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I am a former private equity investment analyst. I have made correct calls of these companies before critical accelerations: Apple, Google, Las Vegas Sands, Watson Pharmaceuticals, BP, Protective Life Corporation. My undergraduate degree is in psychology, where I studied human emotions,... More
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  • Apple's Next Big Mistake

    [This article was originally published in 2012]

    Let's face it: Steve Jobs was Apple. Losing him was, for Apple shareholders, much, much greater than losing a regular CEO.

    Steve Jobs made mistakes. All the time. He was a genius. Some of his mistakes cost him his place in the tech industry, of being the richest man in the world, they humiliated him. A man who could stand above all the rest in tech died last year, and even though his personality was legendarily persnickety, his brilliant approach is to be studied and applied.

    Yet who can lead the cult of Apple, yes, a cult whose members all wear black? Sure, they are nice, but most of them work for peanuts: and they love it. They call them all geniuses, and frankly they are a lot nicer than they used to be.

    The hardware is elegant. Sophisticated, powerful, unusually sleek, unusually resilient.

    But to achieve this, there was the Jobs factor. Apple was what he wanted, and what you wanted (especially if you didn't know it). Towards the end of his career, Steve Jobs could apply pressure to just about anyone, because he was charismatic.

    And now who do we have? Tim Cook? Who is he? Other than the "rightful heir", who is this guy? Sure he might be smart. But he is no Steve Jobs. Cook did not have to suffer painful lesson, after lesson, after lesson, just to become one of the world's most pre-eminent engineers... ever.

    And Steve Jobs was legendary for his mistakes. Like a bird learning to fly. When he was allowed to take off, the skies weren't even the limit.

    So my advice to Apple: assert. Steve Jobs did that. You didn't when you withdrew from that Green-Council of products, then had some pressure applied by consumers, then you back-pedaled. Jobs never did that. He would drive an issue into the ground, until he was gone.

    Don't back down. Don't be a whiney wimp either. With this Samsung litigation, what are you doing? You won't win. Either you get an injunction, they redesign and outsell you, or you do not win and they will compete with you. Like it or not, everyone copies, prepare for it, be good about it, but don't be a whiney brat of a company.

    Jobs whined. Apple didn't.

    And get a CEO with charisma. Cook is a great guy, probably would make a great CEO of Proctor and Gamble, but not Apple. Once your parishioners leave the church, others will follow.

    Bring them a leader. One who can inspire. But one who won't make mistakes. And if she does make a mistake, then she can handle it in a Jobs-Esque way, remember Antenna-Gate?

    It's tough, it will only get harder, but if your weakness is exposed, then you will fall from within.

    My suggestion? Meg Whitman. Buy HPQ.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Tags: AAPL, HPQ, Technology, Apple, Steve Jobs, Genius, Leadership

    Aug 01 1:25 PM | Link | Comment!
  • Primary Secondary Digital Markets

    There was a time, when smart phones were new, literally. But now, they are used. What will become of these used phones and their used software? What stocks will observe valuation changes because of this?

    eBay has thousands of listings for used iPhones, nowadays. Their completed listing for a one week span are also in the thousands. This means that sale on eBay of used phones are in the tens of thousands per year. This means that of the total amount of new iPhones sold in the past, eBay accounts for a respectable amount of their grand total. Add these amounts to other web sites that offer buy-backs for phones, and we are looking at a hefty chuck of the global used iPhone market.

    Then there is AAPL, and what will become of new smart-phone revenues? With smart phone trend growth accelerating, and AAPL capturing well into the double digit percent of that market, they are likely to see continued upwards trend in new iPhone sales. Therefore, there is no foreseeable threat that used phones will cannibalize new phones for iPhone. However, with rising cellular cost upon free upgrades, consumers might not buy new phones and hold off on increasing their cellular cost, although the percentage of those would hold off for this purpose is minimal, but still by my estimates is in the double-digit percentages.

    Because AAPL, GOOG, and SMNG have such similar smart phone models, a case study with the iPhones is appropriate. Brand loyalty between AAPL and GOOG mobile operating systems is not as high as either company would like. Therefore, there should be no reason to assume any differentiation between the valuation patterns between AAPL and GOOG mobile operating system component of revenue.

    Therefore, eBay remains a hold with their used mobile device platform, until they appropriately devise a way to thwart the competition for second-hand items as they have done in the past with other auction companies. The solution eBay will probably attempt is the purchase of a top second-hand dealer. However, this CEO and Board are different from Meg Whitman, who by most standards was quite liberal with acquisitions. This new CEO has not made any notable purchases since StubHub, which was a purchase under Whitman.

    Therefore, you must look at top stocks for secondary phone markets are potential targets for eBay. Those who believe eBay will choose to flatly compete with these sites have history up against them: they have proven a preference for independent brand differentiation of certain specialty items. They kept the Paypal name, Craigslist is partly owned by eBay and still maintains its brand-name, and the target company will likely remain a separate entity.

    The second important issue with used mobile phones is what happens when they are not sold. Data indicates double digit percentage of consumers keep their old smart phones as back-up, far more than that give their phones to somebody else, and a good portion of people sell them.

    This presents the boldest claim this article will make: that of primary secondary application developers. This basically states that a new device has been created, simply by outlasting its life-span.

    This market has not been created yet. There are no companies that make primary applications for secondary phones. But, estimate that the trend of keeping secondary phones is predicted by this author. These are good phones that if given a purpose through software could serve a vital place in a consumer's life.

    What is the difference between a primary secondary digital phone market vs. a primary smart touch digital market? Hardware capabilities.

    This author proposes that such phones would serve as primary units for mobile security systems. Such smart phones have intelligent perceptual capabilities such as an accelerometer, often a GPS, and a camera. These capabilities would allow for an incredibly expensive security system that could guard somebody's house or guard their possessions if they leave them in a hotel room or anywhere in a public space.

    Therefore, ATT's revenue stream, if this business model is adopted by the relevant market participants, will increase and therefore warrants an increase in ATT's price target. It is predicted by this author that different carriers would receive different adoption rates of this kind of system, due to their general disposable income demographic. The carriers that have the highest income for consumers are as follows.

    Therefore, this author posits that mobile carriers are able to have an elastic pricing structure with their digital packages for primary markets, and the emerging primary secondary market will further enhance mobile carrier's revenue streams.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Sep 29 10:58 AM | Link | Comment!
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