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  • Apple's Plan To 'Take By Storm' The Smartphone Market In 2014 Materializes [View article]
    Quite simple. Because sales of iphones are limited by the production yields. Making a larger phone before wouldn't have meant a single more phone sold, but just a higher BOM, lower gross margins, and a potential demand satisfied too early, with customers buying just one larger phone, instead of a 4" last yr, then a 5" now (btw: the size I would like: 4.7 still a bit small, 5.5 ridiculous).
    The point now is: are they releasing larger phones to keep the ASP, to keep their market share, or because they are now able of a quantum leap in production yields?

    My hunch is that this was planned at least 3 yrs ago by Apple (a hint: look at the capex expenditures). That also explains the timing of China Mobile deal. Along with the ups and downs of the stock, and the consequent buyback plan, made at the intentional expense of small investors and naif believers of a company that, since a long time ago, is not moved by changing the world anymore, but instead of eating it.
    Apr 13 11:42 AM | 6 Likes Like |Link to Comment
  • IDC Smartphone Forecast Is Bullish For Apple [View article]
    Michael, you have been constantly noted by the readers of your articles of this income distribution phenomena, and about profit share as the truly important factor. Glad to see that now that IDC says the same, it is a factor worth of your consideration.

    You would be amazed off how this income distribution pattern is visible even within countries and even cities, like in LA, where the usage maps show with striking clarity the difference of high income neighborhoods against low income ones. In Rio de Janeiro, the coast shows only iphones, the favellas, only androids...and so does the amount of money android and iOS move.

    Some quick numbers with this data show that, in terms of revenues, Apple share this year will be about 32%, and in profits, about the 56% we already know.
    By 2018, revenue share would be slightly higher, up to 34%, and profits almost surely climbing well over 60%. And that still doesn't account the share in the total money this business is moving: if you join the profit share with the income share, it is no wonder that the associated incomes (ads, traffic, etc) of the mobile business has an overwhelm concentration in iOS. This is the base of the domination Apple will capture of this business in the coming years; the true source of profit Apple is expecting: iTunes and general ecosystem growth. Read: digital money. That's why the fingerprint experiment of Iphone5s. That's why the desperate, pathetic effort of Samsung/PayPal with Galaxy S5.

    That, if Cook decides that the bloody ROI matters, after all...
    Mar 3 02:47 PM | 2 Likes Like |Link to Comment
  • Apple - Analyzing Risk Through The Prism Of Volatility [View article]
    While it may seems incredible that Apple trades almost at its asset value (and I guess that doesn't count the brand value - currently over 100B, while goodwill in Apple filings is under 3b, and while other companies like HP declare goodwill at over 80% of their enterprise value-), that has been this way for years and years. It is the business of market makers regarding Apple.
    The thesis would be something like: Yes, we know that apple has done the trick too many times, but it must fail at some point. Smartphone and even tablet markets are worned out, this would be, at last, the time for Apple's fall. But if it ain't, just the fear of it is enough for the stock to be trapped in trading ranges, and that is the dreamed situation for option writers having strong enough backs to support their speculative bets. Like Apple's main stockholders and board members supporters, for example.
    The mission of Apple small investors is, either to blind themselves, in their faith that there would be one or more future disruptions and support all this in the faith of a bright future, or to the become aware of where is the path of those trading ranges; unfortunately, moving targets (if not, this would be too easy): once it was the tmm P/E, then the oversold/overbought ranges, then the weekly options OI, then volatility.
    After loosing tons of money in my bullish belief that iphone would almost monopolize the world's mobile e-commerce, that iTV would come years ago, etc., I finally became aware of the above, and started profiting of trading APPL. I also became a firm believer that this: the fear on the future, the pumping of bullish sentiment, the ill-timing of products, the shortages of production, etc., are thought moves of Apple's management in their awareness that, sooner or later the company will dominate the computing world (if not the world at large), and in the meantime an undervalued stock is the best for their long-term goals: achieving the most value for their RSU's via cheap buybacks.
    That's why market makers, and Apple itself, are so happy of reading articles of naif bears like Blair, but also of so easily picking the money of naif investors like all the rest of us.
    Mar 2 02:46 PM | 1 Like Like |Link to Comment
  • Quantifying Apple's Strategic Errors [View article]
    That's inexact. Volumes of android phones are possible because of their low quality in plastic cases, screens, etc. Apple is constrained because of yield capacity of their aluminum bodies, high quality screen, sapphire in touch-id, difficult to handle and assemble devices; that's a fact, that even you have analyzed successfully just recently and led to your nailing of Q1/14 figures. The BIG mistake of Apple (assuming this is not planned in a longer-term view), is not having used the hoards of cash to ramp up production capacity.

    Also inexact, or I would say, biased analysis, is to still use the Q3 figures, when Q4 data is well known. For example, I doubt global market has grown too much last Q, but Apple went from the 30 to 51m. That means going from your 12%, to my 20% marketshare, and so, to expect growth and not shrinkage in the future. You see, now I'm as biased as you. Any number could be thrown to backup one's analysis.

    Then you get the quality of market you are analyzing. To compare marketshare to the whole market is equivalent to compare BMW share over the whole transportation market. Sure, including public transportation dwarfs german cars share in worldwide people movement... Likely, features phones have nothing to do in a true comparison of smartphones share.

    And so, you leave out in your analysis the true androids vs AOSP-only phones -most of the "other" androids-, the truly devilish ways Google is trying to dominate the world's data flow -that won't stand the future, if humans have some sanity after all-, the markets where Apple is not playing - but soon to include, like what happened last Q in LA-, the profits share that, at the end of the day, is all that matters -Apple: 87% of WW profits, Samsung:31%, all other loosing money-, the true phone usage share numbers, the share of IOS in online purchases, etc, etc. And keeps going: what aboutt the dozens of high-profile people, some of them incredibly successful CEO's of admired companies, leaving their jobs to come to Apple in the last year, for what? To bury themselves in obscurity? Don't you have a the slightest expectation of something to happen with them on board?

    You are using such kind of weak arguments one article after the another, Michael, that you make me doubt of my new bear stance on Apple (of course, for completely different reasons than your arguments). In the last months you have lectured Apple because of their weak processors compared to those of Intel (shortly after that Apple came with A7), talked about Apple's profits and margins without knowing Asymco, alarmed about the high prices of Apple devices (when Galaxy S4's, or competitors slim notebooks, or all-in-one computers, or even quality tablets of recognized brands are as expensive as them), or about Apple's capital usage - (neglecting suggestions of no other than one of the most successful investors like Icahn is), etc.

    You need to go back to iphone usage and really know what you are talking about, like Ashraff did, before committing more of your money shorting Apple.
    Feb 13 03:43 PM | 10 Likes Like |Link to Comment
  • Apple Is A Steal Even At $700 [View article]
    Three bear champs comments one after the another. And all three made their best comments in months, right here, in a weak article. Thank you Richbar, Dan, Michael. From an ex-Apple bull.
    Just one thing: Richbeam keeps obsessed with his analysis of the mid 30b revenues made over a year ago; Michael of his marketshare theory; It is Dan, imho, the one nailing it. The guilt of what happens to Apple is from Cook, not of Michael's marketshare, not of Richbar's market saturation. It's Cook's and Oppy's and Cue's RSUs.
    Feb 5 02:12 PM | Likes Like |Link to Comment
  • Apple's Sell-Off Is An Opportunity... To Sell [View article]
    And if they don't?
    Tired of being faithful to Cook. I'm not anymore.
    Feb 4 11:01 AM | 1 Like Like |Link to Comment
  • There Is Still Time To Short Apple [View article]
    There are a lot of amazing numbers in Apple's balance sheet. Numbers you won't see in most other S&P500 companies, when comparing how cheap this stock is (dollars per share in 2012, 2013, 2014):
    1- Cash&eq: went from $103, to $144, to $176 now.
    2- Non current liabilities: basically, money took aside in the event they have to pay taxes for repatriating money to USA: $12, $20, $24 now. As this will never happen, it's money of investors, too.
    3- Deferred revenues: profits already made, but taken aside for guarantee purposes, mainly on software failures. Basically, asume this profit will go back to investor's pockets in the coming Q's: $5, $7, $9 now.
    4- Yearly divs: net money for investors: $0, $10, $12 now.
    5- But you now have to discount to those plus numbers the $-19/share of LT debt.
    So, when the stock had a dip to $399 last yr (I bought then, and compound on profits after that), you were really paying 399-144-20-7-10= $218. For a company that made a free cash flow of over 40B/yr at that time. Meaning that, WITHOUT growth, you get your money back in 5.5 years. People buy properties expecting their money back in 12 or even 20 yrs...
    Now at $500, what you are really paying is 500-176-24-9-12+19= $298. At a FCF of some 50b, your money back would be in 6 years. The stock itself, for free after that.
    But wait, there is more: Goodwill: valued at $1, $1.5, $2 in 2012 to 2014. While just the brand, the most valued of the world, is said to cost 100billion. Thats another $110 per share. Or more precisely, 108/share if you discount how this is valued in the balance sheet. Compare that with goodwill of HPQ, for example, that it's almost 50% of the stock price... ($13.5 of $28)
    IChan is right: this is a no-brainer, I have never seen a more obvious investment opportunity, even considering big growth is almost impossible for a company this size. Even so, I agree with Blair that we should wait a little more to go long again. I bought weekly 540puts on monday before ER to hedge my long leveraged stock that I had been compounding on profits since $399 in june, then exercised them yesterday to stay liquid, for some 130% profits (and more than that from bull spreads sold before that). Kept long with oct 550/570 BuCS, a bit underwater now, ready for some gymnastics with the short leg. And soon I'll be picking up APPLes from the floor again.
    I guess that is more than what Blair got shorting this stock about that same time. I confess, I'm not in love anymore with Apple, not with my long positions, neither with my eventual shorts in the stock. Just want to stay focussed.
    Jan 29 03:15 PM | 3 Likes Like |Link to Comment
  • Apple At $525 A Share Would Be A Gift [View article]
    thanks.
    Jan 11 02:57 PM | Likes Like |Link to Comment
  • Apple At $525 A Share Would Be A Gift [View article]
    It is curious Bret that your bullish article meant more bear than bullish comments. In fact, after two years and mountains of money lost in AAPL, these bears are starting to convince me. But not because of Blair's marketshare POV, for sure.
    Apple prime business these days is to buy back their own shares (because the more they buy, the more valuable their RSU's are). If so, is it good for them to show growth, update guidances, etc? Or is perhaps better to postpone those earning via twists of the financial statements, via postponed revenues, a 0 valued goodwill - for the world's most recognized brand-, and billions of dollars hurting profits in other mere financial tricks?

    I found very suspicious to move the date of ER, once again, too late in the Q, way after the OE of january. My guess: They have been monitoring this month Max pain, currently at $515, and decided it was not good to boost price with an updated guidance, while they can buy them cheap. In fact, I think this is a designed policy, probably by Goldman Sachs, that have been advising corporations to go for buybacks via puts selling. Note again the maxpain going 540 for next months, then another dip to 490 in january 2015... It seems that if your an Apple investor, your first enemy is the very Apple's board. And here we are, small investors, fooled once again...

    It is so obvious that Apple problems are due to not enough production capacity, and with the company managed by a supply wizard, makes this yields problems unexplainable.
    A second issue is a company with 140B in the bank (Panama channel, one of the largest engineering works of history, is now being greatly enlarged for less than 3% of that), and in whole three years all they have done to be valued by users (certainly not the amazing A7, unnoticed for now to most people) is some millimeters higher iphone screen, and some less in the ipad thickness (i'm exaggerating, but not too much in the general public's view). Less than three years is what took Jobs to change forever the phone industry with the iphone; even less to turn this company from a garage hobby to revolutionize the whole computer industry, first with the Apple II and then again with the Mac.

    Today I watched the video of the iphone presentation by Jobs exactly 7 yrs ago. Couldn't stop thinking that I've been waiting for years the day that somebody (certainly not Cook), tells us: "so we invented three devices: a game console - a music entertainment system, a TV-; a video entertainment device, a surround sound system, a beautiful window for family watching. Got it? This is just one device: And we are going to call it: iTV. The hub of your home's computing devices. With a new voice/gestures user interface (like we did it with the mouse, the wheel, the multi touch), a new software (OSX in the big screen), and a gorgeously designed hardware".
    But i'm giving up of that happening while I'll rescue what's left of my money invested in Apple.
    Jan 10 04:19 PM | 1 Like Like |Link to Comment
  • Apple's Last Chance To Dominate The High End [View article]
    How many articles we will have to read in SA cherry picking that Q3/13 marketshare data of Gartner? With this share radically changed once Q4 data of HTC, Samsung and Apple is released, it means the base argument of these articles will be outdated, the world turned upside down in a matter of weeks? I guess you've heard about product cycles, don't you?

    It does not mean I don't share your POV about a large phone. The issue here is that Apple has all this planned since years ago. Not Iphone6 (already in production), but Iphone 7 is already defined, perhaps even in a working prototype mode. What is known today was planned at least 3 product cycles ago. Not for nothing they got probably the world's best computer engineers, market researchers, staticians, scientists, and mountains of user data and of market behavior, probably more than anyone else in the world has (not even the professional spy machine: Google).

    On other matters, Dan Manners made three interesting comments here yesterday, not present now. Banned? Like Ozgenc?
    Jan 7 03:29 PM | Likes Like |Link to Comment
  • What Matters About Apple [View article]
    This article is perfect. Every word of it.
    Dec 24 10:41 AM | 6 Likes Like |Link to Comment
  • An Apple Bear Makes The Case For Apple At $1,000 By 2017 [View article]
    I think that by 2017 iphones and ipads (the main focus of your analysis) will be to Apple what Macs are today. Signature products, but relatively low contributors to global revenues. Even so, their numbers will be much higher than your estimates, imho.
    Much more important will be: digital money, iCloud related services, and video entertainment business (iTV and related). Eventually wearables.
    By 2017 Apple will be working in their new campus, will have most of the brilliant minds of the computer business under their roof, and they will be thinking if it is time to get Google out of business. Several other big, big companies will be left in the side roads by then.
    I believe AAPL will be much higher than $1000 by 2017. At least 50% higher.
    Merry christmas Michael.
    Dec 24 10:11 AM | 3 Likes Like |Link to Comment
  • Are Seeking Alpha Authors Biased When It Comes To Apple? [View article]
    Are you telling me I have already seen over 900 articles about AAPL??
    Regarding the shorts: that is assuming that Blair's trades are for real, not paper trades. If so, it's a wonder that he is still writing...
    Dec 13 04:43 PM | 1 Like Like |Link to Comment
  • Why I Continue To Invest In Apple [View article]
    Do you use software/database for backtesting? I have done some in Zacks Research Wizard (that uses Yahoo data, I understand), but I don't know if your parameters can be modeled or backtested.
    About your gates: you almost never short a stock with those parameters, do you?
    Yet another: what about quarterly rebalancing of positions? Seems you only make yearly evaluations. Although perhaps you don't get enough fundamental change to justify it, unless a stock gets seriously hit in some earnings report. My questions are because most of the higher gains on AAPL obtained by your valuation could be explained by the crash alone (that got you out high once, then in low once, then never changed again the position), so I would like to map a more "fundamental- related" performance.
    Dec 13 09:19 AM | 1 Like Like |Link to Comment
  • Why I Continue To Invest In Apple [View article]
    Make it available in ibooks too, please. I guess most of your readers would prefer it from there....:)
    Dec 13 08:05 AM | 1 Like Like |Link to Comment
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