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  • Apple: Had Enough Reasoning / Guessing Why The Stock Must Go Up - Or Down? [View article]
    I'm fully sold with your analysis, not because it says what I like to hear (AAPL going up), but because, unlike most other articles, it offers a rational and fully credible explanation. To be absolutely clear, if your conclusion would have been that there is more hedging for downside instead, I would be seriously thinking in closing the long legs of my AAPL leap spreads.
    I understand that you may not want to explain the details of how this analysis is done, but I think a good argument would be to compare the situation of the same AAPL in some other time windows in a reverse situation (you know, how this looked exactly two years ago, some months earlier, months later). And also how it looks now for some markedly bearish stocks, say, the offshore drilling industry, for example.
    Sep 18 09:03 PM | 1 Like Like |Link to Comment
  • Doing The Math Again On Apple Pay [View article]
    I also think this is a key question. Theoretically, Pay is secure because it depends on the biometrics of TouchID. If Watch allows payment services for iphone 5 and 5c users (or even for newer phones since it is aimed not to get your phone out of your pocket), it means the Watch payments must trust in a alternative biometric method that uniquely identifies you. Given that heartbeats should not be enough for that, it means the watch must have additional biometric sensors we still don't know. Which, btw, probably are the two other side lenses in the composite on the back of the watch, I guess. If not some other unknown straps (the strap lock mechanism may also be a way to transfer data to the watch's cpu).
    That's why Mayo clinic and others are working on health apps. Such a prestigious institution wouldn't be trashing its name working just with some movement tracking (calories not precisely inferred) and heartbeat data. There must be something else, very big, coming for the very first Watch.
    Sep 17 09:58 PM | Likes Like |Link to Comment
  • Apple Pay - Nice But Not A Big Deal [View article]
    Before reading Blair's article, I was thinking Pay is basically an ecosystem enhancement, with little impact in profits. He end up convincing me it will be a meaningful revenue stream, in no more than two years. In addition to the clever comments of DiCarlo, you have:
    - The much higher proportion in credit/debit card purchases that Apple users have, much higher than the 11% that Blair is calculating. If in line with other indicators (apps purchases, web usage, etc), perhaps 3 or 4 times higher than that, for most of Apple users.
    - The increase in iphone global share by 2017, given the killing advantage that Pay will mean for users. The minute this becomes available in my country, I will upgrade my iphone5s to use it.
    - The trend this will mean about using less cash and more Pay for small transactions, given the comfortable payment method it will mean. People spend perhaps $300 monthly in underground, coffees, lunches, etc., paid with cash money, that probably won't last too long. That would be some $0.5 monthly for Apple, times 500 million users by the time of his survey, each and every month... Most of the pie chart changes in cash share that Blair shows will be due to Pay, I think.
    - The uncovered fees Apple should be obtaining on this. My guess is that those 0.15% is just part of what they will end up obtaining in the future per transaction.
    - The trend of retailers to move to this payment method in the future, as probably will mean lower costs for them, since risk management, the main value proposition of the current payment ecosystem, will be radically changed, and so costs associated with it. Expect a huge market growth.
    - The first serious player in this will have a lasting advantage. It will be very, very difficult for competitors to build an alternative offer, given that in the meantime, Pay will become a standard.

    I think the numbers of Pay will at least double what Anthony is calculating by 2017. My only concern is about eventual regulations that may artificially limit future market share of Apple in electronic payment.
    Sep 14 04:46 PM | Likes Like |Link to Comment
  • Apple Pay - Taking A Bite Out Of Payments [View article]
    That's the surface. The deep implication of this is that the value proposition of the other current middlemen will be dwarfed, and so, their service have to be charged accordingly. Same as happened with physical music distribution, or software license schemes.
    Even so, those middlemen are happy (read what the people of MC and Visa have talked about Apple Pay), because the size of the business will grow enourmously, and also because they know the golden eggs aren't forever, and better be on the right ship at the right moment (and certainly, that is not the AMZN or GGOGL ship).
    Sep 11 10:54 AM | Likes Like |Link to Comment
  • Apple Pay - Taking A Bite Out Of Payments [View article]
    Yes, Apple Pay is the first and definitive step in the end of physical money, imho. That's why they grouped basically all of USA big money under this initiative (All big banks, MC, VISA, etc).
    As they've done before with all other services they offered (itunes, app stores, etc), the goal of Apple has been to add value by cutting the fat of middlemen between the consumer and the merchant; this may well be the biggest effort in this. I believe there is a bright future for Apple Pay, but meaningful profit results will not be seen in a long time.

    That said, in this and another article here in SA there is gross over estimation of the feasibility of marketshare by Apple. 20% of USA credit card transactions is absolutely impossible in less than 5 to 10 years. To achieve that in the near term, and given that (according to comScore) not all population in USA has smartphones, iphone share among smartphones is about 42% (say 46 or 47% with iphone6) , and a fraction of that are using iphone 5 or higher; it means almost every payment done by an iphone 6 and 6+ users must be included. A math that should also include every iphone 5, 5c and 5s user. Which in turn means that every one of them would buy an AppleWatch; and every business in USA would have NFC-enabled payment.

    As bullish as I am in Apple, that's simply impossible in the near or mid-term.

    The great short-term goal of Apple Pay, I think, is the way it will attract more customers to Apple's ecosystem, once people becomes aware of how beautifully frictionless and secure will be to use this service.

    The question would be: once it is validated by public demand, how much longer will Apple be able to sustain a proprietary payment system, without being eventually forced to set up an open standard in such an important matter?
    Sep 11 10:06 AM | 1 Like Like |Link to Comment
  • Why Apple's iWatch Isn't A Guaranteed Home Run [View article]
    Yesterday I had several sudden episodes of vertigo, and finally went to a hospital to check my condition. Doctor said that vertigo's are a rare disease that presents very occasionally, and so with real causes unknown because of insufficient data. If patients suffering this condition would be wearing an iWatch, probably some crucial data would be obtained for progress on the prevention of this disease.
    While on that, a brain MR was made to me. They found me an unexpected brain anuerysm. The situation is aggravated because of my high blood pressure and cholesterol levels. I was ordered to close monitor several times a day my blood pressure levels, until surgery is done.
    I hope these couple of examples, not as funny as your post of course, may clear you the point of iWatch, beyond the already crucial issue of fashion and tech merge it will mean.
    Sep 8 08:21 PM | 1 Like Like |Link to Comment
  • Apple Event: More Than Just iWatch And Bigger Screens [View article]
    To rush for a big screen phone earlier, without production capabilities to meet demand, would have been a bad move from Apple. Most probably, the BOM of the product would have been higher, and the yields lower, sales units about the same, all that meaning less, no more revenues.
    That's the situation that has changed now: Apple has been investing huge in capex for years now. And in the precise moment that this (massive larger phones production) is feasible, they also jump in wearables/fashion, internet-of-things (homeKit), health, and payments (not one, but FOUR game-changers). Surely Apple had it all planned at least 3 years ago, almost certainly before the stock dropped in 2012.
    If they can render all this as a merged, unified value proposition, probably Cue was not exaggerating. We'll see tomorrow.
    Sep 8 08:54 AM | 3 Likes Like |Link to Comment
  • Apple's Payments Platform May Be Ready To Roll [View article]
    Samesung, listen: An NFC working is priceless. For everything else, there is MasterCard.
    Oops, that also won't be, Apple will end up buying it soon :)
    Sep 1 09:01 PM | Likes Like |Link to Comment
  • Apple's iWatch Profit Potential [View article]
    Average cost of a swiss watch: $739
    Number of swiss watches/year: 29.3 million.
    Omega/Swatch revenues: 8.8B.
    Rolex revenues: 4.5 B.
    Annual worldwide watches sold: 1200 millions (android-likes are everywhere you look for).

    My guess is that the iWatch will sell 50% over swiss figures (some 45m), with ASP about $400 or perhaps higher for some versions. It will be made of at least the same material quality (sapphire, perhaps even liquid metal parts), probably as beautiful and certainly more elegant than most swiss-made watches; and with much bigger "jobs-to-be-done" features, and certainly a disruptive one: health monitoring. Even at that high price, it will epitomize the concept of affordable luxury for the masses, as every other Apple product has done before.

    The problem for iWacth will be the same as it is for iPad: low churning rates; it will be so good that it will last several years before users wanting to replace them.
    Aug 21 03:25 PM | 2 Likes Like |Link to Comment
  • Apple: The Final Countdown Clock Has Started [View article]
    "the new phone would be released on Friday, September 19th".
    This looks its gonna be a "Scottish Symphony".. :)
    Aug 14 12:31 PM | Likes Like |Link to Comment
  • Why Apple Won't Build A Cheap iPhone... And Why It Should [View article]
    What's amazing is that both bears and bulls of AAPL think they can lecture a company - the biggest of the world-, having probably hundreds of the worlds' technically best (and best paid) market professionals; with a granularity of data about the usage of their products (they know far better than anyone else who, where, when and how their customers use Apple products: they surely statistically track every bit of data each iphone in the world moves); with a vault of products planned and in testing phases for maybe 5 years in advance (the large phone we will see now, whose previous unavailability was pointed by bears as the reason to backup the downfall of the company, was minutely planned and market-timed to maximize profits perhaps by 2010 or 2011 at most); with an insight of the industry like probably nobody else has; with the power to cluster under their umbrella the most prominent executives of the retail industry; with the buying power to move the distribution market almost at will; etc. Gosh...

    I'm sure there are some people at the company that approved microeconomics 101 courses.
    Aug 12 05:50 PM | 7 Likes Like |Link to Comment
  • Apple Update: Short Interest Hits 2014 Low [View article]
    Blair: last short standing.
    So sad for my longs it's just paper...
    Jul 28 08:21 AM | 9 Likes Like |Link to Comment
  • Apple Stabs BlackBerry In The Heart [View article]
    Amazing how you can just say that Apple "has been unable to credibly fix the recurring security glitches on its own devices and ecosystems for years" without providing any evidence.
    Your article. Yesterday.
    Jul 23 05:42 PM | 9 Likes Like |Link to Comment
  • Why The IBM-Apple Agreement Could Fail [View article]
    "Apple, one of the biggest and most powerful companies in the world, has been unable to credibly fix the recurring security glitches on its own devices and ecosystems for years. Why should IBM succeed where Apple has repeatedly failed is beyond me."
    Can you be more specific about these recurrent security glitches?. AFAIK, IOS is almost virus free, while Android has thousands; and IBM, as arguably the world's most powerful software house and presumeably with direct access to Apple's core code (like no other developer), could very well replicate the security features of BBRY, and then some.
    Most of the low penetration of AAPL in big enterprises, I think, is due to the reluctance of TI professionals to deal with the unfamiliar development environment for them. With Swift and this IBM deal, it is very obvious that this will have a huge shift.

    I wonder if this article would exist if you weren't long BBRY.
    Jul 22 01:10 PM | 9 Likes Like |Link to Comment
  • Apple: A Low-Risk Bet On $130B Of Earnings Within 10 Years [View article]
    Fantastic article. I agree with other comments, one of the best ever seen here at SA. Although it needs at least two or three follow ups, to analyze/validate many assumptions, like the matrix weight or the correlation of those weights with the expected reduction of free cash-flow those risks involve, for example; perhaps applying the same criteria to how previous actors in this market were some time ago previous to their meltdown (BBRY...), or to the market as whole. The point, as I think is virtually impossible for AAPL to follow BBRY steps, is that some factors should be more meaningful than others: in a short time, Apple's market cap and pile of cash will be so huge that it will become literally to big to fail, imho. Any new competitor would be simply absorbed by hostile acquisitions, if needed.

    In fact, I find this so nice that I made a spreadsheet of your model. One interesting issue here is that, not considering the highly speculative fourth step, weighting commoditization as a 2/9 (durabibility/impact, imminent risk of happening and with a big impact), and even considering the cash, you get a fair value of about $96. Which is, I'm afraid, what the market is still considering about Apple, iPhones and iPads in particular.

    If so, you model is quite precise. Needless to say, I consider the market to be wrong about this (basically, the no growth, no new products like the RichBar and others hypothesis). Although there was a time I considered market's valuation of AAPL as grotesquesly wrong, and things went disastrous for my savings.

    One question: if S&P500 has a premium of 2.8%, and is fairly valued, that would mean the average risk of market as a whole would be some 140bp? Hard to get a risk valuation of Apple that low in your model...
    Jul 19 04:27 PM | Likes Like |Link to Comment