Camden

Government's Best Move in 2008? Letting Lehman Fail

For the most part I agree with the idea that it was a good idea to let Lehman fail. That decision ensured the financial system would have to come to grips with it's excessive leverage – the entire system FORCED to change it's ways. It must have been known that Lehman's failure would set off a cascade of asset sales to raise cash to pay down bad debts. In the long run the world's financial system will be MUCH stronger as a result. In the short term, we all suffer the effects of de-leveraging across all financial markets.

However, those that think it would have been a good idea to let AIG, CitiGroup, and other fail don't understand how that would have caused the default on many TRILLIONS of dollars of derivatives – perhaps a value grater than all the common stock on the planet. Seriously. The meltdown of those markets – which was a real possibility – could have wiped out most of the world's wealth and bankrupted many nations. Very, very ugly.

I'm of the opinion that our current situation is painful but healthy and bodes well for a stronger, much more stable, slower-growing world economy in the future.

It's No Big Deal That Apple Is Pulling Out of Macworld

As I see it, Apple's announcement is an indication of 1) there's is no big announcement coming at this year's Macworld, or 2) Steve is on the way out. Or both. Either way it's a disappointment to investors. If there were to be a big announcement and Steve is "available" then surely he would make the announcement – no one does anouncements as well, certainly not Phil Schiller. If Steve is fine and just wants to give Phil the experience of handling the keynote it tells me there is no big news coming. This way the news letdown is gradual.

Then of course, there IS the possibility that Steve is not feeling well and knew he would not be up to preparing for the keynote. Whether Steve has a life threatening illness or not, speculation that he does is appropriate until he shows up in public. Knowing speculation about his health would once again surface, Steve could have made the announcement himself. But he chose not to.

Investors and other interested parties are left to speculate why Steve would make Apple's last Macworld the only one he does not do the keynote for while CEO.

Can You See Apple Under $60?

stox2buy, You are not considering the cash on hand and the effect of subscription accounting. Even if earnings momentum slows (it will) Apple will still do well. If Apple did not sell one Macintosh this quarter it would still have positive earnings because of revenues booked in the prior eight quarters on iPhone and iTV that will be recognized this quarter.

BTW, Mac laptop sales for October 2008 were UP 28% over October 2007.

Can You See Apple Under $60?

Zack,

Re: As stocks go down, so does wealth. As wealth deteriorates investment ceases and jobs are lost. As jobs are lost, money no longer flows, with no sales, things deflate."

I agree there's a bit of negative influence on the economy when stocks fall. But I think it is established knowledge that stocks rise and fall with the EXPECTATION of companies' earnings. The rise or fall of GDP (which is is by definition the determinant of whether or not a depression exists) is not dependent on what the stock market does. GDP can rise during falling stock markets and often does.

Can You See Apple Under $60?

Re: "Apple could hit $40 a at trough, and I'd say its a reasonable buy there."

Nonsense. Southbeach doesn't seem to understand what valuation means. If Apple, a company that has no debt, is bringing in $4billion of cash per quarter and still rapidly growing earnings, were to trade down to $40 it would be trading at less than 1.5X the amount of CASH currently on hand. That's practically impossible. The company is likely to have $40 billion in cash by the end of 2009. At $40/sh Apple's market cap would be less than $36 billion and trading at well below the cash on hand. That's NOT going to happen – even if Steve Jobs, Tim Cook, and two other top executives were to die tomorrow.

Can You See Apple Under $60?

Re: "So what’s crazier now, a 300% gain to hit Munster’s target, or a 25% decline to reach 60?"

I'm not sure which is crazier, but I think we'll see $250 before we see $60.

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Re: "The only way we’re going to avoid the depression scenario is for investors to regain confidence in the markets. And the only way that’s going to happen is if the Bulls retake 775"

Zach, this implies the determining factor of a depression is the valuation of the stock market. Is that really what you mean?

Awaiting Apple Earnings and Guidance

Zach,
Are you really saying Apple will drop to the $80ish area and THEN have a big sell-off? Meaning Apple will soon be trading in the $60's? That's really would be interesting.

Now Is the Right Time to Buy Apple Option LEAPS

Re: "Now that the troubled financial institutions have been consolidated into a sector of strength, we will see the first real rally of the year and high growth/strong balance sheet companies will lead the way."

The first real rally of the year? What was the more than 1400 point advance in the Dow Jones between March 10 and May 2nd? Just how far are you predicting this rally will go?

You're probably right about the Apple LEAPs. I bought some yesterday.

Why Apple Stock Is Poised To Go Flat - At Best

I agree with most of the postings above – this guy is clueless. Yes, of course the law of big numbers will prevent Apple stock from making a "similar move like the last two years" but that doesn't mean the stock will be flat.

This guy has a "Chicken Little" mentality.

Transocean: An Opportunity in Falling Oil

Brian, I agree with you, but if oil drops to $65 the dayrates RIG can get will be at half of their recent contract prices. The PE will drop to under 6 and the stock will be under $100. Fortunately for RIG holders oil is not likely to drop anywhere near that far. World growth may be slowing but there will still be substantial growth – for at least a couple years, if not decades.

Time to Pull the Trigger on Four Oil Service Stocks

DaveW,
I don't think there is anything in the article that suggests oil is dropping to $30-$50. Only that RIG's services will be in big demand unless the price falls to that level. I agree if oil drops below $100 then RIG stock is likely to be lower than it is today (that a direct correlation by the way, not inverse).

jimmy46,
RIG does not book revenues until they are collected.

IMO, RIG is likely a very good long term hold - just don't expect the same appreciation it's had over the past 3 years. Oil won't triple in price again.

How Apple Stock Should Be Valued: P/FCF

Graduate, Apple's subscription accounting has nothing to do with Sarbanes Oxley. Apple says they account for iPhone and Touch revenues over eight quarters because of the value of software updates.

Apple's Interesting Challenge with Its Best Buy Deal

Comparing Apple's business model for the iPhone to that of the RAZR is understandable but wrong. 1) It's a comparing a cellphone to an internet device connected to an ecosystem of robust software and the app store (which gives the iPhone incredible functional expandability) and 2) as opposed to Motorola's business model, Apple has proven it's able to make MORE PROFIT per unit as the price falls by getting economies of scale and lowering the cost of materials.

Financials To Resume Meltdown Momentarily

Jason, I enjoy reading your commentary, but wonder about this comment: "J.P. Morgan issued a statement saying that trading conditions have substantially deteriorated since June. This will effect those financial leaders who have yet to be clobbered, like Goldman Sachs (GS). Ken Heebner, an investor who reportedly trades similarly to Goldman, suffered his worst month managing the CGM Focus Fund in July as he, and probably Goldman as well, expected oil to continue up to $200 a barrel" I

I've heard Hebner speak many times over the past year and never heard him say anything that would suggest he is or was a making any bets on the short term price of oil. He DOES believe oil will continue to dominate the world's list of needed energy resources and has made a big bet that Petrobras will be a big winner LONG TERM. That position in addition to one in Mosaic are what caused the major hit to his portfolio. From everything I've heard, Goldman's portfolio is MUCH, MUCH more balanced in terms of asset allocation and is not subject to the whims of the stock market. If anything, I'd guess Goldman's commodity trading is likely to be one of the reasons Hebner had a miserable month. I'd say they may well have been inversely correlated recently. Using Hebner's performance as a proxy for Goldman's is nuts in my opinion.

Apple: Are Investors Overlooking Cash Earnings?

Turley,

Very impressive piece of work. I'm not sure about some of your assumptions, but let's say they're right on target. You say: "Therefore, when evaluating Apple on its prospective cash flows, shares look attractive under $160." Why $160? Is it just because that's about where the stock is today? How about $170, $180? What is it about the FCF that gets you to precisely $160?