Seeking Alpha


Send Message
View as an RSS Feed
View KenC's Comments BY TICKER:
Latest comments  |  Highest rated
  • Apple: I'm a Believer [View article]
    Let's be reasonable. Certainly e-ink is easy on the eyes, but saying if Apple doesn't use e-ink, "the device will NOT be a viable ereader" is utter rubbish. It's hyperbole.

    And, before we had backlit LCDs, we had non-backlit LCDs on our laptops and PDAs, Mac laptops and Newtons. I'm sure Steve Jobs remembers those.

    The only significant advantage to e-ink is battery life, and even that may not be enough to outweigh the advantages that consumers perceive with color and backlighting. You do remember PDAs, right? When color came, grayscale was out. When backlighting came, non-backlit screens were out. The market decided those choices, just like it will decide what they prefer for an ereader.
    Jan 25, 2010. 10:42 AM | 5 Likes Like |Link to Comment
  • Microsoft vs. Apple - Which Is Worth More? [View article]
    You're long MS and short Apple? Justice is served.
    Sep 8, 2009. 11:14 PM | 5 Likes Like |Link to Comment
  • 10 Reasons Not to Buy Apple [View article]
    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.
    Jul 8, 2009. 03:14 PM | 5 Likes Like |Link to Comment
  • Apple: Android Photography Is About To Take A Huge Quality Jump [View article]
    LOL, if people aren't understanding the "subtlety", perhaps you're being TOO SUBTLE!

    One, you haven't proven that "hardware-wise the mid tier Android phones ALREADY match the iPhone". Cherry picking a few favorable specs doesn't mean the end result is better.

    The problem about whether one will move faster or slower is that Apple is vertically integrated and the parts move in concert. For Android, they have to wait for these supposed quantum leaps in hardware or software. They are not masters of their own destiny. They don't control the accelerator, so who knows if they'll be faster.
    Mar 6, 2015. 10:59 PM | 4 Likes Like |Link to Comment
  • Apple: Android Photography Is About To Take A Huge Quality Jump [View article]
    "Apple is beaten on nearly all camera hardware fundamentals, be it:
    Resolution. The iPhone is at 8MP - competitors easily go all the way up to 20MP with even low-to-mid tier phones now at 13MP."

    You do realize that sensor resolution is not the same as image resolution.

    "Aperture. The iPhone is at f/2.2. Competitors easily field f/2.0 lenses, and Samsung in its latest Galaxy S6 is even using f/1.9."

    One can't assume the published spec is the same as the actual measurable spec.

    "Sensor size. There are several competitors using larger sensor sizes, including the new Samsung S6 at a 1/2.6" diagonal"

    Bigger sensors have greater potential, but actual results depend upon lots of individual factors.

    Really, that's it on hardware? Nothing about optics?

    Basically the three things above mean little without looking at the results, and probably the most important measure now is pixel size, which gets mentioned early, and not when Android is supposed to catch up:

    "The sensor has 1.5 μm pixels, which are larger than those usually used by competitors and facilitate low-light performance. Competitors usually field 1.12 μm-1.2 μm pixels due to using higher-resolution sensors. The advantage in having larger pixels can be negated in software by oversampling pixels either spatially (by producing a final image that's lower resolution than what the sensor is capable of) or temporally (by shooting several photos in sequence and sampling from those to form the final image);"

    The lower number of pixels that Apple uses is considered a negative in your article, and yet it contributes to a larger pixel size, which you admit is an advantage. Your negation point is an interpolation fudge. What's the point of having all those pixels, if you're just going to interpolate by pixel-averaging?

    How many people are blowing up their images that require more than 10 MP? Sure, it may allow people to crop, but then, the key factor is optical quality, and where was any mention of optical quality in this whole article?

    By leaving out things that don't suit your argument, you undermine your whole argument.
    Mar 6, 2015. 10:43 PM | 4 Likes Like |Link to Comment
  • Apple: Pride Comes Before A Fall [View article]
    One, there are more cities than just Shanghai and Beijing. Two, those "hand full of rich" are quite large hands. Three, people in developing countries like China look at their cellphones differently than those in developed countries in the West. As such, they are far more likely willing to allocate a larger part of their budget to a cellphone purchase. Many studies have shown that the average Chinese person is willing to budget 1 months' worth of salary for their cellphone purchase. Four, China's population is ALREADY a "mega large market for iPhones". Five, what exactly do you know of China? Have you ever been there? I was born there, and had a home there until a couple years ago. Funny though, I was just thinking of taking some of my Apple profits to buy a new place there.
    Feb 15, 2015. 12:57 AM | 4 Likes Like |Link to Comment
  • Apple Numbers Get Serious [View article]
    "But there is a point where the company becomes less attractive to investors, relative to other stocks, and that's simply math."

    Aren't you a little late to be drinking at the trough of Large Numbers?

    "At a valuation of $710 billion, you need that to increase by $71 billion to make 10% on your money."

    Didn't Apple just increase over 10%, in a 2 weeks?

    "The Apple dividend that once seemed generous is now yielding 1.50% to current shareholders."

    Oh, and by April Apple will increase it.

    "Sales growth is already slowing - it was less than 10% for 2014 fiscal year, although its blowout Christmas quarter makes the year-over-year gain more like 29%."

    So, sales growth is slowing and increasing all at the same time.

    "There is an assumption built into the stock that Apple will keep growing its top line, and maintain margins of 25% and more, for an indefinite period."

    Where did you get that idea? Have you looked at the PE ratio lately? Apple's valuation trades at a discount to the S&P.

    "I'm not adding my own shares to the pot - at current prices I've nearly doubled my money on an investment I started making less than three years ago, when the price was languishing at a post-split price of $60, or $420 pre-split."

    When you only own about 100 shares, it's hard to move the portfolio needle. What? You own more than 100 shares now? I remember when you bought your first 10 shares, pre-split.
    Feb 12, 2015. 10:46 PM | 4 Likes Like |Link to Comment
  • The Future Of Apple Pay [View article]
    "Apple will have created a virtuous circle, where the customer's purchase of an iPhone may actually pay for itself with the savings on retail purchases"

    This is really not Apple's way of disruption. It sounds far more like what Amazon would do, give away something to get more Amazon Prime subscribers.
    Nov 6, 2014. 09:46 PM | 4 Likes Like |Link to Comment
  • Android Gets A Black Eye From Apple [View article]
    @ks, You wrote:
    "Samsung will eventually have to lower the price of their smartphones to stay on top"

    Really? How much pricing wiggle room do they have? Did you read how much their profits already dropped? If their prices get any lower, it'll become a loss maker. Is that what they should do, lose money to "stay on top"? Is that how they do it in your world?

    "More importantly, operating income from the company's mobile business fell from 6.7 trillion won to 1.75 trillion won"
    Nov 2, 2014. 06:50 PM | 4 Likes Like |Link to Comment
  • Q4 Will Show Just How Stagnant Apple Earnings Really Are [View article]
    NicZ, you sort of understand the story. Apple has a lot of foreign-income sitting in cash overseas. About 2/3rds of that amount has already had the US income tax booked, as Gregg Rosenberg has pointed out. No matter what happens to Irish tax rates, it won't change Apple's taxes, unless that tax rate is above 35%. It's already been booked, if Irish rates go up, the amount Apple has set aside for US taxes will go down. It's a net wash.

    It's the other 1/3rd of that foreign-income sitting in cash that you are looking at in their 10K. If they repatriated that amount, then they'd owe the US corporate tax balance on that amount; however, that amount is not intended to be repatriated as they intend to use it as foreign working capital. Now, that amount has been taxed around 2% in Ireland. If Ireland's tax rate were to change, say to 12.5%, then in the future, Apple would owe about 10% more on the amount the don't plan to repatriate. As for the existing amount, it will take years for the EU to determine. AND, the amount owed won't be $18.4B, that's the amount Apple would potentially owe the US Treasury at a 35% rate. The potential they'd owe Ireland due to the EU would be about 1/3rd that amount, possibly $5.5 to $6B.
    Oct 17, 2014. 10:36 PM | 4 Likes Like |Link to Comment
  • Do The Math: Apple's Fiscal 2015 EPS To Rise (At Least) 25% [View article]
    @exposed, I suppose you are referring to launch numbers of 10M, vs last year's of 9M. Of course, there's the tricky part where one should compare sell-thru vs shipping totals. As several analyses showed last year, the true sell-thru might have been as low as 5.5M, while this year's sell-thru total has been estimated over 8M, for a greater than 40% increase.

    As for the market speaking, the key to "seeking alpha" is to find those opportunities where the market doesn't fully understand. That's how you make alpha.

    For example, a few years back, analysts and the market were totally not understanding Apple's "deferred revenues" for the iPhone. Steve Jobs even made a one-time appearance on an Apple earnings conference call to introduce Non-GAAP data to better help investors and analysts understand Apple's true sales and earnings. Even still, the market didn't react. It took until the FASB changed the rules on revenue recognition where Apple's deferred revs for the iPhone were mostly recognized in the quarter sold, for the market to see Apple's true earnings. Even then, some here on SA called this financial chicanery and Enron-like. Seriously.

    Anyhow, anyone who argued the market has spoken, missed out an easy opportunity, just like now. The market has been slow to react to what is likely an easy 25% EPS increase.
    Sep 24, 2014. 11:27 AM | 4 Likes Like |Link to Comment
  • Apple: Why The Cash Issue Is So Important [View article]
    "In the case of Apple, much of the 'cash' may very well be encumbered through guarantees to suppliers and customers."

    I am quite sure that Apple lists in its 10Q or 10K all of its committed funds, and without looking I am quite certain it is NOT "much" of the cash, but a tiny fraction that is committed, something around 10%.

    Are you serious there is not going to be some "magical tax repatriation holiday"? And you know this how? If there isn't going to be one, then why are all those smart companies holding so much cash waiting for one? Maybe you should tell them something they don't know.

    "Apple may very well be selling its shareholders short by hoarding cash that maybe subject not only to inflation, but to higher rates of tax on its eventual repatriation."

    Seriously? "Higher rates of tax"?!?

    Are you saying that the US corporate tax rate is going up from 35%, and that this higher tax rate will be retroactively applied to foreign income earned?

    You do realize that Apple has already accounted for US corporate taxes on about 2/3rds of its foreign earned income. That's why the net effective tax rate is 26%. Tax analysis by people smarter than I have sussed out that Apple pays:

    31% = US net effective tax rate
    2% = non-US net effective tax rate

    If you do a rough calculation knowing that about 2/3rds of Apple's profit is non-US, with the tax rates above, then you get a global net effective tax rate of about 11.7%, and yet Apple is booking 26%. How is that?

    It's because if you read the 10K Apple is accounting for US taxes on about 2/3rds of its foreign earned income. If you apply a 33% tax rate, the difference between 35% and 2%, to 2/3rds of its foreign income which is 2/3rds of its total, which works out to 4/9ths. When you do the rough math, that adds another 14.7% to the 11.7%, which is coincidentally, 26%.

    The point being that Apple has already booked the appropriate US tax rate on about 2/3rds of its past foreign earned income. It would be highly unusual for US tax authorities to raise the US rate and apply it retroactively.

    If anything, perhaps shareholders need not worry too much about speculation that doesn't apply if you've paid attention to Apple's 10Q and 10K.
    Jul 8, 2014. 09:50 PM | 4 Likes Like |Link to Comment
  • Apple's Biggest Threat - Declining Prices Of Computing Devices [View article]
    "In the foreseeable future, PCs, tablets, and smartphones are expected to decline steadily in price. For Apple, this presents significant headwinds for profit growth."

    Haven't you shown that Apple has been around as long as the PC industry and has faced these headwinds all that time? What's so different now that would make one concerned any more than at any other time in Apple's history?
    Jun 29, 2014. 03:28 PM | 4 Likes Like |Link to Comment
  • Apple: Q2 Results Are Not What They Seem [View article]
    @svdoug, my understanding is that everyone in the industry counts cellphones that way.
    May 9, 2014. 12:39 AM | 4 Likes Like |Link to Comment
  • David Trainer's $240 Apple Price Target Analysis Just Doesn't Add Up [View article]
    Two things:
    1) he wrote a year ago, May 15, 2012, that Apple's ROIC of 270%, was great, and that he recommended investors "buy and hold", at a time when Apple was around $550. He posits that Apple's valuation is $700 based upon 15% growth in NOPAT over the next 3 years.

    Then, this year, Apple's ROIC is now 271%, he decides Apple has no future, and puts a valuation of $240 on Apple. So, the ROIC hasn't changed in a year, and his recommendation has done a 180 degree turn. Utter tripe.

    2) Having looked at his model, his $240 valuation all turns on one assumption, i.e. that Apple's ROIC will be 52%. He doesn't state when, but his current calculations show Apple's ROIC to be 271%. He calls that unsustainable, even though a year ago, he made no such comment.

    That ROIC would mean Apple makes only $8.0B in profit, instead of $41.7B. Clearly, it's going to take a long time to get down to only $8.0B in income. When? Who knows, Trainer doesn't say.

    Just for laughs, Microsoft's ROIC is 71%, which means, Trainer believes Apple will quickly diminish to a level worse than Microsoft's.

    Trainer is being disingenuous for not clearly stating the timeframe for his valuation, which all depends upon some hypothetical ROIC that he has chosen. He needs to write a whole thesis on why Apple's ROIC will decline, if anyone is going to take him seriously.
    May 16, 2013. 03:10 PM | 4 Likes Like |Link to Comment