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Dialectical Materialist

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  • Is Apple More Vulnerable Than Microsoft To Trends In Mobile? Probably [View article]
    "Neighbor's son switches to Android. Could devastate Apple, analysts say"
    Aug 1, 2015. 11:44 PM | Likes Like |Link to Comment
  • Is Apple More Vulnerable Than Microsoft To Trends In Mobile? Probably [View article]

    I actually agree that Apple's q1 guidance might be lower than last years actual revenue (though it will surely be higher than last year's guidance).

    If that happens, and it spooks the market, it will be a tremendous buying opportunity, because the odds of Apple's actual revenue declining YoY in q1 is slight. The 's' cycle for the iPhone is bigger than the plain number cycle, they will have a rebounding iPad (based on replacement cycle alone) and a Watch for holiday gift giving. And Apple music will be accretive. And Apple TV may be a thing.

    There are too many new ways for them to generate additional revenue to think they will actually fail to beat q1 2015. Even if they sold identical number of units at identical ASP, they would beat YoY. This is because the rolling wave of deferred revenue in q1 will include some of last years' iPhone sales (which is greater than the deferred revenue recognized in 2015 from the previous year's sales).

    I will bet the farm that q1 revenue beats handily YoY. If a bunch of traders want to get spooked by Apple's guidance, well that just leaves more for the rest of us.
    Aug 1, 2015. 11:36 PM | 1 Like Like |Link to Comment
  • Is Apple More Vulnerable Than Microsoft To Trends In Mobile? Probably [View article]

    All right... all right... but apart from better sanitation and medicine and education and irrigation and public health and roads and a freshwater system and baths and public order... what have the Romans done for us?
    Aug 1, 2015. 11:24 PM | Likes Like |Link to Comment
  • Is Apple More Vulnerable Than Microsoft To Trends In Mobile? Probably [View article]
    "Actually Mr. Blair has a point. Apple is more vulnerable to mobile than Microsoft."

    Exactly right, davel. Just like LeBron James is more vulnerable to changes in the sports market than I am.
    Aug 1, 2015. 11:15 PM | Likes Like |Link to Comment
  • Apple Entering The Car Sector? Why This Could Be Its Next 'Large Numbers' Move [View article]
    Apple Diner,

    The way I look at it is this:

    Batteries are a highly limiting design factor in most of what Apple makes. The Watch, for example, is limited by the weight and power of the battery they can reasonably fit into it.

    So battery tech is an area of huge potential pay-off for Apple. It makes perfect sense for them to be interested, possibly even obsessed, with improving batteries.

    But if they have ideas they want to pursue about batteries, it would border on the absurd to ignore another obvious device that is currently limited by battery tech -- the electric car.

    So I think Apple is seeing the big picture here, as it tries to do so often, and it realizes that battery technology is the number one limiting factor in mobile progress. Any other breakthrough, like say for example a miniature holographic display, is useless if it can't be powered in a discreet way.

    Apple is clearly interested in batteries. How far along they are with theoretical improvements in battery power is anyone's guess. But if they feel they can meaningfully shrink batteries, then electric cars would be something they would want to be involved in alongside of this development.

    As a side note, if they were interested in personal robots, they might use the manufacturing of electric cars as a cover. So it is possible that Apple has no real interest in cars. But I think they almost certainly are obsessed with batteries.
    Aug 1, 2015. 12:48 PM | 1 Like Like |Link to Comment
  • Apple: The Shift To Asset-Light, High-Margin, Middlemen Businesses [View article]
    "Green band was dopey looking, but watch looked ok."

    It's possible you missed a few of these devices where the user chose a less obvious band color. I sat in a room for two hours with a few friends before one of them noticed my black banded Apple Watch. If I had been wearing white or green, I'm pretty sure they would have picked up on it right away.

    The green may have been dopey, but you noticed it.
    Aug 1, 2015. 12:13 PM | 1 Like Like |Link to Comment
  • Apple Watch Is Making Luxury Watchmakers Uncomfortable [View article]
    I am finding the biggest benefit of the watch is txt notifications.

    Back in the pocket watch days, time was important. You had to catch that train, or call that person at two, or get to lunch, or whatever. Constantly checking the time with a pocket watch was annoying enough that wristwatches caught on. They did the same thing as the pocket watch, only better.

    Well I am finding in my day I get texted a lot by both friends and coworkers. Meeting updates, ideas, social invitations, whatever. And the watch does the same thing as my iPhone in this regard, but it is just so much more convenient that this function alone makes it a keeper.

    Programmers know that if you are optimizing code, you want to focus on the code that is executed frequently. When we do something over and over again, a small improvement to that action can result in substantial benefits. Getting text messages on my wrist sounded like a bit of a gee whiz function to me before I actually experienced it. Now I've come to depend on it. And I think that this one function will justify the watch's popularity for many people. What's more there are many other functions that could amount to the same kind of essential function for others that text messaging is for me. I think the Watch has very bright days ahead.
    Jul 28, 2015. 05:35 PM | 1 Like Like |Link to Comment
  • Apple: Fiscal 2015 Was OK, But Fiscal 2016 Shaping Up To Be A Better Year [View article]
    Ratty, I entirely agree. I was responding to the idea that there was no compelling reason to upgrade because the 4s can do what the 6 can. I was certainly not suggesting that their was anything wrong with having to replace a 4 year old gadget with a newer one in order to have access to the latest features. I think Apple has done a very good job of keeping their older devices useful and enjoyable. In fact I think this is largely responsible for the iPad sales curve that has so many knickers in a twist. Older iPads are still great. They will be replaced eventually, but they remain useful for a very long time, (in tech years).
    Jul 28, 2015. 11:39 AM | 1 Like Like |Link to Comment
  • Apple: Fiscal 2015 Was OK, But Fiscal 2016 Shaping Up To Be A Better Year [View article]
    AAPL's bonds were very competitively positioned, and interest rates are at historic lows. Additionally, each share they buy back is a share they will not have to pay dividends on (effectively canceling 1.5-2% of the interest cost). The interest is further a tax deductible expense. And perhaps most importantly, the debt is used as a substitute for repatriation, and the interest is substantially less than the taxes they would pay on bringing the money home.

    There is no compelling reason I can think of for Apple not to sell bonds when rates are at these historic lows. Apple'e foreign debt offerings may even end up net negative interest because of FX.

    Buybacks don't always make sense for companies. Some have timed their buybacks very poorly. But that does not prove that Apple's buybacks are unwise. And furthermore there is evidence that Apple's capital return program to date has been very good for shareholders.

    There is an argument that they should be as aggressive as possible and purge as much excess cash as they can to buyback as many shares as possible at the lowest average price. Buying over time as the stock rises is less optimal from this perspective.

    But one thing the huge capital return program allows Apple to do is defend its shares against irrational declines like we saw in 2012. A bear raid is much harder if the company stands poised to give support at some unknown level. Just the knowledge that Apple can and will defend its shares makes it a less satisfying target for short sellers. It can decrease volatility as well. Both of these are good for common shareholders. Thus, Apple's capital return program makes good sense for Apple investors.
    Jul 28, 2015. 02:07 AM | 4 Likes Like |Link to Comment
  • Apple: Fiscal 2015 Was OK, But Fiscal 2016 Shaping Up To Be A Better Year [View article]
    No problem,

    But it does suggest that Apple's buyback during times of price to book much higher than 2 have been quite effective. Buying at 84 was a bargain. Unless you are suggesting that AAPL isn't worth more than 84 a share...
    Jul 27, 2015. 06:17 PM | 1 Like Like |Link to Comment
  • Apple: Fiscal 2015 Was OK, But Fiscal 2016 Shaping Up To Be A Better Year [View article]
    Dennis I thought you were going to point out the obvious differences between the 4s and the 6 so I didn't bother. But the 4s can't do Apple Pay and can't connect to your apple watch. So really the 4s is a great example of a phone that must be upgraded to enjoy the current features Apple offers with the 6.

    If those features are not important to the user, that is fine. But it is quite different from the idea that the 4s can do what the 6 can.
    Jul 27, 2015. 05:34 PM | Likes Like |Link to Comment
  • Apple: Fiscal 2015 Was OK, But Fiscal 2016 Shaping Up To Be A Better Year [View article]
    "5 years ago Apple traded at just 2x book value"

    I didn't remember this happening, so I went to yCharts to see. It shows AAPL's Price to book 5 years ago was 5.5 - very close to where it is today. I am not sure where you are getting your numbers.

    During the 50% haircut, when AAPL traded at its recent lows in 2013, it traded just below 3x book.

    I can't really debate unless there is agreement about things as fundamental as these simple ratios. So maybe you could explain how or why you think Apple traded at 2x book 5 years ago.
    Jul 27, 2015. 11:25 AM | 4 Likes Like |Link to Comment
  • Apple: Fiscal 2015 Was OK, But Fiscal 2016 Shaping Up To Be A Better Year [View article]
    "Apple is like the roach motel of phone makers. Customers come in, but they don't come out."

    I picture Don Draper at his desk, slightly annoyed, asking Peggy Olson, "What else you got?"
    Jul 26, 2015. 10:50 PM | Likes Like |Link to Comment
  • Buying Apple: Consider The Scale Of The Potential Investment [View article]
    “Keep all your eggs in one basket, but watch that basket closely.”

    Here he is paraphrasing Carnegie:
    Keep all your eggs in one basket and watch that basket!

    But as it turns out, Carnegie was actually quoting Mark Twain's Pudd'nhead Wilson. (Published in 1894)
    Jul 26, 2015. 03:46 PM | Likes Like |Link to Comment
  • Apple: Fiscal 2015 Was OK, But Fiscal 2016 Shaping Up To Be A Better Year [View article]

    Great points. And I agree with much of what you are saying.

    Regarding AAPL, yes it is true that if not for buybacks they would be trading at PE 16.5 rather than 14.5 using today's price. But they'd also have zero debt and about $40B more in their war chest, so they might warrant that higher PE in that case. In other words, backing out cash net of debt in both cases would get you to about the same PE.

    INTC would not be a better investment if it took on net debt to reduce float. Except maybe insofar as they save money on dividends and right off the cost of the interest payments. But they wouldn't necessarily be a worse investment either.

    PE is just one number and it doesn't tell the whole story, I certainly agree with that.

    If you are of the opinion, as I am, that at least a correction and possibly something much worse is coming for the US stock market, you do have some difficult questions to ask. Is it worth putting any new money in this market? Should a move to greater portion of cash be made? It's tough to time the markets, but it is also insane to think they will go upward with no pauses or declines along the way.

    I think stocks in general are overvalued today. But that is all the more reason to look for quality stocks like AAPL with huge cash reserves, modest valuations (relative to their peers) and quality earnings.

    The story of why AAPL revenue became stagnant is actually an interesting one. If you assumed 2012 was closer to the $48B it should have been based on its growth trajectory, then you'd see 48, 50, 53. It is only because 2012 was just off the hook that growth appeared to stall so badly. So it is hard to punish a company for having had one insanely high year of revenue. The story would have been better if they had actually missed out on $8b in revenue in 2012, which is kind of twisted when you think about it.
    Jul 26, 2015. 01:08 PM | 2 Likes Like |Link to Comment
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