are going to carry two phones, you should carry your flip with bluetooth tethering, and an iPod touch. That way you can surf the net without wifi on the touch. Essentially a WWAN netbook.

Toshiba Is Going into Flash Overdrive: Is Apple Ramping Up?

Tue, 28 Jul 2009 09:54:45 -0400

Uhm, if you listened to the last conference call, Oppenheimer or Cook mentioned that they had pre-bought $500M of flash from Toshiba.

As for suppliers, Toshiba is just one of about 5 flash ram suppliers to Apple.

7 Clues Pointing to an Imminent iPhone China Launch

Mon, 27 Jul 2009 18:10:57 -0400

Nice insight, Dan, but what happened to the last 3 Clues, or did the copy editor not read your post?

Four Reasons to Avoid Apple

Fri, 24 Jul 2009 14:29:36 -0400

You said, "The iPod market is gone." but undermine yourself when you say, "if you want an iPod, you buy an iPhone" Either way, you buy an Apple product, how is that a reason to avoid Apple?

You said, "The iPhone market is terrible: crowded, very intense competition, profit margins squeezed. We do not believe Apple will be able to sustain profit margins in some European countries for so long" and you undermine that by saying, "we do not believe Apple's competitors will improve for some years to come since companies such as Research in Motion (RIMM), Nokia (NOK) or even HTC have done a lousy job of trying to follow up Apple". So, while the market is crowded, you don't think Apple's competitors will improve for years, so what is there to fear?

As for profit margins, do you KNOW what margins Apple has on the iPhone? Gross margins are about 70%! How are they going to be squeezed? They have more room to adjust prices down than any of their competition! Their competition will be bankrupt before Apple doesn't make a profit on the iPhone.

You said, "Mac sales: The company did actually very well in our opinion, but again we consider the price of those great products very high and there will be a profit margin squeeze going forward" Macs have always been expensive. Why are they going to be squeezed now, after so many decades? There's no rationale behind your suppositions.

You said, "Probably the most important matter to be considered mid to long term: we do not believe in companies without visionaries" So, other than Apple, what companies are you invested in that have comparable visionaries? Any? What do you know about Steve that we don't know?

Your four points are poorly supported, and in fact, have very little basis in fact.

Bye Bye Apple

Fri, 24 Jul 2009 12:40:59 -0400

Muddle is right:

You said "Steve Jobs' health is much worse". Dude, if anything, Apple's ability to execute while Steve was on leave, should reassure investors that Apple will continue to execute with Steve or without.

You said, "iPod market is not growing." Yes, because it is being cannibalized by the iPhone. When you add the iPhone back in, then the mobile music player market is still growing, as are iTunes downloads.

You said, "Computer market share is down" Of course it's down. The computer market is being diluted with netbooks. If you were to separate out this group, then Apple share is up. If you include netbooks amongst computers, why not include smartphones, seeing as they both are used primarily for email and surfing the net.

You said, "I still don't see serious attempts to get into enterprise computing." You do know that Apple is building in Exchange support into the core of the OS? Not even MS does that.

You said, "iPhone market share is growing fast, so far. But there is competition around. " Thank you for stating the obvious. You have added no insight whatsoever.

You said, "Another problem is size. Apple is just too big to grow as fast as it did the last 10 years. But P/E is still suggests fast growth. I don't see any new areas where Apple can introduce new products and make money." So, which is it? Apple is too big, or it suggest fast growth? Huh? And, do you really think you know where Apple will innovate next? Did you predict the iPod? Did you predict iTunes? Did you predict the iPhone? No? Why do you think you have the ability to predict or not, the next thing Apple does?

You said, "In short, Apple is not good enough as an investment." LOL, based upon your analysis or lack thereof, I think you should not consider investing as a means of employment. Perhaps, as a hobby.

10 Reasons Not to Buy Apple

Wed, 08 Jul 2009 15:14:40 -0400

You wrote: <<1. Highly competitive markets
The chart below shows Apple's (AAPL) revenue share according to product. All of Apple’s product lines are in highly competitive markets and subject to rapid technological change and aggressive pricing.>>

Yes, and what tech companies don't compete in highly competitive markets? Wouldn't it be better to say that Apple has ALWAYS competed in highly competitive markets and has carved out a successful niche in all of them? They are at the forefront of rapid technological change and have been driving aggressive pricing where they have pricing power, like in iPods and iPhones, iTunes and the AppStore.

You wrote: <<2. Lower margin
Business Week reported on June 19, 2009 that the cost of components for Apple’s iPhone 3G is $179.16, while its retail price starts at $199. >>

This illustrates that you don't even know that the iPhone is subsidized, and is Apple's highest margin product!

You wrote: <<3. iPhone relies on single carrier>>

Uhm, room for growth?

You wrote: <<4. No room to grow for wireless market
In the US, 90% of Americans eligible to use a cell phone already have an account. There is simply no meaningful growth in this market sector.>>

Yeah, and there was no room to grow when Apple entered this sector two years ago, and look at how they've grown! You need to stop overgeneralizing and look at specific sectors that Apple is targeting. They are targeting smartphones, not the general cellphone market.

You wrote: <<5. No room for iPod growth>>

Apple is evolving the market from pure music players to include game players and cameras and whatever else they can think of. There's plenty of room for growth if you look at what the iPod touch can do.

You wrote: <<6. Wrong market target>>
And, what is the right market target? The one Dell is in? Why is BB trying to expand into the consumer space? And, pc share stats are skewed by the proliferation of cheap netbooks. You need to segment the pc market to those areas Apple actually competes in to show that their market share is declining.

You wrote: <<7. Heavy investment needed for Mac stores>>
Yes, and Apple has about $30B in cash that they can spend. As an investor, would you rather they not have stores?

You wrote: <<8. Steve’s health
It’s the process, not the pocketbook, according to the management consultancy Booz Allen. Without Steve Jobs, no matter how much more money Apple spends in R&D, there are unlikely to be more many new, revolutionary products coming to market from Apple soon.>>

Of all the companies out there, Apple may have the strongest corporate culture of all. They have internalized "the process", so that all the top execs from Cook to Ives to Shiller know it. Why should any investor rely upon your unsubstantiated conclusion that there won't be any more new and revolutionary products?

You wrote:<<9. Unclear future strategy
The next big thing in consumer electronics seems to be in home digital entertainment. With iPhone, Apple is moving into communications. I doubt iPhone could be a central control for home entertainment systems.>>

Wow, you are clueless. The iPhone AND its descendents, are the most likely devices that will be the central control for home entertainment.

You wrote: <<10. SEC investigation
Apple’s past stock option practices and the restatement of financial statements may result in additional litigation against the company.>>

The SEC investigation of Apple's stock option grants is CLOSED.

I am thinking of writing an article on ONE REASON NOT TO READ HAO JIN's posts: 1. Total lack of clear thinking.

Smartphone Operating Systems: The Market Share, Usage Disconnect

Fri, 29 May 2009 13:47:16 -0400

Actually if you have been studying AdMob's stats over time, you'd realize they undermeasure the iPhone's net usage. It measures MOBILE web, ie, mobile website use. It does NOT measure if the iPhone goes to a normal website, which it does all the time.

Palm's Pre Launch Has Made RBC Bullish

Fri, 29 May 2009 13:41:07 -0400

10M units is optimistic, since this is not a world phone, and it's on Sprint for 6 months before being added to Verizon. I think 4 to 5M units would be far more realistic.

How Stocks Perform After Being Added to the Dow

Fri, 29 May 2009 11:18:34 -0400

Hmmm...no mention of Cisco?

The Palm Pre's Coming Out Party

Fri, 29 May 2009 10:58:48 -0400

Web apps have their place, and dedicated apps have theirs. Pre putting all of their eggs in web apps is only giving the user half of the benefits. Remember how developers and analysts kicked and screamed when Apple only offered web apps initially?

A lady phone is not going to appeal to guys.

Apple: The iPhone in China

Wed, 06 May 2009 19:35:29 -0400

Basically, China Mobile has a Verizon-like mentality. They want to control the relationship with the consumer and steer them thru their portals. Unicom is playing the AT&T role, and that's why I see Apple cutting a deal with them.

Uhm, user 023490, Apple didn't miss any boat, if people got iPhones, then they paid the full price. How did Apple miss a customer or a sale?

RIM Grabs More Smartphone Share from Apple

Wed, 06 May 2009 19:16:49 -0400

Of course, giving an exclusive to AT&T has driven everyone else to another handset. That goes without saying. The part missing is the context. There's a reason Apple HAD to give AT&T an exclusive. So, arguing that you are so smart is rather pointless when Apple had no way to follow your sage advice.

Amazon's New Kindle-DX: $489 for an E-Reader?

Wed, 06 May 2009 18:44:38 -0400

Dear Virginia, the difference between a Kindle and an iPod, is that while the iPod was not inexpensive, the media was. I'm an avid reader. I visit B&N several times a week to look for new books. I'm exactly like the person the Kindle would seem ideal for; and yet, it's not for me. It's too fragile, too single-purpose, and too expensive, with expensive subscriptions to boot. I find the prices of books to be outrageous for e-media. The books I like are hardcover with pseudo-cut, creamy heavy paper and a nice font. I don't like cheap quality books, but if I'm not getting a quality book experience, then I am not going to pay an arm and a leg. The bottom line is that the Kindle is too expensive for what it is. The early adopters can pay, that's fine, but it won't get mass market penetration like an iPod, until they hit the pricing sweetspot. For me, that'd be around $100. Fine, make it a Book-a-month for 2 years, to subsidize the price, but the initial cost has to be lower, much lower. Or, keep the price where it is, but lower the cost of the e-books, which after all, have virtually no cost to the manufacturer. They have no inventory. They have no costly returns. The pricing is OUTRAGEOUS!

Why Amazon's Kindle May Be Paying for Itself

Mon, 27 Apr 2009 16:07:35 -0400

I doubt Amazon makes a cent from Kindle sales. The profit is in the e-books, so maximizing profit means getting as many Kindles in hands as possible, and that means selling them at cost.

Apple Q2 Earnings: Another Blowout Quarter

Fri, 24 Apr 2009 22:12:35 -0400

Shocking amount of nonsense.

On Apr 24 03:34 AM Moon Kil Woong wrote:
> I love to be challenged as much as any guy.
>
> If you read the computer history, specifically the rise of the PC
> Apple was way ahead of the game to start while Microsoft was putzing
> around trying to steal, I mean convince a programmer to sell them
> DOS for $50,000 because Gates was too big of a newb to actually do
> programming asides from stealing things from programmer meetings.
> A funny take on this is "Revenge of the Nerds."

Dude, you said in your previous post that Apple had "squandered its huge PC lead". That's completely different that saying "Apple was way ahead of the game". Are you thinking of getting into politics? A lead, implies marketshare. When was Apple leading in marketshare? And when was this lead, "huge"?

> So yes, Apple was way ahead of the game.
>
> My comments on Next is to show that without Jobs and his loyal followers
> Apple would have been toast, not the fact I went to Stanford. If
> you read my profile I went to SJSU. That still doesn't mean I didn't
> geek around with my friends in Stanford's computer room. The loss
> of him and his talent team would be like pulling the brain out of
> a person.

Dude, you said, "I used Next at Stanford", clearly implying you went to Stanford, what else was it supposed to mean? Why even mention it if you weren't trying to imply something. Man, you are pathetic.

> I suggest you try a Next computer. You will see how far ahead and
> how visionary Jobs was when Apple was bouncing around trying to sell
> their OS to clone makers. Stock punters these days really mistake
> how much Jobs added to Apple.
>
> Also back in the day, Motorola had about 90% of the cell phone market.
> They did squander their lead.

Dude, you were making an analogy between Motorola's one-time lead to the iPhone's lead. The iPhone does not and has never had a 90% share of the market, so your analogy is NONSENSE. And, when exactly did Motorola have a 90% share of the cellphone market, back when DynaTACs ruled?

> For current meat and potatoes if you look at Apple's filings store
> sales fell 17% and they got rid of 10% of their workforce down to
> 14,000 employees. Is this a sign of health? Their margins actually
> rose due to cost cutting, not as their execs said due to higher end
> and higher margin sales (aside the fact when people don't buy hardware
> software has higher margins).

For REAL MEAT AND POTATOES:
Let's look at FTEs from a year ago, and then extrapolate for the additional stores.

Here are the numbers:
March 2008 = ~12,000 FTEs

March 2009 = ~14,000 FTEs

Both figures were preceded by the word “approximately”, so they are clearly + or - 500 FTEs. Around 17% more FTEs this year than last, HOWEVER…, you have to factor in the number of stores open.

March 2008 = 205 stores

March 2009 = 251 stores

So, number of stores increased by 22%, and FTEs increased roughly 17%, but given the vagueness, the range would be from, 8% to 26%.

In other words, the increase is in the margin of error. Much ado about very little. Did you even read the SEC filings or are you parroting what you read from some blog?

> There is a strong possibility they stuffed Wall Mart and the channel
> with inventory.

Dude, if you listen to the conference call, or even read the transcript here on SA, you'd KNOW that the analysts ALWAYS ask Apple about channel inventory. The inventory levels this quarter were normal, in the 4 to 6 week range. There is NO POSSIBILITY of stuffing WalMart's channel. Do you honestly think WalMart is going to let a mfr to stuff its channel? Are you serious?

> In the meantime AT&T is selling unlocked phones. Why? If they
> were is such utter demand why would they feel the need to rid them
> to users who don't pay for their terrible and overpriced service?

Wow, do you think "unlocked phones" are cheap?

> I love Apple and their products but investment is not about loving
> a company's products. Just ask all those stuck in Starbucks and Mrs.
> Fields cookies stock. That said, I hold to my position of not holding
> Apple.

This is not about loving a stock, this is about getting your facts right, and not spewing home-spun homilies that you read in a book.

Apple: Three Battles Won, Nicely Positioned for the Fourth

Fri, 24 Apr 2009 21:53:29 -0400

Let's look at FTEs from a year ago, and then extrapolate for the additional stores.

Here are the numbers:

March 2008 = ~12,000 FTEs

March 2009 = ~14,000 FTEs

Both figures were preceded by the word “approximately”, so they are clearly + or - 500 FTEs. Around 17% more FTEs this year than last, HOWEVER…, you have to factor in the number of stores open.

March 2008 = 205 stores

March 2009 = 251 stores

So, number of stores increased by 22%, and FTEs increased roughly 17%, but given the vagueness, the range would be from, 8% to 26%.

In other words, the increase is in the margin of error. Much ado about very little.

Clearly you did NOT read the filings you are citing, so everything you say afterward is SUSPECT. And, what are you going on about iPods in WalMart, that has been going on for a LONG time now. Jobs was there, when that decision was made.

No one likes one-sided stock hyping, but one-sided stock bashing with no basis in fact is worse.

How did you become a Top 3 Commenter? Did you game the system, because you are clearly out of your depth in commenting on Apple. Have you even read any of the filings that you are commenting on?

On Apr 24 03:53 AM Moon Kil Woong wrote:

> My take. According to filings Apple dropped its employees 10% from
> 15,600 to 14,000 and is currently under consolidation. It's margins
> rose due to cost cutting and a revenue mix shifting from hardware
> sales to software which means less market share gains.
>
> Looking at Apple to total PC shipments make more sense than comparing
> them with HP and Dell which they are loosing market share. This makes
> sense since Apple sells at a premium and we are in a recession.

>
> One can see positives as well as negatives in this filing. Cost cutting
> is not bad if management is honest about it. Expanding into China
> this year is a positive if Apple is honest about it combating expected
> domestic sales. Choosing not to get into Net books is fine if you
> think it undermines your value proposition with 13" Macbooks and
> iPhones around that price and functionality area. Dissing netbooks
> for no good reason isn't so intelligent. Apple should be happy it's
> computers sell for a premium and commit to those price points even
> if it looses market share. Jobs was always clear it was not his intention
> to try to become 20 or 30% of marketshare.
>
> The fact that Apple sells its iPods in Wal-Mart is unsettling for
> a few reasons 1) it doesn't fit their demographic niche, 2) it doesn't
> ring brand value, 3) it sounds like a good place to dump, and 4)
> shows Jobs is utterly absent in making corporate decisions there
> anymore.
>
> So yes, Apple had a nice quarter but it doesn't smell like victory
> to me.
>
> I don't own or short Apple. I'm a fan of their products but don't
> like one sided stock hyping.

Microsoft Q3: Revenues Miss, Earnings in Line

Thu, 23 Apr 2009 18:51:40 -0400

How does G&A expense go from $2.3B to $900M, in one year? Something looks odd about that.

Apple Q2 Earnings: Another Blowout Quarter

Thu, 23 Apr 2009 17:28:58 -0400

One, Apple never had a "huge PC lead".

Two, what does "the cell phone market is relentless" mean?

Three, noone snickered when talking about Motorola's competition. Nokia and Ericsson were always well respected. When Palm, aka Colligan, thumbed his nose at Apple, Palm's PDA business and Treo line were already dying. Their nose-thumbing was seen for what it was, whistling in the dark.

Four, Apple has been releasing non-GAAP figures, not obscuring them like a FHLMC. Are you on drugs?

Five, what does the fact that Apple's OS is based upon NeXt have to do with anything? Are you trying to say MS can do the same, buy up another OS to replace its dog? Or, are you trying to say NeXt will leave, and that Apple will somehow lose its OS?

The statements you are making are hanging without any context. What are you trying to say? Or did you want to just drop the hint that you went to Stanford? I mean, you aren't the only person who went to Stanford, you know.

As a technologist, why are you betting on any tech companies at all? Virtually all of them were built upon the personality of one of their founders. That's what VCs bet on.

The fact is, your comment seems to say something, but in reality, says not a whole lot at all.

On Apr 23 04:41 AM Moon Kil Woong wrote:

> Despite my love for Apple I don't own the shares right now. 2009
> will probably be the zenith for Apple. Remember we are talking about
> a company that squandered its huge PC lead years ago without Jobs
> at the helm.
>
> As Jobs fades to the background there is a lot of entrenched bureaucracy
> there that will drive it to meritocracy again (like in most big companies).
> And the cell phone market is relentless.
>
> If iPhone can't keep up a few years from now it may look as tired
> as Motorola. When predicting Motorola fall from grace people would
> have snickered at the thought some Scandinavian company could compete
> with them. The same way Palm thumbed its nose at the thought of some
> computer company making a cell phone.
>
> It is true that the revenue recognition of iPhone is designed to
> smooth out earning for apple for 2 years, but creating a way to obscure
> financial results is more suited to Freddie Mac than a tech company.
> It's stock will fall well before it's earnings decline.
>
> As for the rest of Apple, without Next OS technology Apple would
> have never come out with a decent update to it's OS. I used Next
> at Stanford. It was a wonderful OS way before it was folded into
> and morphed into Apple.
>
> As a technologist, I would not want to bet on an Apple without Jobs
> running it. I hope he stays active in Apple and it thrives, but I
> just can't afford to be betting on a person's health.

On Apple's Normal Beat and Sandbag Guidance

Thu, 23 Apr 2009 16:37:44 -0400

Apple is not recognizing revenue on iPhones since March 17. This has a $50M GAAP revenue hit in this last quarter, and a $250M GAAP hit next quarter. Since noone was factoring that in, then true guidance, ie if you want to compare apples to apples, means you need to add $250M to what Apple stated to get a true comparison to analysts' expectations.

Mobile Ad Market Share: Android Catches Up to Palm, iPhone Still King

Thu, 23 Apr 2009 16:00:27 -0400

What the last chart implies is that since these modern smartphones are showing real internet pages, not JUST mobile internet pages, their numbers of requests are far lower than their their actual internet usage. Just something to keep in mind, because not all of the smartphones in their analysis are so good at going to real internet pages as the iPhone and G1. Thus those other phones that go ONLY to mobile websites would get a disproportionate number of mobile ads, as measured by AdMob.

For example, looking at the last chart, and at the iPhone's numbers. They are saying that July 08, the iPhone got 20M ad requests, and by Nov 08, was getting 12x more, at 238M? Clearly, the iPhone number looks small in July 08, as the iPhone was avoiding mobile websites and going to the real websites, where AdMob's ads were not being served. Once the dedicated apps were launched, AdMob could then serve their ads in those apps.

How Apple Will Continue to Surprise Investors

Thu, 23 Apr 2009 15:34:36 -0400

It read like you wrote it before earnings. I thought the last sentence would have the punchline, "Written before earnings".

Betting Apple's New Netbook Is a Big iPhone

Wed, 22 Apr 2009 15:17:28 -0400

The same reasons why flash and java are not on the iPhone apply to why they won't be on this new device.

AT&T Complains About Google, Apple Coopetition

Thu, 16 Apr 2009 15:29:46 -0400

Well, the carriers that are most desperate, T-Mo and Sprint, are the most likely candidates to rock the boat with devices that turn the carrier into a dumb pipe. They have no choice.

The carriers with the most to lose, like Verizon and AT&T, will resist devices that threaten their value-added services as long as possible. There's no way that Verizon will take on an Android-based phone, unless they cripple it somehow. That's their style. Until a Pre is a booming success on Sprint, or some Android phone is a booming success on T-Mo, and by booming success, I mean, Verizon is actually losing customers to those two. Until then, Verizon will not change their modus operandi.