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"it's both a value play and an earnings play"
Meaning ... it's overvalued and will continue to fall until it comes down to the level where fair value rests? Or ... it's going to sell off until it comes in line with the erosion in earnings it will see through this recession?
Or were you suggesting it's really undervalued, but that the market is just being irrational in selling it off in the $125-$130 range?
gigem77 - "pseudo science"
I'd say you're being generous in your characterization. That clown is nothing more than a shake-down artist pushing political buttons.
Frightening that there are people who would actually say things like "I'd trust him more than 'the government'".
Break out the tin-foil hats!
"My guess is he is in trouble"
Yeesh. That's somewhere between the preposterous and the ridiculous. All Buffett's saying is that gross margins in mainline insurance businesses are cyclical in nature, rising in the direct aftermath of high payout events, and shrinking steadily through periods of lower than average payout. To the uninitiated, that's counterintuitive.
But there's nothing about these experiential cycles that suggests Buffett is "in trouble". You might want to actually read the letter and familiarize yourself with the insurance business before making the leap to suggesting Buffett is "in trouble."
Newsfire now free (!)
http://www.newsfirerss.com
"even my solar guy says so"
"yes the energy budget for solar is negetive. even my solar guy says so."
Apparently your "solar guy" is stuck in the 70s. There was a time in the late 60s when the energy budget was negative, and into the early 70s when it passed from negative through neutral. But that hasn't been the case for decades. The energy budget for current solar is between 8 and 30, depending on a wide range of variables. As I'm sure you know, that dwarfs the blended aggregate energy budget for oil.
"the only reason to go solar"
You've got it completely upside down and backwards.
(1) The energy budget for solar is negative? ("certainly costs more in energy when you figure out how much went into making the panels in the first place"). Dead flat wrong.
(2) It's a "tax entitlement system which costs more than the power produced"? Wrong. It's a subsidy system which provides a far smaller subsidy to solar than it does to oil. If all energy industry alternatives were forced to stop shifting and externalizing costs, and full-cost accounting were employed, solar is actually cheaper.
Bottom line, our society makes economically irrational choices on capital investment and consumption in energy because our crooked and broken political system has created mountains of externalities.
The result isn't just that we expose ourselves to greater geo-political risk, but that we create gross inefficiencies in our economy, and destroy net wealth.
FakeSteve on what might happen
... if Apple appointed somebody other than good ole boys and potted plants to sit on the board:
http://fakesteve.blogspot.com/2008/02/andrea-jung-is-making-my-life-miserable.html
Cartoon of the day
Interesting interview with Woz ...
http://knowledge.wharton.upenn.edu/article.cfm?articleid=1903
"Knowledge@Wharton: Looking back over its history, is there anything you wish that Apple had done differently?
Wozniak: I don't like to look back. There was a time that I wished [Apple was] doing a different thing [regarding] licensing our operating system. Our real crown jewel was the operating system. That's what all of our profits came from. And my feeling was we'd get just as much profit and not have to do the hard work of setting up factories, [managing] inventory, buying stuff and scrapping bad computers. But I don't like to look back because you can't say that Apple would have been better or worse if it had done that. Maybe they would have been a Microsoft and had a bigger market share and been a bigger company. But maybe they wouldn't have been even as good a company [as they are now].
....
Wozniak: Now I feel we [Apple] have stepped way back. The computer has all the functionality, but it's not like you would have designed it. You're more of a slave than a master. Computers are supposed to work the way you thought they would. You -- the human being -- should be more important than the technology.
[But] there's no incentive for companies like Microsoft or Apple to make things really good. Apple and Microsoft won't sell one more [piece of] software or hardware based on it [being] adequate versus [being] great."
jarsch - do fans care?
That's a great question. And I think the answer can be deceptive. Often with great business/product franchises, you can see customers still loyal even as quality declines and they become more and more disenchanted. By the time they finally leave, they've reached a point that you never get them back. With disenchantment, often there is a fairly considerable lead time, and a lengthy period where things erode underneath, but the erosion is invisible from the surface.
Ironically, the corrosion-caused crack/break tends never to happen when things are going well. It's only when things turn down or conditions become more challenging that you find out which businesses were masking weakness just beneath the surface.
It's just an opinion, and I have no quantified, statistically valid study or basis for it, but my gut tells me baseball has burned off a big hunk of goodwill.
What I would ask is this: what happens if baseball doesn't get serious about eradicating PEDs and in a couple years, news breaks that one or more of the current crop of stars, like A-Rod or Pujols, has been on the juice? That's the real danger. And if I had a quarter billion dollars tied up in ownership of a franchise, I wouldn't want to be gambling that the media just won't find out. Sure, it would be painful and cost a few bucks to really root the stuff out now, or at least get it out as far as is possible, but that pain would be, IMO, a lot less than what MLB is going to feel when (and I do believe it will be "when" not "if") the next big pile of doo-doo hits the fan.
"I guess his grandmother died again"
Geez. Just when you think the guy couldn't stoop any lower ...
"7-8 years ago ..."
Exactly how deep in the sand have you had your head buried? His first admission was use 5 1/2 years ago. His next admission was use 3 1/2 years ago.
As for contract negotiations, I guess your contention is that there would be absolutely no difference in his marketable value had any of the lies been known. If you actually believe that, you've only served to demonstrated yourself to be utterly clueless about personal services contract negotiations.
If you really can't handle people chatting about reality, to the point you demand people shut up when they don't engage in your particular brand of denial, then you're in the wrong place. In fact, you're probably living in the wrong country.
My, how the times change
PayPal now saying Internet Explorer has acceptable security, but Safari flunks:
http://www.macworld.com/article/132285/2008/02/paypal.html
"did Pettittee negotiate in good faith"
Is there any doubt at all about this?
Either you think Pettitte's guilt has absolutely zero impact on his value to the Yankees, that their assessment of his performance accurately discounted the portion of the performance that came from the dope, and that their contract offer took into account the reduced value to the organization of having him represent it, and that the Yankees would have offered him the exact same amount even if they'd known the truth about his cheating, or it should be painfully obvious that he did not negotiate in good faith.
When you withhold material facts, by definition, that's negotiating in bad faith.
"it's tough to single out a few"
I'm as offended as the next guy about the non-comprehensive and selective nature of the Mitchell Report. But to suggest the guilty ones it nailed ought to walk back on the field with no penalty, and more importantly, without having come clean and admitted their full use, and without providing useful and full details on the doctors, trainers, and MLB personnel who comprise the doping network and the infrastructure that covers it up to this day, is akin to pulling an ostrich act.
Further, the logical extension of that philosophical approach to crime and punishment is that we should let the guy who just broke into your house and stole your belongings, walk scott free, because after all, more than half of all burglars who robbed other houses in your city that week were never caught, so unless they were all caught, none should be punished.
"Pettitte's contract signing is a non sequitur"
Hardly. Yes, there had been rumors that had come from allegedly leaked testimony in the Jason Grimsley case. But the L.A. Times had backtracked and printed a full retraction, killing the rumor and reporting that Pettitte's name definitively was not associated with PEDs (at least in the Grimsley mess). Beyond that Pettitte played the "God fearing Christian" routine when he represented to the Yankees that he was clean.
Bottom line, he deceived them, knowing if they knew the truth, he'd get a much smaller contract, or none at all. That is no different than your garden variety con man on the street corner. It's stealing via deception.
Keep in mind, incidentally, that we know Pettitte's agent (and Andy himself) became aware he would be named in the MItchell Report only days/hours before going in and rushing through the signing of that contract. Did the Yankees know he would be named? Do you think Andy or his agent told the Yankees? Or did they try and get the deal signed real quick before the news got to the Yankees?
If it's the former, then the Yankees are complicit in the whole doping coverup mess. If it's the latter, Pettitte's no different than a garden variety con man. Take your pick, neither has a particularly flavorful odor.
Ace - congrats
Seriously! It looks like you've done it again.
AAPL is up nearly $10, ramping in AH on top of the midday reversal. C'mon now, admit it, isn't it just a little fun watching that kind of ramp? On the old Ace command?
yofal - I'll trade you
... an apostrophe and a windmill for your straw man.
my mistake, yofal
Obviously I failed to recall my posts were to other boards. I stand corrected. You wuz right, I wuz wrong.
So, indeed, it sounds to me as though you should be out there buying AAPL hand over fist, no? That's the bottom line, no?
"seem to be at a four month high"
Interesting, the gulf between perception and reality, sometimes. If you check, you'll find that you've gotten it precisely backwards -- my monthly postings here are at a four month low, not four month high. Granted, with the dearth of other posts, I can see how even posting at roughly 1/4 the volume I was back when the stock was at its high, it might seem otherwise.
Susie - I'm beginning to wonder
... if we're not all caught up in a secret filming of Dumb and Dumber: The Sequel.
It's also come out that the father of Canseco's next door neighbor who has the photographic proof of Clemens' presence, actually contacted Clemens' lawyer days before the Congressional hearing and told him about the photo.
It would be reckless and foolish enough had they gone in and told that lie, simply relying on the Canseco affidavit (which I suspect was secured by a little cash on the side -- Canseco is hard-up for dough) and the code of silence of fellow players. But to have gone in and perjured himself knowing there was photographic evidence that would nail him to the wall, is completely nuts.
I can't think of rational explanation.
Clemens saga twists and turns
Just when you thought the Clemens silly season was winding down, we find that some unnamed ballplayer has allegedly confirmed Clemens' presence at the Canseco party -- specifically because he remembers Clemens' wife and Canseco's wife getting together to compare their boob jobs.
Further, it seems McNamee had separately already testified to this. And there's apparently additional corroborating evidence that Clemens subsequently joked about it in the clubhouse.
Seriously, I couldn't make this stuff up if I tried.
Meanwhile, Congress appears to be on the verge of formally referring this to the Justice Department.
http://www.nydailynews.com/sports/baseball/yankees/2008/02/25/2008-02-25_roger_clemens_may_have_joked_about_wifes.html
Props to Jeter
That wasn't necessarily an easy thing to say. He knows there are guys who will not take kindly to this. Not just because they disagree, but because they'll also view it as breaking the "code" of "privacy".
Raises Jeter's standing in my eyes.
OTOH, there is the question of sentiment
When AAPL was trading at $190-$200, the message volume here was quite high. Infrequent posters posted more frequently, and unknown yahoo types showed up and rattled around.
Now down at $115-$120, most all the yahoos are gone again, and the message volume is the lowest it's ever been. roni has made fewer posts in the entire month of February than he did in a single day mid-December when AAPL surged past $190.
To the extent general sentiment is a contrarian indicator, perhaps the indication is that AAPL is in the range of an intermediate low. It would seem the only thing left is for Ace to show up and do a little dance.
It's now perfectly reasonable to ask ...
How would AAPL respond if any of these things happen:
(1) One or more analysts cut shipment estimates for iPhone
(2) One or more analysts cut shipment estimates for iPod
(3) Popular financial media outlets begin reporting that iPod sales are stagnant or "mature" and revenue is falling
(4) Popular financial media outlets begin reporting Mac sales are slowing
(5) One or more (additional) analysts cut EPS estimates
(6) Apple "misses" on an earnings report (not misses its own pointlessly low guidance, but misses street consensus or whisper numbers)
How much, if any, of these are already discounted in the stock price at $120-$125?
What is the likelihood the US grinds through the rest of the worst housing cycle since the Depression of the early 30s, grinds through the yet-to-come final depths of the blowup in the financial system, without any impact on Apple sales than currently are evidenced in sales volumes?
I figure there are still plenty of people holding AAPL who either don't fully believe there will be a recession, or believe any recession would be short-lived, shallow, and done by the 2nd half of the year, or don't believe Apple's sales would get dinged by a recession even if one occurred. That seems a statement of the obvious to me. To the extent they're wrong, and to the extent they are forced to shift their views and modify their expectations, it would seem that shows up in AAPL at some point.
I find myself wondering ... exactly how realistic is it to believe that not a single one of the half dozen hypotheticals listed above will happen? And how realistic is it to believe if one or more of them do happen, that the stock price wouldn't get hit?
He claimed he was short
both NG and crude, more heavily NG.
change and substance
I believe the articles I linked said Microsoft has opened up the APIs. No? Isn't that a (the?) major obstacle to companies like Apple being able to create seamlessly interoperable apps?
"Will Apple leverage this into a label?"
Is there any reason to believe Apple would choose to do something no other reseller of music has ever done?
A few things to think about ...
(1) Apple already has created a de facto label, if you define a label as a marketing and distribution business that interacts directly with artists and with whom artists contract to market and distribute their content. Unless I'm mistaken, Apple's Indie artist agreement enables artists to contract directly with Apple to distribute their work for a uniform fee contract. As part of the distribution, their work is "marketed" via the display and information and promotional pages Apple places for them in the iTS, as well as other promotional and marketing activities like placement on the front page of the store, and freebie sample distributions via the Tuesday Free Song program.
(2) A relatively small percentage of artists are willing to release their content to digital-only (never minding granting an exclusive to a single digital storefront/reseller). Unless Apple wants to get into the business of stamping out CDs and distributing them through retail, the current market for Apple among artists is at this point in time, very limited. In other words, perhaps someday, but for now, it's not ripe.
(3) A statement of the obvious ... the day Apple opens up shop to compete directly with the labels is the day they have made the sort of power play that means they're going to be shut off from that content. I'd say it's a bit like the old adage of setting out to kill the king. If you're going to do it, you'd better succeed, because if you don't, you're a goner. Apple is a pretty conservative outfit. If you agree with the premise, even if you give Apple a 50-50 chance of killing off all the record labels, risking the entire value of the iTS franchise on a 50-50 chance would be silly. No better than if Apple took the $15 billion cash in the bank, went to a casino, found a sports bet with 50-50 odds and slapped the cash down on the team with the best uniforms.
fibait - are you seeing
... the product mix for laptops (between MacBooks and MacBook Pros) shifting?
If consumers are growing more price-sensitive, my gut tells me there are going to be some portion of potential MacBook Pro purchases that get shifted to MacBooks.
Strikes me that some sizable percentage of MacBook Pro mid-range (15" model) purchases are "discretionary" rather than "necessary".
I can almost hear the wheels turning inside the head ...
"Gee, I'd like a 15" screen rather than a 13.3" screen, and I'd like a bit larger HD, and who knows, perhaps I'll have a use that benefits from that better graphics card .... OTOH .... I can buy a 500 GB external HD for a $150 (or less), I doubt seriously I really have any realistic use that will ever require the extra graphics card horsepower, and what the heck, I can live with the 13.3" monitor for an extra $1,000+."
Fascinating (and hopefully temporary) disconnect
MacBook mid-range:
2.4 Ghz CPU
2 GB RAM
$1,299
iMac mid-range:
2.4 Ghz CPU
1 GB RAM
$1,499
Will we see a quiet refresh of the iMac next Tuesday, including a bump from 1GB to 2GB of base RAM?
Another take on the same subject
The Real Message in Microsoft's Conciliatory Moves
By ERIC J. SAVITZ
ONE OF THE MOST OBVIOUS TAKEAWAYS from Microsoft's pending multibillion- dollar bid for Yahoo is that the always-connected world is a lot more complicated place for the boys from Redmond to navigate than the quaint old world of desktop office applications. Inherent in the bid is an admission that Microsoft (ticker: MSFT) has failed, despite billions of dollars of investment, to gain significant traction in online search and advertising. So now it's trying to buy its way in, targeting the only company that's had any substantial success competing with Google (GOOG) in search.
Last week, the news from the merger front was relatively subdued. True, Microsoft made noises about a potential proxy fight. But Yahoo! (YHOO) did not find a white knight, it did not outsource its search service to Google, and it did not cut a deal with News Corp. (Barron's is published by Dow Jones, a News Corp. (NWS) subsidiary).
But there was a significant development.
On Thursday morning, Microsoft held a conference call to announce what at first sounded like a pretty technical set of changes in how it does business with other software players. But anyone who wants to understand Microsoft's current thinking about the software business will want to dig through the legalese of its dense press release about the changes to discover what's really going on here.
In short, Microsoft is trying to convince some key people -- in particular, regulators, open-source software developers and Yahoo insiders -- that it can play nicely with others in a connected world. To get the message across, it unveiled four new principles for conducting business.
• Microsoft will ensure that it provides creators of other applications open connections to Office, Windows and other key products.
• The company will work to ensure that data can move from application to application and device to device. Among other things, Microsoft will allow third parties to design their own links to Word, Excel and Powerpoint, and to allow them to work with new data formats.
• It will enhance support for industry standards.
• And it will more openly engage customers and the software industry -- including open-source developers.
In line with this, the company is publishing the documentation for all application programming interfaces, or APIs -- the software hooks used to connect one computer program to another -- in its most widely used products. Last week, Microsoft published 30,000 pages of documentation about Windows client and server protocols, and similar info is coming for Office and other software.
Developers of plug-ins and software extensions will be able to access the documentation without taking a license or paying a royalty fee. Bill Gates & Co. also will allow the royalty-free use of the patent rights relating to those APIs. Microsoft also pledged to provide licenses for the use of its intellectual property "on reasonable and non-discriminatory terms, and at very low royalty rates."
In a nod to the Linux community, Microsoft promised not to sue open-source developers for development or non-commercial distribution of software that uses its protocols. And companies that want to sell commercial versions of such software will be able to obtain patent licenses from Microsoft.
Not least, Microsoft pledged to make its products more compatible with Linux and other open-source software. I'm not sure that you'd call what it's offering a peace treaty, but it is at least a form of detente in the battle for control of corporate IT departments.
Microsoft has been nudged to take the steps announced last week by legal harassment from the European Commission, which for years has been accusing the company of anti-competitive behavior. The EC contends that Microsoft hasn't been sufficiently forthcoming in providing links to its software for outside developers, and it says the company has illegally tied Windows to Internet Explorer. (The second issue isn't addressed by the new policies.)
The announcement's timing, in the thick of Microsoft's attempt to buy Yahoo, may at least partially be related to the need to get any deal past European regulators. And the EC isn't going to be snowed. In response to Microsoft's moves, it issued a statement expressing skepticism that the company will follow through on its promises.
The conventional wisdom on the Street has been that a Microsoft/Yahoo deal would face serious scrutiny, but ultimately would sail through, because the combination would still have a much smaller share of the search and related ad market than industry leader Google does. But the EC, unlike U.S. regulators, fears that Microsoft's dominance of the desktop could be leveraged with its acquisition of Yahoo, giving the company too much power to influence consumer behavior on the Web.
Finally, Microsoft's moves suggest that it is coming to grips with a world in which heterogeneity rules. You can't just be "a Microsoft shop" anymore. "As a direct byproduct of the Internet's ubiquity, virtually every system and product nowadays has become interconnected in some way to most everything else," Microsoft's chief software architect, Ray Ozzie, said on last week's conference call.
In the bubble years, when I worked at the Internet magazine called the Industry Standard, we did a lot of stories about companies that really understood the online world. Many had headlines like "Big Corp. Gets The Net." With its moves last week, Microsoft may be sending the none-too-subtle message to regulators, software developers and Yahoo engineers that Microsoft Gets the Net. At last.
Meanwhile, in Redmond ... isn't this important?
http://www.infoworld.com/article/08/02/25/09NF-microsoft-new-leaf_1.html
Macs 'n profits
Tex, FWIW, iPod revenue has already reached the tipping point, and now is in DECLINE. (That's right - "Negative" growth).
When 40% of your revenue stream goes from 100+% annual growth rate to ZERO or negative, the other 60% had better be experiencing ACCELERATING growth rates, and/or you'd better have new revenue streams coming to market, equal to or greater than the portion of the revenue stream that just hit the skids ... just to maintain the sort of p/e multiples accorded. Otherwise, as we're seeing, it's margin compression time.
sing, birdie, sing!
(I'm betting it's new MacBook Pros)
Sign of the times
Looks like the Tour of California has come and gone. Didn't tune in to even a second of the "race". Why bother? No way to know who deserved to win, and who didn't. Without a level playing field, it's pointless.
I see ASO still holds the line that Astana won't be permitted to line up for the Tour. And Levi Leipwhiner has launched a website to petition ASO to reverse that decision.
http://letleviride.com
Classic Levi interview video on the site ... poor Levi can't imagine any reason ASO might take this action other than it just doesn't want Bruyneel and his riders to keep winning every year. Heh. Next we know, he'll be whining about how the sport has lost most of its casual fan base and is relevant only to a tiny niche that consigns the sport to oblivion in the North America.
Classic.
More trouble for Clemens?
Rut row, Scooby Doo ... there's chatter around media circles that there are photographs of Clemens at the Canseco party.
http://www.nydailynews.com/sports/baseball/yankees/2008/02/22/2008-02-22_new_photographic_evidence_could_prove_da.html
Interesting how Clemens' joker lawyer Rusty Hardin doesn't have a bombastic comment in response to this one. If it's true, and the photo exists and is authenticated, then Roger is going down and he's going down hard. I would be more than a little nervous if I was Pettitte.
Hats off to the NY Daily News which has been a leader in investigating and reporting on doping in sports for years now.
Kind of funny, but wrong headline?
Instead of reading:
"Sheffield says former agent Boras is a 'bad person'" ...
Shouldn't the headline have been:
"Finally!: Sheffield becomes last person on planet earth to figure out Boras is an a$$hat"?
"he sees AAPL oversold"
Careful there, Tex. He didn't say AAPL was oversold. He said it was "attractively valued". Very different things.
Of course "attractively valued" based on cash flow depends on what you think cash flow will be. As you point out, that's the real question, and what that turns out to be in 2008 and 2009, is an awfully tough unknown to predict.
FWIW, iSupply is reporting that Apple has gone and warned the NAND producers that it is pessimistic on the economy and cutting back orders substantially. Is this true, or just bad info? iSupply isn't perfect, but they're reputable, and they have excellent sourcing in all electronics supply chains. I seriously doubt they've gotten this wrong. If iPod and/or iPhone sales (not to mention PC sales) show deceleration and slower growth rates, it's almost inevitable that there will be a p/e compression in the stock. That's pretty much the law of the market jungle.
Regardless of how things go in 2008 and 2009, I doubt we'll be bored, and even if the stock slips on a banana peel, there will always be new products to talk about instead.
iSupply warns of coming NAND meltdown
In an early warning sign of consumer weakness, Apple Inc. has reportedly slashed its 2008 NAND flash memory order forecast significantly and informed suppliers that its demand growth will slow in 2008 compared to 2007.
The move will have huge ramifications on the overall NAND market, says market research firm iSuppli, as the iPod maker was the world's third largest OEM buyer of NAND flash memory in 2007, with purchases of $1.2 billion, representing 13.1 percent of the global market. Much of Apple's order reduction is attributed to weakness in consumer spending spurred by macro-economic concerns including the U.S. subprime mortgage crisis.
"Unless the economy recovers vigorously later this year, last year’s DRAM market disaster could be repeated in NAND this year," said Nam Hyung Kim, director and chief analyst, memory, for iSuppli.
Before word of Apple's warning, iSuppli had predicted the company's NAND flash purchases would rise by 32.2 percent this year, helping drive significant market growth. The Cupertino-based company employs the solid-state memory in its iPhone, nearly all of its iPod models, and most recently began offering it as an option on the MacBook Air sub-notebook.
Despite the softness in demand, capital spending on NAND production will reportedly rise by more than 20 percent this year, ensuring easy availability of parts and causing prices to decrease. iSuppli said these factors are likely to compound problems for NAND suppliers who are already dealing with prices below their fully loaded costs.
"In light of these factors, NAND suppliers are likely to go into the red in the first quarter, and are not likely to recover in the second," Kim said.
I trust you ...
And I've noticed. That's why I said the blinded-by-loyalty gang, rather than all Yankee fans, b/c obviously those are two very different things.