Wondering if anyone else is watching Netflix. It’s popular to bash them and they’ve made some ridiculous mistakes. But they seem to own streaming. There’s ample opportunities for them to fail or lose to competition and they keep bouncing back.
I’m not long on it, but I could see it picking up 20-30% through the year as it rebounds. Just wondering if anyone else has thoughts…
AAPL has been on a tear for the past two weeks. Glad I didn’t take at earnings. It will be interesting to see if the Greek situation comes back to haunt us or if the market keeps on chugging for now. Volatility seemed to be the play through the summer and fall (seemed clear the bankers were trying to hump every penny they could), thus I don’t wonder but what the spring/summer will be more consistent.
All of this is to say that I’m in a bit of a quandary. I would like to do my usual: take profit, invest some of the cash elsewhere, and then buy back in after it falls back… But this is going to be an interesting year. The competition seems to have fallen away and Apple is set to release an updated iPad, revised MacBook Pros, and the iPhone 5 this year. I may just sit on it. We might see a year of steady AAPL growth with much less volatility.
Oh yeah, the DIVIDEND! The much fabled dividend. Wouldn’t want to miss out on that non-starter. ; )
This is the one weekness that Apple has. They have not needed PR until now, but now they need it. And they need to take a lead on this issue. These jobs ARE gone, but industry isn’t. Apple is the one cpany that uses this supply chain to the best advantage. Other companies use it to build race-to-the-bottom engines.
Sadly, we’re no longer a manufacturing nation, so we will fumble with this issue before we can understand it. Henry Ford wouldn’t know would be stunned at how we’ve changed.
http://www.nytimes.com/2012/01/22/business/apple-america-and-a-squeezed-middle-class.html
Edit: Henry wouldn’t know what to say and would be stunned to see how we’ve changed.
Actually, despite what is commonly thought, I believe the US still has the largest manufacturing output of any nation, and Europe, as a whole, is even larger. I know Chinese manufacturing has grown greatly, and will continue to do so. But Let’s not buy into the “The West is Done!” hype that is senselessly repeated.
I certainly don’t believe that the “West is Done!” but there’s a messaging problem here. We probably don’t want the rapidly scalable technology jobs that have left. What happens with iPhone glass might sound sexy but look at the parable of the story: The chinese live in dormitories and the engineer in California wants to see his kids play soccer. We can’t have both. That’s the message that needs to get out. “Let’s find a stable balance of manufacturing that shares the load.”
Sadly, I could go on for days on this particular topic. It’s not simple. Which is my fear, that this issue blows up out of proportion without someone stewarding the cause for greater quality of manufacturing jobs here in the US while we outsource the lower-overhead work elsewhere. (Which in itself is a political football)
Your response sounds sensible to me.
What annoys me is that the Apple execs who were quoted in that article were extolling what they called the “quality” and “scalability” of Chinese manufacturing, when in fact what they were praising was the desperate work conditions. People are so disenfranchised that they’ll do whatever they are asked (move into a dorm, work with hazardous chemicals that make them sick, forgo seeing their families for months at a time, etc.) because they have no other option. Plus Apple (and all the others using Foxcon, etc.) doesn’t have to worry their heads about it or get their hands dirty. It’s pathetic (and frankly, it not sustainable.)
I love this. The guy made a prediction. This isn’t even a rumor. I’d imagine this is an attempt to start beating this drum… I’ll believe it when I see it. (Perhaps though: they might have SOOO much cash…)
I always like it when they start the “must give a dividend” banter. It’s always fun to take a look at their darlings that give dividends. Of course, they use a time frame that supports their argument.
If I’m on the board of a company, I want to see how the dividend helps the stock price in the long term. When you look at the two companies this guy uses as the leaders of the dividend stocks and aapl over the last 5 years, I wonder which stock he would have picked?
I kind of like the one that has 372% return. 
Sure. I will admit that if they have a MASSIVE quarter that they might award a one-time dividend (assuming such a thing exists) simply to off-load some cash. They might even start a dividend. Steve might have hated the idea and steve’d it. Oppenheimer might see a strategic advantage to it moving forward. So yeah, it MIGHT happen. And we can quietly discuss those reasons.
But to go on record and claim that it WILL happen? Ridiculous.
Apple never does what people want it to do. They never do what “conventional wisdom” (contradiction in terms?) dictates. If they offer a dividend it will be on their terms for their reasons on their time. No other way to frame it
I’m fascinated by the talking heads. They will say anything to fill silence.
If anything, buyback is more probable than dividend. But I think Apple is not letting go of any of its cash until Google is punished for Schmidt’s backstab. If Apple is still Steve Jobs’ company, this thing is on the list and it doesn’t have a low priority.
I think one goal should be to kill the stolen product (which is stealing market), not obsess over a person. I wouldn’t like “my money” (technically not true, because I do not own shares, only calls) to be spent on a man hunt.
It’s not man hunt for man hunt. It’s man hunt for broken principle that have put in jeopardy the whole company. It’s man hunt for breaking the trust. Unpunished will encourage similar behavior in the future. Godfather like, huh?
I still prefer to see the guy and Google as collateral damage, not the main target. But if the only way to kill the stolen product is by killing Google, so be it.
Apple uses it as an exponent, as in acceleration…
I love this article. When people harp on Siri and fret about Apple’s future because Tim Cook doesn’t present well, I look at an article like this and remember what makes Apple so strong…
http://www.businessweek.com/magazine/apples-supplychain-secret-hoard-lasers-11032011.html
Steve Jobs might have been holding them back.
Pretty good article. It nicely points out the Apple expertise edge in manufacturing logistics and process and design planning and engineering which I have lauded for years. Design is so much more than making it pretty. Notice that Ive is involved deeply on the manufacturing and engineering front which would never happen with most companies. Deep design, by its nature, cannot be only skin deep.
I’m impressed by how much great Apple coverage has come out in the past month. Much less FUD, much more in-depth and revealing info. There’s no other player in the PC game that takes it this seriously. They’re much more interested in hot-potatoing useless CEOs and selling failure off as success.
No one seems to care that Dell/HP/etc could have been innovating while shipping us cheap products. They didn’t, they plowed the profits into bonuses and marketing, and now they’re minutes from the cliff.
This is the backside of the fencepost that Jobs’ dad used to talk about.
I could write a longer reply but pff will do.
Consh, I hope you don’t think I was taking a swipe at you with the Siri comment. In retrospect I see that you could have taken that the wrong way. My apologies.
At the same time, I hope you read the article and see the perspective I’m trying to provide: Bloggers get enflamed over little things in the foreground while Apple makes big moves in the background. It’s easy for us to underestimate the importance of this.
btw. just releasing Beta version of something in final product is so not Apple.
Your attacks on Siri seem a bit misguided. It’s beta because it will use all the experience gathered from millions of users to become a 1.0 product. This could not be done in house in a reasonable amount of time. On the other hand, being not good enough, is one of the main reasons it is a disruptive technology (not a sustaining one). I cannot get into details, but reading “The innovator’s dilemma” will enlighten you. A much shorter take on it here
http://www.asymco.com/2011/11/03/revolutionary-user-interfaces/
As for the supply chain, that’s exactly why Apple is a huge startup, because this huge machinery just gets out of the way, so new products can be launched and ramped up at a incredible pace. Looking at Apple, you may get the feeling manufacturing is easy (I felt into this trap not so long ago), but in fact it is damn hard! And being a huge startup is exactly why the share price is growing relatively fast (5x in 2.5 years) and is hugely undervalued so we can shoot fish in a barrel for 2-3 years to come. Nobody expects a company of this size to grow at such speed. Let’s give credit where it’s due and make some easy money in the process 
This is what I think. Apple had lately few fuckups that are not business as usual. It started with natural buildup into release of iPhone5. The very fact that they didn’t release iPhone5 is monumental marketing fuckup. Everyone was disappointed and surprised as I was, but somehow some people found a way to quickly justify this and become apologetic for criticizing Apple. Apple always used this natural buildup before and then delivered the goods. When it it didn’t people did and should be critical. It was a marketing faux pas.
Then the biggest feature of the half phone should be Siri. Siri is a great technology and all but 1) it’s a Beta, 2) there is much more hype to it than actual usefulness. It feels like Siri was slapped on iPhone4S to have at least some great feature because what is iPhone4S without it? Just faster phone with better camera – after year of waiting and postponing the purchase of iPhone5. These are all fuckups as Apple knew sales of iPhone will be slower because people are waiting for iPhone5. This leads us to the fuckup #3.
Apple missed the street expectation first time in a very long time. I know. It wasn’t Apple’s forecast and growth was still great, but it didn’t happen for many quarters before. When Apple is functioning at it’s top this things are not happening.
Then you have battery drainage problems, and Siri outage problems. Not really that big deal but still.
So this is what I think why are these things happening. I think Steve wasn’t really well ever since he left the active role at Apple and went on last medical leave. I think your mind goes through whole bunch of other things when you know you are terminal. I think although Apple was running daily business as usual there was vacuum created in leadership. Steve wasn’t really running Apple anymore but was still somewhat involved, and other heads at Apple weren’t yet fully in the charge of decision making as Steve was still numero uno.
If Steve was well there would be iPhone5 and Siri would be one more thing. Wall street expectations would be met and Siri wouldn’t be Beta.
All that said, I don’t think Apple is on the the downslope, I just think they were already going through the transition pains for the past year. I think decision making roles are clearly reassigned now maybe with some few things left to work out.
I’ve been with Apple for over two decades, never switched to Windows, even when Apple was on death row and had to accept Bill Gates’ handout. Apple was rebel outpost and I was rebel. Still am. I like Apple, it’s interweaved into my life.
I just miss Jobs at the helm!
Cosch, I normally concur with most things you think and post (which is neither here nor there, because agreement is overrated and I abhor group think.) Lately though, I find myself shaking my head in wonder at some of your thoughts on Apple. It seems to me you have taken a more personal and irrational stance lately (just my opinion, not a criticism.) Apple (and Steve) has never “not made mistakes.” Mistakes are part of the process for them. That said, I am amused at the notion that “Siri” and “no iPhone 5″ are perceived by so many people as “mistakes.” And seeing “Apple beating guidance, but not by as much as people though they should” is particularly funny.
I like the article not because it’s glowing, well written, or even particularly insightful. I like it simply because it shows more people are actually starting to perceive the breadth and depth of Apple’s skill in the areas of, planning, logistics, strategy, and sustainability in their execution of design, engineering, production and delivery. As more people realize this the stock price will start to rise to reflect the company’s true value, which will benefit me.
Agree. This link is inline with my group think. I’m glad that @Consh has a different view and we’ll simply have to wait to see who’s right.
http://macdailynews.com/2011/11/04/more-proof-that-apples-siri-is-intended-to-be-a-google-killer/
Also,
I’m so tired of hearing this old chestnut,
“I’ve been with Apple for over two decades, never switched to Windows, ***even when Apple was on death row and had to accept Bill Gates’ handout.***”
(Although I don’t blame you as it has always been misreported in the media.)
I’ve been hearing it in various forms ever since that WWDC in 1997. Usually it in the form of Microsoft or Bill Gates “saved Apple.” I even heard it in the PBS special on Steve Jobs the other night. In fact Microsoft was simply living up to a legal settlement with Apple (and it was far more than $150 M.) The stock deal was no more than a distracting gesture so Microsoft could save face over the deal.
I was going to carefully compose and post a description of the actual facts, but I found this instead. It’s a fairly good statement of most of the facts:
http://www.zdnet.com/blog/apple/stop-the-lies-the-day-that-microsoft-saved-apple/7036
BTW the best research I have seen on the matter which included a forensic examination of several years of Apple and Microsoft financial documents estimates the total legal settlement at just over $1 billion. But we’ll probably never know the exact settlement.
God, I miss MacWeek.
I also miss the world before the Internet. This was an open secret back then. Anyone who knew it wouldn’t talk about it in detail because the Mac circles were much tighter back then and there was a good chance Steve Jobs might lop your head off himself. That said, I’m also a little stunned that this story hasn’t been more vocally corrected in the recent orgy of Apple coverage.
Microsoft shipped Apple code when they were at their zenith.
Perhaps that isn’t a big story to other people, but I think it’s the whole story about Apple and Microsoft. All of it.
Somehow you missed that important part in that sentence – which is that Apple was almost dead.
You see John I was never a long term investor in Apple. I took short term rides mostly on the long side for many years. I had many arguments on old Google Finance when Apple was criticized, but because I am not married to Apple, I was free to take other side of the argument too when I felt that something is not going that great. You see I am not looking at Apple and asking myself “What’s great about Apple”? I am just looking at Apple and ask myself as with everything else: Do I like this particular thing or not? If I do, you will hear it from me, as you many times did. If I don’t, you will hear that too.
I think many people that are invested in things for long haul tend to be more sensitive to criticism of their investment than people that aren’t.
Although when I first read your post I thought you said,
“All that said, I [do] think Apple is on the the downslope.”
(I just misread it.)
But I didn’t miss that important part in the sentence about Apple being dead. I just wanted to correct the overall inaccuracy that is commonly believed. Apple was in a bad place but nowhere near dead. Steve Jobs had been back for 6 months, years of damage , neglect, and mismanagement was being rectified. They had 2Billion in the bank and they were owed 1Billion by Microsoft. Bill Gates didn’t give them a handout. The exact opposite was true. Microsoft and Intel were finally compelled to pay for part of what they had stolen.
Admittedly though, this was the end of a period when it was a hard time to be a Mac user in a world dominated by Wintel monopolistic practices.
Remember Steve Jobs said, “We were making a tablet and realized it would make a great phone…” The iPhone was the beta test of the iPad. Furthermore, the first gen iPhone had A LOT of limitations, even by the standards of the day, when it arrived. It was effectively Beta too.
Apple has an iterative philosophy. Get it right, even if limited in functionality, ship it and see what the customer does with it. Then revise and enhance based on response. Whereas Google ships EVERYTHING in beta so no one holds them accountable (while they continue to make a mint selling your personal info).
Interesting thoughts going on here. Not a great piece, but it delves deeper into why Siri might change things.
More than anything, a light went off in my head. Siri is an interceptor, not just a curator. It bypasses Google, or uses it on an aggregate level (this is brilliant, one IP address at Apple is asking Google millions of questions it can’t track to a specific user), and then provides curated responses from trusted sources that can be monitored. Good for the consumer and great for Apple. Apple gets the consumer data, Google doesn’t. Apple doesn’t sell the data and by default, neither does Google. Apple keep sit secrets and Google loses ours.
Indeed, Apple’s search volume is small (for now). But iOS and MacOS users are clearly understood, predictable, and highly desired consumers for advertisers to reach. Apple is keeping them in the pen.
http://techpinions.com/why-google-and-microsoft-hate-siri/3572
“this is brilliant, one IP address at Apple is asking Google millions of questions it can’t track to a specific user”
Um, can’t do that — violation of the TOS for Google (and other search engines).
As the article notes, however, what Siri/Apple *can* do is point those questions to databases (Yelp, Mapquest, etc), bypassing Google, Bing, etc.. I suspect that people conducting searches from a mobile device tend to have a comparatively narrower scope of questions than someone using a computer/browser — so Apple wouldn’t even need to have answer sources for everything — just the most frequently searched items.
However, it appears that the service Siri would be providing would be answers (ala Wolfram Alpha), not a list of search results (ala Google/Bing). That will be phenomenally convenient for users (for example — when I ask what 23 degrees Celsius is, I just want to know that it’s ~74 degrees Fahrenheit – I generally don’t want a list of websites teaching me the conversion formula). However, Wolfram’s failure to even put a dent in Google’s traffic leads me to believe that people use Google for far more than just answers…
Pardon the TOS violation. I’ll annotate my metaphors next time.
Still reading it over…
Apple today announced financial results for the third calendar quarter and fourth fiscal quarter of 2011 — plus the full fiscal year. For the quarter, Apple posted revenue of $28.27 billion and net quarterly profit of $6.62 billion, or $7.05 per diluted share, compared to revenue of $20.34 billion and net quarterly profit of $4.31 billion, or $4.64 per diluted share, in the year-ago quarter. Gross margin was 40.3 percent, compared to 36.9 percent in the year-ago quarter, and international sales accounted for 63 percent of the quarter’s revenue.
For the 2011 fiscal year, Apple reported revenue of $108.25 billion and net profit of $25.92 billion, or $27.68 per diluted share, compared to revenue of $65.23 billion and a net profit of $14.01 billion, or $15.15 per diluted share, in fiscal 2010. Gross margin for the year was 40.5 percent, compared to 39.4 percent a year ago. Apple’s yearly profit and revenue were company records with Apple reporting more than $100 billion in yearly revenue for the first time ever.
Apple shipped 4.89 million Macintosh computers during the quarter, a unit increase of 26 percent over the year-ago quarter. Quarterly iPhone unit sales reached 17.07 million, up 21 percent from the year-ago quarter, and the company also sold 6.62 million iPods during the quarter, representing 27 percent unit decline over the year-ago quarter. Apple also sold 11.12 million iPads during the quarter, up 166 percent over the year-ago quarter.
“We are thrilled with the very strong finish of an outstanding fiscal 2011, growing annual revenue to $108 billion and growing earnings to $26 billion,” said Tim Cook, Apple’s CEO. “Customer response to iPhone 4S has been fantastic, we have strong momentum going into the holiday season, and we remain really enthusiastic about our product pipeline.”
Apple’s guidance for the first quarter of fiscal 2012 (the holiday quarter) includes expected revenue of $37 billion and earnings per diluted share of $9.30.
Gartner has released their market share numbers.
HP: 28.9%
Dell: 21.9%
Apple: 12.9% (+21.5% YoY)
I recently read that HP has to sell between 6 and 7 computers to match the profit Apple makes selling a single computer. That means Dell probably has to sell at least 10 or 12.
So does Dell make any money on that 22% of the market they have?
The most popular smartphone in the world just doubled it’s processor, download speed, graphics; it has a camera that is competitive with point-and-shoot cameras and greatly improves the most popular camera on Flickr; implements a well thought out and secure cloud; and once again provides integrated services that are unmatched in the industry. If you don’t get that, I can’t help you.
If nervous investors don’t get it, you have a buying opportunity.
To say that this is reflective of Tim Cook’s leadership is foolish and ignorant. This phone has been in the can for 8 months. Steve is still around and still has a hand on things. If he thought this was a weak showing he would have said something. Tim cook is why Apple controls the entire industry’s supply chain. Steve Jobs is why they lead it.
Do some research, learn about Apple, and swallow hard. Taking risks is how you make money. These guys research, plan, develop, an execute. This isn’t Enron.
Besides, how many of the critics are self-made Billionaires?
And they are capable of making mistakes, especially when it comes to PR. Not good to be a fan boy (which I am) when investing. For me, being an AAPL long is that I’ll have to wait about a year before AAPL hits 420 again.
This isn’t a PR mistake. Apple really isn’t into PR anyway. This new product and the reaction to it is pretty normal for Apple, Wall Street, the analysts, the Apple haters, the Apple fans, and all the sheeple too.
I would bet that 3/4 of the people who frequent this site would bet that AAPL will hit $420 again within 4 months—in other words, before the end of January. Within 3 months is probably nearly as good a bet.
at least $420 on Oct. 19
The conference call.
Do you have a big options bet ending on the 21st?
This crow really tastes bad!
Quote me “And they are capable of making mistakes, especially when it comes to PR. Not good to be a fan boy (which I am) when investing. For me, being an AAPL long is that I’ll have to wait about a year before AAPL hits 420 again.
Watching CNBC becoming fanboys is a bit scary since all those BlackBerry users don’t dare speak up anymore. As a friend of mine like to say “Oh, how fortuitous!” But Apple didn’t really need the additional impetus.
I think it should taste good, as you get your $420 (or so) in less than two weeks (9 days in fact).
It does have a wonderful after taste!
Well, I figured it would only be a few weeks but said 3 or 4 months to hedge my bet. I should eat crow too! Good on you for bringing it up.
Now Consch needs to fess up admit that Siri isn’t just a gimmick
Sitting at the house waiting on UPS to deliver my wife’s Sprint iPhone4S. Can’t tell if I’m more jealous of her phone or the $20 less per month that she’s paying.
I can’t believe these dipshits get paid for this kind of stuff. Has any one of the tablet competitors sold a million tablets yet? How can IHS possibly predict that the competition will even show up? Clearly they think tablets will look like phones. What if they look like iPods? err… I mean, MP3 players? Where Apple has something like 80-90% of the market…
Predictions like this are about as good as trying to predict the weather in 2013. Completely useless.
Nicu 3:43 pm on February 9, 2012 100 days ago Reply
This is just an idea for an artificial dividend and a hedge for a drop in the same time without paying anything. Sell some covered calls for 6-12 months out, out of the money, let’s say in the range $520-$550. Jan $520 calls sell for about $38 right now, which means about 7.8%. The “worst” case is when AAPL goes over $520 and you miss the upside, but in this case you will be called out at $520 so you gain $38 from the calls and $35 from the difference $520-$485 (if you hesitate to sell at $485). The “best” case is that Greece f**** up and we go back to $400 or worse, at which point you can buy back the calls for half the money or less so you keep the difference “for free”.
Nicu 3:49 pm on February 9, 2012 100 days ago Reply
BTW, I have some Jan ’13 $380 calls that I try to exchange for $410 calls and keep 75% of the strike difference in cash. If it tests my patience too long, I may simply start selling slowly the $380 C when they reach $125. So I do hesitate too how to take profits. After so much pain (lost $1.5k on Oct calls, $9.5k on Nov calls, $17.5k in high strikes Jan calls and $6.1k in weekly calls which expired just after earnings), it feels too good to be true so some profit taking just fills my neurons and I cannot think at other trades until this gets done.
Nicu 4:14 pm on February 9, 2012 100 days ago Reply
OK, exchanged those $380 C to $410 C for $22.6 credit. I bought them in Jan 2011 at an average of $47.6 so I end up with $410 calls worth above $105 with a net cost of $25 after 13 months.
Crazy AAPL day !
Nicu 9:00 pm on February 10, 2012 99 days ago Reply
out of those $410 C at an average $105.7 – don’t like what happens in Greece
conshmillo 4:15 pm on February 9, 2012 100 days ago Reply
Yup, I was just looking at it today. If you bought in January 2003 at 2:1 split adjusted $14 ($7), and was somehow able to sit on it until today, every $1,000 worth of AAPL shares (71.4) would be worth to you $33,748. Gain of 3,371.43%. So $29,631 invested in AAPL 9 years ago would give you a cool 1 million today.
Senator Gronk 4:28 pm on February 9, 2012 100 days ago Reply
My parents gave me 5 shares in 1991 as a high school graduation present. They’ve split twice in that time. So, initial investment: 5 x $45 = $250 (with commission). As of today they’re worth nearly $10,000. Considering they couldn’t afford anything else, it wasn’t a bad present. Of course, watching them languish through the 90s was an excellent learning experience as well.
FWIW – My SE/30 still works too. ; )
Birra 4:48 pm on February 9, 2012 100 days ago Reply
What a great learning experience! Bought my AAPL when I purchased my first Mac. Kept it all these years as evidence that I had no idea what I was doing. Still proves it!
Senator Gronk 4:53 pm on February 9, 2012 100 days ago Reply
To be clear, I was my stock languish in the 90s, not my parents… ; )