ThinkFirst

Why I'm Selling Apple and Google Today - and Holding Amazon

I meant......

..so-called bad news is in the stock.

Why I'm Selling Apple and Google Today - and Holding Amazon

With $28 a share in cash and a cashflow yield of about 10%, I think all the so-called bad news about Steve's health is in the news.

I bet you will see him in very good health in the spring. By that time the stock will have put on 30%.

Fear indeed !!

It's Not Too Late to Buy Coal

Something is odd about the move in PCX. Could be a huge short-squeeze.

But, be careful here. On May 28, it sold $200 million worth of convertibles with a conversion price of $135.34 and the stock was at $96.67 the previous day. At some point, those buyers of converts will lock in their profit by shorting the common. Plus, PCX will be issuing more shares soon to use in its acquisition of Magnum. The sellers of Magnum will want to lock in their profit by shorting the common of PCX even before the deal closes.

Maybe, others can add more to this.

Should Apple Investors Focus on 3G iPhone or WWDC Message?

Ernie Varitimos calls himself "Chief Bloviator of Investor in the Wilderness."

The definition of the word "bloviator" is "one who discourses at length in a pompous or boastful manner."

Is this hilarious or what? This guy is calling himself a pompous blowhard.

Should Apple Investors Focus on 3G iPhone or WWDC Message?

Why does Seeking Alpha allow such self-serving drivel to be published? I wish they would exercise some quality control.

Three Reasons I Chose Microsoft over Apple for Home Media

Whatever happened to motherhood and Apple pie?

Apple: On an Innovation Treadmill

Danny, my boy, why do you own AAPL stock? Perhaps, you don't believe your own analysis! If you are not going to put your money where your mouth is, as it were, why do you think anybody should take you seriously?

Air T vs. Apple? Not Even Close

Another meaningless analysis based purely on numbers without considering the nature of the companies' businesses, the size of their markets, and their competitive positions.
What does AIRT do? This from Yahoo Finance: "Air T, Inc., through its subsidiaries, provides overnight air cargo services to the air express delivery industry. It also manufactures, sells, and services aviation ground support and other specialized equipment products, including aircraft deicers, scissor type lifts, military and civilian decontamination units, and other specialized types of equipment. The company offers its products to domestic and international passenger and cargo airlines, the United States Air Force, Navy, airports, and industrial customers. As of March 31, 2007, it operated 88 cargo aircrafts under dry-lease service contracts in the United States, the Caribbean, and South America; and owned 2 aircrafts. Air T was founded in 1980 and is headquartered in Maiden, North Carolina."
Does this company have any sustainable competitive advantage? Not that I can see. Are they ever going to have high margins? I don't think so. They are in a notoriously low margin business. Is there balance sheet strong? Not particularly. About 17% debt to equity ratio. Cash equal to amount of debt outstanding.
Not only that, AIRT's business is extremely cyclical. Couple of bad quarters and the company can easily go out of business. And, to assume that it can grow its revenues at 20% per year for the next 10 years?? This is what happens when neophytes start analyzing companies without any understanding of how business works.

Apple's iPhone 'Hype' Overhyped

Seeking Alpha has no quality control. What a shame!

Unlocking the Case of the Missing iPhones

Some observations. 1) there is a huge worldwide demand for the iPhone. Just look at the prices they go for on Ebay to foreign buyers. Sometimes as much as $200 over U.S. prices. 2) Apple must realize that it's deals with carriers is throttling demand. One thing they have done is make the iPod touch as close to the iPhone as possible. But, you cannot make calls, take pictures, send messages, and browse the internet unless you have Wi-Fi. So, the iPod touch may satisfy some of this worldwide demand, but not all of it. 3) They will have to introduce an unlocked phone to meet this demand, and this may require renegotiating their deal with carriers. My guess is that they will introduce a phone with less features but which is unlocked.

Even With Apple, Price Will Follow Value

Price WILL follow Value. About that you are right. But, you have the direction wrong. With $21 per share in cash, no debt, and significant growth ahead in personal computers and smartphones worldwide, the current price of 130 will look like a "missed opportunity" a year to 2 years from now.

Apple Needs to Execute, No Longer Innovate

There is no other large cap company that innovates AND executes better than Apple. It has a lot more growth ahead as more and more consumers switch to the Mac, and the iPhone increases its penetration in many countries. I expect that sometime this year Apple will expand its iPhone product line to drive growth. In terms of valuation, it has $21 per share in cash and no debt. During the Christmas qtr, it generated operating cash flow per share of $3.1. It should generate about $7 or more in cash per share during the next 12 months. You back out the $21 per share in cash, and you get 6.5% cash flow yield at $130 share price. And this is still a growth company which should be trading at a much lower cash flow yield (i.e. higher stock price). Sometimes, the market is dumb as wood. What I think will happen is that the stock will trade around here for a few days and then suddenly people will wake up and push the stock higher.

Earnings Power vs. Investor Sentiment

There are a couple of serious problems with your analysis. Others have mentioned one problem, i.e. that consensus estimates by analysts may be under- or over-estimating true earnings power. The second problem is that there is no right way of overlaying earnings with price. Take Best Buy for example. If you move the earnings line up, you get a far different picture. The way you have drawn the lines, you are leading viewers to conclude that Best Buy is a sell because, at some point, the price has to come down to touch the earnings line. But, if the earnings line were drawn above the price line, somebody who viewed the graph would conclude that Best Buy is undervalued. Neither conclusion would be valid from a simple glance at the overlay chart. I hate to say this but, such simplistic analysis is practically worthless.

iPhone Price Cut Causing Trouble For Apple

The iPhone was announced at MacWorld on January 9th this year. The pricing was announced then as well. It was also announced that it would be available in June. Sales began on June 29th. As far as I know, Apple has never announced a product 6 months before the date of first sale. Even the new iPod touch will be available in just under a month.

I believe Apple would have preferred a shorter gap between announcement and first sale. But, this was their first foray into the cellphone market and they needed to work with another company (AT&T) to make it successful. And they need FCC certification. They would not have been able to keep the product a secret much beyond January 9th.

For the early adopters, the price cut came 2 months after the day of first sale. From Apple’s perspective, the price was cut 8 months after the pricing was first announced (Steve explained the pricing logic in his MacWorld keynote). In the consumer tech world, 8 months for a price cut is not unusual. I think therefore that Steve was genuinely surprised at the strong negative reaction from early adopters.

The $100 store credit is a great response to placate angry Apple fan(atic)s. The cost will be much less than the estimated $85MM. In fact, Apple may even come out ahead. But, Apple needs to make it clear that this is a one-time only deal and that they will change product pricing as and when they see fit as part of overall business strategy.

Many commentators have jumped to the conclusion that iPhone sales must have slowed down. Although that may be true, I think a more reasonable explanation is that Apple needed to realign iPhone pricing to the rest of its iPod product portfolio and to upcoming iPhone product announcements. And, to take advantage of higher production capacity of their suppliers, to generate higher sales volume and, to lower manufacturing costs of common components. That is just Business Strategy 101.

But, more than that, I think that Apple initially saw the iPhone as a product quite separate from the iPod (Steve sort of said that to Walt Mossberg at D5). Yes, it had features of the iPod, but it was mainly a phone with a terrific touch-screen interface. At some point, probably long before MacWorld, they must have realized that there would be a significant market for an iPod touch. Certainly from those who did not want to switch to AT&T. But, logically, its introduction had to wait after that of the iPhone. With the introduction of the iPod touch, there is now a continuum (more or less) from the shuffle to the iPhone. Apple needed a rational price structure. And, so the iPhone price cut.

If you now look at the pricing of all its new iPod/iPhone products, it makes a lot of sense. For $299, you can get an 8GB iPod touch. Pay a $100 more and you get an 8GB iPhone with its additional calling, email and other features.

According to a recently leaked T-Mobile Germany ad, a 16GB 3G iPhone will go on sale in Europe for 499 euros. I expect that before the end of the year, and perhaps in time for the holidays, Apple will announce a 16GB 3G iPhone for the US as well. And, logic dictates that it would be priced in the $499 to $599 range. If this announcement happens, Apple will have a formidable product portfolio: from the $79 1GB iPod shuffle to the $499 to $599 16GB 3G iPhone.

And at some point within the next few months, or maybe the next holiday season, will come the $199 2GB iPhone nano. No iPod features, no WiFi, just a cute little phone. I am just speculating but it makes sense to me.