Seeking Alpha

Dialectical Materialist

Dialectical Materialist
Send Message
View as an RSS Feed
View Dialectical Materialist's Comments BY TICKER:
Latest  |  Highest rated
  • Apple Earnings: What To Look For Beyond The Numbers [View article]
    "Apple didn't count sales until the customer took delivery. Wasn't this one of the big issues in 4Q?"

    Apple seems to mean "take delivery" when they report that x millions bought the phone over the weekend. But when they report sales for each quarter, it does include channel fill (those items shipped to stores like Best Buy in order to be sold).

    This makes it very likely that they will report a monster quarter for the iPhone. They started the quarter with very little channel fill and should end it with stores pretty well stocked as they finally got in front of the demand curve.

    Some argue they got a handle on inventory because demand was weak, but we know that AT&T and Verizon sold more than ever and that the first weekend in China blew away the 4s's first weekend in China, so it seems unlikely that demand was anything but record breaking.

    So you have record breaking sales vs last q1, a release to more countries than last q1, a launch in China in q1, and an empty channel to fill. 53 million seems to low to me.
    Jan 21, 2013. 11:02 AM | 1 Like Like |Link to Comment
  • Apple: Get Ready For January 18 [View article]
    Real or not, thanks for the info.
    Jan 20, 2013. 11:02 PM | 1 Like Like |Link to Comment
  • The 'Too Big Of A Market Cap Stock' Theory [View article]
    Market Cap to GDP comparisons are of limited value. It is like comparing the holding capacity of a lake (market cap) to the flow of a river (GDP). It makes it seem like your are saying that Apple would be 5% of the economy if its market cap were 5% of the GDP but that is simply not the case. Gross sales to GDP would be the measurement you want here, and more specifically you would want US sales to US GDP.

    There is no mathematical reason that a global company could not have a market cap that is as large as the GDP of some large nation. The first is a measure of stored wealth the second is a rate of economic activity.
    Jan 20, 2013. 04:57 PM | 4 Likes Like |Link to Comment
  • Apple: Get Ready For January 18 [View article]

    Gore was exercising an option he had been awarded in 2003 when he joined the board. He executed it at the earliest possible time, for obvious reasons. He doesn't just "apparently" sit on their board. The board of directors of any publicly traded company is public knowledge. Apple's BoD is made up of these folks:

    This is not a "sham" in the proper sense of the word. It was not done illegally or without public disclosure. If you look at the boards of all of the major corporations in the US you will see lots of familiar names from business and politics and you will see that they get compensated very nicely for their trouble.

    The reason a person is given options to exercise at a certain price point is that it gives them an incentive to work hard and make the company worth more so that they can get paid. This is not an Al Gore thing or even an Apple thing. It is simply the way it is done. I can see having some reservations about the process, but to think it has anything to do with Apple specifically or with Al Gore being a shady politician is to misunderstand the process.

    Jan 20, 2013. 12:02 PM | 7 Likes Like |Link to Comment
  • Apple: Market Hero At The Crossroads [View article]
    "to an iPad, which I can never get my hands on"

    A couple weeks ago I had a friend mention that he bought a 4th gen iPad for his family for Christmas. He knew I had been using an iPad for a while. Someone else asked him what he thought of it. He just shrugged.

    The investor in me cringed. Uh-oh, he didn't like it. He was underwhelmed. "You don't like it?" I asked.

    "I should have bought two," he said. "I haven't even been able to try it out yet!"
    Jan 19, 2013. 05:45 PM | 2 Likes Like |Link to Comment
  • Apple: Market Hero At The Crossroads [View article]
    Rope, it sounds to me like you are saying the options market is not rigged. Yet at the same time you caution that this is not a level playing field. While I agree with you, I think that is a pretty fine distinction that may be a source of some of the problem

    You argue that there are no "big boys who manipulate the market" but also warn that the professional trader will always win. Do you see why this dichotomy may be hard for some amateurs to wrap their heads around?
    Jan 19, 2013. 04:02 PM | 3 Likes Like |Link to Comment
  • Apple Is Not A Retirement Stock [View article]
    Apple doesn't have any verbs, but its does own two nouns. An mp3 player is an iPod and a tablet computer is an iPad. Not bad for now.
    Jan 19, 2013. 12:18 PM | 4 Likes Like |Link to Comment
  • Sharp (SHCAY.PK) has "nearly halted production" of displays for the regular iPad as demand shifts towards the iPad Mini and Apple (AAPL -0.6%) attempts to manage inventory, Reuters reports. Many analysts have already forecast the Mini, which is thinner and much lighter than the 4th-gen regular iPad, will account for a majority of iPad sales in Q1. Higher Mini sales benefit display suppliers AUO and LPL. Due to lower price tags, Apple's average gross profit on Mini sales appears to be lower than its average gross profit on regular iPad sales. [View news story]
    Typical Seeking Alpha Dynamic:

    Author: 20+ divided by 9 is something less than 2.

    Commenter: No, you mean more than 2.

    Author: Less than 2. The 20 is only an estimate. But it is something greater than 20. Divided by 9 should be less than 2.

    Commenter: Do the math. By your own assumptions, the answer is at least 2.22!

    Author: You're so emotional. You really shouldn't fall in love with numbers.
    Jan 19, 2013. 12:12 PM | Likes Like |Link to Comment
  • Apple: Market Hero At The Crossroads [View article]
    "I'm talking management guidance for which direction they are taking the company."

    That is a dilemma for a company like Apple. Would you have them map out their product line five years forward and have the competition get a look at where they are going? They have never even officially confirmed they are doing anything with TV, after all.

    Tim Cook, said, "Don't bet against us." I think that is the clearest roadmap you will ever get from Apple. They do not like to telegraph a punch.

    You know a better analogy might be from football and a wide receiver who has "late hands". Randy Moss always had some of the best "late hands" in the league.

    What this means is that he is running down the field being covered by the corner. The corner knows the receiver is going to try to catch a pass. He is running after him watching his eyes and he can tell that the ball has been thrown to him. Most corners will see the receiver begin to react to the ball and they can tell that the ball is about to come into contact with the receiver, so they make their move to hit the ball or obstruct the receiver.

    "Late hands" means reaching out at the very last second to grab the ball. It gives the defender almost no time to react. By the time they realize the ball is on its way, it is in the hands of the receiver.

    Apple wants to have "late hands" with its product releases. Rather than map out a clear strategy and allow its competition to know what it coming, it wants to surprise as much as possible with each product reveal. Everyone knows it will happen, but they don't know exactly what it is until it is too late. Whatever small advantage they can get from reducing the time the competition has to react to their product gives them an edge over others.

    So expecting a clear roadmap from Apple will leave you disappointed.
    Jan 19, 2013. 11:50 AM | 4 Likes Like |Link to Comment
  • Analyzing Apple's Past To Gain A Better Perception On Its Future [View article]

    I don't know how long you have been following AAPL, but revisit your assumptions after earnings. What they should demonstrate is:

    -- Apple is still producing products that people enjoy.
    -- More people are creating accounts on iTunes.
    -- China's significance continues to grow.
    -- The iPad mini was a monster hit.

    All of these together should suggest to the open minded person that Apple's sales in the near future will rival or exceed their recent past. Why? Because Apple remains a popular brand in the growing mobile market.

    There are no certainties. But there are reasonable assumptions. Just as people expect Samsung to continue to sell its phones, one has to assume that the satisfied Apple consumer will continue to buy Apple products.

    The lower margin argument in particular is a red herring. The whole idea promoted for why Apple's margin must shrink relates to their market share. But the market for mobile devices is expanding. So if they protect or grow their market share, they will have higher sales volume. Lower margins do not "demand" higher sales volumes, they cause them. It is largely self correcting.

    Similarly the "cloudy forecast" is part of Apple's history. Regardless of what the competition wants to talk about, Apple will do what it wants to when it wants to. This is key to the success they have had. Do you remember CES in 2010? It was all about the tablet. No one had yet seen an iPad, but there were any number of manufacturers trying to get ahead of the curve and release concept pieces that reflected what they expected the iPad to be. When the iPad was released, these pathetic prototypes were forgotten and the projects behind them died on the vine. Go back and check the history if you don't remember that.

    So now at CES we had a dog and pony shows involving TV. Everyone is trying to figure out Apple's TV in advance. Any wonder who the real force in innovation is?

    You can't possibly be bullish on innovation if you want it spelled out for you in advance, because if it is spelled out in advance, it is no longer innovation. So that is a dilemma.

    But what you can do is draw reasonable trend lines from existing market data and add to that the knowledge that Apple is not going to stand still. A new data point is about to be drawn on Jan 23rd. It should help advance the discussion about Apple's future.
    Jan 18, 2013. 10:00 PM | 1 Like Like |Link to Comment
  • Apple: Get Ready For January 18 [View article]
    Tuesday. Monday is a holiday.
    Jan 18, 2013. 05:05 PM | Likes Like |Link to Comment
  • Apple Sure Looks Cheap [View article]
    Glenn, my story is not terribly different. I have made some money and lost some money on OTM calls. Overall I have lost money on them. The real performers have been far dated deep in the money calls. The return is less when it hits, but the chances of total loss are much lower.

    I have a fair amount of OTM calls for Apple going into next Wednesday, but it is not a strategy I would ever recommend as "wise investing". I am using money I can afford to lose and that I expect I probably will lose. That is not what most folks are looking for when they are "seeking alpha".
    Jan 18, 2013. 12:29 PM | 1 Like Like |Link to Comment
  • Analyzing Apple's Past To Gain A Better Perception On Its Future [View article]

    You have posed an interesting question. Or looked at the problem in an interesting way. I propose walking through your own model using your own assumptions, only I will go you one better and say that AAPL will not grow at all (for this example).

    Suppose 2 x book. Cash and securities are the bulk of their "book". You neglect that they while they only have $20 a share in "cash", they have $120 per share in "cash and short and long term marketable securities".

    You say 250. Suppose Apple were trading at 250 today. They are minting money -- to the tune of about $40B a year.

    If they kept the same business in 2013, at the end of 2013 they would have another 40B in the bank. So the price at then end of 2013 should be 330. Then at the end of 2014, with another 40B in the bank, they should be trading at 410. And by the end of 2015 this price is 490.

    So an investor sizes up this company and determines that he can hold on to the stock for three years, collect a small dividend, and just about double his money in three years when he sells the shares for 490.

    Sounds like a great deal, doesn't it? And the fact that it is such a great deal would drive the price higher. Suddenly the investor would be willing to pay 2.5 or 3 times book to get in on this bargain. Others seeing the stock trade at 3 times book would do the math and conclude they would have even better profits in 2015...

    In short the reason that AAPL is not trading at 250 now is that the assumptions you would have to use to get it at that level quickly make it a great deal in a couple years, and people would want to buy in advance to make the money. This is why some people say that slowing growth is not a real killer for AAPL since the stock is currently priced for little or no growth. Many people forget to project out the impact of their cash into the coming years.

    The only real explanation for why AAPL does not trade at a higher multiple is in fact the assumption that this cash generation will be slowing down in coming years. In other words, many people assume growth will actually shrink.

    If Apple can convince investors that it is not on the verge of shrinking, you may see the multiple expand. If not, it should continue to contract.
    Jan 18, 2013. 11:00 AM | 1 Like Like |Link to Comment
  • Apple Earnings: Expect The Unexpected [View article]
    It's not a large wooden rabbit by any chance...?
    Jan 17, 2013. 09:38 PM | 3 Likes Like |Link to Comment
  • Apple: Market Hero At The Crossroads [View article]
    Derek, alas, there will always be those who thing the Carnegie Foundation is "PC crap"!

    I'm glad you liked the idea.
    Jan 17, 2013. 09:14 PM | 2 Likes Like |Link to Comment