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08:35 AAPL Apple introduces $999 iBook G4 (47.75 )
Computer includes 1.2 GHz Power PC G4 processor, available slot-load SuperDrive for burning DVDs, 12-inch display, and comes w/ iTunes, iPhoto, IMovie software.
Neye_eve I posted that from briefing.com for information only. I wasn't trying to get any idea across.
Congratulations to all longs. EOM
06:50 AAPL Apple Computer upped to Overweight from Neutral at JP Morgan (38.29 )
Firm says it is now increasingly apparent that there is substantially more upside left for investors; believes that if certain trends continue, even the upward revisions that they are making to their ests may prove conservative. They believe iPod leverage could expand considerably in 2005. Without a significantly better product from a competitor, or a repeal of the DMCA that protects Apple's tightly bundled iPod/iTunes model, Apple's current dominance of the mkt could last beyond next year. In addition, the iPod/Apple Store link may finally be driving computer mkt share. Firm raises rev/EPS ests for DecQ to $0.41/$2.89 bln from $0.29/$2.64 bln (consensus $0.28/$2.51 bln) and for CY05 to $1.35/$10.71 bln from $1.00/$9.77 bln.
06:56 AAPL Apple Computer: Color on Quarter (38.29 ) -- Update --
You guessed it! Analysts happy with Apple's FQ4 results announced last night with several houses raising their estimates and price targets. Of note, the upside was entirely in iPods as Mac sales suffered from continued shortages of the G5 chip from IBM. Apple managed to sell 2.02 mln iPods vs the general expectations of 1.3 mln. BofA was probably the closest with their estimate of 1.9 mln (upped from 1.2 mln on Oct 7)... Merrill Lynch out saying that the bad news was that all other products-PCs, peripherals, and software-were a bit light of firm's figures. The caveat was that the G5 chip supply from IBM was worse than already reigned in expectations, which affected the Power Mac and new iMac. Power Mac units of 156,000 was far below the roughly 200,000 units. Notebook shipments totaled 451,000, slightly below firm's 460,000 unit forecast. Software and peripherals were good but below their estimates. B/c they believe in the halo effect of iPod, the positive impact on Mac sales may still be coming. F2005 figure goes from $0.95 to $1.20. Tgt goes to $49 from $44...UBS out raising their tgt to $50 from $42 noting that while Mac unit sales of 836k fell short of firm's raised estimate, it seems demand was pushed into 1Q05 due to constraints, which should actually help earnings momentum from here... see 06:50 comment for JP Morgan upgrade
07:15 AAPL Apple Computer upped to Outperform from Peer Perform at Bear Stearns, tgt $52 (38.29 ) -- Update --
Bear Stearns upgrades AAPL to Outperform and establishes price tgt of $52 following strong results to reflect AAPL's superior execution, strong operating leverage from its high-growth music biz and multiple product cycles and potential for year-end seasonal strength. Firm believes that AAPL is benefiting from leadership in the music biz where it learned from its mistakes in PCs by partnering and opening to Windows, which broadens mkt reach. Further, its model is driving EPS leverage from superior execution and numerous product cycles. Firm raises EPS ests for FY05 and FY06 to $1.30 and $1.60 from $0.90 and $1.20, respectively.
18:10 After Hours Summary: AAPL up 6.9% in reaction to earnings report; strong iPod sales
17:55 AAPL Apple Computer on conference call (39.75 +1.46) -- Update --
Mgmt notes that iPod is still in its infancy, and likens the potential to that of how Sony shipped 300M walkman's in the 80's and 90's.
17:50 AAPL Apple Computer conference call summary-- Update --
Sales were driven by 450K portable mac shipments and strong iPod sales of 2M... Mac revenue was driven by 836K total shipments, lower than expected due to G5 availability... Sell through was greater in the quarter which sent inventories below the target level... HPQ sold 6% of the iPods, Co does not expect that to be a one time event... Co is expecting to see a marked increase in the Dec quarter of unit shipments... Retail segment saw sales of $4.6M per store (average of 81 stores open during the quarter). Co noted that foot traffic was higher at its retail stores... Mgmt noted that co had a strong back to school business... Gross margins of 27% were consistent with previous guidance and up y/y... Co states that iTunes has 70% market share in the US, and will from time to time hold sales for music... Believes they have 65% shares in Mp3 players... Looking to add more features to the iPod and not looking to contribute to a standard. Two factors that help gross margins going forward are the expanding direct business and the increasing portfolio of AAPL branded software. A negative factor that effects gross margins is the hardware end, which is very competitive. Although co later went on to mention that component pricing was falling, with memory and LCD's weaker than anticipated. This lowering of component pricing drove mgmt to push gross margin guidance higher in the coming quarter.
06:59 AAPL Apple shares look expensive, but does that matter? - WSJ column (38.29 )
The WSJ's "Ahead of the Tape" column discusses Apple, which is scheduled to announce results today. On a valuation basis, even after accounting for the more than $12 a share it has in cash, at $38.29 the stock looks rich compared with other computer makers. This is worrisome because Apple, with its stores and design-oriented products, is looking less like a technology co and more like a consumer-electronics concern. Consumer-electronics co's have lower profit margins and face fiercer competition. So their stocks tend to carry lower valuations than do technology shares. At the same time, when Apple bulls close their eyes, they see Christmas stockings laden with iPods. With rumors flying that Apple will launch a more-powerful version of the music player ahead of the holidays, that vision seems unlikely to be dispelled.
10-7
briefing.com Previewing Apple Computer (AAPL)
Updated: 12-Oct-04 15:00 ET
Regular readers of the Looking Ahead page will know that our "Playing Defense" series normally appears on Tuesday. However, in an attempt to preview what we believe will be some of the more closely-watched, and actively-traded, earnings reports, we are going to suspend that segment until after earnings season.
Today's preview piece focuses on Apple Computer, which reports its fiscal Q4 (Sep) results after the close on Wednesday. Before delving into what analysts are saying ahead of the report, let's first review the guidance provided by Apple when it reported fiscal Q3 earnings in July.
What Apple Said in July
* Looking ahead to the fourth quarter of fiscal 2004, we expect revenue of about $2.1 billion and earnings per diluted share of $0.16 to $0.17, including $.01 per diluted share in restructuring charges.
A Taste of What Analysts Are Saying Now
* Piper Jaffray (Oct. 11) - Based primarily on confidence related to iPod sales and greater supply/demand balance, we are slightly raising estimates for FY05 and FY06. Our price target is now $44, based on a multiple of 35x CY05E EPS (plus cash).
* Prudential (Oct. 11) - We believe that demand for the company’s new products remains strong. We would not be surprised to see the company post upside to both our $2.1B revenue estimate (up 4% sequentially and 22% year-over-year) and our $0.18 earnings estimate (in-line with Street consensus). At current levels, we believe that the shares are priced for perfection and vulnerable to anything short of a stellar performance. We would look for a much lower entry point before becoming more constructive on the shares.
* UBS (Oct. 8) - We expect a solid quarter from better notebook sales, strong debut of the new iMac and increased sales of iPod Minis. Our estimates are for sales of $2,186m and EPS of $0.19.
* Merrill Lynch (Oct. 7) - We recently increased our estimate to $0.19 on higher iPod sales. The iPod should beat our 1.1 million unit estimate though estimates above 1.5 might be pushing it. We look for positive guidance for the December quarter when all cylinders could be firing for Apple.
* Morgan Stanley (Oct. 6) - We raised our FQ4:04 revenue estimate by $90MM to $2.2B largely due to iPod and accessory strength and our EPS shifts to $0.20 from $0.18 on slightly lower gross margins (26.7% vs previous estimate of 27.0%). We increased our iPod unit estimate to 1.55MM from 1.2MM.
* First Albany (Oct. 6) - We expect 4Q:04 (Sept.) upside not only to our projections for 1.25B iPod units but expect EPS to beat our estimate of $0.18 by at least $0.01... we think further upside potential will become increasingly difficult to justify as competition (and comparisons) get tougher.
* Bear Stearns (Oct. 4) - we think Apple has the potential to exceed its guidance of $0.17-$0.18 in EPS on $2.1 billion in revenues... While a key swing factor to Apple’s performance is the supply of G5 chips from IBM for Apple’s new iMac and Power Mac lines, our sense is that availability was sufficient to meet what Apple had budgeted in its guidance. Though investors may be optimistic about Apple's near-term outlook and prospects as a play on seasonal trends, we think most of its catalysts are reflected in the valuation, are concerned about slowing momentum beyond the holiday period – particularly in the face of decelerating year-over-year EPS growth rates – and don’t see compelling valuation upside.
General Impressions
Preview notes are generally optimistic, with special attention to the growing success of the iPod and the company's new G-5 iMacs. Seems to be a sense, too, that Apple is an opportune seasonal play entering calendar Q4 when spending on consumer electronics revs up for the holidays. An underlying question is whether that consideration has already been discounted in Apple's stock, which is up 80% year-to-date and 18.1% since the start of calendar Q3.
In many cases, analysts have either revised EPS and/or revenue estimates upward or have acknowledged that there is good potential for Apple to surpass their estimates when the company reports its Q4 (Sep) results. In turn, iPod unit estimates have also been on the rise, but we would note that the range of estimates remains wide (roughly 1.0-1.9 mln).
Given the improved expectations, an in-line report is likely to be regarded as a disappointment, especially since Apple has made it a recent habit (see table below) to surpass both top- and bottom-line estimates. According to Reuters Estimates, the consensus EPS and revenue numbers are $0.18 and $2.149 bln, respectively; for fiscal Q1 (Dec), they are $0.28 and $2.516 bln.
Since hitting a new 52-wk high of $40.93 on Oct. 7, shares of AAPL are down 6.1%. Weakness ahead of what most believe will be a solid earnings report can be interpreted to mean that traders are either (a) fretting that AAPL will be unable to live up to such high expectations (b) taking profits now as they recognize material upside will be harder to come by or (c) are anticipating a sell-the-news response and getting out ahead of time.
To reverse the recent trend in meaningful fashion then, we suspect Apple will have to beat the consensus EPS estimate of $0.18 by at least $0.02, report better than expected top-line results, with unquestioned strength in iPod sales, and provide upbeat guidance for the pivotal December quarter. The table below offers a snapshot of how the stock has traded just before, and after, earnings reports in the past six quarters. The second table, meanwhile, offers a look at some of the company's related (and publicly-traded) competitors, suppliers, vendors, etc.
Period Consensus EPS Actual EPS Consensus Revenue Actual Revenue 1 Day before Report Day of Report 1 Day after Report 2 Days after Report
3Q04 $0.15 $0.17 $1.944 bln $2.014 bln +0.3% +1.2% +11.3% +8.9%
2Q04 $0.10 $0.14 $1.813 bln $1.909 bln -4.0% -1.1% +10.0% +9.5%
1Q04 $0.14 $0.16 $1.926 bln $2.006 bln +1.6% +0.3% -5.6% -6.1%
4Q03 $0.07 $0.08 $1.649 bln $1.715 bln +0.8% +1.1% -6.3% -8.3%
3Q03 $0.03 $0.05 $1.491 bln $1.545 bln -1.5% +1.3% +5.2% +5.0%
2Q03 $0.02 $0.04 $1.464 bln $1.475 bln -1.4% -1.1% -0.9% -0.8%
Computers
DELL, HPQ, GTW, IBM, SYNA
Processors
IBM, MOT, BRCM, HIT, NVDA, ATYT, AGR.a
iPod/iTunes
ROXI, RNWK, LOUD, YHOO, MSFT, DELL
09:12 Apple (AAPL) has 82% of of U.S. retail hard drive-based digital music player market as of August, up from 64% yr ago, NPD Group says...
07:02 AAPL Apple Computer: Teens rave for iPods -- NY Post (38.59 ) -- Update --
NY Post highlights Piper Jaffray's survey, which says that after clothes, money and a car, an iPod is what US teenagers want most this holiday season. A survey of 600 high school students by analyst Gene Munster found Apple Computer's digital player No. 4 on their wish list. And the iPod wasn't even among the items Munster suggested, the kids wrote it in. "It was really surprising," Munster said in an interview. "They didn't say music player. They said iPod. Teens want to be cool, they want their music, and the iPod is a cool way for them to get their music." Also see 05:51 story on Virgin Group introduction of a competing product.
05:51 AAPL Apple Computer: Virgin to Unveil Portable Music Player -- AP (38.59 )
The consumer electronics arm of the Virgin Group is introducing a new $249, 5-gigabyte hard-disk portable music player (1 gig more than the iPod), bringing a powerful brand name in music to the increasingly crowded product space. Virgin Electronics hopes its slim Virgin Player, which debuts Tuesday and is smaller than a deck of cards, will rise as a lead competitor to Apple Computer Inc.'s wildly popular iPod players. Apple dominates the portable player market that is filled also with choices from Rio Audio, Sony Corp., Samsung Electronics, and Creative Labs Inc., among others. But few of the rivals have introduced a direct challenge to the iPod Mini model, which has a 4-gigabyte capacity. And that's the segment San Jose-based Virgin Electronics is pursuing -- people who may want to tote about 1,000 songs in their pocketable devices but don't necessarily need the whopping 20-gigabyte-or-more capacity of audio players offered by Apple, Sony, Samsung and others. Unlike the iPod, the Virgin Player includes an FM tuner. But it has another notable difference: while the Virgin Player is fully integrated with its sister online music store, Virgin Digital, it also plays tunes purchased from other online music services that use the Windows Media Audio or MP3 formats. Virgin also sides with the set of music providers, such as Napster (ROXI) and RealNetworks' (RNWK) Rhapsody, which believe online subscription services will one day become more lucrative than the basic pay-per-download model that Apple helped pioneer.
07:19 AAPL Barron's column discusses Apple Computer's valuations negatively (39.06 )
According to the Barron's article, investors have found plenty of reasons to favor Apple. The iPod phenomenon and Apple's related iTunes music-download service are certainly impressive. Some 3.7 mln iPods were probably sold in the FY that ended Sept. 30, says Merrill Lynch. Even with the parabolic growth in iPod and iTunes sales, earnings from these businesses in the latest year should amount to just under 30% of earnings, with iTunes only a modest contributor to the bottom line at all, according to Merrill. In F05, the music units should account for about a 1/3of projected earnings. Music, certainly, should persist in becoming an ever-larger part of Apple, but more-distant forecasts are blurred by unknowable competitive and technological shifts. The rest of Apple's income comes from Mac and PowerBook sales and interest on Apple's massive cash hoard. Subtracting Apple's cash from the share price suggests the market values the business at about $27 a share. Lance Ettus, an analyst at research firm Libertas International, has issued a recommendation to sell Apple shares short, pegging the stock's sum-of-the-parts value in the low $20s. On a P/E basis, he says a generous valuation gets you to $30 or so.
Briefing.com on KONG China small cap
Thoughts on Small Cap Investing.
Updated as opportunities present themselves. Archive
Updated: 08-Oct-04 09:14 ET
Small Cap Trading: Changing of the China Guard
[BRIEFING.COM -- Robert J. Reid] Buy interest in Chinese Internet stocks had seemingly come and gone after triple-digit moves attracted sell-side research and the stocks eventually breaking down following a string of mishaps (e.g., China Mobile crack-down on wireless spam). However, after watching names like SINA appreciate more than 800% in less than a year, traders/investors have come back for a new round of Asian technololgy stocks. This time, the focus seems to be on companies that aren't coming in with a lot of baggage -- recent initial public offerings. Recent volume surge and price advance in this group leads us to highlight some of the names that have been finding buy interest. The purpose here is to present the stories of a few select names, so that our readers are familar with the stocks should the recent rally continue.
* * *
KongZhong (KONG)
* The co is a provider of 2.5G wireless interactive entertainment (games, pictures, karaoke, electronic books), media (news, sports etc.) and community services (chat, message boards) to customers of China Mobile, which has the largest mobile subscriber base in the world.
* It posted sales of $7.8 mln in 2003, but posted $7.1 mln just in Q1 this year.
* The co is profitable with healthy net margins.
* A possible concern is that on Aug 18, China Mobile found one of KongZhong's interactive voice response services contained "inappropriate content", and suspended approval of new applications for new products and services on all platforms, as well as all joint promotions, until year's end.
* However, keep in mind that CHINA, SINA, SOHU all have received sanctions.
* KONG is up 40% since the announcement. Key will be to get above $10 offering price.
New China ETF from Barclays FXI
From the prospectus
Description of the FTSE/Xinhua China 25 Index
The Index is designed to represent the performance of the largest companies in the China equity market that are available to international investors. The Index consists of 25 of the largest and most liquid Chinese companies. Securities in the Index are weighted based on the total market value of their shares, so that securities with higher total market values generally have a higher representation in the Index. Each security in the Index is a current constituent of the FTSE All-World Index. All but one of the securities in the Index trades on the Hong Kong Stock Exchange (the single security that does not trade on the Hong Kong Stock Exchange is expected to be deleted from the Index in the fourth quarter of 2004). As of August 31, 2004, the Index’s top three holdings were Bank of China Hong Kong (Holdings) Ltd., Petrochina Co. Ltd. and China Mobile and the Index’s top three industries were resources (e.g., coal & oil), non-cyclical services (e.g., telecommunications) and financials (e.g., bank and insurance).
Apple Is Rotten (Motley Fool)
Apple fans don't want to hear it. Analysts don't want to say it. But here it is: Apple's ready for a mighty big fall. The Borg-like fidelity of Mac zealots, coupled with misplaced enthusiasm for the firm's nifty gadgets and a giant dose of media hype, has conspired to push the stock far beyond a rational valuation.
By Seth Jayson (TMF Bent)
October 7, 2004
This week we're dueling over the prospects of one of our most popular stocks here at Fool.com: Apple Computer. Loved by many, hated by just as many, Apple separates Fool from Fool frequently in our discussion boards. We take the battle to the front page today with Fool contributor and Mac aficionado Tim Beyers defending the iEmpire while Fool Seth Jayson argues that Apple is rotten to the core. After you've read both sides, vote on which one has won your heart.
Ladies and gentlemen, the Apple (Nasdaq: AAPL) is rotten. OK, let's qualify that. After all, this is to be a discussion -- for the most part -- about Apple the company, not Apple technology. Apple's stock is overripe. Stinking. Mealy, full of worms, and wholly unsuitable for public consumption. Why? Shortsighted enthusiasm.
No doubt about it, Apple the brand is hot. Over the past couple of years, the stock has outperformed the S&P 500 by a huge margin. There's a one-word reason: iPod. The world's best-known digital-music doodad has juiced Apple's sales over the past several quarters and made the company the latest shoeshine-boy stock. What's a shoeshine-boy stock? Something like Krispy Kreme (NYSE: KKD) before it found out that reality bites. It's the popular company, the one that gets free press coverage with every new retail outlet, the stock everyone's telling you to buy. And as Lynch and others have pointed out, when the wingtip-buffing ragamuffins recommend an equity, that's a pretty sure sign that the hot streak will be coming to an end.
But the shoeshine-boy syndrome isn't the only symptom of Apple's upcoming malaise. There are others, clearly visible in the financials. Why no one seems to notice the obvious is another story, and, conveniently enough, that's the one we'll explore first.
Think different, like me!
"Think different?" I've always found this key slogan in Apple's marketing to be troubling, and not just because it shows that CEO Steve Jobs needs to brush up on his fifth-grade grammar. (Hey Stev-o, buy yourself an adverb!) It's creepy and ironic because Mac fans -- especially the ones who write me -- are about as freethinking as the lovely ladies of Stepford. They're like a pack of Moonies telling a congregation of Snakehandlers, "You're brainwashed. Join us to free your mind."
Americans have always preferred their rebellion in commercialized and socially acceptable packages -- witness GM's Hummer H2, Harley Davidson motorcycles, or the Mullet -- but wake up, people! Leaving a $300 billion monopoly to support a $15 billion one does not constitute intellectual daring.
In fact, it simply means you've got less consumer freedom, not more. Think I'm making this up? Ha! Count the PC vs. Mac software packages at your neighborhood Best Buy. Try using your iPod with competing software. Try using any non-Apple MP3 player with iTunes. This is more than a question of tech theology: Mac's legendary insularity has always been a huge anchor on growth.
Apple's iTunes and iPod are the biggest things in digital music today, and Jobs and Co. are determined to screw it up. Why? They think different, all right. By refusing to play nicely with outfits such as RealNetworks (Nasdaq: RNWK), Roxio (Nasdaq: ROXI), and Loudeye (Nasdaq: LOUD), Apple's not only passing up lucrative licensing opportunities but also missing the chance to rocket to the front of the digital music world forever.
Taking measured steps toward dominating a market is how Microsoft (Nasdaq: MSFT) came to be 20 times bigger than Apple. As things stand, Apple's congenital narrow-mindedness makes it easy pickings for the dozens of dit-music firms out there who want to take a bite out of Cupertino. Just because none of them have come up with anything as nifty as the iPod doesn't mean they won't. Low-margin iTunes is already under threat.
But surely Apple's management realizes this fatal error, right? Don't count on it.
Hey, Emperor! Nice duds!
The end result of the overdone enthusiasm for Apple is a major lack of accountability. I've worked with Macs for well more than a decade, and though they've gotten more stylish, they haven't necessarily gotten any better, especially compared with the competition.
Consider the photo and design audience. For years Apple has been milking its reputation as the computer of choice for this constituency. There was a time when Macs had a lead that looked insurmountable. That's no longer the case.
Every year I get to play with brand new Mac gear -- direct from Apple -- as the "tech guy" at a well-known photojournalism workshop. This year, as usual, I wasted entire days trying to coax the new Mac OS to make nice with a variety of printers. Plug and play? Try plug and pray. Color fidelity, WYSWYG? Not with top-of-the-line Power Macs and cinema displays, I guess. This year, incredibly, I ended up relying on a no-name Windows laptop purchased at Wal-Mart's Sam's Club to do the heavy lifting.
I'm not surprised, because I've seen this for years. But here's the odd thing: Even though the diehard Mac fans (everyone there) were cursing the quality of the machines and the OS, they remain Mac fans. They've made a lifestyle choice, and they're sticking with it. But their sheepish acceptance of the frustrating state of affairs is another drag on Mac growth. There's no need to improve when all you hear is how great you already are.
Stockholders should realize that when you're fighting for turf on the open market, style goes only so far. To judge by the public's lukewarm response to Mac computers over the past few years, Apple's not so efficient with the proselytizing. For 2002 and 2003, total Macintosh unit sales have been either flat or negative. So far this year, they're doing better, up 10%. Sound good? Dell's (Nasdaq: DELL) unit growth is 50% better, at 15%. And industry observers have recently started to wonder whether the late launch of the new iMac and limited availability of the new PowerMacs will rein in Apple's slimmer scale-up. Outside the iPod, Mac is definitely not a quick grower, so what's up with the stock price?
Two-bit Apple
Apple is one of those companies where investors are enthusiasts, and vice-versa. Sometimes, that's OK. But in this case, the result is a self-deluding, self-amplifying feedback loop. Earlier this year, there was reason to cheer the iPod's contribution to the top line. But these days, it's nearly impossible to hear through noisy enthusiasm.
The cacophonous refrain these days is the claim -- so far unsubstantiated -- that the iPod will increase demand for the company's computers. Over the past few days, the Macintosh media have repeated this contention, pointing to a single analyst's pie-in-the-sky wish for an increase in Macintosh market share. Here's what was actually written: A .5% increase in market share is "not out of the question."
Not out of the question?
Listen, a visit to my back yard from people-probing Martians is also not out of the question, but that doesn't mean you should bet your investing dollars on the likelihood. How about looking at the numbers instead? Yes, let's.
To start with the obvious, Apple's price to earnings ratio (P/E), we find a 73. Yikes! The forward P/E, based on estimates, clocks in at 43. Though it is a mistake to judge a company only by its P/E ratio, the fact that Apple's is more than twice its competitors' demands some explaining.
Hey, Apple is growing, right? So, when we account for Apple's likely rate of expansion, is the stock's price more solid ground? Hardly. When you compare the P/E to expected growth, through the PEG ratio, Apple's stock looks even crazier. Apple's PEG is an insane 3.36.
Yes, the PEG is a bit old-school, but it's still a good rule of thumb. When paying up for growth, you should start getting skeptical when the P/E exceeds the rate of growth. When they're in balance, the PEG sits around 1. You could argue that Apple's explosive earnings increase over the past year has put this metric out of whack, but even if you don't believe in absolutes, taking a look at Apple's peers provides a good dose of reality. Dell's PEG is 1.37. Hewlett-Packard's, 1.45. Even Google's 2.38 is an order of magnitude lower.
OK, we're still talking about valuation shorthand here. Certainly there must be some other reason that people are paying such a premium for Apple. Could it be superior margins? Nope, Apple's operating margins of 3% are pathetic by industry standards. Those are the kind of margins you see in cut-rate retail businesses -- 2% lower than Wal-Mart's! What that means is that Apple is going to have a tough time continuing to club earnings out of the park, even if it can scare up big sales gains. To see what a profitable tech firm should be achieving, look at Dell's 8.5% operating margins, or Microsoft's 24%.
C'mon, there must be something! How about major products in development? Nothing so far. In fact, one of the few analysts brave enough to put a "hold" on Apple recently was practically begging the firm to come up with anything new. A flash-RAM iPod, a set-top box, a media PC, anything. When the analysts start pleading for a reason to stay bullish on the Street's favorite pet rock, it's time for savvy shareholders to look for the exits.
The final word
Friends -- and by friends, I mean those of you out there furiously typing angry defenses of Apple -- open your eyes. Enthusiasm for a computer, pocket stereo, or cleverly marketed lifestyle choice is no reason for an investment. Apple's done well over the past two years, but the stock is now priced beyond perfection. For your $40 a stub, you should be getting an unstoppable business with huge growth potential. Instead, you're getting a slowing, sub-par nerd-niche operator with a shiny surface. To add insult to injury, 47% of the stockholders earnings so far this year are wiped when you consider the impact of stock options. Where's the payback for shareholders?
They wax and polish the mealy apples at the supermarket in order to fool you into buying them. Don't fall for the same trick when you're buying stocks.
If you like real growth companies, see what David Gardner is digging up in his new Rule Breakers newsletter. A trial is free.
At the time of publication, Seth Jayson had no positions in companies mentioned. View his stock holdings and Fool profile here. Fool rules are here.
07:40 AAPL Apple Computer iPod estimates raised dramatically at BofA (40.64 )
Banc of America says that further field checks indicate that their iPod ests are too low. Consequently, they are raising iPod unit ests to 1.9 mln from 1.2 mln units in the Sept qtr, to 2.7 mln from 1.8 mln in the Dec qtr, and to 9.3 mln from 6.8 mln units units in FY05. With the changes to iPod ests (mostly mini), and some additional G&A, firm raises their EPS ests higher as well: Sept to $0.21 from $0.19, Dec to $0.34 from $0.31, and FY05 to $1.14 from $1.06 (all above consensus of $0.18, $0.28, and $0.94).
SI fine here. EOM
06:31 AAPL Apple Computer tgt raised to $44 from $39 at Merrill Lynch (38.75 )
Merrill Lynch out positive on Apple raising price tgt to $44 from $39 and increasing their F2005 estimates from $0.90/$9.53 bln to $0.95/$9.79 bln. Firm believes the iPod market has been underestimated and that Apple will gain small increments of PC share (half a point is about $1 bln in sales) thanks to the halo effect from iPod, retail store support, the new iMac product cycle, better supply of G5 chips from IBM, and Apple's lack of viruses. Believes Apple could earn $1.83 per share in 2007 and $2.26 per share in 2008 in a strong case scenario. Maintain Buy.
Here in Maine there is a simple solution. On the trunk lid a decal of a yellow ribbon. On the bumper a sticker "Regime change begins at home."
The election is very spirited here because Maine casts it's electoral vote by district. A candidate may lose the state and still win one vote. The northern district is more conservative and Bush is given a good chance there.
Thank you for your attention
Another advantage to open source.
07:40 Rebellious customers may cut into profits at big software firms - WSJ
The WSJ reports corporate and government software customers are rebelling against the rising annual "maintenance" fees that co's such as PeopleSoft, Oracle and SAP charge for updates, bug fixes and access to "help desk" technicians to keep systems running. The revolt has gathered strength as the software co's, facing flat or falling sales of new software, have sought to derive more rev from existing customers. They often impose steep price increases for maintenance at the expiration of initial, often heavily discounted, service agreements. These maintenance contracts carry operating profit margins of 70% or more. Those juicy margins give outside support providers the opportunity to undercut the major vendors and gain a share of the software industry's most profitable rev stream. That trend ultimately could undermine not only the rationale for the proposed takeover of PeopleSoft, but also hurt Oracle's own business, which increasingly is reliant on the approximately $4.5 bln the co collects in annual maintenance payments. One outside support provider is TomorrowNow, which touts its service as a "major medical" policy, providing critical fixes and updates and a responsive help desk, but sparing customers the hassles of installing a constant stream of more minor changes. TomorrowNow avoids possible legal complications by exploiting a clause in PeopleSoft's software licenses that allows outside consultants to modify customers' code. The co claims to have snagged more than 70 customers. While that is a tiny fraction of PeopleSoft's more than 4,500 users, TomorrowNow says it has won business from such major accounts as Adolph Coors, Safeway and Lockheed Martin. According to the article, some TomorrowNow price quotes are only 30% of what PeopleSoft is charging.
Are you sure you didn't misunderstand that?
From the link dilleet posted.
dilleet- CLIX & OnyX - Very nice. Thanks.
Some people have an inner moral compass.
The more I read about Theresa the more I am amazed at her unerring instinct for making decisions for the good of others, while at the same time keeping her moral and emotional balance so she can continue to do so.
If this sounds like the sentimental rambling of an old man, I suppose that's because it is. At my age I didn't expect to find a new hero. Uh, heroine.
OT: Nice article on Theresa Kerry in New Yorker today.
Dump the husbands. Run the wives.
Yup. Replied. Resend?
Lango - From their Picaso requirements:
# Microsoft® Windows 98, Microsoft® Windows Me, Microsoft® Windows 2000, or Microsoft® Windows XP.
From Google:
http://www.google.com/press/pressrel/picasa.html
Google Acquires Picasa
MOUNTAIN VIEW, Calif. - July 13, 2004 - Google Inc. today announced it acquired Picasa, Inc., a Pasadena, Calif.-based digital photo management company. Financial terms of the deal were not disclosed.
"Picasa enables users to easily manage and share digital photographs, and its technologies complement Google's ongoing mission to organize the world's information and make it universally accessible and useful," said Jonathan Rosenberg, vice president, Product Management. "Picasa is an innovator in the field of digital photography, and we're excited that the Picasa team is joining Google."
Picasa was founded in October 2001. In May 2004, Picasa announced a technology partnership with Google's Blogger service to make publishing digital photos with Blogger faster and easier. Further product integration plans have not been announced. Picasa users will not experience any interruption in service.
14:24 QCOM Qualcomm: TWP trims revenue est following co's guidance
Thomas Weisel comments that revised guidance by segment shows some pricing pressure. For SepQ: (1) Chipsets -- MSM chip units at 38-39mn units v. prior expectations of 36-38mn, (2) Royalties -- 46mn CDMA phone shipments v. prior expectations of 44mn; CDMA phone ASPs at $210 v. prior expectations of $206. Given that unit guidance is going up while overall topline guidance is moderating, it appears the issue is chip ASPs/royalty rates. In light of the new revenue range guidance, firm is revising its SepQ estimate to $1.41bn from $1.43bn. Given that the stock trades at 05E PE/PS of 32.6/10.5 v. peers at 18.5/3.2, firm believes many of the uncertainties QCOM faces are largely not priced in.
10:45 QCOM QualComm a Buy on accounting weakness -- AmTech Research
AmTech Research says the market has reacted too negatively to QCOM's announcement that they may stop estimating royalties. The accounting change may introduce volatility which investors may not like, but firm says the trend for royalties is upward and would provide more upside surprises than downside in the next year or two as CDMA based technologies outpace the market, adding that it could improve the quality of earnings. The firm notes there have been many critics of QCOM's estimation policy, and that going forward, most investors would rather have "real but volatile" numbers as opposed to "smoothed and controversial."
09:17 QCOM Qualcomm: details on Accounting Review...
From briefing.com
QCOM states that royalties from licensees for which estimates could be reasonably made have, since 1998, been accrued in the qtr when earned and adjusted in the subsequent qtr for the actual royalties reported. QCOM has previously noted in its financial reports filed with the SEC that, as the CDMA market further develops and diversifies, its ability to forecast for many or all of its licensees may decrease, and if so, the Co may no longer be able to estimate reliably and may change its accounting policy to record royalties as revenue when they are reported by licensees. QCOM is currently evaluating its ability to estimate reliably the royalty accrual. If co in its ongoing review concludes it does not have this ability for some or all licensees, QCOM will cease accruing royalty amounts for these licensees and record royalty revenues as they are reported. In particular, were the Co to determine that a change in accounting method is warranted effective for the Q4 of 2004 and applied to all licensees for whom estimated royalties are accrued, the change would result in a one-time reduction of the royalty revenues by approx $298 mln in Q4, representing amounts the Co expected to accrue absent an accounting change. Reported pretax income would be reduced by approx $298 mln. However, this change would have no effect on operating cash flow in the qtr, nor would it impact the underlying economics of the Company's licensing business...
Day trading QCOM and GE. Going flat at the close. It's like a Woody Hays offense, and just about as exciting, but $200-$300 a day adds up over time, at least for us old folks. Couldn't do it without QCharts, by the way, and thank you for that recommendation.
08:22 AAPL Apple Computer target raised to $42 at UBS (35.49 ) -- Update --
After meeting with the CFO and completing a series of checks, UBS raises estimates on Apple. The firm's FY05 est goes to $0.95 from $0.85 and FY06 to $1.15 from $1.05. Even with CPU shortages, the firm believes the iPod multiplier effect is helping Mac sales. The firm raises its target to $42 from $37.
Bigger that tobacco? Asbestos? Exon Valdez?
Sounds to me like someone is off their meds.
08:48 QCOM Qualcomm: Prudential reiterates Overweight rating; raises tgt to $44 from $39 (39.00 )
Prudential reiterates Overweight rating on QUALCOMM (QCOM), raises tgt to $44 from $39. Firm states that recent channel checks and positive industry views from Nokia and TI have given firm renewed confidence in their outlook for the current quarter and remain comfortable with their above-consensus estimates of $1.45 bln in sales and $0.30 in EPS. Firm believes early consumer uptake on WCDMA devices has been positive as well. Firm believes Cingular may be close to announcing its WCDMA upgrade plans- serving to further broaden QCOM's addressable market in N. America and feels QCOM is uniquely positioned to benefit from the growth in demand for wireless devices and from the upgrade of existing networks to 3G standards over the coming years.
dileet-Rule or ruin. Worthy of Microsoft.
Ellison will buy them or bury them. Ruthless. Unprincipled. Deep pockets. A lethal combination.
Bootz-All part of monitizing internet access.
More and more the site gets their money up front by resitricting sccess to paid subsctibers, or by requiring "registration" and selling the information they get. Free and open access is dying. It's that simple.
Blue, you can do bettter than that.
SPACE ALIEN RATES GEORGE W. BUSH: 'HE STINKS!'
WASHINGTON -- The mysterious space alien whose endorsement of George W. Bush helped him win the election has issued a candid assessment of Bush's first 150 days in office -- and he gives our new commander in chief a humiliating D-minus!
BUSH'S SECRET PLAN TO INVADE THE MOON--And Make it the 51st State!
JUST months after liberating Iraq, President George W. Bush plans to bring freedom to another far-flung region, the moon.
Would you give it a try? ):
I really hope it is, but I've wasted a lot of bandwidth downloading various alternatives to MSO. File compatibility has always been the killer. I simply must be able to exchange Word and Excel documents with both Mac and Windows users.