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skibimamex

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  • Samsung (SSNLF.PK), unsurprisingly, plans to appeal its harsh legal loss to Apple (AAPL). Apple's response to the jury's verdict: "We applaud the court for finding Samsung’s behavior willful and for sending a loud and clear message that stealing isn’t right." Samsung's response: "It is unfortunate that patent law can be manipulated to give one company a monopoly over rectangles with rounded corners, or technology that is being improved every day by Samsung and other companies." (more[View news story]
    none of the software patents that the jury found Samsung violated willfully (actually it was Google that violated them) had anything to do with "rectangles with rounded corners". It's just too bad that Samsung's lawyer hung its case on a cute "sound bite" but the jurors were smart enough to know to see through it.

    All the other OEM's relying on Android have the same dilemma. The only solution is for Google to work around a solution (assuming that it doesnt violate some other Apple patent instead) or otherwise negotiate a license with Apple and Microsoft to allow the features that it wants to retain in Android.
    Aug 24 09:19 PM | 13 Likes Like |Link to Comment
  • Shame On You, Apple [View article]
    This is a ridiculous sentiment. I am an AAPL shareholder and this is exactly what I want the company to do with my money. I didnt buy my house with all equity, and I certainly wouldn't buy my house with a pile of cash stuffed in the kitchen drawers and say "that's ok, leave it there".

    Apple has been a superb implementer of technology to package and market to the masses and has enjoyed fabulous success in exttracting a profit stream. The fact that it is now finally pursuing best practices to be better allocator of shareholders' capital doesn't take away from its prowess as a fabulous marketer or innovator in the products it sells. It just means that its financial strategy has finally begun to be brought in line (rather than simply be neglected and be satisfied with its prior strategy of capital in-efficiency) with now the same drive for excellence as the rest of its business. If only we can channel the same energy and creativity that Apple deploys in design, marketing, engineering, supply chain, logisitics, etc to managing its balance sheet for improved capital efficiency. Optimal Capital Structure dictates that given the tax shield of debt capital, the optimal capital structure is never optimizes at zero debt, let alone negative debt as currently exists at Apple.

    So rather than be "ashamed", I applaud management and the board. If you don't like it, please, please, please simply sell your shares, and avoid the loss that you fear from this new financial paradigm. I would much rather management employs a prudent level of 1% after-tax yield capital to displace 3% after-tax yield stock that otherwise dilutes my share ownership. The more that shareholders sell who do not like a little less negative leverage or who otherwise preferred gross capital ineffiicency on the balance sheet (for the company to earn ~0.5% on shareholders' cash), the more that will be left over for other shareholders like me that prefer the anti-dilutive outcome of borrowing cheap to fund cheap share buybacks.

    Apple, don't be ashamed, please do more iBorrowing to do more iBuybacks.

    So please sell your AAPL shares and thanks.
    May 1 01:01 PM | 12 Likes Like |Link to Comment
  • Inventory Risks Loom For Apple [View article]
    i enjoy reading Mr. Blair's blogs, as they give me the occasional laugh, and even more so, the vitriol from responders. What I find most entertaining about MB's arguments about his purported investment thesis is that his ability to be inconsistent in his arguments while holding a straight face.

    "Apple seems to see India and Brazil as dumping grounds for its unsold inventory of iPhone 4S and is rumored to be considering restarting production of the antique device for sales at lower prices in India and Brazil."

    Why would it be a "dumping ground for unsold inventory" if it is "rumored considering restarting production" -- so which is it, new production, or dumping ground. I get so confused, what is the point again?

    Basically his argument is that smartphone market is mature or maturing -- yes it is, and that the bulk of the growth are in segments that AAPL doesnt participate in or isn't viewed as competitive. Let's see, the auto industry is very mature with what growth there is only in emerging markets but yet Daimler and BMW continue to thrive. Why are they not doomed again? Oh a car is not a commodity and brand image, distribution presence, service network, ability to to hold value, engineering strength, and quality of product, are all elements of their success.

    Oh that's right, I forgot, it's because all things electronic must be commoditized. He is entitled to his investment thesis. What is silly is that all the monies that he will lose from his modest investment position will presumably be made up, and more, by the clicks he gets to monetize his blog writing. You see, Mr. Blair, like a Howard Stern, is in the shock-jock entertainment business, not the investment advice business, so he stakes out views to entertain us, and I do get the occasional chuckle.

    Keep it up with the funny writing. Will sit back and watch the sardonic comedy and bear parody.
    Feb 22 03:04 PM | 11 Likes Like |Link to Comment
  • BAML: Apple/China Mobile hopes too high [View news story]
    BAML analyst has to have the dumbest logic. Because 30M CHL users already paid hefty premiums to get unlocked GSM phones that can only run on EDGE (i.e. under 256kb) on CHL's legacy 2G network, he thinks these customers will only buy 1 smartphone in their lifetime. What it means there is an installed base of at least 30M that have been indoctrinated to iOS that are dying to upgrade in order to get some decent data capability on the TDLTE network that CHL is now rolling out.

    It is highly likely that AAPL has MFN provisions in its contracts so it is precluded from giving CHL a deal without jeopardizing its own existing contracts. And yes CHL is desperate to get higher ARPU data customers as it has lost significant market share to Unicom and ChinaTel on 3G both because CHL was stuck with a non-standard 3G technology and it had limited high-end devices. and yes CHL does do significant subsidizing on higher ARPU post-paid plans. Its pricing structure is more similar to TM-USA with an installment structure in the form of higher monthly service (with higher bundles) and longer term commitments in exchange for lower initial handset prices.
    Dec 10 09:39 AM | 10 Likes Like |Link to Comment
  • Apple (AAPL +3.2%) is reportedly offering $17B in its bond sale, making it the largest U.S. corporate debt deal ever. Bloomberg reports $5.5B in 10-year debt will be sold at just a 75bps premium to 10-year Treasury yields (currently at 1.68%). (previous: I, II) Update (3:47): The deal is official. Reuters: "The company is offering $1 billion of three-year floating-rate notes, $1.5 billion of three-year fixed-rate notes, $2 billion of five-year floating-rate notes, $4 billion of five-year fixed-rate notes, $5.5 billion of 10-year fixed-rate notes and $3 billion of 30-year fixed-rate notes." [View news story]
    this is a variation of Einhorn's "borrow to fund" -- only difference is using tax deductible debt instruments rather than perpetual preferred stock. use of proceeds, however rather than a ratable distribution, is instead used to claw back shares at attractive prices in order to accrete share value tax efficiently for those who dont want to sell. Glad that Einhorn was a protagonist/catalyst for more thoughtful captial allocation strategy by the company.
    Apr 30 02:26 PM | 10 Likes Like |Link to Comment
  • Why iPhone 6 Won't Reverse Apple's Market Share Decline [View article]
    Why should Apple drop price for its flagship iPhone when the relevant competitor's equivalent flagships such as Galaxy S5 and Note 3 are priced comparably or higher. Look at LG G3, HTC One M8, Galaxy s5, Note 3. So the whole argument of price is patently stupid. The low-end of entry level smartphones (what we would consider as throwaway "burner" phones in the US) is enjoying massive profitless growth -- Apple doesn't play in that space, no different than Mercedes doesn't play in the $6000 entry level car in India market. So when you want to measure share, you need to measure the relevant market share of flagship devices.
    Jun 20 11:04 AM | 9 Likes Like |Link to Comment
  • Apple's Q3 Bonanza: The Real Story May Be Not Quite So Bullish [View article]
    "If I am right"...

    but MB, you weren't right, because you can get to the same overall ASP if you did not inflate the ASP for the 5S model like you did. Get to the same answer on overall ASP without your conclusion (that discounted 4S is flying off the shelves) if 5S ASP is $30 less.

    And do you know why you clearly aren't right -- look that the gross margin beat from guidance. Some of that was from lighter iPad volume (which are much lower margin, especially the Mini), but the other is precisely because the 4S did not hugely impact volume mix rather than how you posited.
    Jul 25 05:11 PM | 8 Likes Like |Link to Comment
  • Apple: Worth More Than $130 Per Share [View article]
    it's not a tax loophole when it is caused int the first place with the US having the highest corporate taxes in the world and the ridiculous notion of taxing global income wherever it is earned. Because that is such a stupid concept and puts American companies at such a competitive disadvantage that Congress adapted US tax laws to allow a deferral of US taxes for such off-shore earnings so long as it stays off-shore.

    The fact that Ireland created a "blue-light" special to attract multi-nationals to domicile thier parent or off-shore holding companies in Ireland just means that the Irish are smarter than the idiots in washington. Medtronics just did a $42B merger with Covidien to move MDT's $62B market-cap to Ireland in an inversion trade.

    So the fact that TS Nelson is so ignorant of tax laws that he actually thinks that so-called "investigation" has any impact on Apple's valuation is a joke. Apple is one of very few US companies -- actually I cant think of any other --- that fully accrues US taxable income rates (and putting the non-cash tax accrual as deferred tax liability on the balance sheet) whereas most US MNC's rely on APB 23 (certification of intent for permanent re-investment off-shore income) to report lower ETR on foreign source earnings.
    Jun 17 05:26 PM | 8 Likes Like |Link to Comment
  • 3 New Reasons Netflix Could Shed $10 By 2013 [View article]
    Your misguided understanding of how content licensing works was kind of amusing except how emphatic you use mis-information to prove your point. Disney's output deal in the UK is already locked up by BSkyB. Blinkbox is simply another non-exclusive distributor of studio content during the PPV (i.e. ala carte rental) window and also offers for purchase -- presumably a cloud based locker like what everyone and ther grandmother is no offering (Amazon, iTunes, WalMart's VuDu, Google Play, Samsung Media Hub, and numerous others).

    You seem to bundle all IP-delivered programming into the same bucket as if a cable operator's programming such a Golf Channel, HBO, and the Food Network are competitors of each other in a winner-take-all battle because they all distribute via the same cable pipe. Get over it, the SVOD players or pay cable networks dont really compete with the PPV offerings of either the cable/satellite operators or other IP-delivered services such as Blinkbox/Amazon/Google... When it goes into the pay cable 1 window, the content usually goes dark in the PPV channel as part of the pay cable "exclusive", and will return after its exclusive pay cable 1 window for subscription services is complete.

    Your statement, "These agreements aggravate Netflix's existing content woes, as Sony, Warner Brothers, Viacom, Universal and 20th Century Fox have all pulled contracts giving Netflix permission to stream its content in lieu of other online competitors such as Blinkbox, Google and Amazon" is an outright lie or simply reflects ignorance."

    Each of WB, Universal, and 20th Century Fox have pre-existing exclusive pay cable 1 deals with HBO until they come up for renewal during 2015/2016 and have never had licensign deal with Netflix other than for non-exclusive catalog (i.e. older films). Viacom's Paramount Pictures actually pulled its film output deal from Showtime (it's previous corporate brethren until CBS was spun off in 2008) when its output deal expired and in turn set-up its own cable channel and streaming service called Epix in partnership with MGM and Lionsgate. Epix, with teh guidance of its corporate partners, in turn entered into a 5 year content licensing deal with Netflix in 2010 where Netflix had rights to stream all Epix content 90 days after initial viewing on Epix. Sony Columbia Pictures has NEVER had a direct output deal with Netflix but instead has an exclusive long-term output deal (for licenisng rights for both cable and streaming in pay cable 1 window) with Starz that had a subscriber base kick-out feature. During the summer of 2011, Netflix streaming subs grew to the point that combined with Starz's own cable subscribers would have triggered Sony's kick-out feature, at which point Sony films that were showing on Starz channel were removed from Netflix per their contract in order that Starz not be in violation of its agreement with Sony. This did not affect Disney films, which also has long-term exclusive output deal with Starz, and its films continued to run on Netflix until Starz's agreement with Netflix expired in Feb 2012. Starz and Netflix could not come to terms on the renewal because Starz insisted that it wanted to segregate its programming on a separate premium pay tier (i.e. an add-on subscription to Netflix's subscription plan) in order to protect Starz's cable distribution. That was a non-starter and a conflict with Netflix's basic value proposition of all-you-can-eat. Mark my words, Netflix will easily out-bid Starz for one or the other of Sony and Disney output deals when they come up for renewal in front of the 2015 expiration. Disney, for example, has already entered into direct licensing agreements with Netflix in Latin America for some of its film product from both Pixar and Buena Vista - in these markets where licensing is often a bundle of specific titles rather than forward output deals.

    I'm sure that Netflix will be invited to bid for all major studio output deals (except maybe Warner Brothers since it is a captive) in US for licensing to subscription services when they come up for renewal (because it has one of the bigger checkbooks), just like Dreamwork Animation left HBO for Netflix, and Weinstein entered into new multi-year agreement with Netflix for film output not otherwise included in Weinstein's deal with Showtime.

    Your basic thesis that the studio's "pulled" their programs from Netflix is simply wrong. The studios are dying for their existing contractual agreements to expire so that they can have a healthy auction for their pay cable deals when they come up for renewal (and hope that Netflix hasn't spent its budget allocation for recent films by then).
    May 9 05:45 PM | 8 Likes Like |Link to Comment
  • Reports: Apple talking with Samsung, Ahrendts hatches big retail plans [View news story]
    I just ordered 2 iPod Touches for our 5 and 6 yo, including AppleCare. With personalization, will arrive in 3 days -- amazing logistics. So I just parted with $760. the design quality was superb and the features robust. for us this was to leverage the content in their iPad Air devices (Christmas upgrade from original iPad 2 and iPad with Retina) and to stop them from commandeering our smartphones (both Samsungs) at restaurants. My 6 yo knows which restaurants she prefers based upon whether they have public WiFi. So the iPod as a "starter iPhone without the cellular data plan" is a viable entry mobility device that keeps them in the Apple ecosystem (they also have iPads at school too as the school has migrated to heavy reliance on individualized education using iPad apps)

    Of course our spoiled kids are the exception and we are probably bad parents willing to indulge in such excess. Nevertheless, it does indicate that there is a strong recurring revenue stream -- even though we only buy new iPods once every 2-3 years, that Apple can continue to monetize. I am sure that when they get old enough, if laptops still exist, we will be buying them Mac Airs or whatever they are called in 10 years.

    Apple is not a consumer electronics company, it is a design and luxury branded experience and it engenders tremendous loyalty leveraging across multiple platforms. Given that their content are all tied to iCloud, it will be a tough habit to break,...and frankly, I am not sure why one needs to. So even without growth on the next product line extension, the existing Apple platforms will likely continue to extract high gross profit dollars from the installed base.
    May 19 07:16 PM | 7 Likes Like |Link to Comment
  • One Word Separates Apple From $500 [View article]
    Dana, you got it backwards. By calling it a iPhone Pro, Apple gets $450 carrier subsidy, so $700 ASP gets street-delivered at $249 with 2 -yr contract, and it gets prospects for successive $100 add-ons for additional memory configuration (incremental 80% gross margin, which is shared some with the carriers to buy down their subsidy).

    If it called it an iPad Micro with phone, it gets much lower ASPs as the iPad reseller agreement generally has no required subsidies.
    May 30 12:36 AM | 7 Likes Like |Link to Comment
  • NTELOS - Don't Fall For The Yield, Sprint Contract A Risk With 50% Downside Potential In Share Price And Dividend Cut Likely [View article]
    Author actually has done decent analysis alhtough some items he is guessing at and he doesnt need to.

    1. his assumption of 31% operating COS (cash only) is too light to compare what is relatively low density rural mountainous market against Sprint's national network. there is a direct proxy in looking at the finanicals of Sprint Affiliate Shentel that is in adjacent territory to NTLS.

    2. Shentel's cash operating COS is 40% (which better reflects operating cost in similar region to Ntelos), plus D&A is 15%, where the D&A is for depreciation of network capex and amortizaton of spectrum licenses; so the apple to apple comparison is 55% to 60%

    3. You didn't need to do high school algebra to guess at the local gross margin -- just read the SNA contract that is on file. Sprint pays 60% of its national average revenue yield for both voice and data for "home" customers and 90% of same for "travel". This way, as Sprint's national (including heavy user metropolitan customers) subs drive down average revenue yield per minute or per GB, then NTLS unit prices have to drop as well.

    4. The contract is designed to assure Sprint 40% gross margins at the local subs, and to make sure it is not upside down on "travel" usage -- the 60% guaranteed COS (which ratchets down as sprint drops its prices to compete) is not very different than Shentel's all-in cost of around 55% COS for similar geography.

    5. By the way, in case you were wondering, Sprint actually makes money on the "travel" minutes since it has reciprocal rates for NTLS' roaming. In other words, Sprint gets to use its national network to service roaming NTLS customers and use that unit cost to off-set roaming usage on NTLS' network.

    6. so when you look at the outflows to NTLS, you need to recognize that a significant portion of the usage paid to NTLS is grossed up from the travel as there are reciprocal payments to Sprint at the same rate that gets netted.

    7. in addition your sub count is light. Shentel has same 2M covered pop footprint with 350K+ subs; I believe that NTLS footprint is higher and closer to 400K; plus the heavy college density brings in gypsy population (Sprint customers from out of region) that hang around 9 months out of the year. NTLS has greater network density than Shentel (just count the cell sites) because it can leverage the network sharing economics of two customer bases on one network, and so it is more dense in order to realize the capacity, but it gets better coverage as a collateral benefit. Therefore all your math based upon singular assumption of 300K is totally different when you use 350K subs (like Shentel for same covered pop with Sprint branded distribution) or the 400K that I believe to be the case. The reason that Sprint branded distribution (including Virgin, Assurance, and Boost sub-brands) is greater in these markets is because neither Metro PCS or Cricket (which either each or together can secure up to 12% combined market share of the market) is not prevalent in these markets.

    6. the dispute arose principally from the calculation average revenue yield for data usage and whether it made sense to include WiMax (Clearwire's network) or now LTE in the calculation of data revenue yield (obviously would drive it dramatically lower since such throughput encourages consumption while no additional revenue given Sprint's "unlimited" pricing model) versus sticking with CDMA EV-DO (3G) only. The SNA contract is explicitly only for CDMA network so NTLS was probably in the right, but practically, the data usage goes across all platforms, so Sprint was probably more "right" in a practical sense -- in any case the parties settled and agreed to move forward.

    The author is absolutely correct in his calculation of the math -- NTLS would be hurt upon non-renewal or drastic reduction in rates, but the author has zero judgment as to how probable that is. It will take 2 years at a minimum, to 4 years in reality for Sprint to overbuild a network with the comparable density of coverage and arrange fiber or DM backhaul to support the current bandwidth requirements. Forget about the idiott analyst Dixon at FBR, 800mhz is not the solution because probably only 1/3 to half of Sprint's current installed base have 800 capable handsets (but these will eventually turn over) but more importantly Sprint only has 1 CDMA carrier devoted to CDMA voice (1.25mhz x 1.25mhz) in order to maintain 10 mhz (5x5) in reserve to deploy LTE-A on 800mhz. In other words, while 800 gives great coverage in these regions, Sprint doesnt have enough to serve the capacity that it needs to support this customer base without employing 1900mhz, which means it needs essentially a similar cell site footprint in order to get comparable network quality as NTLS's network.

    It simply makes no sense to bear the execution risk of such an overbuild in mountainous terrain that took NTLS 15 years to season that network, when the fundamental analysis of the "make vs rent" is not as far off when you actually include the capital cost in the analysis and understand the cost of the region, and that the gross payments grossly overstate the payment because you have to understand there is flow going the other direction. If sprint was going to roam on Verizon in this instance (the only guy with CDMA except a couple of areas where USM has 800mhz CDMA footprint), it's costs would 3 times what NTLS is charging. So the only solution is a lengthy and operationally challenging overbuild -- if Sprint was going to do that, it really should have started that aggressively in January this year, the earliest when it was allowed to initiate overbuild on CDMA, because it will take every moment of the remaining term plus the 18 month extension to buid this overlay network -- oh by the way while it is building this out and wants to use the NTLS network, it needs to pay for both since there is minimum $9M/mo toll for the SNA.

    So this stock is not for the feint of heart, and author is absolutely correct, the dividend yield is high and one shouldn't invest because of the dividend because there is high beta in terms of the outcome. however, it would be insane to short this stock (like the 4.5M that is short), because the stock can double on an SNA resolution. Now somebody may determine it is a "coin flip" because the outcomes are binary, or he doesn't have sufficient industry knowledge to assess the probability of each outcome, so he should avoid taking a position. However, don't be deluded to think the author's solid financial analysis of the potential economic outcome in the case of haircut or termination of the SNA, means his assessment (from the tone of his implied orientation and his statements seeming not to know that Sprint has no other viable network solution in this footprint) of the probability of the different outcomes is anything close to on point.

    So just my two cents worth and IMO, dont believe either the bull or bear case because it is better for you to simply avoid such a binary outcome if you dont have the ability to do deep enough due diligence to make an informed bet (and it is a bet due to the binary outcome).
    Apr 26 03:48 PM | 6 Likes Like |Link to Comment
  • Apple's 5C Coming: BlackBerry Better Hurry [View article]
    iPod Shuffle, iPod Nano, IPod Mini, iPod Classic, iPod Touch covers all price points. iBook, MacBook, MacBook Pro, MacBook Air covers a range of price points. The Mac Mini, iMac, and iMac Pro covers range of price points. iPad Mini, iPad 3rd Gen, iPad 4G (with retina) covers arange of price points.

    Why do people think smartphones are different. Each of Samsung, Moto, LG, Nokia, BB, Sony, HTC, all have different products that play at different price points with different features and cusotmer propositions - why is Apple different. Even ZTE, Huawei, and Lenovo have different price points for their flagship smartphones and entry levels and mid-tier. Why is Apple constrained by some other law of physics that says that if it plays in different segments, all hell will break loose?
    Aug 13 03:53 PM | 6 Likes Like |Link to Comment
  • Is Apple Using Share Buybacks To Support Its Stock Price? [View article]
    AAPL would now be in its trading "blackout" period until earnings are released (since Company is currently in posession of material non-public information) and therefor AAPL cannot trade on a discretionary basis in its own securities.

    AAPL would have had to set up what is called a 10b(5)-1 repurchase plan BEFORE the blackout period began (probably at least a couple of weeks if not three weeks before quarter-end, in other words more than a month ago) to set up a repurchase plan that is on "auto-pilot".

    It would not be unusual for such a repurchase plan to buy more shares upon certain stock price triggers and/or dynamic triggers such as a decline in VWAP from the prior day's VWAP. That's "volume wieghtedaverage price".

    However, any repurchases are subject to 10b(18) stock trading rules for share repurchases by issuers such as cannot purchase on an "uptick" and cannot be solicited. These SEC rules are established for share repurchases to prevent stock price manipulation.

    So the author's entire thesis is pretty much useless and should be categorized in the file folder for "Posters Who Have No Idea About Share Repurchase Plans and SEC Rules" or simply "Dumb Posts from the Ill-Informed but Not Embarassed by Such".
    Apr 9 08:36 PM | 6 Likes Like |Link to Comment
  • How Apple Gave Wall Street The Middle Finger [View article]
    The Company did NOT increase share repurchase authorization which requires both board approval AND the filing of 8-K. The company purchased $2B of its $10B authorization so has $8B to go within existing plan. Nothing prevents them from increasing or amending authorization, just that they have to announce it. They would probably have to "true-up" their disclosure by providing an interim update of any subsequent purchase since last report at the time they increase share repurchase authorization.

    So while I am cheering them on in repurchasing the rest of the initial authorization, there is n oway they can stealthily repurchse $45B because that exceeds the authorized limit AND there is not sufficient liquidity to execute that program within this quarter to do that much repurchases without driving up the market price of hte shares significantly.

    so good wish, but not exactly how it will play out, but you are correct that it would be foolish for them to signal their intent with respect to share repurchases and projecting EPS will necessariy get to the share count question.
    Jan 29 11:01 AM | 6 Likes Like |Link to Comment
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