Thursday, April 25, 2013

Apple's new campus

For those wondering why Apple has slowed its product timeline, here is the 128 acre, $6 billion campus.

But in regards to the stock, NO ONE can match Apple's strength in the buyback of their stock. Every marginally seller will be sucked up by Apple, and the floor on Apple is found.

Wednesday, April 24, 2013

Wall Street to Tim Cook--You are lying!

New products? Innovation? Tim Cook you are lying. At least so says Wall Street. If the stock is so cheap, why not buy it all now? Unless of course this quarter and next quarter are in the toilet also. Wall Street wants to hear none of Mr. Cook, as he repulsed the analysts on the conference call last night. Wall Street, though is respectful, and they won't show it on the call, but they will on the downgrades of the stock, and today, they got a slew of them, as they vehemently, in the only way that Wall Street can, tell Tim Cook to go and screw himself in the only way they can!

Tim Cooks says sorry to China, but lies to Wall Street. Cook breaks the code, instead of having Apple engineers write some code on iOS, for a 5" screen, and then, he disengeniously calls the lack of code writing a "trade-off." On Wall Street you tell the truth, and you man up. You don't hide behind platitudes of bullsh*t.

So Wall Street gives Tim Cook the finger today, and here is an example.

Apple removed from Focus List, target cut to $545 at JPMorgan
 JPMorgan removed Apple from its Analyst Focus List and lowered its price target for shares to $545 from $725 following the company's Q2 results. The firm thinks Apple's June quarter outlook could weigh on shares over the short-term, but feels the company's buyback and dividend boost could set a floor in the stock. JPMorgan keeps an Overweight rating on Apple.

 Apple price target lowered to $500 from $575 at Goldman.
 Goldman lowered Apple estimates but continues to believe new product cycles will remedy current challenges. Shares are Buy rated.

Apple multiples likely permanently lowered, says Oppenheimer 
After Apple reported in-line EPS for its March quarter but provided June quarter guidance that the firm views as weak, Oppenheimer thinks that several factors, including negative mix changes and increased competition, will cause the company's multiples to be "permanently hurt." The firm thinks that the shares are likely to be range bound until the company's next product cycle, which it believes will "make or break the stock." Nevertheless the firm keeps an Outperform rating on the shares.

Apple downgraded to Market Perform from Outperform at BMO Capital
 BMO Capital downgraded Apple to reflect longer-term concerns regarding the "trade off" for revenue growth vs. margins and the impact of increased competition on ASP's, which will offset improved capital allocation. The firm lowered estimates and reduced its price target lowered to $435 from $440.

Apple price target lowered to $480 from $575 at Deutsche Bank
Deutsche Bank lowered its estimates and price target for Apple due to lower margin assumptions following the company's Q2 results. The firm notes that Apple management did not confirm the June quarter will be a margin trough. Deutsche says Apple's buyback and increased dividend do not hide the fact that new products need to be introduced. The firm maintains a Buy rating on the stock despite dropping its estimates and price target.

Apple price target lowered to $475 from $505 at CLSA
CLSA lowered Apple estimates but said its shares price is discounting lower gross margins. The firm believes shares can outperform as new product cycles and the $60B buyback kick in and maintains its Outperform rating.

Apple price target lowered to $430 from $480 at Citigroup
Citigroup says Apple's below-consensus guidance partially nullifies the positive earnings impact from its big buyback increase. Citi expects investor attention to focus on Apple's weakening fundamentals now that the capital allocation catalyst is removed. The firm keeps a Neutral rating on the stock with a lower price target following Apple's Q2 results.

Tuesday, April 23, 2013

Should Tim Cook be out at Apple?

Tim Cook has spoken eight times before Wall Strreet, and every time he has spoken the stock has moved down. Today in the after-hours it went from 429 to 405.  Tim now is promising great stuff in 2014.

Really? How about when Apple was asked about making a 5" iPhone, three months ago and Tim Cook panned that idea. He was asked about it again during the conference call; and once again it was panned.

Ben A. Reitzes – Barclays Capital, Inc.
All right, thanks and Tim my follow-up just for you, just maybe asking you this every quarter in different ways. But I just wanted to you get reaction to what you thought of the 5-inch phone market at this time versus three months ago? And if anything has changed in your view as to that market and it’s placed in the smartphone world versus your 4-inch product? And that’s it for me.
Tim Cook
Yeah Ben, good question. It might continue to be that iPhone 5 has become the best to supply in the industry. And we always drive to create the very best display for our customers. Some customers’ value large screen size, others value cost of other factors such as resolution, color quality, white balance, brightness, productivity, screen longevity, power consumption, portability, compatibility,apps many things. Other – our competitors had made some significant trade-offs in many of these areas in order to ship a larger display, we want to get the larger display, iPhone by trade-offs (inaudible)...(sic).we would not ship a larger display iPhone while these trade-offs exist...(inaudible)
(Cook basically said the larger screen resolution wasn't good enough with Apple's current technology/operating system)

The reason Apple is panning this is that they have to change their code on their operating system so the screen can be used, and that's the problem. So then, what magic is Apple going to bring to the market? In 2014??

Maybe Apple's problem is really Tim Cook, and what Tim Cook thinks is important.

Let's take a look at Cook.  Below is Tim on an Apple Special event on September 12 2012....

You just have to watch 90 seconds of it, as Tim Cook waxes on and on about the Barcelona store....

He said the company had spent 2½ years working on every detail of the store,”getting everything exactly right.” He mentioned that Apple used limestone from a local quarry to restore and modernize the store. “No one would have done this but Apple,” he said. “It’s absolutely gorgeous.”

At last June’s World Wide Developers Conference, Cook highlighted the retail chain at the beginning of his keynote to formally introduce iOS 6. “It has a signature glass staircase and the opening had a signature crowd,” Cook narrated as the slides changed from the store interior to the outside waiting line. ”Our customers in Barcelona loved this store...”

So if Tim Cook got that bent out of shape over the Barcelona store, what is happening to Apple manager's as they are spending $6 billion on their spaceship corporate headquarters??

Apple's idea of innovation is to now take on debt to buy back stock, as AAPL "invests in themselves."

Why doesn't Apple instead invest in a 5" phone?

Why Apple ramps after earnings

Because management is now under pressure!!

Monday, April 22, 2013

CAT: The Apple of Wall Street's eye!

So CAT cuts numbers for $7, and the stock doesn't sell off,as bargain hunters look to buy the stock at 80. So do you really think AAPL can say anything on Tuesday's earning call that will make the stock go down?

And now, that we have a whisper campaign, of "Fire Tim Cook" on Wall Street--at least now the boadroom is understanding that AAPL's non nonchalance to a $290 billion loss of shareholder value and 44% plunge in the stock is finally enough and at 390 you buy AAPL stock without worry, as every kitchen sink disaster is already priced in!

Friday, April 12, 2013

A letter to Tim Cook

Dear Mr. Cook:

After watching the debacle in the price of Apple common stock, I have finally decided to write you a note.

Above is a graph of your stock price. A, is when you had the problems with maps.  B is your 60 minutes interview, and C is when you stated, regarding the $140 billion pile of cash on your balance sheet, that you were “seriously considering” that issue.

Wall Street is very simple. It is expectation and earnings game, and you, as a CEO have failed Wall Street and much of the $250 billion of value, lost in AAPL stock, can be explained by management’s missteps.

Consider that you will release earnings on April 23, and as expected, will announce your dividend rate. Wall Street has come to the conclusion that a dividend increase will probably come at that time, ostensibly to diffuse your weak earnings and prospective guidance for the next quarter. (See Morgan Stanley’s research note today on 4/12/13).

Previously you stated that Wall Street shouldn’t look at AAPL trends/extrapolations from supplier issues. If that statement is true, then you have done a disservice to shareholders who actually, have to use their own money to buy the stock, and have reacted to those reports by selling Apple, as Wall Street has already analyzed that.

If however, your earnings are poor, then we can understand why you decided to wait on a dividend increase at earnings, because of the simplistic mind set at Apple. Either way, it shows poor judgment.

Here’s why.

Apple was held in very high regard by corporations and individuals alike. The stock swoon has caused individuals and corporations to take a closer look at Apple as a corporation, and the veneer of Apple, the corporation is being washed away. We know that AAPL the corporation has stashed $90 billion in cash overseas, to avoid taxes. We know that Apple as a corporation has a business model that depends on low wage Chinese workers to assemble your products, to increase your profitability, at the expense of those workers.  We know that AAPL as a corporation has stashed $140 billion in investments that have not generated any substantial return, and that their dogged pursuit of safety, shows that Apple’s money managers, have a fear complex that permeates their investment decisions. We also know, that Apple, as a corporation, spent billions on a buybacks at much higher prices than current prices, with a hastly conceived buyback program that aided Wall Street instead of shareholders! And we know that you have apologized to China, but have completely disrespected your shareholders who own shares of Apple. Wall Street trusted Steve Jobs to do what is right; Wall Street trusts you, only, to do what is wrong.

Now you may disagree with what I say, and you may completely disregard this letter as the ravings of a malcontent shareholder, but you will be sorely mistaken. The stock price already assures that at this moment in time, I am right and that Apple as a corporation has already made many missteps; and therefore, you have done the only thing you could do, and that is to ignore the issue, in that hopes that eventually, the stock price will rise, and then, your sagacious Zen like quietness will be proven to be proper, and therefore, in the future, you can tell shareholders that Apple, like Father, always knows best, and the best advice, is to ignore Wall Street.

But it isn’t Wall Street that you are ignoring; it is the shareholders and the buyers of your products who have become disgruntled with your brand, which has been badly tarnished by the resultant fall in your stock.

And now, Mr. Cook, your comparisons, to Steve Ballmer of Microsoft, has already started.  Microsoft never regained the edge that it had when Bill Gates handed over the reins, a situation that Wall Street feels is now happening with Apple. The result of that perception, and low expectations for the company, has caused Apple’s stock price, to be giddily pushed around by Wall Street, depending on the open interest of the weekly option expiration contracts!

Isn’t that ironic? The biggest and most profitable company in the world gets pushed around by Wall Street, because Apple has adopted a “Father knows best” attitude!

So you can ignore Wall Street, while you are safely seated in your Apple ivory tower, but it still leaves one question unanswered, “What if Wall Street is right?”