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Denny_Chasteen

Denny_Chasteen
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  • With Apple, What A Difference A Week Makes [View article]
    "Ramp Ups - Bending and Breaking Manufacturing Cost Curves"

    Yes Zhang. I am talking about the first few weeks of cost. Not YoY. Consider sales by week on the iPhone 5. Then back that up to offset logistics and manufacturing lead time.

    Costs are not static. They are way higher and margins way lower on the front end of any new product. Not only manufacturing, but also retail and marketing. Right up front, there is training and certification, new packaging, creation of the advertising and retail store capacity. A lot of small tools and fixtures are expensed up front rather than capitalized. For example, the first few weeks of supply may have to be shipped air-freight rather than ground or sea. Same for the components getting started up on the assembly lines. It's a crazy and stressful process to manage no matter how well it appears from the outside. If you knew half the problems every company has in starting up new production you would scare off all their investors.

    I have ramped up many new manufacturing lines and processes for electronics manufacturing and also ramp ups for two major semi-conductor fabs (even harder and more costs). "Ramp up" costs are significant and go from high to zero over some short months of production. Quality costs are higher. More inspection, rework and scrap. On and on.

    I guess people just think Steve Jobs had this magic wand. He didn't. Tim Cook is the man who made all that magic happen. I wish he was also an innovator. But he is not. He needs to go back to operations and let's get a visionary leader.

    Not only that, but AAPL is trying to get off Samsung components. OMG what a cost risk and investment this will require. Look for foundries like Chartered Semi-conducter in Singapore to get a huge chunk of business potentially. They have produced processor chips for Microsoft, IBM, Motorola, you name it. Not sure how the accounting will be done on this, but the start up and ramp up costs will be VERY high.

    I suspect that the quarter caught the iPhone 5 at a point on the cost curve where ramp up costs are highest. But every aspect considered, things are much better with Apple than most people realize right now. The cost and margin curves are just bent, not broken.
    Jan 25, 2013. 02:01 PM | Likes Like |Link to Comment
  • With Apple, What A Difference A Week Makes [View article]
    Look it costs more money to manufacture a new item than an old one. PERIOD. As more are produced, inefficiencies are discovered and implemented. Let me add that it's a very, very sharp curve on that also. Get on the front side of the cost curve for a new product and many times your are lucky to even show a profit!!!!!!
    Jan 25, 2013. 08:32 AM | Likes Like |Link to Comment
  • In Defense Of Apple: Battling The Mounting Hysteria [View article]
    Dropping expectations is very smart. Painful for a while. Netflix did that as did Amazon and CRM. All those being highly overvalued, however. But it did set them up for "huge beats" in the following quarter and propelled their over valued stocks even higher.
    Jan 25, 2013. 08:27 AM | 2 Likes Like |Link to Comment
  • In Defense Of Apple: Battling The Mounting Hysteria [View article]
    That's what this article shows so well, I think. The YoY comparisons were stunning. Many positive headlines are right in that one chart.

    Although better at ciphering than Jethro Bodine, I am just as naive. I am amazed at Tim Cooks lack of skill in delivering results. It has be wondering if he is not just "crazy like a fox." What can he do with all that cash? Well, he could drive down the price to $370 and then buy back 100 million shares. That would be very smart indeed.
    Jan 25, 2013. 08:24 AM | 4 Likes Like |Link to Comment
  • In Defense Of Apple: Battling The Mounting Hysteria [View article]
    Trey, you are imagining that Cook has an imagination. He does not.
    Jan 24, 2013. 09:28 PM | 1 Like Like |Link to Comment
  • In Defense Of Apple: Battling The Mounting Hysteria [View article]
    Yea, Intel is hated. I don't understand why. It's core power for the cloud, man!!!
    Jan 24, 2013. 09:26 PM | 2 Likes Like |Link to Comment
  • In Defense Of Apple: Battling The Mounting Hysteria [View article]
    Just wait until everyone figures out just how bad Samsung Galaxy and Windows 8 really are. A lot of these were sold. Not many will still be around this time next year. Also the returns for refund are not all in yet. Will be a stunning piece of data when you see it.
    Jan 24, 2013. 09:25 PM | 10 Likes Like |Link to Comment
  • In Defense Of Apple: Battling The Mounting Hysteria [View article]
    That's right. Current price is just the price of the most recent sale. Just one tick in time. Watch the volume.
    Jan 24, 2013. 09:21 PM | 3 Likes Like |Link to Comment
  • In Defense Of Apple: Battling The Mounting Hysteria [View article]
    Meanwhile headlines read: "Samsung Posts Record Profit; Keeps 2013 Capex at 2012 Level." It's all in how you spin it. There could have been 100 or more even more glowing headlines about AAPL performance for Q1 2013. Go figure.
    Jan 24, 2013. 07:41 PM | 4 Likes Like |Link to Comment
  • Apple Blossoms In The Spring [View article]
    Interesting. I think RIM is considering that right now. You know, APPL has not done well with that approach. They tried to with versions OS-X for Intel based servers. Let me tell you that Apple messed up the Berkeley Unix so bad!!!! We tried it on a few servers. Everything was customized and required use of a Mac as the console terminal. Sysadmin work could not be done from the command line at all. Awful OS for servers. Nothing compares to Redhat Linux

    Generally, Apple likes to keep the OS on their hardware as proprietary to their own devices. Very different approach than MSFT. Microsoft took over the PC world with that approach and that's partly how Steve Jobs got booted the first time. And that's exactly how MSFT got such a prolonged period of growth. But neither of us will get any input to that decision. Mr. Cook simply won't return my calls. If you hear from him first, please tell him that I support your idea. :)

    I am not knowledgeable enough about iOS vs. Android to know. It could be that Android OS is actually the better OS. One thing I do know is that other than durability, the iPads and iPhones are much better to use overall. At least to me.
    Jan 24, 2013. 05:17 PM | 1 Like Like |Link to Comment
  • With Apple, What A Difference A Week Makes [View article]
    Thanks smr36. I base this on recently owning and using Apple iPod nano, iPod Touch,and iPad and having used products from competitors based on Windows 8. Big difference in usability and utility.

    One way to see what is trending it to analyze the Google Analytics for a large public web site. One can tell the volume and percentage by browser, device, and OS from the logs. I bet there is an uptick in Windows 8 through Christmas followed by a flattening or slowing. But the other thing is the number of people viewing the web site from mobile is still growing strong both as a percentage and as a total. It's worth some analysis and consideration. I will do that when I get a couple hours to take a look. Intersting also is if you know the demographics of who is visiting each section of that website, you can also break down the mobile device information by demographics.
    Jan 24, 2013. 11:49 AM | Likes Like |Link to Comment
  • With Apple, What A Difference A Week Makes [View article]
    P/E less than 10, $137B in cash 20% growth and a 38% margin is not a bubble, Minutemen.
    Jan 24, 2013. 11:01 AM | 3 Likes Like |Link to Comment
  • Apple Blossoms In The Spring [View article]
    Excellent. Perhaps they need a Marc Beinoff as CEO and put Mr. Cook back in operations.
    Jan 24, 2013. 08:59 AM | Likes Like |Link to Comment
  • With Apple, What A Difference A Week Makes [View article]
    Hey when it turns out like that, they say you made the mistake of "trying to catch a falling knife." When it goes the other way, and works out, they call it "buying on the dips."

    Apple is a great company. Profits are up. Revenue is up. Just not as much as was expected. They lowered guidance to try and lower the bar a bit for the future. There were a flurry of new products introduced including Windows 8 tablets. Samsung Galaxy and other tablets. They are all very inferior to AAPL products. You will see a return to AAPL. Also know that the mobile is still a growing market overall. AAPL market share my dip a bit on the release of new products from competitors. However, when it becomes widely accepted that these products are inferior, APPL will gain back market share. I think margins will have to come down a bit. But I see AAPL getting a growing share of a growing market. It may take a two or three quarters, but I think you will see the stock go back up. I don't have the tools to say how much, but all the considerations point in favor of a stronger AAPL going forward.

    Good luck.
    Jan 24, 2013. 08:55 AM | 2 Likes Like |Link to Comment
  • Apple Blossoms In The Spring [View article]
    Hey Luke, didn't you also make a comment about having iOS become the dominant OS and getting it on as many devices as possible? You know that is the kind of leverage and the way MS fared so well over the explosion of the personal computer so many years ago.
    I was crying in my beer tonight wandering if all those growth base mutual funds are going to start a missive rotation out of AAPL tomorrow. A lot of AAPL stock will be traded. That's for sure. I bought a pretty good few lots at around $500. Actually with investment in mind, but also hoping for a $40 pop in which case I would have sold it right away. It went the other direction as a good many people predicted.

    So for the next few months, it looks like I am an "Apple Investor," It has been said that an "investor" is a "trader who is underwater." At any rate, it's an undervalued stock at this point and I still see a tremendous opportunity for growth. That is based on the potential growth of iOS as a part of that "ecosystem." Those 38% margins that investors poo-pooed today are quite high actually. APPL can grow profits wildly even at 30% margins.

    AAPL is both a growth stock and a value stock in my opinion. But I don't think that opinion will be shared by the investment community's huddled masses over the next couple of quarters.

    Tomorrow and the next few days will be interesting. My mindset is to hold and not buy any more for sure. Even at $444. So there will surely be others with the same mindset could drive to that $444 number that was thrown out by another chap here. He was looking purely at the chart. So will a lot of other people now that earnings fade in the rear view mirror and fog mixed with drizzle sets in along the roadside. Technicals may take the wheel for a while.
    Jan 23, 2013. 10:39 PM | Likes Like |Link to Comment
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