Week Ending 07/26/13: $440.99 (+16.04)

[marcellus]

Anyone a member of YCharts? My computer goes into eternal spin mode when I attempt to see history back to 2007.

[macwire]

Fundamentals don't matter for tech stocks. If AAPL and AMZN aren't proof I have no idea what is

Market can remain irrational way longer then you can stay solvent. Ask any uber amzn bear.

[macwire]

[td][/td]

Jul 26, 2013 22:23:25 GMT -5 marcellus said:

Anyone a member of YCharts? My computer goes into eternal spin mode when I attempt to see history back to 2007.

Tradingview dot com is the jam!

[marcellus]

Jul 27, 2013 7:52:18 GMT -5 macwire said:

Fundamentals don't matter for tech stocks. If AAPL and AMZN aren't proof I have no idea what is

Market can remain irrational way longer then you can stay solvent. Ask any uber amzn bear.

I don't accept an extended period of irrational exuberance as proof. But yeah, I'm not going to buy any puts on AMZN.

[marcellus]

Does anyone realize the Apple's 6.9B in net income for its June Quarter is 328% greater than the entirety of Amazon's 2.1B of net income since it opened?

[Red Shirted Ensign]

But it's about revenue growth, not earnings... Earnings don't matter

( I'm going to get your blood pressure surging!)

[marcellus]

Jul 27, 2013 11:21:12 GMT -5 Red Shirted Ensign said:

But it's about revenue growth, not earnings... Earnings don't matter

( I'm going to get your blood pressure surging!)

I just popped an aspirin.

[Lstream]

Jul 27, 2013 11:03:11 GMT -5 marcellus said:

Does anyone realize the Apple's 6.9B in net income for its June Quarter is 328% greater than the entirety of Amazon's 2.1B of net income since it opened?

It is easy for the average investor to look at Amazon and see no serious competitor to what they do. I bet none of us can name a single relevant competitor for their core business. They are looked upon as the gorilla in the future of retail. I would never invest at these valuations, but their story is easy to understand and there is no threat to their business model. I suspect that there is belief that they can become more profitable when they feel like flipping that switch. But right now, their strategy is to become embedded in people's lives. And Bezos is real good at articulating his view of the world.

But with Apple, there are perceived and real threats everywhere. People invest in the future, not the past. And there are many who see Apple as an impending has-been with dangerous competition. Not saying they are right, but Apple is clearly under attack from the likes of powerful companies like Samsung and Google. Who are Amazon's Samsung and Google?

And Apple articulates their vision of the future very poorly. That hurts them in my view. This whole "we build great products and growth follows" comes across as snubbing their nose at conventional investing principles. It is hard to tell if they are right, arrogant, or have their heads buried in the sand with that attitude.

My money is in Apple, not Amazon. I don't get Amazon's valuation either, but it is what it is.

[marcellus]

^ Well said.

But at that point when Amazon "flips the switch," don't they invite anti-trust scrutiny? And as vendors get more e-commerce sophisticated, what's the glue that Amazon has over another trusted brand, like Apple? Vendors HATE their "partnership" with Amazon and would LOVE some competition here.

In other words, is there an opportunity for another software platform without the heavy-handedness of Amazon? Buy.com doesn't have the brand power anymore to compete with Amazon. Why can't Apple's iTunes and its 600M account holders be an option for direct sales by vendors? All risk of inventory remains with the vendors and manufacturers, not Apple. Even Tim Cook has alluded to the opportunity with mobile payments and it's not a stretch to imagine that Apple start monetizing its customer list across goods and services outside current iTunes content.

[chinacat]

Tiernan Ray has been pretty even-handed in his commentary, and this quote from his earnings review echoed a topic recently covered by Horace.

"ONE THING WAS MISSING in Yeung's grim assessment—the same thing many miss because they are focusing on Apple's hardware units. Apple controls a platform, one of the two dominant platforms in mobile computing, its iOS software, which is an effective duopoly with Google's Android. In the category of software and services, Apple sold $3.99 billion last quarter, which was up 25% from the year-earlier quarter. That was slower than the 37% growth recorded last year, but still impressive for a business running at $16 billion annually.

Why is that important? Again and again, mobile market stats, and anecdotal evidence show that people want these devices increasingly for the applications and services they can consume with them. The same data suggest Apple's customers are willing to pay up for those apps and content and services somewhat more than users of Android.

Being at the center of an ecosystem that makes money for app developers and advertisers and publishers is a position of control that Apple maintains that is still valuable even if the mobile device market is rather out of control right now."

As also reflected in Tim's remarks on the call about the iPad's domination of Web traffic, Apple's post-sales monetization of its mobile devices, not only for itself but also for third parties, far exceeds any of its rivals but is usually ignored when comparing device profitability.

[applemuncher]

Jul 27, 2013 11:43:57 GMT -5 Lstream said:

Jul 27, 2013 11:03:11 GMT -5 marcellus said:

Does anyone realize the Apple's 6.9B in net income for its June Quarter is 328% greater than the entirety of Amazon's 2.1B of net income since it opened?

It is easy for the average investor to look at Amazon and see no serious competitor to what they do. I bet none of us can name a single relevant competitor for their core business. They are looked upon as the gorilla in the future of retail. I would never invest at these valuations, but their story is easy to understand and there is no threat to their business model. I suspect that there is belief that they can become more profitable when they feel like flipping that switch. But right now, their strategy is to become embedded in people's lives. And Bezos is real good at articulating his view of the world.

But with Apple, there are perceived and real threats everywhere. People invest in the future, not the past. And there are many who see Apple as an impending has-been with dangerous competition. Not saying they are right, but Apple is clearly under attack from the likes of powerful companies like Samsung and Google. Who are Amazon's Samsung and Google?

And Apple articulates their vision of the future very poorly. That hurts them in my view. This whole "we build great products and growth follows" comes across as snubbing their nose at conventional investing principles. It is hard to tell if they are right, arrogant, or have their heads buried in the sand with that attitude.

My money is in Apple, not Amazon. I don't get Amazon's valuation either, but it is what it is.

Nice post. I agree 100%.

[greggthurman]

Jul 26, 2013 19:35:37 GMT -5 lovemyipad said:

Jul 26, 2013 19:25:35 GMT -5 Mav said:

But it "ended" with Apple, a company that's never stopped making a profit. Is this just a function of smaller market cap?

I think it's a function of the shoe being on the other foot now. It's the rational side that gets screwed for being rational.

it's the "up is down" mentality that the media and our schools teach. Seldom is a firm given credit for being smarter/better than its competitors once it leads the pack. At that point perceptions take a 180º turn, and that firm becomes the object of every crackpot theory on what's wrong with it.

Capitalism is nearly always described as bad because the "rich and powerful" got that way by "exploiting the masses".

So while we love Apple's products, the "masses" hate that Apple is making so much money. Surely Apple is guilty of something to make so much. In America (and elsewhere) we admire, we applaud, success stories, until the success becomes "too much", and then we turn on the very object that was previously admired.

Stalin has won. During the 1930s Soviet Russia made a concerted effort to infiltrate our universities, unions and media. He succeeded, not in making them card carrying communists, but in shaping attitudes where "up is down", where financial success was achieved because the worker was exploited.

We love the products, but find the financial success that follows, abhorrent.

Products good. Stocks bad.

[Mav]

Apple would've been a slower-growing but likely profit-growing company this fiscal year if not for intentional strategy shifts.

The long view.

Btw Mercel, if AAPL is up about 3.4% for the week and diluted shares outstanding are at least 3.6% or so lower (23M + 11M IIRC, though not reflected in EPS yet), does that "mean" anything? Aside from WS giving little value to AAPL's cash even when AAPL uses it?

[Mav]

Quit that.

If Stalin won, why tilt at windmills with options? Or buy shares? That's right, AAPL isn't "dead money". Or a bunch of us wouldn't be posting here.

Resentment, disrespect, AND opportunity exist for AAPL.

[marcellus]

Posts that accept Amazon's valuation as "it is what it is..." goes against my grain. Apathy drives me bat sh*t crazy. Any effort any of us makes to push back may have zero impact but no effort guarantees it.

I "GET" that WS is running AMZN on the basis of sales growth, but it's all out of proportion given the lack of profits. It's a travesty that financial media fails to hold AMZN accountable -- this has continued for 19 years.

[marcellus]

Jul 27, 2013 13:03:47 GMT -5 Mav said:

Apple would've been a slower-growing but likely profit-growing company this fiscal year if not for intentional strategy shifts.

The long view.

Btw Mercel, if AAPL is up about 3.4% for the week and diluted shares outstanding are at least 3.6% or so lower (23M + 11M IIRC, though not reflected in EPS yet), does that "mean" anything? Aside from WS giving little value to AAPL's cash even when AAPL uses it?

I'd have more appreciation for this if AAPL were trading at $600+

[Lstream]

Jul 27, 2013 13:38:16 GMT -5 marcellus said:

Posts that accept Amazon's valuation as "it is what it is..." goes against my grain. Apathy drives me bat sh*t crazy. Any effort any of us makes to push back may have zero impact but no effort guarantees it.

I "GET" that WS is running AMZN on the basis of sales growth, but it's all out of proportion given the lack of profits. It's a travesty that financial media fails to hold AMZN accountable -- this has continued for 19 years.

I get worked up and non-apathetic about stuff I can change. Amazon is the product of free market pricing and there is nothing I can do about it. It is simply not a cause I can get behind, when no one is forcing people to pay the ridiculous prices AMZN gets. The 19 years just provides more evidence regarding the futility of the cause. And so what if the stock falls to earth? That is meaningless to me as an Apple shareholder.

[Mav]

Wouldn't we all?

[marcellus]

Jul 27, 2013 12:15:30 GMT -5 chinacat said:

Tiernan Ray has been pretty even-handed in his commentary, and this quote from his earnings review echoed a topic recently covered by Horace.

Can we all agree that Glen Yeung at Citi is a world class dipshit who has no business commenting on Apple. This same "analyst" predicted Apple would sell 17M iPhones in the June quarter. How can anyone take anything he writes seriously. I mean, seriously...

[marcellus]

Jul 27, 2013 13:52:15 GMT -5 Lstream said:

I get worked up and non-apathetic about stuff I can change. Amazon is the product of free market pricing and there is nothing I can do about it. It is simply not a cause I can get behind, when no one is forcing people to pay the ridiculous prices AMZN gets. The 19 years just provides more evidence regarding the futility of the cause. And so what if the stock falls to earth? That is meaningless to me as an Apple shareholder.

My reply:


For Want of a Nail

For want of a nail the shoe was lost.
For want of a shoe the horse was lost.
For want of a horse the rider was lost.
For want of a rider the message was lost.
For want of a message the battle was lost.
For want of a battle the kingdom was lost.
And all for the want of a horseshoe nail.