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Post by Big Al on Apr 19, 2013 1:41:50 GMT -8
I am a little surprised how quickly the competence of Apple's management is being questioned by a lot of members in this board.
I think that a lot of the criticism against Apple's management (especially TC) is unfounded. Not because of a lack of reasons why that criticism is warranted/right. Actually, there is a long list of reasons why people criticize management/TC (see yesterday's intraday thread). But I think that most of those reasons are not important/relevant for the long-term success of the company, and hence, its long-term valuation.
In an article from last year in which Horace Dediu and Clayton Christensen discussed the future of Apple I have found the following sentences very interesting:
"If Apple lapses back into traditional management and runs the company based maximizing shareholder value, it will be unable to maintain a sequence of bold new innovations and it will succumb to the innovator’s dilemma. If on the other hand, Apple sticks to its goal of delighting customers and sees making money as the result of its activities, and continues to pursue radical management, and learns from experience, then it has a chance to achieve lasting prosperity through continuous innovation."
People are arguing and are anxious about buyback, dividend, screen sizes, China mobile, TC's performance during the conf call etc.
Yes, these are interesting and important issues when looking at the short-term valuation of Apple, which is based on sentiment more than financials.
However, the long-term holders of AAPL, the ones who would like to keep the stock for the next 3-5 years, should not be too concerned about these issues. There will be bad quarters and other companies will be successful in competing against Apple. But is/will Apple stop growing? Are current profits sustainable for the next few years? How are current products doing? How will new products do? How effective is the ecosystem to lock-in customers for the foreseeable future?
These questions are important and are related much more with mid- and long-term strategic planning by Apple than with pleasing the investor community in the short-term.
I haven't seen any data/facts so far which would lead me to think that Apple is losing in the marketplace, and will stop growing. Quite to the contrary, it looks as if Apple will generate a good amount of profit for the next few years. And this will be reflected in the valuation. Maybe not in the next few months. But if you are patient, you will most likely get rewarded.
By the way, concerning the criticism on Apple not innovating anymore. Please keep in mind that innovation cycles are measured in years not months. So not having presented a new product category since the introduction of the iPad is not proof of Apple not innovating anymore.
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Post by rob_london on Apr 19, 2013 2:06:48 GMT -8
I am a little surprised how quickly the competence of Apple's management is being questioned by a lot of members in this board. I think that a lot of the criticism against Apple's management (especially TC) is unfounded. Not because of a lack of reasons why that criticism is warranted/right. Actually, there is a long list of reasons why people criticize management/TC (see yesterday's intraday thread). But I think that most of those reasons are not important/relevant for the long-term success of the company, and hence, its long-term valuation. In an article from last year in which Horace Dediu and Clayton Christensen discussed the future of Apple I have found the following sentences very interesting: "If Apple lapses back into traditional management and runs the company based maximizing shareholder value, it will be unable to maintain a sequence of bold new innovations and it will succumb to the innovator’s dilemma. If on the other hand, Apple sticks to its goal of delighting customers and sees making money as the result of its activities, and continues to pursue radical management, and learns from experience, then it has a chance to achieve lasting prosperity through continuous innovation." People are arguing and are anxious about buyback, dividend, screen sizes, China mobile, TC's performance during the conf call etc. Yes, these are interesting and important issues when looking at the short-term valuation of Apple, which is based on sentiment more than financials. However, the long-term holders of AAPL, the ones who would like to keep the stock for the next 3-5 years, should not be too concerned about these issues. There will be bad quarters and other companies will be successful in competing against Apple. But is/will Apple stop growing? Are current profits sustainable for the next few years? How are current products doing? How will new products do? How effective is the ecosystem to lock-in customers for the foreseeable future? These questions are important and are related much more with mid- and long-term strategic planning by Apple than with pleasing the investor community in the short-term. I haven't seen any data/facts so far which would lead me to think that Apple is losing in the marketplace, and will stop growing. Quite to the contrary, it looks as if Apple will generate a good amount of profit for the next few years. And this will be reflected in the valuation. Maybe not in the next few months. But if you are patient, you will most likely get rewarded. By the way, concerning the criticism on Apple not innovating anymore. Please keep in mind that innovation cycles are measured in years not months. So not having presented a new product category since the introduction of the iPad is not proof of Apple not innovating anymore. A very good post. |
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Post by phoebear611 on Apr 19, 2013 2:42:20 GMT -8
Yesterday there were several posts questioning AAPL management, specifically TC's strategy. I think that as much as many of us love the company - it is very foolish not to question the recent lack of direction. You can't go through life on blind faith, it's simply not a strategy. It is ok to question. Furthermore, it is not ok to be static....particularly in this sector. The world is a different place in this space than it was a year or two ago. That's an eternity in technology. I am thrilled that people post different points of view on this board...especially when we are deviating toward group-think. We should encourage it - debate it - verify or falsify the evidence presented. It will help all of us because it will help prompt thought and insight. So I applaud your openness and celebrate your differences. It's ok to "think different" - no?
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Post by rob_london on Apr 19, 2013 2:42:59 GMT -8
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Post by Big Al on Apr 19, 2013 2:46:17 GMT -8
Yesterday there were several posts questioning AAPL management, specifically TC's strategy. I think that as much as many of us love the company - it is very foolish not to question the recent lack of direction. You can't go through life on blind faith, it's simply not a strategy. It is ok to question. Furthermore, it is not ok to be static....particularly in this sector. The world is a different place in this space than it was a year or two ago. That's an eternity in technology. I am thrilled that people post different points of view on this board...especially when we are deviating toward group-think. We should encourage it - debate it - verify or falsify the evidence presented. It will help all of us because it will help prompt thought and insight. So I applaud your openness and celebrate your differences. It's ok to "think different" - no? Yes, it is more than OK to "think different" and be critical. However, I just wanted to point out that the recent criticism of Apple management is focused on issues which not all AAPL investors think are the most relevant ones for the long-term success of the company. |
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Mav
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Post by Mav on Apr 19, 2013 2:50:57 GMT -8
Happy trails, burgess. Or was it haka? (/reference to his favorite rugby team)
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Post by phoebear611 on Apr 19, 2013 2:54:47 GMT -8
Yesterday there were several posts questioning AAPL management, specifically TC's strategy. I think that as much as many of us love the company - it is very foolish not to question the recent lack of direction. You can't go through life on blind faith, it's simply not a strategy. It is ok to question. Furthermore, it is not ok to be static....particularly in this sector. The world is a different place in this space than it was a year or two ago. That's an eternity in technology. I am thrilled that people post different points of view on this board...especially when we are deviating toward group-think. We should encourage it - debate it - verify or falsify the evidence presented. It will help all of us because it will help prompt thought and insight. So I applaud your openness and celebrate your differences. It's ok to "think different" - no? Yes, it is more than OK to "think different" and be critical. However, I just wanted to point out that the recent criticism of Apple management is focused on issues which not all AAPL investors think are the most relevant ones for the long-term success of the company. Point well taken - but I don't want to discourage people from posting simply because there are a few that get condescending or belligerent at times. I've noticed a pattern where we tend to press (hard) those with opposing views but if someone has something positive to say - the questioning, if at all, is very soft. Just hoping to keep this place balanced. |
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Post by Deleted on Apr 19, 2013 3:08:20 GMT -8
Yes, it is more than OK to "think different" and be critical. However, I just wanted to point out that the recent criticism of Apple management is focused on issues which not all AAPL investors think are the most relevant ones for the long-term success of the company. Nice post above there Al, to which I'll add this: Opinions and diversity of thought are great, but the best comes when they're articulated with support, some evidence for WHY one thinks that. Otherwise, it's dumbed-down Yahoo board. I'll say this again: There's far less wrong with Apple, Inc. than the stock market and media covering it. When the reasons for this drop aren't well known (outside of wild opinion), it's far easier to blame one person, which is really unfair to Tim Cook. Hindsight is 20/20 and if the stock were flying at $600 - $700 right now, we wouldn't be discussing Apple management. Has so much changed about Apple since September to justify this $300 drop? MY OPINION: Absolutely not. |
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Post by tourist on Apr 19, 2013 3:13:38 GMT -8
I am surprised at how widespread the acceptance is that Apple has really stumbled. It is disconcerting to hear it repeated with such frequency. The articles and reports that I read about Apple, that are based on factual information such as the Chitika report yesterday, give no indication of such stumbling, but every opinion piece regardless of the venue or the slant that is being taken does. Even if it is just in the headline chosen. 'Everyone' seems to be convinced that Apple is going to report disappointing results next week, but the disappointment seems to have little to do with what Apple is going to report and everything to do with individuals' beliefs that Apple is failing and thus MUST report disappointing results.
It probably won't matter what they report, if it is better than expected, because as we have seen in the past for quarter after quarter, the expectation for the following quarter will be that Apple won't be able to sustain it. After all, they don't have a 5" screen, or Tim Cook isn't Steve Jobs, or Android is eating their lunch, or...
I do miss those days when Apple's stock soared on the expectation of amazing results to come. But I've never been under the delusion that Apple's stock price is a reflection of Apple's long-term performance. I am not a believer that markets are rational. What does bother me though is the irrationality, and what often seems to be dishonesty, of the media that dissects and reports on Apple.
I know this is an open forum and everyone can speak their mind here, so I use it as a barometer of public sentiment towards Apple. But it still surprises me how much opinion seems to be diverging from actual facts known--even here.
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Post by Deleted on Apr 19, 2013 3:14:17 GMT -8
In case some resist CNN and the NYT (completely understandable), some really great news is breaking that Boston will soon be free of the bombers. One has already been "removed" from his earthly existence and the other is in the crosshairs of police. Great job Boston Police and FBI!!!
Edit -- this spell check feature drives me nuts, substituting words for unintended ones. Sheesh.
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Post by rob_london on Apr 19, 2013 3:15:12 GMT -8
For those who have expressed frustration at an apparent lack of communication from Apple... it is all relative. Today one of the companies I invest in gave their usual, incredibly succinct quarterly management statement...18 words in length.
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Post by phoebear611 on Apr 19, 2013 3:21:43 GMT -8
Part of the debate yesterday also had to do with AAPL management being more vocal about defending the company or promoting its great products. There was discussion of the role of the CEO in all of this from a public company's perspective. Having worked extremely close with my former CEO I can tell you that it is absolutely part of his job and responsibility to defend the stock price in some way. In most of those ivory towers the word is - "stock price is our report card." Again, you don't have to agree, but that has been my experience first hand.
By the way - I am and have been long the stock and have all their products but I do question Cook's methodology right now. I truly HOPE to have a huge helping of humble pie on earnings day...truly.
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Post by phoebear611 on Apr 19, 2013 3:23:05 GMT -8
In case some resist CNN and the NYT (completely understandable), some really great news is breaking that Boston will soon be free of the bombers. One has already been "removed" from his earthly existence and the other is in the crosshairs of police. Great job Boston Police and FBI!!! Edit -- this spell check feature drives me nuts, substituting words for unintended ones. Sheesh. I am up since 4 a.m. EST watching this thing unfold...my son is up in Cambridge at Harvard - they are in lock down. So unsettling. |
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Post by Deleted on Apr 19, 2013 3:23:15 GMT -8
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Post by Deleted on Apr 19, 2013 3:27:16 GMT -8
Worthy of another Pulitzer no doubt. The NYT has played a role in turning the sentiment negative and there's no one to call them out on it. |
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Post by fas550 on Apr 19, 2013 3:42:57 GMT -8
Drivers for the stock
You'd be best served by ignoring fundamentals: the market picks and chooses when to listen to fundamentals for various stocks and Apple has been ignored for a significant time. Get a graph of PE for 5 years if you want to see the facts.
Where is the bottom? No one really knows. Cash value, maybe.
What earrings are they going to report? Only IMHO; they are going to barely beat guidance range or miss. This is based on their some key supplier data; While as have many have stated this is not always accurate, if you listen to their conf calls there are some common themes: They built to forecasts, those forecasts overshot demand, guidance for the near term is cloudy and things look better in the latter part of the year. My last hope was CRUS (Apple is 60% of their business) but given they took a major charge on inventory this screams they could not ship as much as expected. CRUS is a quality key supplier.
Guidance? No one and I mean no one knows. My guess is light unless they release a new product in the next 3 weeks or possibly a China Mobile announcement but then again they have little room to run without a lower cost, non-contract phone.
Sentiment: really, really bad. No one including value investors are jumping in until it turns around. Problem is for it to turn it around we need buyers and for that I go back to my previous sentence.
Cash use and effect on stock? That train left the station a few months ago for the maximum effect. As so much time has gone by the value of such a move has diminished. Unless its a surprisingly significant move of a buyback or increase in div, this will probably cause a yawn of reaction. The current value of that cash on the stock price based on potential is basically 1:1 which is very sad and given the sheer amount demonstrates management does not know what to do.
Turn around possibilities based on most impact to the least?
1. Increase of growth to levels near the past (not likely for at least the next 6 mos)
2. Major product announcements
3. China Mobile and/or significant use of cash.
4. Management showing some skills in the use of cash through 3 above or a large strategic acquisition.
5. External change in investment allocation of major funds brought by the perception of another investment looking chronically worse than Apple.
Bottom line IMHO protect yourself. I am not a bear but a realist. If you are a long term holder with a low cost basis and view the stress of selling and waiting for growth higher than the stress of an unknown level of decline then stay in. Apple has great products but that has increasingly less to do with the stock price.
With Tech especially it does not pay to wallow in history. Things could get much worse from here.
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Post by appledoc on Apr 19, 2013 4:07:39 GMT -8
Insane what is going on in Boston. Hopefully this ends soon.
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Post by lovemyipad on Apr 19, 2013 4:26:55 GMT -8
My hubby was in Boston for business from Sunday until yesterday. Now in Philly and will fly home tonight. It's such a sad, sad, scary thing.  |
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Post by appledoc on Apr 19, 2013 4:39:39 GMT -8
My hubby was in Boston for business from Sunday until yesterday. Now in Philly and will fly home tonight. It's such a sad, sad, scary thing. Glad he is okay. I hope they catch the second suspect alive. |
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Post by artman1033 on Apr 19, 2013 4:56:59 GMT -8
IN OTHER NEWS:April 19, 2013 Chances are you’ve already heard about Microsoft’s big earnings report yesterday. The headline on the press release that came out following Thursday’s market close proudly hailed that “Microsoft delivers record third-quarter revenue and earnings per share”. That same release — and to be fair, the headline following the record earnings — noted that CFO Peter Klein would be stepped down by the end of the fiscal year. That was the first bait and switch: upbeat earnings combined with the announcement of the CFO stepping down. And that’s how all of the news stories we saw have played it (see here and here, for example). But we were more interested in this 8-K that Microsoft filed an hour later, right around the time the earnings call wrapped up. In that filing, Microsoft provided some details on what Klein would be getting when he stepped down: $1 million in Jan. 2014 and a second payment of $1 million in June 2014. Here’s the entire agreement, which is actually pretty concise as these sorts of things go. While we were really hoping that the agreement would spell out that Klein got to keep several non-Microsoft devices (as we’ve footnoted before, iPhones and iPads are very popular parting gifts) there was nothing like that in the agreement. Needless to say, the details about Klein’s $2 million separation payments were not in either the earnings announcement or the conference call. In our book, that’s a bait and switch and switch.
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Post by rezonate on Apr 19, 2013 4:57:18 GMT -8
I hesitate to post to Intraday but that's where the discussion is. Stuck down in the daily weeds of despair it's hard to see the real Apple, but "I've seen through a different lens".
Apple has always loved being the underdog and loved being the comeback kid. And now guess what? The market has set them up once again as the underdog ("Stock off almost 50% in 6 months, P/E lower than Dell, etc") and Samsung has set them up as the comeback kid ("if only Apple would release a 5" iPhone like everyone else.")
As little faith as many seem to have in Cook, or the missing mercurial CEO position, or the radio silence we've experienced since last summer when they decided to "double down on security", Apple as a company is very smart, and as individuals they are insanely tuned to perform for the customer.
Before I retired I was the Chief Academic Officer for all U.S. Coast Guard leadership schools. I lived, breathed and worked leadership issues every day. We studied and dissected historical military, business and non-profit leadership tactics, strategies and behaviors. When the latest and greatest business best seller came out it got assigned to someone to read (on their own time) and then report how we could apply something to "enhancing shareholder value" for the taxpayer through our USCG leaders. In every single case, from "Blue Ocean Strategy" to "Made to Stick" to "Everything is Miscellaneous" and dozens of others, Apple was/is always at least two years ahead of the trend. It was uncanny to discover this over and over and over.
I took vacation time to attend the Disney Institute program in Anaheim, where they bring you backstage for a look at the business processes behind making the magic. Without revealing too much (you should treat yourself to one or several days of their excellent programs), Disney focuses on only two metrics. I believe Apple has similar metrics and I've posted about them here before. Disney's metrics are 1) repeat business and 2) intent to refer. Will you come back and bring your friends? EVERYTHING is driven by performance against these two metrics. When you know this and you watch Apple, understanding their approach becomes really simple.
Apple wants a multi-decade hegemony, built across generations by rabidly loyal customers. Customers who would turn down a Pepsi because they love Coke, or refuse to rent a Dodge because they love Ford, or ignore Windows 8 announcements because they are basically irrelevant. Apple and Disney have very similar "DNA", or execution strategy because they come from the same place: User experience, Quality and Creativity. If you have a good experience you will come back. If your experience has high enough quality it will impact your performance in other areas, your friends will notice and they'll want a piece too.
Creativity is the byproduct of a restless mind. It comes from asking the question "what if?" and answering "let's see..." It doesn't take a Steve Jobs to ask that question, it just takes relentless application of the question to a few things that matter, and then building repeatable and supported systems to ruthlessly execute on just those things. Apple has stated publicly and often that shareholders like us are just not their focus. They want repeat customers who bring their friends. As this continues Apple will prosper. Right now Apple is back where they love to be: a hungry underdog that must stage a comeback after foolishly ignoring a key customer experience trend.
A hungry and foolish underdog comeback. Perfect.
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Post by terps530 on Apr 19, 2013 5:30:28 GMT -8
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Post by valere on Apr 19, 2013 5:31:38 GMT -8
One item to consider in the TC question is the board..
One has to believe that the board has a very clear view on the roadmap which may be why they are hanging on to the cash and TC.
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Post by appledoc on Apr 19, 2013 5:41:11 GMT -8
Want a red dog reversal here.
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Post by Deleted on Apr 19, 2013 5:48:09 GMT -8
Canaccord going against the trend and raising their PT from $830 to $890. If I had an email I'd give the analyst a big attaboy (or attagirl). ___________________________________________________ I suggested this idea to Tim Cook last quarter and still think it's a good one: Skip the audio presentation and do a full-on presentation, with video of them and slides showing the results of the March quarter, a surprise that's part of Apple's DNA. A picture is worth a 1,000 words and it's time to seize the narrative back on Apple's financial performance, dominating the mobile landscape with customer satisfaction, retention and profitability. The list of achievements is LONG. Give analysts something they don't expect, a powerful presentation unlike any analysts have seen before. Certainly, Apple has enough to crow about, far more than what Google can B.S. analysts with. Sentiment is a funny thing, an intangible that can turn direction quickly. Then, one more thing....Apple is increasing its dividend to 4% and will be making a $50B stock repurchase, more if necessary. |
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Post by macwire on Apr 19, 2013 5:50:16 GMT -8
Want a red dog reversal here. On options expiration? Unlikely. |
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Post by appledoc on Apr 19, 2013 5:55:30 GMT -8
Want a red dog reversal here. On options expiration? Unlikely. Given how far we've plunged below an ever decreasing max pain the past two days, the potential for a reversal is greater here than on most monthly OEs. |
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Post by sponge on Apr 19, 2013 5:55:46 GMT -8
Volume is very heavy today so far. Our next line is 385.
I like to see us close above 392 with 30+ million shares trading and then I would declare today a very good day.
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Post by macwire on Apr 19, 2013 6:07:05 GMT -8
On options expiration? Unlikely. Given how far we've plunged below an ever decreasing max pain the past two days, the potential for a reversal is greater here than on most monthly OEs. That is certainly plausible. If anything, the unexpected has been the norm. |
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Post by sponge on Apr 19, 2013 6:07:27 GMT -8
WOW talk about a reversal. It is going to be wild for the next four trading days.
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