Dialectical Materialist

Dialectical Materialist
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  • Apple: Does It Matter That iPad Pro Isn't A Notebook Replacement?  [View article]
    And 7 hours later, the same site zdnet, publishes "So long Surface Pro..."


    It's almost as if these differing tools will find different uses among those with different needs and different tastes. Hard to imagine, I know.
    Nov 24, 2015. 08:39 PM | 1 Like Like |Link to Comment
  • Next Quarter Could Be A Back-Breaking Event For Apple Shareholders  [View article]
    And in looking back to make sure I got the author's price target correct, I scanned his previous AAPL headlines. There was an article from last January arguing the a 4" phone would be a positive for sales. Same author, different opinion.


    I don't think the issue here is that the author changes his mind -- any investor not willing to do that will either be very broke or very lucky -- rather I think it is that these shifts in what the author "anticipates" or "expects" are not well examined. If I change my mind about a company or a product, shouldn't I be able to tell you why I used to think one way and now I think another? If I can't, then what was my original opinion based on in the first place?
    Nov 24, 2015. 08:31 PM | 3 Likes Like |Link to Comment
  • Next Quarter Could Be A Back-Breaking Event For Apple Shareholders  [View article]
    Richbar says, "I put no faith in Goldman Sachs and much much less in Brian White, whose price targets have repeatedly been ridiculous, and orchestrated mainly for attention."

    Yes, I don't put much faith in ridiculous price targets either. I didn't buy $174 and I don't buy $116. Price targets themselves are silly. They are best viewed not as the target price on date certain that they claim to be but a measurement of the intrinsic value the analyst sees in the company. If the price target is high, the analyst thinks the stock is undervalued, and if it is low, the analyst thinks it is over-valued.

    This is part of why I join those who are puzzled by the author's apparent belief that AAPL was wildly undervalued less than a year ago and his sudden conversion to the idea that it is mildly overvalued now. What has changed about the company? The author has not done a convincing job of making this case.

    And while we're on the subject of price targets, Brian White was widely derided for his gimmicky 777 and later 888 price targets, before his almost inexplicable 1111. It is interesting to note these prices, split adjusted work out to 111, 127, and 159. If you assume as I do that price targets are really just a guess about where a stock may be headed in relation to its current value, I think much of what Brian White has been saying has been vindicated. It's not like he said AAPL would hit $174 or anything, is it?

    I'll leave it as an exercise for the reader which price targets mentioned here should be construed as "ridiculous and orchestrated for attention".
    Nov 24, 2015. 08:22 PM | 4 Likes Like |Link to Comment
  • Tim Cook, We Need More Share Buybacks  [View article]
    Let's get this much clear, Retired One: You don't owe me or anyone else an explanation for where you worked or what stocks you're invested in. But I feel like you bought it up when you talked about MO returns and management use of capital outdoing AAPL.

    As soon as you bring up MO, especially in terms of how it may do better as a stock than AAPL, you open up the floor to reasons an investor might not want to be involved with the company. You have the right to have worked for any legal employer to have put your hard earned dollars into any legal stock you darn well pleased. But if you bring up your position in the context of an Apple article, those commenting on the article have every right to chime in with their beliefs about MO and its stock.

    And every stock carries a footprint, as you say. I don't like MO's footprint. If Apple ever did team up with MO (which of course would never happen), I'd sell my stock. I don't take this comment to message boards about MO stock. I leave those people alone. I like leaving people alone who are merely exercising their right to live in the world in their own way. But you brought it up, and at that point it is not out of line to give an opinion on the matter.

    I hope that makes this sound a lot less like a personal attack on you and your choices and more like an opinion on the "footprint" of a company and why this particular investor would not want to go there.
    Nov 22, 2015. 08:03 PM | 2 Likes Like |Link to Comment
  • Tim Cook, We Need More Share Buybacks  [View article]
    It was not one of my more original posts. I'll grant you that. I think your comparison between an addictive device and an addiction to smoking is pretty cynical. But as you allude to everyone needs to draw their own lines.

    Some people get upset that a company like GM can knowingly sell a product which has a defect that causes 10 or maybe 100 deaths depending on who you ask. For some that kind of corporate cynicism is beyond the pale. For others, they are okay with a company that knowingly sells a product which according to the CDC kills 6 million people each year. But that's okay, because some people are addicted to playing Candy Crush. Gotta draw your own lines on these things. I get it.
    Nov 22, 2015. 05:05 PM | 1 Like Like |Link to Comment
  • Tim Cook, We Need More Share Buybacks  [View article]
    There certainly is a lot of profit in selling addictive drugs, no one can argue that.

    I'd rather not try an defend the actions of a man who has beaten women, but it seems easier than defending the actions of a company that knowingly sells a harmful and addictive product to hundreds of millions of people around the world. Brand loyalty means something entirely different in the world of addictive drugs. The deck is stacked in favor of the seller. They get a lot of "customers for life".

    It's not a surprise that a company could make a lot of money selling an addictive carcinogen. It's only a surprise that any rational human being would want to.
    Nov 22, 2015. 01:10 PM | 2 Likes Like |Link to Comment
  • Tim Cook, We Need More Share Buybacks  [View article]
    "Apple's dividend compound annual growth rate is about 10% now." From an admittedly modest base.

    "I am not unhappy with 10% a year and do not consider it to be stingy." Nope. Me neither.
    Nov 21, 2015. 09:48 PM | 1 Like Like |Link to Comment
  • Tim Cook, We Need More Share Buybacks  [View article]
    rnsmith, you're right of course. I was referring to a more substantial increase than they have done so far. Lots of folks, as evidenced by comments here and elsewhere, think Apple is being pretty stingy.
    Nov 21, 2015. 08:27 PM | 1 Like Like |Link to Comment
  • Tim Cook, We Need More Share Buybacks  [View article]
    I have a suspicion that dividend increases are on the way. I suspect one more year of modest increase and then some more significant boosts, all on the schedule of April announcements that they have been maintaining.

    Their chief problem is that while they have enormous cash flow, so much of it being overseas is hindering their capital return. When they ratchet down they buy backs, they'll have plenty of domestic cash to support substantial dividends.

    One thing I know for sure, even if I could be mistaken about Apple's strategy, is that they do have a strategy. They have no doubt given a great deal of thought to what they'll do with their cash. They have a plan. And since they have brought in a new CFO and a board member with substantial fund management experience (one of the founding members of Blackrock) over the past couple years or so, I have complete confidence that they'll manage this "problem" of having too much money piling up.
    Nov 21, 2015. 06:55 PM | Likes Like |Link to Comment
  • Tim Cook, We Need More Share Buybacks  [View article]
    If you don't believe that reducing the float creates value for the shareholder, then logic dictates increasing the float wouldn't destroy shareholder value. Do you really think if Apple had issued a billion new shares instead of retiring a billion old ones, the stock price would be the same? Of course not. But it should be if one accepts the notion that reducing the float is shareholder neutral (i.e. creates no value).
    Nov 21, 2015. 04:29 PM | 1 Like Like |Link to Comment
  • Tim Cook, We Need More Share Buybacks  [View article]
    Wow, you don't think so? Why not?

    Do you think revenue will actually be lower or do you think margins will suffer?

    I think there is a great deal of room for revenue growth. The Apple Watch alone is going to be huge this holiday season. I'll bet Apple sells 15 million watches at least in 2016. That's about $7.5B in revenue. That can help mitigate a lot of "tough comparisons".

    Then there's Apple TV, Apple Music, App store growth... There are a lot of comparatively small contributors that add up over time. I think Apple can top 2015's revenue.
    Nov 20, 2015. 07:01 PM | 4 Likes Like |Link to Comment
  • Tim Cook, We Need More Share Buybacks  [View article]
    MSFT has 8 billion shares and its traction seems just fine. I don't understand why the number of outstanding shares would have any relation to valuation. It doesn't.
    Nov 20, 2015. 05:59 PM | 1 Like Like |Link to Comment
  • Tim Cook, We Need More Share Buybacks  [View article]
    Couldn't you frame the risk of accelerated repurchases in terms of the likelihood that the stock may pop? If shares are substantially undervalued but may climb suddenly as good news is priced into the stock, being on the hook for this increase would be less than ideal. So sure you could argue at some price it is undervalued enough for management to throw caution to the wind, but couldn't it also be seen as a barometer of management's assessment of the risk of sudden share price appreciation? I would want to be accumulating on the open market at cost if I thought I might be on the hook for a bulk purchase that climbs 20% in the next 60 days.

    I think the decision to use accelerated share repurchases is probably a complicated one and not subject to a single explanation.
    Nov 20, 2015. 05:42 PM | 1 Like Like |Link to Comment
  • 2016 Will Be Apple's Biggest Year  [View article]
    And look out for q1 2017. It will be another 14 week quarter. That means an extra 25 cents in EPS just because the reporting period is longer. You could say. "Yeah but the reporting period is longer, so that doesn't mean anything." But that will not be the way the market treats the news. It's like with home runs... No one cares about at bats they just focus on the number of home runs. In just over a year, that extra week will mean an additional $4billion in revenue, $1billion+ in earnings, and about 0.25 EPS.

    This will set up the mother of all compares for the following year, but initially the numbers are bound to stun many traders, exactly as happened the last time they had a 14 week quarter.
    Nov 17, 2015. 03:10 PM | 1 Like Like |Link to Comment
  • 2016 Won't Be Apple's Biggest Year  [View article]
    Alex, you could be right. I got all my college calculus credits while I was still in high school many many years ago. But "decelerating sales" is a poor expression for "slowing growth". It is still growth. And just as in my example, no one would reasonably breathe a sigh of relief that a train that was once moving 120 miles an hour but is now moving 132 miles an hour is "slowing." It's not slowing at all. It's still moving faster. And similarly AAPL's iPhone sales are set to grow in 2016.

    If you made $100k a year and got a $20k raise each year, are you going to complain that over time this raise amounts to "slowing growth"? Because it is, of course. The $20k raise when you're making $200k is only 10% whereas it was a full 20% of the original $100k. But it is still $20k above and beyond the previous year.

    All of these dangerous sounding phrases like "slowing sales" make it sound like we're talking about an actual decline when nothing could be further from the truth. And if you fall for your own voodoo, you start to think that only growing 5% on revenues of $230 billion is somehow a sign of decline.

    There's cute statistical jargon and then there is reality. Don't confuse the two is my point.
    Nov 14, 2015. 06:13 PM | 8 Likes Like |Link to Comment