Why Apple Is A Short-Term Sell Based On David Einhorn's Plan [View article]
What Mr. Einhorn wanted to do is to create a AAA+ rated iPref and sell them to institutions (ie. insurance companies seeking higher-yielding long-bond alternatives). And if he doesn't get his way, he'll propose a new board of director to make it happen (and herd of shareholders will follow his lead because many wanted short term gain). He is a distraction but certainly not a "silly sideshow". By raiding the coffer, he is looking out for Greenlight's interest, not Apple's.
Judge Richard Sullivan has granted Greenlight Capital/David Einhorn's motion for a preliminary injunction on Apple's (AAPL +0.9%) bundled proposals (one of which asks for shareholder approval for the issuing of preferred stock) at its Wednesday shareholder meeting. Will Apple now request separate votes on the proposals? (previous) (more) [View news story]
I listened in to Einhorn's conference call yesterday... He wants Apple to issue "iPref" so that he can then SELL them to institutional investors looking for "safe yet relatively high 4% yield". Specifically, he said that Greenlight isn't one who would want to own these "iPref".
SO, would you trust a hedge fund whose primary goal is to make a quick buck and leave the company paying a 'perpetual dividend'? Remember that perpetual is a very long time, as in forever, compared to a debt instrument.
Smartphone Entry Barriers Have Ceased To Exist. Welcome To The Smartphone 2.0 Era [View article]
You concluded that we'll have 4 ecosystems going forward. However, the first ecosystem (the IOS/Android duopoly) is the vast majority of the total, and it won't take much (a new iPhone6 or Galaxy4) for the dominating ecosystem to squash the smaller ecosystem. Also, how is the smaller ecosystem going to convince developers to make apps for them when the initial audience is so small? That is one barrier to entry that this article didn't cover.
Blackberry said that it has bet its future on BB10 platform so it is a do or die situation. If they can't pull it off soon, then they will just fade away. BB10 has got to be successful in its home turf of Canada, but the US market is much more competitive. The timing is also bad because BB10 isn't even available here in the US until say March? The novelty of a new-product will have worn out by then.
The Cost Of Product Cannibalization Dooms Apple's Growth [View article]
To Author, I liked your article and you did present valid points...points that others will surely disagree. I took the time to read through all these comments and observed that, (like many author who are emotionally attached to his own writing) you became defensive and reject all opposing views. Your language became abusive and unbecoming of an article contributor. If you would simply apologize to your readers for how you responded, and promise to learn from your mistake, then it'll do more good than harm to your reputation.
Reduce EPS By Issuing Preferred Stock [View article]
@vinchainsaw, you are correct in saying that WACC is a determining factor when deciding on the capital structure and the 'required return on investment'. Carrying some debts are prudent and improves upon Apple's current capital structure.
If anything, Apple should take on some low interest debt using their AAA credit rating and buy back shares with it. However, the issuance of preferred stock is still not a good idea, when you calculate it via WACC.
How Apple Can Generate A Decent Return On Its Cash [View article]
I think you've misunderstood the balance sheet definition of cash: Cash and cash equivalent are suppose to be liquid and near risk-free. What you are proposing is to take on more risk by investing in hedge fund & mutual fund. If they do that, then it is no longer categorized as cash/cash-equivalent.
You are also assuming that it has more cash than it knows what to do with. Just because the talking-head at CNBC said so, does not make it true. If you compare companies based on cash-per-share relative to its share price (cash/shr divided by share price), you'll see that Apple stock price is 24% cash but Microsoft is 29%. I've even seen companies with >50% cash per share. Don't just look at the sheer number, but look at the number with a perspective.
Reduce EPS By Issuing Preferred Stock [View article]
@STDvooh, Tim Cook just pull a Steve Job and said that iHorn's proposal is a "silly sideshow". The stock dropped 10 after that comment but it is still a good stance.
Reduce EPS By Issuing Preferred Stock [View article]
Not only does the preferred shares reduce future EPS, it also reduces the financial flexibility for later on when it needs the cashflow to fund projects, pay for law suits, acquisitions or 'rainy days'.
If Apple succumbs to Issuing preferred share, it will then allows the hedge fund to raid the coffer using a faulty excuse that Apple has "too much money". There are many company out there with more cash per share relative to the stock price... Microsoft has $8.13 cash per share so at $27.86/shr that's 29% cash, whereas Apple has $116 cash per share, at $480 that is only 24%.) Einhorn should go pick on Microsoft instead.
Simply raise the dividend to attract the value and income funds, and announce stock buy-back would be much simpler and more effective for the long-term shareholders.
Apple's New Smartwatch: Why Investors Should Care [View article]
This is one of those products where consumer don't know they want it until it is shown to them. Plus, it is a "complementary good", meaning no cannibalization and in fact it will contribute to sales of iPhones. Let's just hope that Samsung do not start copying it and make a basterdized version of it.
Einhorn Is Right About Apple, But... [View article]
Excellent analysis... especially on your point that this is a shareholder-friendly proposal, not what Einhorn spinned it to be.
I don't believe that preferred stock issuance is the best way to go because even though it is a sure way for hedge funds to make a quick buck, longer term, it forces the company to pay a perpetual dividend and cripples its growth and flexibility. I'm sure that Einhorn will win on his contention of proxy bundling which is fine, but lost on the issuance of preferred. I do appreciate that he brings to the company's attention the need to take care of shareholders.
I don't own any Dell shares so I can say it without emotional attachment: all that Michael Dell has to do is to get 51% of the total vote and it is not hard to do, given all the hedge funds and short term traders who are ready to make a quick buck. As cheap as it is (and I'm agreeing with everything author said when it comes to valuation), the truth of the matter is that Dell is operating in a competitive industry with margin erosion caused by tablets, VMware, and cloud computing, and if it is voted down, the stock will go back down and not likely to rise past $20 anytime soon.
It is always better to have a $13.63 bird in your hand than two birds (worth $23.72) in the bushes. If you forego the bird-in-your-hand, you may end up with no bird to speak of. (PS: what you paid in the past... $15, $18, $20+, has no bearing on what it is now worth)
Apple Uniquely Positioned To Cash In On Android [View article]
Very interesting article. I don't believe the mobile virtualization concept you presented will ever come to fruition but then again, Bill Gate said in 1980's that "you don't need more than 64k of RAM."
I can think of a few reasons what this won't work: 1) corporate acceptance of BYOD will involve 3rd party provisionining tools (for example Air-Watch makes one) so that corporate resources can be securely deployed to employees' own device. You don't need to complicate things with a VM mobile session unless you really wanted to see what's on your office desktop. 2) why would anyone with a fast-n-easy-to-use IOS be willing to downgrade to Android and learn the idiosyncracy related to it? Maybe Android users wants to use IOS interface? if so, then just buy an iPhone. 3) There are so many features (NCF, SD drive, data tethering) that Android has that iPhone do not have... If you have an iPhone that wants to pretend it's an Android via virtualization, it will not have the Android specific feature functional.
Apple (AAPL +2%) roundup: 1) A Chinese site reports an iPhone 6 sporting a 5" display is in the pipeline to go with a 4" iPhone 5S, and that the device could launch this year. 2) Macmillan has joined other publishers in settling with the DOJ over e-book price-fixing (previous). This leaves Apple fighting the DOJ by itself. 3) Apple's Indian sales, long a fraction of its Chinese sales, are starting to pick up with the help of aggressive marketing. 4) Former top Apple UI designer Bruce Tognazzini thinks an iWatch is just a matter of time. (iLounge rumors) [View news story]
if iPhone4 is 4", and iPhone5 is 5", then iPhone6 must be..... 6"? I can't wait fot iPhone 65 to hit the showroom... I'll need a tripod for that.
Einhorn's Apple Preferred Stock Dividend Solution [View article]
Does anyone here know that the "real" purpose of a blank-check preferred stock is to use it as a poison-pill against an unwanted corporate take-over? http://bit.ly/VJVAOF
Issuing preferred stock is like shooting a bullet into the air to warn an intruder, when there is no intruder to be found anywhere.
Greenlight is a hedge fund, and as such, it is a short-term trader, not long term holder. It is not acting to the shareholders' best interest, other than to see a short-term pop so that it can unload its 1M+ shares at a profit. There are many ways to unlock shareholder values... issuing preferred stock is one option, but not a good option.
Why Apple Is A Short-Term Sell Based On David Einhorn's Plan [View article]
Judge Richard Sullivan has granted Greenlight Capital/David Einhorn's motion for a preliminary injunction on Apple's (AAPL +0.9%) bundled proposals (one of which asks for shareholder approval for the issuing of preferred stock) at its Wednesday shareholder meeting. Will Apple now request separate votes on the proposals? (previous) (more) [View news story]
SO, would you trust a hedge fund whose primary goal is to make a quick buck and leave the company paying a 'perpetual dividend'? Remember that perpetual is a very long time, as in forever, compared to a debt instrument.
Time For Apple To Waddle And Quack [View article]
Smartphone Entry Barriers Have Ceased To Exist. Welcome To The Smartphone 2.0 Era [View article]
Blackberry said that it has bet its future on BB10 platform so it is a do or die situation. If they can't pull it off soon, then they will just fade away. BB10 has got to be successful in its home turf of Canada, but the US market is much more competitive. The timing is also bad because BB10 isn't even available here in the US until say March? The novelty of a new-product will have worn out by then.
The Cost Of Product Cannibalization Dooms Apple's Growth [View article]
Reduce EPS By Issuing Preferred Stock [View article]
If anything, Apple should take on some low interest debt using their AAA credit rating and buy back shares with it. However, the issuance of preferred stock is still not a good idea, when you calculate it via WACC.
How Apple Can Generate A Decent Return On Its Cash [View article]
You are also assuming that it has more cash than it knows what to do with. Just because the talking-head at CNBC said so, does not make it true. If you compare companies based on cash-per-share relative to its share price (cash/shr divided by share price), you'll see that Apple stock price is 24% cash but Microsoft is 29%. I've even seen companies with >50% cash per share. Don't just look at the sheer number, but look at the number with a perspective.
Reduce EPS By Issuing Preferred Stock [View article]
Reduce EPS By Issuing Preferred Stock [View article]
If Apple succumbs to Issuing preferred share, it will then allows the hedge fund to raid the coffer using a faulty excuse that Apple has "too much money".
There are many company out there with more cash per share relative to the stock price... Microsoft has $8.13 cash per share so at $27.86/shr that's 29% cash, whereas Apple has $116 cash per share, at $480 that is only 24%.) Einhorn should go pick on Microsoft instead.
Simply raise the dividend to attract the value and income funds, and announce stock buy-back would be much simpler and more effective for the long-term shareholders.
Apple's New Smartwatch: Why Investors Should Care [View article]
Einhorn Is Right About Apple, But... [View article]
I don't believe that preferred stock issuance is the best way to go because even though it is a sure way for hedge funds to make a quick buck, longer term, it forces the company to pay a perpetual dividend and cripples its growth and flexibility. I'm sure that Einhorn will win on his contention of proxy bundling which is fine, but lost on the issuance of preferred. I do appreciate that he brings to the company's attention the need to take care of shareholders.
Dell: The Art Of The Steal [View article]
It is always better to have a $13.63 bird in your hand than two birds (worth $23.72) in the bushes. If you forego the bird-in-your-hand, you may end up with no bird to speak of. (PS: what you paid in the past... $15, $18, $20+, has no bearing on what it is now worth)
Apple Uniquely Positioned To Cash In On Android [View article]
I can think of a few reasons what this won't work:
1) corporate acceptance of BYOD will involve 3rd party provisionining tools (for example Air-Watch makes one) so that corporate resources can be securely deployed to employees' own device. You don't need to complicate things with a VM mobile session unless you really wanted to see what's on your office desktop.
2) why would anyone with a fast-n-easy-to-use IOS be willing to downgrade to Android and learn the idiosyncracy related to it? Maybe Android users wants to use IOS interface? if so, then just buy an iPhone.
3) There are so many features (NCF, SD drive, data tethering) that Android has that iPhone do not have... If you have an iPhone that wants to pretend it's an Android via virtualization, it will not have the Android specific feature functional.
Apple (AAPL +2%) roundup: 1) A Chinese site reports an iPhone 6 sporting a 5" display is in the pipeline to go with a 4" iPhone 5S, and that the device could launch this year. 2) Macmillan has joined other publishers in settling with the DOJ over e-book price-fixing (previous). This leaves Apple fighting the DOJ by itself. 3) Apple's Indian sales, long a fraction of its Chinese sales, are starting to pick up with the help of aggressive marketing. 4) Former top Apple UI designer Bruce Tognazzini thinks an iWatch is just a matter of time. (iLounge rumors) [View news story]
I can't wait fot iPhone 65 to hit the showroom... I'll need a tripod for that.
Einhorn's Apple Preferred Stock Dividend Solution [View article]
Issuing preferred stock is like shooting a bullet into the air to warn an intruder, when there is no intruder to be found anywhere.
Greenlight is a hedge fund, and as such, it is a short-term trader, not long term holder. It is not acting to the shareholders' best interest, other than to see a short-term pop so that it can unload its 1M+ shares at a profit. There are many ways to unlock shareholder values... issuing preferred stock is one option, but not a good option.