Search This Blog

Monday, September 23, 2013

$aapl to have a great Q1

- 9 million iPhones sold this weekend. 

- margins boost from production and material costs. 

- the buyback already reflecting a 7% beat on expected eps. (The above points may accelerate the beat, assuming estimates don't change.)

Estimates are going to be rising. AAPL belongs in the mid-500s. 

Thursday, September 19, 2013

Market Thought... Fed's helping hand

I was one of the many who got surprised on Wednesday. Not so much for the lack of withdrawing QE, but more for the lack of acknowledging the improvements the data is showing. 

The employment numbers have been choppy, with respect to estimates, but have been growing at a healthy clip. Jobless Claims have been really good.

The unemployment rate is at 7.3%. Year-over-year, that is a pretty nice decline. In fact, if looking at the rate of decline, an optimistic estimate would suggest a 6.5% unemployment in about 4 months. 

Throwing in a few wild card economic shocks, could push the estimates further out. The thing is, the economy is not dishing out these negative wild cards. In fact, the more data comes in the better the economy looks. To name a few:

1. Existing home sales at 6 yr highs.

2. Jobless claims are already a pre-recession levels.

3. Philly Fed outlook spiked 22%!

The Fed said they are letting the data guide them, and their key data point is the unemployment number. But their lack of adjustment-in-preparing for withdrawals suggest they are ignoring their target. 

If the fed gives the markets 4-6 months of 'easy', then the market trading dynamic should be to keep trading at a premium multiple. The market (sp500) should maintain a Trailing PE near 17.

Assuming, recent estimates hold, the SP500 should be near 1720 by the end of the year.

The SP500 is already above the 1730. As such, I'm cautious.

A short term trade is setting up so that the market eases from its really over bought condition. Longer-term, who knows what the era of tightening will do, but there is structure the technicians can work with.

Wednesday, September 18, 2013

Is the Fed on crack?

They must be looking at some other US economic data. Or throwing the international community some time to get their houses in order. 

- Jobless claims are trending down. Way down. Lower than 2007.

- Employment rate is down. Not to their target, but lower with the trend in the Fed's favor. (Unless the Fed governors are looking at the number of applicants who withdrew from searching for a job to sway their opinion.)

The employment trend simply don't justify 2015 tightening.  If the job trends continues, we will be at 6.5% in about 6 months. 

Surprised by the dovish tone. 

Tuesday, September 17, 2013

$aapl - misdirection and secrecy

While all the leaks focused in superficial aspects of the iPhone 5c and 5s, the most critical innovative features were very much kept quiet. 

1. iOS 7 was very much kept quiet.

2. A7, 64bits, and M7 were very much kept quiet. (The capability of the A7, M7, iBeacon and Touch ID have mid-to-long term consequences that few mainstream press is chatting about.)

Management is still firmly in control of the secrets they need to keep.

$msft being attacked, hard

1. Tablets - accelerating the decline of the PC (aka WinTel era), jeopardizing Windows profits. 

2. iWork is now free for new iOS device purchases. iWork can now be accessed through mobile and PC (via web browser). With iOS gaining device share, and more importantly enterprise acceptance, this jeopardizes Office profits. 

3. IBM announcing another $1billion backing of Linux servers. IBM's efforts were effective in 2000, and should continue to be. Jeopardizing Windows server business. 

(Curious to the effect of the gaming console business with the 64bit push in mobile. Still too early to list as a threat just yet.)

Three large profit centers of Microsoft are being attacked pretty hard, at the same time. 

Saturday, September 14, 2013

$aapl stochastic

Apple is getting oversold. Its about to get oversold enough for a bounce.

Short-story, the current pattern is to buy AAPL when the weekly Slow Stochastic is near or slightly below 20.

The long-story, last year's massive decline obviously created a new trading pattern. The wash out was witness via the monthly chart approaching very over-sold conditions via the Slow Stoch.

Upon achieving this oversold condition, the stock fundamentally changed.

1. The massive buyback was announced and being executed.

2. The street was re-conditioned via their expectations (to tone down the out-of-whack numbers).

3. It became acceptable to buy AAPL again. Numerous big name players entered the game.

4. Last quarter's report suggested Apple management is in control of the street's expectations again.

There is always the possibility that the stock breaks down, and re-enters the low 400 trading range. However, due to the above, that scenario seems unlikely. We already know management is not hesitating purchasing the stock below 420. And we also know big-boy investors are also not hesitating to purchase in the low 400s. (There is also a new found realization that Microsoft not being a secure of an investment as some big-funds would hope. There is a lot of concern via the lack of mobile penetration, still loosing money from online services and most importantly the attack on Windows and Office.  These funds are going to have to migrate these funds or get caught in a declining revenue/earnings story. These funds will have to go somewhere.)

Near-term catalysts remain:

1. China Mobile deal. (The iphone is now technically capable and approved. We just need confirmation.)

2. Actively improving its online services. As the 'services-perception' changes to a positive one, the stock should also reflect the sentiment.)

3. Good-old financial out performance. Continue to under-promise, over-deliver. (Combined with the reduction of shares, from the buyback, the stock can accelerated to the upside.)

Also, many analysts are ignoring the affects on margins w/the current iPhone strategy. New, more inexpensive process for the 5C and already established process for the 5S. In Apple's 1st quarter, margins may very well approach 40% again. Handedly beating the street's expectations.

Near-term negative catalysts:

1. Ignorant media looking for page views. Negative chatter will bring down the stocks.

2. Initial sales do not meet expectations

Thursday, September 12, 2013

$tsla hasn't been oversold in 8 months

Thought that was an interesting stat. 

It's had it's dips, but that a true oversold condition. 

Wednesday, September 11, 2013

$aapl looks to have a good Q1on deck

Current eps estimate for Q1 is for 13.45. If margins increase due to the 5c, a higher eps should be seen. Leading to a better stock performance into the end of the calendar year.

If we assume Apple produces flat revenue growth (which is conservative given the new product lines and expected iPad refresh), with only a 1.4% increase in margins from Q12013, Apple may produce a 7% beat. (Thanks to the buy back.)

Tuesday, September 10, 2013

$aapl margins will be interesting

With the new iphone releases, margins should expand. Curious by how much.

Monday, September 9, 2013

$fb $goog $aapl = mobile ad kings

Think FB and GOOG have a lock on mobile ads? 

With iRadio, leveraging an install base of over 500M high-quality upper-middle class desirable ad targets, Apple will solidify its status as a mobile ad play. 

Just an fyi: iRadio has gotten positive chatter.  It's apparently well executed. And Apple has already lined up big name brands as inventory. (I guess they like the target audience.)

Friday, September 6, 2013

$aapl mobile services in top 5

Topped ranked mobile properties and apps per ComScore. 

I am still baffled by the perception of weak services. Especially since Apple's services are on one OS.

With the release of iOS 7, improvements to Maps and positive chatter on iRadio the perception should change.

Tuesday, September 3, 2013

Trying to be like $aapl, instead of playing strengths

AAPL: vertically integrated. 

Best of breed hardware, and leading online services. (Not sure why Xaiomi gets away with calling their App Store online services, and Apple can not.) 

Slowly integrate key services into its ecosystem. (Which seemingly goes unnoticed or unappreciated by users and investors.)

Building out services targeted to their ecosystem. (ie iRadio) Although, I would love to see them go horizontal with iWork, maps and iRadio. (Those that ads can be placed or software to be purchased.)

iTunes user base is north of 500M. 

GOOG: provides horizontal services (and understand the concept well), but can't make up its mind on vertical integration.

They have the know-how to produce interesting hardware, but lack the capability of distribution and mass adoption.  

Google seems confused with respect to the vertical. At the moment the market is forgiving of its confusion. But the lack of clarity will start to really affect margins. When the margins hit affects the expectations, the stock will get hit and Google will have to decide what it wants to be.

MSFT: horizontal, but voluntarily limits its services. And allow great properties to get passed up by newer players. (ie Skype-to-WhatsApp)

With their re-org, and purchase of Nokia, they can be truly vertical. Limiting their services now makes sense. 

They have changed their mobile strategy more times then I care to remember. 

They in a mess right now. First few steps should be to

1. Improve their mobile OS UI.
2. Keep their services relevant. 
3. Like Google, decide on vertical or horizontal. (But looks like they currently chose vertical.)