.crazylegs..

95 Comments

    • Apple's Problems - Bad to the Core? [view article]
      With an opening like this:

      "The company boasted revenue of $9.6 billion and a net profit of $1.58 billion, compared to revenue of $7.1 billion and a net profit of $1 billion in the third quarter of 2007. But its second quarter results were down ($7.51 billion in posted revenue and $1.05 billion in net profit) from the first quarter. Some people think this downtick signals the beginning of an unfortunate trend-line … or worse."

      It seems difficult to take this article seriously. Isn't the first quarter the holiday selling season? And the second quarter is Jan 1 - Mar 31? Does the author just totally dismiss this?

      No doubt with greater volumes comes more glitches, but overall, in terms of quality can one realistically say that Apple products exhibit significant issues and they are rotten to the core? That's a huge stretch. Puffy piece here.       Aug 25 09:45 AM
    • Research In Motion's Blackberry Bold Launch Should Calm Investors [view article]
      been watching you a long time hasn't been watching the mobile space for a long time. simply doesn't understand how economics and elasticity of demand works. just keep believing there will only be one platform that thrives in a billion plus annual unit market. even though the iphone is an amazing device, it just won't hurt the blackberry. what's funny is it actually helps blackberry sales due to more attention to smartphones and more folks wanting more than just a voice capable handset.

      carriers could never do with iphone what they are doing with blackberry - offering cheap data/email plans. why? because iphone has such a great browser. the owners use them so much that they eat up network capacity/bandwidth. so they'll have to keep the price of data high to justify necessary upgrades over time. RIM compresses all data through their network so the data intensity/bandwidth usage is much lower.

      RIM gives the carrier greater incentive to offer their product because 1. they subsidize them less (i.e. lose less money on the handset = quicker time to profitable sub) and 2. they get a high value customer (data upsell) that respects the use of the network.

      the average person doesn't understand this, but the carriers sure do, and in time, you'll see more cheap and/or pre-pay bb plans that drive huge amounts of adoption.       Aug 13 02:02 PM
    • Research In Motion's 3G Counteroffensive: The Smartphone Arms Race Escalates [view article]
      ALL YOU IPHONE FANS/USERS/BELIEVERS SHOULD READ THIS:

      You all are accurate in believing how wonderful the iPhone is. It is. Truly an awesome device. A great platform that will develop and get better and better. I love my iPhone.

      BUT, you need to understand economics to see why RIM has an advantage to take huge amounts of market share from Motorola, Samsung, and Nokia even when iPhone is exploding.

      There is HUGE demand elasticity in data pricing. All you guys here simply accept whatever the monthly data charge is and pay it happily to have the iPhone. But the vast majority of people are very price sensitive and may not want to pay the full $30/month for data services. However, they might pay $10/month extra to have a great email service. This is where RIM comes in and is uniquely positioned to expand. They are actively working with carriers to offer flexible data pricing plans for BBs. This drives huge adoption in every carrier they have done this.

      Apple could never do this. Why? The posters above say it all - they are addicted to the iPhone and use huge amounts of data/bandwidth. In fact, I wouldn't be surprised to see AT&T try to tier the iPhone data plans because of this.

      So, on one hand you get an iPhone sub that costs you more money upfront (larger subsidy) and taxes your network but offers a great experience and on the other hand the BB offers you a high value customer (typically higher ARPU) but respects the network's bandwidth due to the BB architecture which compresses all data.

      Economics usually end up winning out, so before you guys call it game over for RIM, you might want to delve deeper into some of these issues that affect actual end user sales AND incentives that carriers have to sell one product vs another.

      Oh, did I tell you I love my iPhone? I did, but interestingly enough, I USE my Blackberry because it does everything I need it to do very efficiently. Funny how personal choice affects end use as well.

      Disclosure: Long AAPL & RIMM       Aug 07 09:06 AM
    • Replacing P/E in Valuing Apple Stock [view article]
      You're only missing one thing in your formula - you have to back out the cash on the balance sheet before doing the calculation. Cash is worth cash, so net out the $23 per share cash and your multiple gets even cheaper. Jul 31 10:58 AM
    • Apple: Are Investors Overlooking Cash Earnings? [view article]
      Well written article. Spot on analysis. Agree that shares are dirt cheap at these levels - when you look at the only thing that really matters: CASH. However, I have one issue - margin guidance should not be attributed to iPhone accounting issues. They should be attributed to the apparently new strategy to really stick it to the competition, grab mkt share, and increase sales by lowering prices on products. Apple senses a critical juncture in the landscape where they have great products, great momentum, and finally the grassroots distribution (retail) to really extend mkt share. Why not give up some margin today for a large increase in adoption of the iPlatform? They will hopefully ride the elasticity curve to even greater results in the future. Jul 30 01:43 PM
    • Despite Drop, RIMM's Valuation Still Too High [view article]
      WOW! This article misses on many fronts:
      1. High expectations: 14% sequential growth is HUGE (that would mean 68% annual growth if that continued each quarter for a year). It's priced at a discount to its growth and the opportunity ahead of them is gigantic.
      2. Food companies? Yeah, that's a fair comparison.
      3. Transparency? How about the 6K that I read. You know, the one they file with the SEC after each quarter.
      4. Pitfalls? Finance represents about 13% of the company's users and that is falling each quarter. Not a large impact. And if you think any bank will adopt the activesync protocol and accept incoming pings from devices (which requires opening their firewalls), you aren't paying attention. Patent fights are part of the business and always present a risk to any company.

      I can't say whether the stock might be down "20%" in the near future, but you simply can't ignore the fundamental opportunity ahead as mobile phone users adopt "smarter", connected platform devices. Combine that with RIM's push to have carriers offer low cost BB plans, and you'll see how the economic principle of elasticity of demand for data services propels the company's revenues and earnings significantly higher over the coming years.       Jul 29 11:01 AM
    • Five Great Quality Companies: Are They Too Expensive? [view article]
      1. GOOG is expected to put up $20 earnings in 2008 and it has $40 cash per share. SO, net of cash it is valued at 22.5x 2008 earnings.
      2. AAPL EPS means little. Show me the cash! They have generated $6 per share of cash in the first 3 quarters and will generate at least another $1 to $1.50 per share in cash in Q4. With $23 per share cash on the balance sheet, it trades at about 18x 2008 cash flow net of cash - and you are paying for that figure for the year ending in 2 months! It gets even cheaper if you look at 2009.
      3. RIMM might appear most over valued but it has the best growth potential. iPhone is serving to HELP them in a big way by bringing tons of attention to the smart phone space. Seems strange, but the reason for this is simply price of data. They will ride the demand elasticity curve for data services as they continue to work with carriers to offer lower data plans (tmobile $10 BB plan?, pre-pay BB plans?) The company has said they see huge volume increases anywhere they get the carrier to lower data pricing. Demand elasticity is huge for data services - and they are the only handset maker who is in a position to work with carriers to lower data prices as RIM offers a compelling service with their email system. Combine that with cheaper handset prices (cheap flip, curve update coming) and you shouldn't be focused on whether the Bold or Thunder competes with the iPhone, but you should watch home many folks buy the BB flip (aka Kickstart) instead of that cheap LG, samsung, or moto when combined with a low priced email plan because the customer gets a great service for a small incremental fee.       Jul 28 10:21 AM
    • Apple: Expecting Short-Term Weakness [view article]
      Guys, give this kid a break, it's his opinion, which I believe is wrong, and all reasonable and rational economic thought would lead one to the opposite conclusion from him, BUT - from his BIO:

      At twenty years of age, Andy has much on the road ahead of him. Currently, in college, he is in pursuit of his stockbroker’s license with a goal of a full time career in the securities industry. He currently works as a licensed financial representative at the Northwestern Mutual Financial Network.       Jul 25 09:20 AM
    • Apple: Expecting Short-Term Weakness [view article]
      Andy, ever heard of the elasticity of demand? perhaps they sense a HUGE opportunity to grab mkt share while 1. Vista flounders and 2. microsoft won't deliver another OS until 2010. SO maybe they will lower prices and sacrifice margins for a huge increase in volume. This makes perfect sense given the large number of clues that were given on the conference call. It also makes perfect sense that this quarter will be weak (relatively speaking, of course, still up 25% YOY) while they "transition" to this new strategy. Jul 25 09:16 AM
    • Despite Uncertain Market, Analysts Still Bullish on Research In Motion [view article]
      umm, samij, how do you explain the 375 carriers worldwide that RIM sells through? and how do you explain that more than 50% of new BB buyers last quarter were outside of North America? please check your facts. Jul 23 01:14 PM
    • Steve Jobs' Health: A Red Herring [view article]
      Personally, I love when the numbers are spectacular and the stocks - it means it is much cheaper to acquire. The only pertinent metric one needs to know is cash flow. They announced cash flow of $5.4 in the first 3 quarters or $6 per share. If they can come close to $8 per share cash flow, you are buying this company at roughly 16x cash flow net of cash. (And you are paying for these earnings for the year ending Sep 30 2008). The multiples get even better for next year's cash flow. Jul 22 10:32 AM
    • Canaccord Raises Research in Motion's Estimates [view article]
      ballsy call here given he has no way of knowing what iPhone demand will do to BB demand. I agree with his premise that iPhone will end up helping BB sales due to more attention to the space and the much lower price for a Pearl or Curve. Add more flexible data pricing on some carriers for BB data plans and this really makes sense. Also, how does limited supply of iPhones help RIM. Maybe RIM steals a few potential iPhone buyers if they can get it out sooner than later. (Of course ATT will bend over backwards to delay the Bold in favor of the iPhone) This will be interesting to watch. Jul 18 11:02 AM
    • What Pushed the SEC to Tighten the Rules - Now? [view article]
      Apple Heavy, shorting is a major help to the markets to provide liquidity. This is a bona fide activity, and it is what makes a fair market. What should be banned is 1. the naked shorting and failing to deliver stock to the buyer at settlement; and 2. the rumor mongering to drive down shares. All shorts SHOULD have to pre-borrow. Even though this rule is already in place, the SEC has FAILED THE MARKETS MASSIVELY BY SITTING ON THEIR ASSES AND NOT ENFORCING THE RULE. Jul 17 11:28 AM
    • Channel Checks Show Blackberry Sales Not Pressured by iPhone [view article]
      Only time will tell who is correct. Next month's channel checks should be much more telling. If he is in fact correct that the first half of the quarter's shipments were ahead of schedule, then this gives RIM some cushion for iPhone defections, which there had to be some. It seems that everyone thinks iPhone is going to really hurt RIM. This will be proven wrong in time. iPhone will HELP RIM by bringing lots of attention to smartphones. For the price sensitive buyer, many BBs can be had for free with contracts plus RIM is actively working with carriers to offer flexible BB data plans. This is RIM's secret weapon of elasticity that no one is discussing. Jul 17 11:12 AM
    • Apple Ups The Ante With 3G iPhone - But RIM's Almost Ready to Counter [view article]
      It's a little early to call it game over for RIM guys. Yes, Apple has the best mobile platform out there, but this does not automatically translate into death for all other platforms. Using that logic, Windows would be dead already as there is no question Apple makes a much better OS. Yet over the last many years they were only able to keep a small market share. The broader point is that while Apple has one relatively pricey phone with a large screen and wants to innovate on the software side going forward, RIM is quietly positioning the company for mass markets by offering lower priced models like the new clam shell (rumored to be sold for $50) and the curve update called Javelin (the EDGE radio will help keep costs very low so they can sell it cheaply). Even today you can find free Pearls and Curves with contracts. The real thing to watch here is how much mkt share RIM takes from moto, samsung, LG, nokia at the lower end as they work with carriers to offer more flexible data pricing. Well, I gotta go and buy my new iPod Touch! (Don't forget how many people will opt to buy the Touch and still be on the platform). Jul 11 12:45 PM
Loading...
Symbols:
Authors:
Quick Links:
Contribute an Article Become a Seeking Alpha Contributor

Transcripts

More Transcripts»