jonreagan

Apple's Balancing Act: 3G iPhone vs. Jobs' Health - Barron's

Back in a Seeking Alpha article last December (12/17/2007) SA writer Alan Brochstien penned an article advising investors to "get out of AAPL before the crowd", and in the article, brought up Steve Jobs' previous illness. I thought it was creepy then, and it's creepy now. Subsequent to this so-called "article" the stock continued an upward rise from the 170's to 202 in January, before correcting. But above all, that was back in December 2007, and this is June of 2008....and the man is still kicking ass.

So it's not surprising that the same tired old garbage is being trotted out now, in advance of a major product launch....it's nothing more than money-grubbers trying to create a buying opportunity. Apple is a volatile stock; notice these cretins never peddle their lies when the stock is in a trough. They get trotted out four weeks before the launch of the 3G iphone.

It's a sad commentary on our overweight culture that someone in shape and fit is ridiculed as "skinny", and becomes vulnerable to rumors of frail health. About two weeks before Tim Russert's tragic passing, I commented to a friend that Russert was looking way too heavy, which is worrisome in a high-pressure position like his. I was not surprised when he was stricken last Friday.

Personal anecdotes may be of limited use, but I recently purchased a high-end pair of New Balance running shoes. In speaking with a rep at the company, he mentioned that this particular pair was Steve Jobs' favorite......in spite of the superb quality, he told me that Jobs still burned through two pairs in a year! No wonder he's so slender. The guy is fit, driven, a total stud, and will be with us for a long time, I suspect. This all makes you realize how ludicrous the rumors are. Apple is right to not to engage these stories beyond what they said last week; otherwise, it's like feeding the beast. ANY responses will get nitpicked and analyzed six ways to Sunday. And before long, all these shorts will be psychoanalyzing Jobs' bathroom habits....

Apple Facing Serious Downside Risk - Morgan Keegan

Morgan Keegan did a similar downgrade on RIMM last November, about 4 weeks before they announced earnings on 12/22. It send the stock on a downward spiral, which continued until the earnings announcement. As usual, RIMM announced record earnings, and beat the street estimates in revenue, earnings and new subscribers. Needless to say, the "downgrade" was way off the mark, if not highly suspect.

Morgan Keegan pulls lots of these stunts, you have to wonder about their motivation.

Apple's Valuation Is Looking Attractive Again

Last point seems to be the most relevant: whether the fundamentals are good, bad, or indifferent, the big institutional investors have bailed--and who knows when they'll come back? When the stock tanked after MacWorld, we were told that this was a buying opportunity....and then after the earnings disappointment on 1/22, same thing. And so on... I know one guy who's been buying shares all the way from 202 down to 120; sometimes he's in tears when I see him.

In an irrational market, perhaps the toughest thing for traders and investors alike is in deciding what constitutes "value". I've been told to go after "bargains" on the dips...damned if I know what they are anymore.

Apple Is Still Executing

I'm not sure I can argue with any thing in this article; the company is hugely successful, with products that people want. And they've executed flawlessly. I would have to question the target of 10 million i-phones by the end of 2008; while they have a full year to go, they've had the benefit of a huge product launch and a full holiday selling season. Good luck with the next 5.5 million....

On the other hand, I've heard one of the CNBC "Fast Traders" recommend getting long AAPL every night since MacWorld began! With each decline, he's declared a buying opportunity--and here we are more than sixty points down two weeks later.

Markets aren't rational; in fact, they're more irrational (and rigged) than ever. Apple is a great company, but at this point, a broken stock. From where I'm sitting, it's a classic "stage 4" stock, right out of Stan Weinstein's writings.

Apple Passes IBM in Market Cap; Cisco's Next

Minor correction....AAPL's earnings announcement is scheduled for Tuesday, Jan.22nd.

But it does bring up a sore point...three online brokers (including mine) had posted AAPL's earning announcement as being Jan.16th, before changing it to the correct date about 2 weeks ago. Given that options expiration is Jan.19th, this was a fairly significant mistake--if it really was a mistake. I have to believe they sold a lot of call options to people trying to game an earnings announcement.

When I called my broker's HQ in St.Louis, the individual responding quickly admitted the error, and said immediately that they were prohibited from saying anything else about the matter. Here's to "transparency".

Obama is Apple, Hillary is Dell

I reiterate: people don't want to be troubled with analyzing details or policy; just mindless slogans and comments.

As to the previous mindless comment, (a) learn to spell Hillary, and (b) I hate to break this to you, but most people who want to build their portfolios and accumulate wealth would LOVE a return to the Clinton 90's. We cleaned up the deficit mess left by Reagan/Bush, ushered in a free trade policy and embraced globalization, and created more jobs than any administration in history. That's not socialism; it's free-market capitalism. We'll have a lot of cleaning up to do after W, but we've cleaned up after the Bushes before, and we'll do it again.

Obama is Apple, Hillary is Dell

This kind of focus on clever analogies is totally devoid of substance, not to mention flawed. Apple is thriving not only because it's "hip", but because the company sells products that people want, and has plenty more in the pipeline. They come up with great products, and execute flawlessly in bringing them to market.

Comparing this company to Obama seems very strange. When I've asked people why they intend to vote for the Senator from Illinois, I've received the following answer several times: "Well, when he speaks, I just get goosebumps!" People are too lazy to get into the details, because, let's face it, policy is just SO damned boring! But just seven years ago, people's choice got down to "oh, I'd just like to have W as a next door neighbor, and...gosh...maybe even have a beer with him!"

So here's the deal: the things generating Apple's success are very specific. Those which have boosted Obama are vague, and in some cases, mindless. Hopefully, most SA readers realize that the problems facing the financial sector and economy are serious, deep, and will require a serious approach to fiscal and monetary policy, as well as some regulatory changes in the banking industry. Goosebump generating speeches probably won't help a whole lot.

Wake up America. Mike Bloomberg, Hillary Clinton, or Mitt Romney might be a little boring, but we may just be ready for a boring, analytical type of President. As for you, Mr.Cooper, why don't you just go back to hanging out with Scooter Libby.

13 Predictions for 2008

Mike Bloomberg will never be #2 to ANYONE....especially not a blowhard like John McCain. And if the winners in tonight's Iowa caucuses (shame on Iowa) manage by some cruel twist of fate to gain traction, I wouldn't bet against the Mayor in a presidential bid. God forbid someone who is QUALIFIED should ever get the job. A successful executive who built a financial empire, and is effectively managing the greatest city in the world...why would we ever elect HIM as our President? Let Oprah decide instead...electing a President is too difficult for most Americans to think about. After all, remember how we ended up with W ("the kind of guy you'd love to have a beer with!)

Thursday's Options Report: Emerging Markets ETF Battered After Assassination

Yeah, "proof read you copy", damn it!

RIM 'Priced to Perfection'; Gadgets Top Gifts in '07

Steve--I think a good follow-up here would be a case study of what happened to RIMM's stock price over the November-December period. Specifically, a Morgan Keegan analyst downgraded the stock early on during this period, after which all kinds of negative buzz began, about how the stock had "broken down". I believe it got as low as $99, after reaching a high of $137.

Could RIMM have gone from being one of the vaunted "four horseman" stud stocks, to a broken stock, and then back to having targets around $170 again--all in a space of 8 weeks? There are more and more examples of gaming and rigging going on in the market--which are occasionally illegal, such as naked shorting. More often than not, it's just a case of traders trying to create buying opportunities. This is fine, as long as such people don't masquerade as financial analysts when they're merely traders like the rest of us, trying to make a few bucks. One SA writer offered a piece two weeks ago urging readers to bail out of AAPL ("get out while you can"), raising all kinds of wierd scenarios about the company's future; to read this garbage, you would have thought Apple was some kind of speculative play. And it came out only days before AMZN published its "top 10" list of best selling holiday gadgets, five of which belonged to Apple.

In the case of the Morgan Keegan analyst and RIMM, I wouldn't necessarily question his motives, but I'd sure question his competence--especially now that RIMM is being hailed again as a star. One guest on CNBC suggested last week that they could ultimately grow their subscriber base to 100 million. While this may represent an opposite extreme of optimism, it's increasingly difficult for the average investor to find that "sensible center" middle ground, where the truth usually lives.

Analyst Expresses 'Extreme Skepticism' on First Solar

We've been hearing that about AAPL for some time--most of it from analysts trying to create buying opportunities. Its growth has been explosive, but steady--not the kind of +20 point days you saw in FSLR last week. Beyond that, wait for AAPL's earnings report on Jan.16th: it will offer the best explanation there is for why this company is such a success story, and will continue to grow.

12 Stocks to Buy on a Pullback

Great list; only place I'd disagree with you is on coal. The one other time I disagreed with your picks--and bought against my instincts--was on TSO, and I've still got a little indigestion on that one.

Would like to get your take at some point on the level of shorting/gaming/riggin... going on in this market. We all know it's a fact of life, but it seems to be at a fever pitch over the last couple of weeks.

As always, this was a really good article.

Sell These Three Stocks Before Everyone Else Does

OINK, OINK!

There is a foul odor in the air---the stench of a short pig.

Don't represent yourself to be some kind of financial expert, when you're just trying to drive down the price of a stock. Bringing up Steve Jobs and a two year old case of cancer--long since cured--is just downright creepy. All of us are trading and/or investing to make money, grant it....but why don't you get out your tin cup and go begging somewhere if you're that greedy for a few bucks.

Why I'm All About Apple

It's great so see some enthusiasm--which I think is well placed--for a change! This is a fairly irrational market which tends to play up negatives, many which of which end up being insignificant. I'd add two observations to your article:

1) So much corporate thinking today is short-term, which in turn is often motivated by greed. Yesterday's WSJ had a good-piece about share buybacks, which many companies are coming to regret in this market. More often than not, these have the singular goal of increasing EPS (no surprise here) which in turn is tied to the top officers' bonus objectives. In one high profile case this year, a company actually incurred debt to finance a share buyback; yes, I am serious. One could make the case that at the worst, such a move constitutes malfeasance; at best, incompetence. Share repurchases are just one of three things have been especially prevalent in the last two years:
a) share buybacks
b) M&A's
c) increasing dividends
My larger point is this: what ever happened to R&D? How often do you hear about a company aggressively increasing their expenditures on research and development? "Well, gosh, our shareholders may not like that...we have to do something for them NOW!!"
Apple is great primarily because they think long-term, and have never stinted on spending money to develop new products. They sell things that capture the public's imagination, and that people want. Apple has a steady stream of new products, a ton of creativity, and therefore a steady stream of revenue and profit....not to mention the "tie-in" revenues from AT&T, I-tunes, etc. I haven't heard them talk about share buybacks, and they don't pay dividends. But if you own the stock (or options), you've been handsomely rewarded, and will continue to be. This company thinks long-term. Period.
2) You touched on this point, but as the core of their strategy, it merits emphasis: Apple takes a "lifestyle merchandising" approach to its products, so that customers---like yourself--want to own everything they make. This is the result of great product design, savvy marketing, and a host of other things--and it's obviously working.
3) Finally, good debate is healthy, but the Apple bashers often "don't want to be confused with the facts". I spoke to one the other day who was suggesting I unload my Apple shares, to invest in.....Baidu. Which had a P/E ratio somewhere around 195X the last time I checked. Somehow, he kept trying to convince me that Apple was overpriced. Well.
Having watched the early reports on Black Friday this AM, one interview after another with the "man on the street" revealed people wanting to buy i-phones, i-pods, or macs. So the next time you hear a retailer whine about poor sales or lousy business, tell them to get over it. And to get to work.

Apple’s Momentum Will Continue

Proof again that no company or issue inspires as much debate and emotion as AAPL. Not much additional can be said, except that:
1) While the original article is very good, it really didn't adequately explore the tie-in revenue streams (iTunes, AT&T) which are both sizable and extremely lucrative. Perhaps a follow-up article could focus on these, and their potential impact on Apple's 2008 earnings. Not easy, given that the company doesn't divulge that much.
2) Markets tend to be irrational, and this one is no exception. While I'm not one of these folks that tries to blame all negative trends on "the media", I did endure an hour of CNBC this morning, as people gushed over whether "today would be THE DAY". I finally determined that they were discussing the possibility that oil would hit $100. Yes, I'm serious. It was like the old movies where people gather on the sidewalk, waiting to see if some poor slob is going to jump off the ledge 30 stories up.
3) We need some economists to weigh in....because a recession is by no means certain. When earnings for the S&P 500 and Nasdaq are tallied for the 3rd Quarter, it appears the results will be close to a 5% increase. You would never know it from the wailing and moaning of the last two months; companies like CAT and CMI reported record earnings, but got punished for missing estimates. Performances in the Tech sector were fairly impressive as well (INTC, AAPL, RIMM, HPQ).
4) Fundamentals are not sensational, but are basically sound; an additional rate cut is neither assured nor necessary, and could obviously be counter-productive. The people who mis-managed our leading financial institutions are squealing like stuck pigs (pigs being the operative word). They may even have to forego their end-of-year bonuses...but somehow, I doubt it.