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zd2002

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  • More from Gundlach: Not concerned about inflation, he calls TIPS (TIP) "pretty bad" investments and says he'll be a buyer if the 10-year (TLT) yield bounces back to 2% (off 3 bps today to 1.94%). As for the inevitable Apple (AAPL -3.3%) question - he prefers the common stock to the just-issued bonds. Warren Buffett says he prays for stocks he owns to go down in price - it allows him and company repurchase programs to buy at better prices. Is Apple putting money to work the last couple of days? [View news story]
    If there is any evidence, I'm not seeing it. Since the announcement of the buyback, Apple has traded in a familiar pattern: up on open, high around noon, then fade into close. I assumed it to mean Apple executed the buyback at the opening bell and noon to prime the market for the day.

    Goldman Sachs is supposedly at the helms driving this buyback, but the results so far are lackluster at best. Apple struggled to gain a few points on an up day, but gave back all of May's gains in just 2 days.

    The silence from Apple management is deadly. Since announcing the iPad Mini in October, Apple execs have not make any public statement other than on ER calls and investment conferences. Not a single word of support was given to the stock until the buy back plan.

    Tim Cook said "trust us, we have great products in the pipeline", the market needs to see some to regain confidence. Google pre-announced their Glass a year in advance with great buzz. And today they showed some really great improvements in Maps. Apple needs to up their game. I know Apple Map is getting better, but it's too slow to catch up with the already market leader.

    Opennheimer was (intentionally?) vague when asked about what price level the buyback will support. This doesn't put a floor into to the stock price and ordinary investors, 40% of them retail, are now feeling the crunch.

    I'm losing confidence in the leadership team at Apple by the day. Granted stock price has little correlation with Apple's business, but those constant drops are causing real damage to the brand. Every one thought Apple has lost the cool factor, and that will affect the real business.
    May 15, 2013. 04:49 PM | Likes Like |Link to Comment
  • Apple's Earnings Projections Continue To Irritate Wall Street [View article]
    Apple may become a Microsoft story but there's an important distinction here: at peak, Microsoft's PE was over 100x; Apple's was 15x, in line with what Microsoft has been for the past 10 years.

    At current pricing, Wall Street is completely discounting any new products in the pipeline, and assuming that Apple will lose its iPhone business. When one of those assumptions is broken, Apple's PE looks unreasonably low.

    For my thesis, a stock with 9x forward PE, loyal customers, potential for new products, plenty of cash, willingness to go to debt to finance buy back, and 3% div make for a strong case of dividend growth.
    Apr 25, 2013. 08:58 AM | 9 Likes Like |Link to Comment
  • Apple Earnings Preview: Guidance Achievable, Tim Cook Aims To Beat Expectations [View article]
    A good article with decent analysis. I would like to add 2 things that I observed from last quarter's conference call:

    1. Oppenheimer remarked that management guidance is based on sell-through, not sell-in:

    "And as Tim talked about that was sell-in that was not sell-through, we are thinking about the business on a sell-through basis. So, don’t lose sight of the 1.6 billion"

    2. The $1.6B Oppenheimer mentioned was the iPhone channel fill. This year they also have the iPad Mini, iPhone 4, iPhone 5, and iMac. Channel fill will obviously be bigger.
    Apr 22, 2013. 06:02 PM | 1 Like Like |Link to Comment
  • Apple Earnings Preview: Guidance Achievable, Tim Cook Aims To Beat Expectations [View article]
    The Cirrus one got a little asterisk next to it that the market chose to ignore: "the customer moved on a new version of the product". Could be Apple playing rough and not to Cirrus about its update plan. Next, the 20 - 30% iPad mini demand drop was likely a Samsung's invention. The Digitimes article spends 1 paragraph citing an anonymous source with no further details, and 3 paragraphs on how good Samsung tablets are.

    Like Tim Cook said: don't read too much into the supply chain. It's very complicated.
    Apr 22, 2013. 05:58 PM | 4 Likes Like |Link to Comment
  • LG Display (LPL): Q1 net profit of 3.49B won ($3.1M) vs loss of 129B won a year earlier and vs consensus of 76B won. Sales +10% to 6.8T won. Operating profit -74% on quarter to 151B won, hurt by falling seasonal demand and weaker sales to Apple (AAPL), which accounts for a large part of LG's sales and is due to report its results tomorrow. Analyst Pak Yuak reckons that LG's panel sales for iPads rose 192% on year but that iPhone-screen sales dropped 33%. [View news story]
    Did LG actually say that iPad panel orders were up and iPhone panels went down, or was that simply an analyst guestimate? Even then, the Reuter and WSJ seem to disagree with each other. Reuter said it was iPhone demand slowing, while WSJ says Apple is diversifying suppliers. So what is it?
    Apr 22, 2013. 05:26 AM | 1 Like Like |Link to Comment
  • Apple Is Where The Value Is At [View article]
    I read last Quarter's conference call transcript and made the following observations:
    1) Management guidance was based on sell-through (what sold to customers). Wall Street estimates are on sell in (sell through + channel inventory)
    2) Apple had no iPhone 5 in channel for much of the quarter; and no iPhone 4 in the channel at all during the quarter. iMac, MacBook Pros, and iPad mini were supplied constrained for the quarter as well. iMac has a 700K backlog which may be captured this quarter.
    3) Last year Mar Quarter inventory fill for iPhone alone was $2.6B. This year they have 5 products to fill, not to mention a bigger channel.
    4) With one fewer week, supply constraints, and compressed margin (38.6% vs. 44.7%), Apple still delivered a flat EPS YoY in the Dec quarter. The Dec 2011 quarter's gross margin was 38.5%, and there was no iPad Mini, nor massive product refresh in the quarter. Nobody complained back then.

    Those are all taken straight out of the CC. I didn't make any of those stuffs up. No assumptions involved. I leave you here to draw your own conclusions.
    Apr 21, 2013. 02:13 PM | 2 Likes Like |Link to Comment
  • Having digested more bad news and 4 days away from an FQ2 report expected to show an 18% Y/Y EPS drop, "investors are suspicious about the ‘E’" in Apple's (AAPL) P/E, notes fund manager Lawrence Creatura. But for now, Apple (AAPL) trades at just 5.6x FY13 EPS after backing out cash. Or as BI puts it, Apple needs only 6 years to produce enough cash to match its enterprise value, if it was simply produced at FY12's rate. The FQ2 report could include light guidance for an FQ3 that's about to see Samsung's Galaxy S IV go on sale, and could see iPhone/iPad buyers delay purchases ahead of refreshes. Is that enough to justify a valuation lower than Dell's? [View news story]
    Management is hasn't done anything during the whole ordeal but that's not to say that they will not. The issue is drummed loud enough now that Average Joe thinks there's something wrong at Apple (hints: there's not any with Apple the company).

    The short interest recently shot to 1.28 days-to-cover. It historical average was 1 day. The last time it was this high was in mid-August 2012 (I can't remember anything happened then, other than the imminent release of the iPhone 5). So... shorties short on good news and bad.

    When (not if) management decides to act, and jack up the dividends or announce they have authorized a new buy back plan, there will be a jam at the exit. Of course, Apple *may* also beat the estimates, now that it's low enough. Apple has not missed their own guidance for several years. They know their business better than anyone else.
    Apr 20, 2013. 08:06 PM | 1 Like Like |Link to Comment
  • Apple $395: Time To Give Up And Abandon Ship? [View article]
    At 2.5% it's barely anything. High is anything above 4% these days. Apple generates more than enough cash in a single quarter to pay for the annual dividend.
    Apr 19, 2013. 12:15 PM | 6 Likes Like |Link to Comment
  • Apple Should Pay Its Tax Bill [View article]
    Nano SIM is an industry standard. How else would you be able to buy it from every carrier in US, Europe and Asia? The nano SIM card wasn't initially available when the iPhone 5 launch, but you can now walk into every mobile phone store to get it. My Hong Kong friends told me about it some time ago.

    About sharing photos: have you ever heard of Photo Stream? Available any place where there is a web browser. And contrary to your statement, a lot of people go all Apple for the integration. In fact, the halo effect of iPhone is stronger than any brand out there.
    Apr 16, 2013. 06:59 AM | Likes Like |Link to Comment
  • Apple Should Pay Its Tax Bill [View article]
    It is an easy problem to solve. They can issue debt against the assets of Apple Ireland. Apple pays the bank a paltry 2 - 3% interest rate, much cheaper than US tax, and it's now the bank's problem to repatriate that cash. Of course, the bank wouldn't have to worry too much, their financial engineering department will figure how to get the money back to the US.

    It's only a matter of will. Apple has the means to do so for a long long time. Warren Buffet said that Steve Jobs called him, admitting that Apple had a little bit too much cash. And that was 18 months ago.
    Apr 16, 2013. 06:53 AM | Likes Like |Link to Comment
  • Is Apple (AAPL -1.7%) starting to see a brain drain in the post-Jobs era? "There is a growing level of dissatisfaction among Apple executives and employees, and a greater willingness to explore leaving," one VC tells BI. Another says his firm is seeing a lot more resumes from Apple employees, and attributes this both to the impact leadership changes have had on Apple's culture, and the higher pay offered by startups. A month ago, John Gruber warned Apple is at risk of losing top talent, and called it "the single biggest problem that Apple faces." [View news story]
    I bet a substantial number of employees are also shareholders of Apple. When the stock tanks for as long as it has been now, it creates the impression that the ship is sinking, and everyone must swim for him/herself. Apple's pay has never been the best in Valley (except for the top ranks) but Steve Jobs made everybody believe that the prestige of working for Apple more than compensate for the difference. With the icon gone and the image of a sinking ship, it's no wonder people are leaving now.

    If Tim Cook and the Board can get the share price back up to a decent level ($600+) and dismiss the image that Apple has been stale, he will automatically have the brain drain problem resolved.
    Apr 15, 2013. 01:34 PM | 2 Likes Like |Link to Comment
  • Apple: Major Concerns Overstated And More Than Priced In [View article]
    Cash flow, revenue growth, new partners, product pipelines, yada yada yada. You can analyze them ad-nauseum and show that Apple is severely undervalued but the blood-letting won’t stop. It was a mistake when they renewed all their product lines in two months at the end of last year. Tim Cook and the Board have the bazooka to stop this but they elected to endure the bombardment instead. Recently insider trading trends aren’t helping either. Nobody bought the stock to show confidence in the share. We need a CEO or CFO who can manage market expectations. Tim Cook was the perfect COO, but his CEO role requires more than just running the perfect supply chain.
    Apr 1, 2013. 11:29 AM | 2 Likes Like |Link to Comment
  • Buybacks Vs. Dividends: Bottom Line, Get Rid Of That Cash [View article]
    In the short term the market is irrational. But much can be said about Apple’s management attitude toward the problem. This bleeding has gone on for 7 months and you can only blame tax changes, hedge funds and manipulators for so long.

    I would argue that this relentless drop in Apple’s share price has caused some serious damage to the Apple brand. The media must invent a reason or two to explain for this spectacular drop, after all, they love the fallen-hero stories. They came up with un-innovative products, competitors closing in, arrogance, etc. Repeat something enough of times and it becomes the truth. The users eventually buy the stories and perceive Apple products as stale, which cause further drop in stock price. Which produce more media stories. And the cycle repeats. An anecdote here: a friend of mine got the iPhone 5 on its release date, loved everything about it, but after 7 months or so, started to moan about a larger screen. There is no doubt in me that the relentless talks on TV have changed his perception about the iPhone.

    Tim Cook and his board failed miserably in managing the fall out in this topic. They remained silent, as Apple has always done, not realizing that time has changed. Without their #1 salesman, they must do more to convince the public (and Wall Street) that they are still cool.
    Apr 1, 2013. 11:23 AM | Likes Like |Link to Comment
  • Buybacks Vs. Dividends: Bottom Line, Get Rid Of That Cash [View article]
    I think everybody can agree that $137B (likely $150B at end of March) is much more than Apple needs for their day-to-day operations. Even the M&A-savvy Berkshire Hathaway maintains about $50B so that Warren Buffet can make billion-dollar deals. Apple likes to do sub-$100M deals. In fact, the biggest acquisition I remember they did was NeXT Computer for $400M way back in 1996. For that, they got a new operation system, and a new CEO who turned out to be their best ever.

    With the stock price at this depressing level, a buy back should signal confidence from the board that the company is undervalued. In this near-zero interest rate market, Apple can issue bonds at 2-3% to get the billions they need for buy back. No cash needs repatriated, and hence no tax. They can lay low until a new tax holiday comes along.

    The question is never about the means management have to boost the share price, it’s about the will. So far, Tim Cook and the Board have shown none of it.
    Apr 1, 2013. 11:14 AM | 1 Like Like |Link to Comment
  • Google Glass Already Banned: Why It Will Fail And Why You Should Not Buy Google On This Hype [View article]
    Watching the YouTube videos of Google Glass doesn't give me a convincing reason why I should own one. There were an awful lot video recording, picture taking, video chatting etc. The driving direction seems distracting if not outright uncomfortable, since I must roll my eyes up to see. My natural reaction will be then roll my neck up too. The flight schedule and weather examples look decent, but I can do those, and so much more with my smartphone that is always in my pocket.

    So basically a $1500 webcam attached to my head?
    Mar 12, 2013. 12:46 PM | 1 Like Like |Link to Comment
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