Apple

[Vanraw]

Bounced back a little today but still in the red.

Interesting to watch the news on these guys. The stock market pretty much is treating Apple like it is a general goods commodity conglomerate. I guess that makes sense when you think about the growth they had and the numbers they continue to sell. They cant continue to grow at the same rate. Especially if they don't come up with a new product, .

[Grieve]

The analysts are starting to model not just lower growth, but negative growth. At a PE of 6.45 ex cash, they are really priced for armageddon. One analyst today lowered his price target from $800 to $300. That would give them a trailing PE of something like 4 ex-cash. It really is staggering how sentiment has soured. Everyone is also assuming no new products, which is pretty insane.

I bought more shares yesterday, for both my and wife's IRAs. Not buying any new options for now, since it's impossible to know when things will turn around.

[Vanraw]

Yea I'm holding what I bought at 445. I still see a 10% pop at least in the short term.

[Vanraw]

Well this stock is one of the few that has been resisting this rally. Bad sign in my opinion. I think Im going to be dumping it today or tomorrow for a loss.... I hate to see what it will do when the market takes its little correction that is inevitable after this run. Anything that is resistant to strong market upswings is likely to be like greased shit when the market falls.

I was hopping for the apple faithful to give me some quick profit, but they have disappointed me yet again

[Grieve]

As soon as you bought, I told my brethren to hold off buying until we'd shaken you out.

I think we could be on the cusp of a big run higher, because:

1) Galaxy IV is finally out, and so is no longer the bugbear on the horizon. Plus it really doesn't amount to much - iterative rather than innovative, as people love to say about Apple.

2) After an avalanche of downgrades and lowered targets, Apple actually got an upgrade today.

3) Supposedly the secret hedge fund pair trade (long Google, short Apple) since February is now being reversed since the media found out about it.

4) It's about time for an Apple product announcement (usually happens in March). Plus maybe a dividend hike.

5) Most importantly, I sold a call against my long Apple position a few days ago (a bet the stock won't go up before early April). That's sure to bite me in the ass.

[Vanraw]

Well I didn't sell today. But if you compare the last month, week or 3 months of this market run, Apple is flat and or down. When in March do they have a product release? That might make me stay.

And when I say new product release, I'm not talking about a ipad or iphone 6.

[Grieve]

Well it probably will be an updated iPad, and maybe updated hockey puck Apple TV. But just an invite to an event can juice the stock.

See history of events here:

http://en.wikipedia.org/wiki/Timeline_of...._products

March 2012 - iPad 3, Apple TV, ect
March 2011 - iPad 2
March 2010 - original iPad
March 2009 - new macs
Etc

[Breand]

It seems like it is behaving inverse to the market...like when the market is having a down day like today, people are like "well I'll buy some cheap AAPL then!"

I just hope something positive happens to it by June because I have to sell it by then.

[Grieve]

Today I'm sure it's related to my first bullet point in the earlier post - the Galaxy IV is no longer a unknown quantity. Not a bad jump on a down day...

[Breand]

My entire portfolio is up except for Citi today (and my mutual funds I'm sure will post downwards). Weird!

[Vanraw]

It seems like it is behaving inverse to the market...like when the market is having a down day like today, people are like "well I'll buy some cheap AAPL then!"

I just hope something positive happens to it by June because I have to sell it by then.

Yea its odd. Thats what i was saying above with this gain in the market. Could be like greive says, people just moving money in and out.

Im almost even now. Happy i didnt sell.... I might hold for a bit. I still think that unless apple rolls out something new and exciting, your not goingnto see 700. Growth just cant maintain the same percentages.

[Breand]

At this point I'll take $525 so I can break even, heh.

[Vanraw]

hah, 525 was my goal / sale point. I don't know if we will get there.

[Vanraw]

Wow, talk about opposite of the market. This stock is really odd. Glad I didn't sell.

[Grieve]

Broke 50 day ma to the upside today - that should be a good side...depending on what news comes out.

I feel the market is pricing in a big increase in the dividend (like it being doubled), which seems REALLY unlikely to me. Big buy back is more likely.

[Breand]

sigh

[Vanraw]

Yea, that's a big ole ouch

[Breand]

So Grieve...wtf is Tim Cook doing? Why are they sitting on a pile of cash and not buying anything? The month of March when all their new product announcements usually come out has come and gone...Apple has never been the company to rest on it's laurels but nothing new is coming on the horizon. How can one of the largest tech companies in the world limit itself to 3 product lines, all of which leech off each other for sales?

[Jakensama]

I should own Grieves house soon.

[Vanraw]

So Grieve...wtf is Tim Cook doing? Why are they sitting on a pile of cash and not buying anything? The month of March when all their new product announcements usually come out has come and gone...Apple has never been the company to rest on it's laurels but nothing new is coming on the horizon. How can one of the largest tech companies in the world limit itself to 3 product lines, all of which leech off each other for sales?

QFT? ...... WTF ......

It is awful odd that they have like 100 billion in cash. I can picture Tim Cook sitting on this pile of gold like smog.....

As I said before, they need to give that money back to the company owners, or use it....

[Grieve]

Well...definitely ouch, but a few things I'd say in response.

First, Apple has always been a company to not release stuff until it's ready. Arguably they didn't do that with Maps, and look what happened. So I say, if it's not done yet, screw what the market wants and wait until it is. I'm a software developer, and I'd love to work for a company that based the release on when the product is ready, and not on a date that is decided on before we even start.

Following on from there, there has been a lot of chatter recently about delays to pretty much everything they are working on - the retina iPad mini, the iPhone 5S, the budget iPhone for China, the iWatch, and the iTV. So I suspect that some of that stuff WAS going to be announced in March, but has now been pushed off...maybe to the third or fourth quarter. I don't blame Cook for that. Jobs was always a perfectionist, and it looks like that hasn't changed.

Apple NEVER pre-announces when stuff is coming out. The problem is that "analysts" decide when they think a product is getting released, and then when that doesn't happen its a big black mark on Apple. The iTV is a pretty good example of that. Analysts having been saying it's imminent for years - based on what?

As for the cash, I'm sure they will be announcing a bigger buyback and/or dividend. Maybe next week with earnings, but more likely a couple of weeks after that. But I doubt it will be huge. Sure, they have $135 million, but most of that is overseas. They'd have to pay a massive amount of taxes to repatriate it. Other tech companies have even more cash hoarded, as a percentage of their market cap.

Ultimately, this is pure anxiety by investors. They don't like the fact that Apple seemingly isn't releasing products when they think they should be. They think Android is taking market share. They think they aren't competing in China. We've seen this story before. AAPL fell to $82 in 2008. Four years later it was almost 9 times that.

Times like this aren't fun if you have options (I do, and it has cost me dearly), but I'm also holding a lot of the stock, and I'm not particularly worried. It will hit new highs. Maybe later this year, maybe next year, maybe 2015. But it will happen. For the next few months there's a good chance it's dead money, though.

Next week's earnings are probably going to be bad. And guidance for the following quarter will likely be even worse. Is it already priced in? Who knows? I guess we'll find out. But I believe the second half of the year is going to be big.

[Grieve]

I should add, don't pay too much attention to the doom and gloom you hear. Anyone would think that nobody is buying any iPhones or iPads any more, and that Samsung has totally crushed them.

So it's bit odd that Verizon said this morning that iPhones made up 56% of their smartphone activations this quarter, don't you think? Yep, all the Samsung, LG, Motorola, Blackberry, Windows, and every other smartphone type only added up to 46% TOTAL. And this is from Verizon, who spends almost all their advertising budget on Android and Windows phones. It's also up from 51% last year.

In fact if you look at this graph you see that Android has basically flatlined at AT&T and Verizon, while iPhone has doubled or more in that time:



Another interesting point - people love to pour scorn on Apple for only having about 5% of the world PC share. But who cares about the share when you take 45% of the world PC profits? And this is Macs only, don't even include iPads:


http://www.asymco.com/2013/04/16/escaping-pcs/

They also take 70% of the world's cellphone profits. That all cellphones, not just smartphones. Samsung takes most of the rest - just about everyone else is actually losing money.

Edit: Apple is now officially the cheapest on a ex-cash PE ratio basis than it has EVER been - 5.53.

[Slamz]

To take a Grieve comment on the Netflix thread into the Apple thread, here's why I don't think Apple is comparable to Netflix in terms of market fluctuations:

Netflix has no direct competitors and their sales are driven by having a good, pretty unique product. Their dive came from analysts just plain not understanding the market and making bad comparisons to companies that aren't really competing with Netflix for customers (like Amazon). If you want to cancel cable or just plain have a good selection of things to watch for cheap, you get Netflix. No question about it.

Apple is driven too much by "coolness" -- that is, they have plenty of actual market competition; they aren't offering anything particularly new or unique anymore -- and I think it actually hurt their ability to maintain their "cool" image when companies like Microsoft and IBM stopped being relevant to the average consumer. Basically Apple was cool when they were the little guy fighting the big, evil Microsoft. Fighting the big, evil HTC or Samsung just isn't going to fly and I actually think they've hurt their public image (and their financial image) by building up this enormous pile of cash. Image-wise, Apple has let themselves become the overly rich fat-cats that they used to benefit from fighting. And it suggests that they just don't have a plan. Amazon runs on thin margins because I think Amazon always has a plan. They're always doing something. Netflix is always expanding their offerings, always expanding their coverage area. Apple is raking in cash and doing nothing with it.

The only real question in my mind about Apple is that since they DO have so much money, they COULD do something stunningly amazing and that could happen at any time. Maybe they can do something awesome with this new battery technology I've been hearing about.

Really, though, I think it's a testament to Apple's lack of vision that we all still own Windows (for gaming). I'm sure that for a scant billion dollars, pocket change for them, Apple could revamp their operating system to develop whatever APIs and create whatever incentives are necessary to attract developers to the Mac platform and bring about the finale of Microsoft Windows as a home OS but they don't seem interested.

Hell, for 2 billion they could surely create a bunch of Mac-only super-awesome MMORPGs, FPSs, RTSs, and whatever else anyone wanted and eat the losses for a year or two until everyone said "fuck Windows, I'm outta here" and converted to Mac.


In short, the only thing more stunning than Apple's profits is their lack of clue for what to do with it all. I think it's actually beyond baffling what Apple has been doing for the last couple of years. Netflix and Amazon stock soar beyond reality because people see them going places, maybe great places. Apple goes the other way because their future is, at best, a huge questionmark. They aren't going in any obvious direction. Like Microsoft, they've just become a lump on a log.

[Grieve]

Netflix has no direct competitors and their sales are driven by having a good, pretty unique product.

I'm a Netflix bull, but I have to disagree with that. Amazon Prime is absolutely a direct competitor, and quite a bit cheaper than Netflix (plus many people have it anyway). There are also a lot of direct competitors in countries outside the US (particularly the UK).

Netflix is not a unique product at all - anyone with some cash can do a streaming model. The studios love competition - it drives up the prices they can charge. And when someone like Amazon has way more cash, and doesn't mind losing money to gain share, it's a problem.

What Netflix has is name recognition and a fairly large number of devices supporting them. In other words, a head start. Which Apple had too. I'm not sure I see too much difference between the situations, to be honest.

Pandora is similar to Netflix. We'll have to see how they fare when everyone and his brother (including Apple, Amazon, and Microsoft) bring out competing streaming radio services later this year.

Don't have time to respond to the Apple stuff right now - will get back to it later today, if I'm not too busy drowning my sorrows...

[Slamz]

I'm a Netflix bull, but I have to disagree with that. Amazon Prime is absolutely a direct competitor, and quite a bit cheaper than Netflix (plus many people have it anyway). There are also a lot of direct competitors in countries outside the US (particularly the UK).

This is like saying that the apple orchard down the road is a direct competitor with Giant or Whole Foods. I mean yeah, I guess, for that one thing, but you're not going to quit going to the grocery store just because there's an apple orchard nearby that sells cheap apples. Amazon Prime has a very limited selection, doesn't seem to be getting much better and will, I think, always be a little frill on the side. Calling them a competitor with Netflix is a huge exaggeration -- exactly the mistake analysts were making back when Netflix was in the $60 range.

Amazon is more of a competitor for iTunes, with the real emphasis being on pay-per-view and digital purchases -- a market Netflix isn't in on.

From what I've seen, Redbox and foreign options are rowboats to Netflix's RMS Queen Mary 2. Recall that Netflix's stock went UP when Redbox revealed the extent of their streaming content. I think unless a new startup can hit the ground with a ton of capital to strike significant deals, they'll have a hard time budging Netflix. RedBox Instant is just like their kiosks -- cheap, but very very limited.

Netflix is not a unique product at all - anyone with some cash can do a streaming model.

Anyone with cash CAN do it, but they aren't. That's why Netflix remains unique. Apple COULD throw down a few billion and totally bust caps in Netflix and the streaming market but so far they haven't done so and quite possibly just aren't interested. Amazon probably COULD do it and might even have interests in that direction but they haven't. Meanwhile, Apple has real direct competitors across every market they're in, with no apparent technical advantage that I can think of in any of those markets.


I think one of Apple's real challenges today is their image. The whole company was built on the image of the underdog and counter-culture. There may be some irony in the fact that now that Apple is top-dog, the marketing campaign they used to build their company up no longer applies.

They may need a new image and that's just one more big question on top of the already huge question mark of what they're going to do next.