Seeking Alpha


Send Message
View skibimamex's Comments BY TICKER:
  • Why Apple Won't Build A Cheap iPhone... And Why It Should [View article]
    chfp, the carriers have not "moved away" from subsidies. they just call it leasing because it is an accounting gimick. So rather than "free" with 2 yr contract and a $350 ETF, it is now $0 down, and a $20/mo "lease" (while lowering service plans by $20/mo) --- thus the economic ETF starts at $480 and declines $20/mo. At the end of year 1 to 15 months, the carriers are now offering "early upgrade" programs if you trade in the phone, so another $0 down, and $20/mo lease. In the meantime, the carriers have delayed the EBITDA impact of the subsidy and time shifted it. They used to have a $450 P&L hit up front and an ongoing service contribution stream. Now they have no P&L hit, and instead capitalize the asset, and enjoy the same combined service and lease rental stream as before. Now the subsidy cost is below the EBITDA line and amortized as depreciation on revenue generating equipment.

    Why do you think the 4S is still flying out the door on $0 down payment plans? Because even among the less well-to-do demographics, an iPhone is affordable luxury surrounded by the halo of an aspirational brand.
    Aug 13 10:30 AM | Likes Like |Link to Comment
  • Apple's CDN Now Live: Has Paid Deals With ISPs, Massive Capacity In Place [View article]

    curious if you believe Apple will eventually transport the streaming content that their devices can host. for example, I subscribe my Hulu+ through Apple iTunes -- I could do the same for Netflix too I guess, but it was simply an impulse buy for Hulu subscription (now 3 years ago) when I was using my Apple TV. Right now I assume that when i pull hulu or netflix form the Apple TV, that it turns passive and lets Hulu and Netflix be responsible for delivering the content to the Apple box. however, if I am pulling down a download or rental from iTunes rental or for purchase, then Apple is using its own CDN and responsible for delivery.

    If apple ever becomes a "virtual mvpd" like Dish is planning to do with launch of its service later this year, do you think Apple would ever step up for assuring the QoS and pull Netflix and Hulu content over Apple's own CDN network along with the other streaming VMVPD content that it wishes to deliver?

    I'm just trying to understand why the massive scale in infrastructure. the only app that can use that sort of capacity is video. all the other stuff such as software download or music download or streaming are thin pipe apps, whereas HD Video, and 4K HD would be a quantum leap from how they are using now. Just curious what you hear why Apple planning for such a fat pipe and why it feels it needs it.
    Jul 31 08:53 PM | 1 Like Like |Link to Comment
  • iPad Cannibalization From iPhone 6 Sales Will Be Insignificant [View article]
    Hmmmm 5.5" iPhone 6 Pro will likely have ASP of $750 (like Samsung's Note 3 is +$100 more) and gross margin close to 50%, so that is $325 gross profit dollars for each unit

    the 7.9" iPad Mini has ASP around $400 (mix of regualr and with retina) and has GM% around 30%, or $120 gross profit dollars per unit.

    $350 GP per unit vs $120 GP per unit. Shoot me in the head, which one do I want?

    Oh I forgot, the retail street price of the iPhone 6 Pro will be $299 (either subsidized purchase or initial "down payment" on lease as they are calling the new subsidized purchases) since on average, the carriers buy down high-end iPhones by $450/unit. This will compare to the $400 ASP for iPad mini, so the 'street price of the big Iphone will be actually lower than the street price of the iPad mini, despite Apple making nearly 3x the gross profit dollars per unit.

    As a long AAPL shareholder, I say bring it on, give me as much iPad cannibalization as you can. I love the nearly 3x per unit gross profit contribution that will result.
    Jul 31 08:37 AM | 4 Likes Like |Link to Comment
  • Why iPhone 6 Won't Reverse Apple's Market Share Decline [View article]
    "reduced subsidies" is such a red herring and mostly voodoo accounting by the US carriers.

    Call it "subsidy" and it hits the income statement immediately as a cost of acquisition. Get the customer to "lease it" with the same $199 down, and 24 payments of $20/mo, then they dont bear a hit until the carrier tries to collect the the remaining balance on a churned customer -- no different than they tried to collect the $350 ETF in the old model. In the old model, the carrier took the income statement hit on the subsidy upfront, but mitigated it if it recovered ETF on the back-end in realizing income, but if the ETF was uncollectible it was income statement neutral since it had previously taken the subsidy hit already. In the new leasing model, there is no income statement hit up front; instead the carriers capitalize the asset and recognize leasing revenues along the way and only take the income statement hit on the back-end if they cant collect the balance from the customer who has left with a remaining lease balance.

    In reality, the carriers are in fact now promoting "early upgrade" options by letting customers "trade-in" at the end of 12-15 months on lease in order to get a brand new iPhone and start the lease cycle again. The carrier's loss is that $240 remaining lease balance less whatever the wholesale recycle market will bear for the 1 yr old iPhone, which usually should largely cover it -- which means that the carriers are incented now, due to their accounting change, to promote the velocity of the upgrade cycle. Guess who benefits from that.

    In fact the bears were focused on the competitive impact on ASPs, but like cars, when you compare the cost of ownership, now crystalized by the carriers supporting early upgrade options, an iPhone is actually cheaper to own than something priced $150 cheaper due to the higher residual value of the iPhone. In this lease accounting paradigm, this will become more clear when you see the promotional behavior of the carriers.
    Jul 28 09:00 AM | Likes Like |Link to Comment
  • Apple And Me: Why I Finally Bought Some Apple Shares [View article]
    but ote, had you done the same trade instead used your monies and bought a $500 Jan 15 call for the same $3K, you would be up >$20K right now.

    If you believe in something back then, better to invest in it for the left bleachers, rather than merely a bunt single for a trade.
    Jul 27 06:49 PM | 3 Likes Like |Link to Comment
  • Apple's Q3 Bonanza: The Real Story May Be Not Quite So Bullish [View article]
    Wow, MB's articles sure brings out the shrill commentary. He catches more attention than a loud fart in church.
    Jul 27 06:40 PM | 1 Like Like |Link to Comment
  • Apple Earnings: Gross Margin Drives The EPS Beat [View article]
    Apple's gross margin decline resulted from the growth of the iPad and its relative portion of the revenue mix, particularly the launch and growth of the iPad Mini. And now it gross margin accretion/recovery is precisely because of the decretion of iPad in Apple's relative revenue mix.

    Weirdos that kept on harping on iPhones' "increasing competitive vulnerability and loss of market share from price competition" never could understand or understand that their theses was contradicted by the fact that Apple's iPhone ASP actually didn't move much from the low to mid $600's.

    Here we go again to bring out the zombie shorts to paul revere "OMG the iPhone ASP is cr*pping through the floor", when in reality it is a mix shift in iPhone to improving market acceptance of the 5C and its greater impact on ASP for iPhone. Initially the potential impact of mix shift to 5C was masked by the far greater success of the 5S relative to the 5C models during first couple of quarters of launch. Now we see that the ASP for iPhone is starting to illustrate that mix shift as the 5C gets an increasing portion of the overall sales mix. But I agree with author that Apple's margin beat during 3Q despite this shifting mix to 5C (or 4S if you believe Michael Blair) suggest the COGS of the 5C is quite competitive in order for Apple to increase consolidated gross margin....and because shrinking lower margin iPad sales.
    Jul 25 05:27 PM | 2 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
  • Quantifying iPhone 6's Potential Cannibalization Of iPad, It Is Not Pretty [View article]
    iPhone 6 Pro's gross profit dollars is almost twice that of an iPad Mini (it's closest screen size likely to be displaced). Tell me why that is a bad thing? Oh, you didn't know that iPad Mini's have 20 pts lower margin and half the ASP of an iPhone?

    Enough said.
    Jul 24 12:19 AM | Likes Like |Link to Comment
  • Why The IBM-Apple Agreement Could Fail [View article]
    BBRY is only more secure at the device level but it is becoming extinct. Enterprises are not going to trust / rely on the device OS to protect security. They are going to force solutions vendors to develop app solutions that leave the data in the enterprise's private cloud and only send minimal encrypted data streams that are decrypted within the app itself to wall it off from the rest of the device. In other words those selling hyper security solutions will not accept the security weaknesses of any of the mobile devices and instead design their solutions expecting device security flaws. These are not off-the-shelf mass market consumer apps but rather high value B2B (high priced too) designed to serve the enterprise needs. They will bias to iOS because Android is fragmented, and BBRY is not even in the discussion. BBRY sole claim to fame is security in an email context - it has no presence, ZERO, anywhere in many of the custom applications (largely relational database management) that characterize enterprise application solutions -- and besides, no enterprise application developer would make it through investment decision committee to actually invest in resources to develop a solution that operates on BBRY 10 as its devices are seen in the wild only slightly more frequently than Big Foot sightings.
    Jul 23 06:14 PM | 3 Likes Like |Link to Comment
  • Why The IBM-Apple Agreement Could Fail [View article]
    Blackberry killed Blackberry....
    Jul 23 05:54 PM | 1 Like Like |Link to Comment
  • Apple Earnings: Ecosystem Contraction Playing Out; Regulatory Risk Looms In China [View article]
    Apple is a "home grown" phone in China. HonHai is hiring an additional 100,000 in China factory just for the iPhone 6 Pro launch. From day 1, every single iPhone has been made in China except those intended for Brazil which are sent in kit form to Brazil for "final-final-final" assembly to comply with Brazilian local content regs (just like all other OEMs).

    BTW, I opened the back of my Samsung flag ship phone -- yep "Made in China"

    In fact pretty much all smartphones are made in China, including almost all final assembly and most of the components are fabbed there as well since most the chipmakers have moved their production capacity to be near final assembly.

    If you know absolutely nothing of what you are talking about why spew nothingness?
    Jul 23 10:42 AM | 4 Likes Like |Link to Comment
  • Why The IBM-Apple Agreement Could Fail [View article]
    No one is going to bet on BB as no user will be "bringing" those devices. You think Android is more secure than iOS? Which version of Android as there are 5 flavors out at any time - you think that makes it more secure? The reality the type of apps and software solutions that have value in the enterprise segment are going to drive to the tablet devices first rather than on smartphones. Tablets are not BYOD devices as the applications that an enterprise wants to migrate are corporate centric and the device budget displaces laptops.

    P.s. Written on a corporate issued iPad.....
    Jul 22 11:08 PM | 5 Likes Like |Link to Comment
  • Apple: Time To Scrap The iPod [View article]
    iPod Touch has the one thing that iPhone doesn't have -- it strips out the QCOM com processor and saves a bunch of cost in order to deliver a lower ASP. The Touch is exactly the screen size as the 5c/5s and has all the functionality except the cellular connectivity. therefore without the $50-$100/mo bill.

    iPod is the gateway drug intended to introduce trial and seed the addiction
    Jul 6 09:24 PM | 2 Likes Like |Link to Comment
  • Don't Tell The iWatch What It Can't Do [View article]
    there were all these mini-CD players and portable MP3 players before iPod showed up and totally re-imagined the user interface.

    there were all these MS-DOS-based PC's and even Apple's own, until the Mac showed up with a different user interface; Of course Xerox had been working on that 10 years before.

    interesting that 7 years later, Apple introduced the iMac using NEXT's operating systems that was re-named OS-X. Of course everything it did, mostly, was also done by Windows.

    By the time of the introduction of iPhone, there had been many years of "Smartphones" (originally coined by Compaq for its iPaq) relying on the Palm platform and RIM. They all could access the internet by 2007. So what the iPhone "could do" had all been done before.

    At the introduction of the iPad, others had conceived different forms of mobile computing, including laptops, netbooks, and other PDA and tablet type devices (even Apple's own failed Newton). So the concept of mobile or portable computing was certainly not new.

    The point is that nothing is EVER new and almost any new successful product that resonates with the mas market all had previously failed versions that had various "pain points" for the consumer that the ultimate successful product eventually solved -- but almost everything it "did" was done before but maybe not in the same seamless and effective user experience.

    I agree with you that we have no clue whether this new iDevice will be successful but just because other have conceived similar functionality and may or may not have more success doesn't mean that it is certain there is no opportunity for Apple to iConceive the product and user experience differently. I certainly wouldn't "pay up" for this unknown iWhatever, but I think the bet is well paid for by the existing cash flow stream and expectations of a robust iPhone refresh cycle with a free option on maybe some unknown iDevices. Hell, iBeats headphones is a $1.4B business out of the box; who know whether that has legs to become a $3B biz relatively quickly leveraging Apple's distribution footprint and marketing prowess.
    Jul 3 07:00 PM | Likes Like |Link to Comment
More on AAPL by skibimamex