rd4sndk

20 Comments

    • All Quiet on the DRAM Front: Can Micron Survive the War of Attrition? [view article]
      I can not believe someone is trying to put lipstick on this pig of an investment. You should try a list of worstening scenarios that suggest under what conditions would micron become insolvent. As I see it, smart money will start to exit micron no later than 1Q09 and that micron will receive a bit somewhere in the 2Q09. At a current market cap of $3.4B (4.4 pps), it's p/b at 50% would suggest that with a little further deteriation in its share price, one can pick up at least two 300mm mfg plants for the fire sale price of $4 Billion. Throw in the other operations and a hefty 25% layoff after acquisition micron is ripe for the picken. Buying micron would benefit Samsung or Hynix well as all two are in the 3 basic businesses that Micron operates. Sandisk would also benefit in buying Micron because they would eliminate another major nand competitor while improving its royalty stream, and more importantly give Sandisk an upper edge in removing Intel from the nand business. If Sandisk were to buy Micron, this could usher in a greater collaboration between Intel and Sandisk and would go further to solidify Sandisk/Toshiba partnership as the defacto standard for nand chips and cards. Oct 04 10:09 AM
    • Apple: Great Company with Lofty Valuation - Due for Pullback [view article]
      Exactly why should anyone listen to your prognostications. Anyone whose invested in Apple over the past 2 years know that P/E ratios for valuating Apple doesn't reflect its true earnings.

      By your writing style, you're not an uninformed person. So what's your reason for writing such an uninformed piece?

      I see a lot of these short side biased blogs on Apple that just boggles my mine. I finded it intreging to here someone write such a negative piece on a company that is accellerating cash flow by 35%+ per annum and will top out near $40Billion within a year. With such a matrix, who cares about less than 0.1% stock price dilution.

      Come on, be honest for once and tell us the real reason for this useless piece.       Aug 18 07:52 PM
    • Research In Motion's 3G Counteroffensive: The Smartphone Arms Race Escalates [view article]
      Wow... Thanks for the chart. This chart clearly shows that Apple was taking share from Palm and stalled RIMMs advance. What's not shown is after the 3G launch which will clearly show that Apple is now taking market share from all smart phone OEMs including RIMM.

      However, one could tell Apple has captured a significant portion of the smart phone market by its SP performance. This is all shaping up to become a short for RIMM and a long play for Apple. By Christmas, RIMM will be punch drunk from Apple's reported sells and the analyst will have to take notice of the iphones contribution to Apples top and bottom line.

      Big money was betting on RIMM and they have clearly choosen the wrong race horse. These low tech investment gurus have provided a great opportunity for small investors to benefit from Apples rise to mobile phone prominence. RIMM should go down by 1Q09. Nokia will take some time--perhaps another year. Motorola is dead in the water and neither are prepared for the next iphone platform that will catapult Apple market share of all mobiles above 10%. These are great times for the retail investor. Big money will not be able to ignor a 12 million plus 4Q08 iphone 3g sales.       Aug 06 01:08 PM
    • Replacing P/E in Valuing Apple Stock [view article]
      Wow... After 4Q09 its not going to matter any way. Both EGM and CGM will move the stock higher. From my estimates a forward looking CGM (4Q08) should value Apple at 20.3 x 10B= $203B. Apple earings and Cash are accellarating which indicates a growth stock. Cash growing 50%+ and earnings growing 30%+. Most growth stocks are valued based on 4 quarter forward looking estimates. If I were to do that, the cash looking forward would be 12 to 15 billion. Using a 20.3 multiple we're at 240 to 300 PPS.

      I'm not trying to be contrarian here I just believe that Apple is unfairly undervalued at this time. Your CGM of 20.3 is based on backward looking CF. My contention is that forward looking cash flows are more appropriate. I estimate that Apple will have 45 to 50billion in cash by 4Q09-- 150% growth in 1.5 years. What company growing that fast uses multiples of 20x?       Jul 31 10:51 AM
    • Apple: Are Investors Overlooking Cash Earnings? [view article]
      This was a great treatment on Accounting principals but your analysis ended up with "Therefore, when evaluating Apple on its prospective cash flows, shares look attractive under $160." This is exactly where the market took Apple which currently stands at $158.5. Most Apple longs believe Apple is not being priced right given its growth projections and like your post points out its high FCF.

      Also, your analysis doesn't include the impact from iphone cannibalizing ipod sales and the addition of the apps store and mobileme revenue streams.

      Third, the current accounting methods will show that the iphone represents 5% of Apple current sales. That number will move to over 20% by 1Q09 without including app store and mobileme revenue. By the 1Q09, the iphone will represent the 2nd largest revenue catagory to Apple. Assuming minimal ipod sales erosion (15% or less), how does this not warrant an increase in valuations.

      Finally, your 2009 20 million iphone sales are low, extremely low by about 15 million. In terms of cash, Apple will be sitting on about $28 billion by the end of 2008 and adding about $3billion per quarter to that number. This time next year, Apple will have somewhere in the vicinity of $44billion. This stock is worth much more than $160/share and its p/e multiple should be in the area of 35.       Jul 30 03:33 PM
    • Apple Math: Market Share over Margins [view article]
      Jason... Although I agree with the general low eval of Apples potential, I totally disagree with your numbers and the time frame inwhich the iphone will be acretive or noteworthy to earnings.

      Why disagree with your numbers
      1. Munsters predictions are already wrong in that he did not expect expansion of 74 additional countries with initial launch of 22. His numbers included only Japan for 2008. Although I agee with munsters 300% growth over the next 2 years its possible that given Apples momentum, app store and content model, 400% is more probable than 300%.

      2. You $71.75 per phone seems too high for my estimates. I estimate a single 8GB phone addes only $65/quarter in sales and using a conservative 40% GM (this number would include royalties, packaging and other mfr incidentals). Much less than your $72/phone.

      My estimates

      1. The iphone is not just hardware. It includes additional revenue to Apple via the apps store, Mobileme, accessories, repair and itunes. Two of these 5 catagories are new independent multi-billion dollar revenue streams while the others benefit from incremental sales. All total, the iphone represents an initial hardware sale and residual revenue to Apple over the life of the product.
      2. The iphone will canibalize the ipod product line. Apple tried to put a good face on this by growing quantity shipped but that was accomplished by halving the price of the shuffle and lowering the ASP for the other ipod line. On the CC, this was reported as being a good thing because the iphone carries a higher GM than the ipod. I agree.
      3. In the current quarter iphone sells is $419M lower than all Apple revenue generatine catagories; next quarter it'll be $800M larger than software and peripherals. The 4Q08 iphone sales will be $1450Million larger than desk tops, itunes, sw, and peripherals. By 1Q09 iphone revenue will be 1800Million, the second largest revenue catagory exceeded only by lap tops. Starting in 4Q08, the iphone will be the greatest contributor to cash flow than any other catagory including lap tops.
      4. While iphone is moving quickly up the catagory hierchy, apps store and mobileme revenue will approach $250Million per quarter by 1Q09. Although the these catagories will contribute the least the renvenue, added with iphone sales they represent more than 20% of the iphone catagory.

      My point is that we don't have to wait until 4Q09, iphone sales and impact to Apples revenue are relevant now and they are substantially significant.       Jul 30 02:30 PM
    • Dividend Yields Soar [view article]
      Correct me if I'm wrong but Since you're buying the stock for the div, then why not hedge your stock purchase with some puts? Any errosion in the stock will bet off set by the puts. Any sign of a bull market, you can cover lower your puts and benefit some form the stock appreciation. Jul 30 03:16 AM
    • Apple: Expecting Short-Term Weakness [view article]
      At best the Apple should not have suggested 10% lower margins without backing that up with expected higher volumes. Hedge funds love this type of disperity which is fodder for shorting the stock. It's apparent that, longs are not selling which leads me to the conclusion that there are a lot of short sellers out there. Irroneously they link the lower GM to the economy. What a idiot thing to do, given that we're most likely moving out of a recession and by early next year we'll see signs of economic improvement. The greatest threat to the economy is oil which is used in almost every aspect of the US economy. It alone is probably 50% of the current economic down turn. But Oil prices are down 20% the past 2 weeks and falling even further. Demand destruction is accellarating and supply is increasing. There's no place for oil to go but down. This entire contrived oil imbalance has finally ran its coarse; eventually the truth always win. Fortunately for us (unlike the oil barons) the future for oil prices is lower given the shift in America and other western countries will to become energy independent. The Saudi's are probably shaking in thier sandles. In an ironic since, the hedge funds may have done America a good think by given focus to the huge 700Billion of cash leaving US soil for foreign countries. The light is on this little hidden win fall and the exterminator is cranking up the gas can.

      Apple's problems is not the economy and the earnings results from Apple proves it. Forward guidance from Apple is worthless other than providing some insight into the direction of new product releases. Any one that suggest otherwise is just providing cover for hedge fund shananigans.       Jul 25 10:23 AM
    • RBC Analyst: Expect 1 Million 3G iPhones to Sell on Launch [view article]
      agreed, Abramsky is grossly off in his predictions for the 3G iphone. His conservative estimates doesn't take into consideration the canibalizing of the ipod and mp3 markets. I estimate they'll sale 1.2 million in the US alone and twice that everywhere else. If you make the assumption that on average each country does 100K iphones in the first weekend, then you reach a number of 2.1 million world wide excluding US. Include the US and you get 3.3 million the first weekend. I also estimate they'll sale somewhere's upperwards of 6 to 10 million this Christmas albeit at the expense of ipod sales but this is not a bad thing given that the GM and ASP for the iphone is higher than that for the ipod. Secondly, residual sales from the apps store and itunes bolds well for Apples bottom line and future sales. My god, some are saying the Apple could do $1Billion in apps store sales a year.

      I further estimate that Apple will move above $10Billion annual cash flow and by this time next year will be sitting on a hoard of $30billion+ in cash. By 4Q09 Apple will have $37 to $40 billion in cash and would have to start putting some of this FCF to work for share holders in the form of stock repurchase, annual dividends or special dividend. Given Job's personality, a stock repurchase may be what he chooses because he then will have control over whether, how and when the money is spent.       Jul 12 02:33 PM
    • Did Apple Manufacture a First-Day iPhone Shortage? [view article]
      Why would apple turn customers away after standing in line for hours. Pissing off customers again after the orginal release contraversy (under cutting early adopters) would make no sense. I believe Apple underestimated the success of the iphone greatly and again got caught with under supply. It made since to me that the large number of people buying the Iphone are moving up from ipods and MP3 players to the iphone with its multimedia and smartphone capabilities. Their estimates may be as high as 3x off. Why would one buy a $189 4GB ipod nano when they could get an 8GB iphone for the same price.

      Apple will sale at least 15 million of these things in 2008 and as much as 8 million this Christmas. Next year will be off the charts with north of 35+ million sold. Getting any higher will depend on the success of RIMMS, Samsung and Nokia's new offerings. I suspect they will be have very competitive products.       Jul 12 02:16 PM
    • Garmin: Market Erroneously Pricing In Nuvifone Failure [view article]
      Tim... You raise a good argument for investing in Garmin based on nuvifone sales but I'm not as optimistic about cell phone revenue contribution as I am in continued automotive penetration and having aero+boating GPS becoming a larger percentage of revenue. These latter markets are less competitive and are sufficiently large to continue Garmins as a growth stock. My concern is that the cell phone market is too competitive and may consume a disproportionate amount of R&D resources from the other bread and butter product lines--not to mention its the competitiveness. Selling a car phone as an automotive GPS package for the low end consumer with WIFI or Wimax as the primary broadband low cost conduit for toll and network access would be huge as well as game changing. Those locations that don't have WIFI access could then use a specialized pay as you go cell network until within WIFI range. Essencially free cell phone access.

      But competing with the likes of Nokia, Apple, RIMM, Samsung, Motorola and Google is highly risky in the cut throat cell phone market.       Jul 08 01:18 PM
    • Will Some Solar Companies Face a Cash Crunch? [view article]
      You've done a great hack job on the solar sector, but let's look at what the balance sheet really says. For CSIQ, inventory ramped to $81 mm from $71 mm. That's a 14% increase q-o-q. No company in their right mind will increase inventory when sales are not being made. Secondly, 30 and 90 day terms are typical for all businesses especially for service oriented business which have to rely on MFG credit worthiness to fund inventory builds. Solar companies limit their exposure to even heavier marketing cost by relying on a small number of integrators. They also limit labor cost by relying on integrators as well. However, nonvertical industries do share marketing and installation cost by providing consignment inventory to their custormers. Further, booking this cost is done only when the sales are made not when the consignment is delivered. The 30 to 90 day terms are used to help cash limited integrators.

      Your post is nothing more than a cover to short these companies. The important matrix in the solar sector is visibility of sales. Companies like ELSR and CSIQ with 2 years of sales backlog is not a company going out of business any time soon. On the contrary, its apparent that with increasing volume, panel efficiency and growing awareness I for the life of me don't see this trend ending for at least 5 years-- with each year bringing surprised upward revision of capacity and revenue.

      Great hack job though!!       Jul 02 12:43 PM
    • WSJ Report: What Apple Will Be Creating in 5 Years [view article]
      The only prediction I found plausible is the Apple TV/multimedia console. All other products won't be material to Apples earnings. Over the next 5 years Apple's success will not be in new products but old products expanding within their respective markets. You, perhaps mistakenly, give the impression that you're investing in Apple as a growth story because of these new products. I beg to differ with that conclusion. Apple is a growth story because of its legacy products--the Mac, iphone, ipod and software/services. All of these product lines will grow at double dig over the next 2 to 3 years and some over the next 5 years. The Mac is growing over 35% annually, taking market share with no known viable competition. The iphone is in its infacy with less than 0.5% of the cell phone market. The ipod is morphing into a multimedia game playing machine and software and services will expand at the same rate as these new hardware products as Apple capitalize on new apps for all of them.

      Finally, there are 2 additional lagecy categories inwhich Apple will have double digit revenue growth namely content distribution and mobile microprocessors. Content on itunes is expanding into, TV, new motion picture releases, and soon gaming and posibly print media etc. With over 100 million processor needed for its mobile lineup, Mobile microprocessors will become an instant $2Billion market for Apple. Assuming a cost savings of 25% per processor, Apple will be looking at adding at least $500 Million to material cost savings annually.

      Apple is the new Sony. Given their war chest of $20B and approaching cash flow growth rates of $10B annually, Apple will become more and more vertically oriented to minimize material cost and system complexity.

      New markets are great but investment in Apple today should be based on its current market potential and track record not these small trinkets of CE products that are so consumer fickled. I see Apple is a congloramate in direct competition with (MS, HP, RIMM/Nokia, ToysRus, BestBuy and Block Buster). Add to that mix the Apple ipod which is the MP3 market and you have the making of the largest tech company by market cap in the world. I suspect Apple to surpass MS in market capitalization in 3 years.

      Where will Apples expansion come from:
      1. SW - Apple will become 25% of the desk top market as its Mac line expands. It will add more applications on top of the current purchase of Mac version of MS office from MS. SW Applications will expand into mobile as well.
      2. iphone - Apple will capture at least 5% of this market in the next 2 years. Thats an annual $10 Billion in sales with GM above 50%.
      3. Mac - Growing at 35% plus.
      4. ipod - rejuvinated by gaming applications suspect growth rate of 10 to 15% annually.       May 23 09:27 AM
    • The iPhone-BlackBerry Showdown Continues [view article]
      Unless RIM's new thunder phone comes with more NVM (nand) it will not compete with the new or the present Iphone as a mobile computer. The RIM BOLD missed the point and I suspect limited success of that phone given its under minded NVM capacity. RIM's at a advantage but old habbits are hard to break. Equipping the BOLD with only 1GB of embedded memory was a calloso mistake and the poultry 8GM max SD slot wont cut it. Surfacing the web requires storage. People will want to store video, music, photos, data, video clips, SW apps, gaming etc. 8GB is a joke.

      RIMM's reliance on email will be their down fall. Email is not as compelling for a smart phone as the media makes out. If that were so, palm and others will be viable and RIMM wouldn't be afraid of lossing market share to Apple.

      The evidence is so overwhelming from the Apples first launch of iphone that they had to discontinue the 4GB model an standardize on the 8GB as a minimum. Iphone currently has two models 8 and 16GB and I suspect they will add an additional 24GB or 32GB models this year if not in June. And don't forget the ipod-touch which already has a 32GB model and is selling in the top 10 best selling ipods on Amazon.

      From this canadian analysis own admission, Apple is expected to double iphone sales in 2009 to a tune of 20 million and I've heard estimates upwards of 43 million. If the latter turn out to be the case, RIMM is in deep trouble. But they have until next year to release a phone with adequate NVM and a compelling user experience. Relying on the QWERTY keypad and email is a mistake of huge proportions. Consumers will abandon RIMM in droves if they fail to heed what the masses desire--more NVM. Its the memory stupid.
      May 21 08:57 AM
    • What's Better: BlackBerry or iPhone? [view article]
      Too much attention is given to business class and the key board for mobile use. My disappointment with the BB bold is it missed having sufficient memory, the OS was inferior and the LCD is not competitive with the iphone. However, this is a good start and I suspect RIMM will have additional releases that will be more competitive. The bold is not the answer to the iphone let alone the 3G version.

      Lastly, its clear that Apple is not building iphones to compete with RIMM or any other cell phone OEM. What is clear to me that Apple is building an interconnected multimedia ecosystem. The iphone is one of two devices that will spear head this interconnectivity multimedia rich experience--the ipod-touch and to a lesser degree the iTV products. Follow the announcements and you'll see that browsing the web, viewing TV, viewing motion picture releases, listening to music, and reviewing pictures are all coming together in the ipod-touch and iphone. The PC, laptop, DVD,phone, TV and jukebox are morphing into smaller mobile devices and Apple is leading the way. All other discussion is superpulous. Now ask yourself why would you buy any other product than the Apple mobile platforms when you can get all of this in one product as opposed to just business class email.       May 14 08:17 AM
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