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Post by Red Shirted Ensign on Aug 13, 2013 14:57:23 GMT -8
We are up $3.21 after hours. I suspect many feel the run is not....quite....over. Not long ago being up $3.21 after hours would have made me euphoric. Now it just seems that it is about right...
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Post by Red Shirted Ensign on Aug 13, 2013 14:58:03 GMT -8
I know my Oct 550 calls would be thanking "Uncle Carl." Hey, maybe I can buy me an iPhone 5S now! ;D That's right...plow the gains back into the company. Good thinking....
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mark
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Post by mark on Aug 13, 2013 15:43:07 GMT -8
How come this brilliant guy didn't smell a bargain $100 ago?! Don't get me wrong, I love this rocket fuel but it is just as manipulative as all the downside FUD. Do we know when, and at what price, he bought most of his shares? Maybe he's been accumulating since 400?
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Deleted
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Post by Deleted on Aug 13, 2013 15:47:32 GMT -8
This is typical Icahn thinking .... it's all about the math to him. Reuters just put this short pgh out on the story: (Reuters) - Hedge fund billionaire Carl Icahn told Reuters on Tuesday that he believes Apple has the ability to do a $150 billion buyback now by borrowing funds at 3 percent. "If Apple does this now and earnings increase at only 10 percent, the stock -- even keeping the same multiple currently -- should trade at $700 a share," Icahn said in a telephone interview. Apple has "huge borrowing power, little relative debt and trades at a low multiple," Icahn said. Shares of Apple were at $489.57 on Tuesday. Given that DEMAND for shares is going up, at the same time that SUPPLY of shares is going down, Investor Sentiment Multiple (ISM) will have to go up, making it easier to hit $700 on projected FY2014 earnings. If my model of Net Income for FY2014 is reasonably accurate, we could see $700 by the end of April (ISM ~15).
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Post by phoebear611 on Aug 13, 2013 16:08:10 GMT -8
By the way Gregg, Carl Icahn and his group are very familiar with options as one might guess. I've seen him accumulate a position through call purchases that are later exercised. That would fuel your theory in your earlier post, no?
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Mav
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Post by Mav on Aug 13, 2013 16:23:05 GMT -8
You don't think he has anything to do with that 360k synthetic position iPad mentioned yesterday, do you? ;D
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Post by rutgersguy92 on Aug 13, 2013 16:38:48 GMT -8
32 trading days ago AAPL bottomed at $388.87. Today's intraday high is $100.30 higher. Me thinks my $500 target prior to October earnings may be a bit conservative (hope so). I hope so too because I still haven't sold my ten Oct 500 calls which I bought at $1.70 Nice work, Raj. Looks like you are a Jason Scwarz subscriber, and just did a 10-bagger on those options.
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Post by phoebear611 on Aug 13, 2013 16:42:03 GMT -8
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Mav
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Post by Mav on Aug 13, 2013 16:45:03 GMT -8
I always enjoy a good cup of matcha (as in green tea). All of this, PLUS an Apple television rumor? It's like someone turned over the hourglass of AAPL sentiment, if that even makes sense. And speaking of Apple TV set rumors, surely Mercel will weigh in on this later today. ;D
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Post by lovemyipad on Aug 13, 2013 18:25:12 GMT -8
You don't think he has anything to do with that 360k synthetic position iPad mentioned yesterday, do you? ;D Indeed I do. ;D Somebody knew something. I just don't expect big money to be dumb money. So I would venture to guess that was a humongous synthetic long.
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Mav
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Post by Mav on Aug 13, 2013 18:30:54 GMT -8
Probably wasn't Icahn though, now that I think about it. Much too "small potatoes" for the stake Icahn reportedly took.
So if someone ELSE initiated the trade based on Icahn in some way, that sounds sorta sketchy, but whatever, it's the SEC!
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Deleted
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Post by Deleted on Aug 13, 2013 18:34:51 GMT -8
By the way Gregg, Carl Icahn and his group are very familiar with options as one might guess. I've seen him accumulate a position through call purchases that are later exercised. That would fuel your theory in your earlier post, no? : ) It would, wouldn't it?
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Deleted
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Post by Deleted on Aug 13, 2013 19:04:09 GMT -8
A week or so ago, i suggested to PED that, in light of the total uncertainty of shares outstanding, he query analysts for their Net Income estimates instead of EPS. That and a comment I made earlier today about Net Income got me to thinking about its growth rate vs that of EPS.
What I found is exactly what you would expect from a Company that continued to issue more shares each quarter. It also brought into clearer focus why AAPL dropped like it did for FY2013, and why it is now expanding.
FY 2009 Net Income YoY Growth = 39.89% FY 2010 Net Income YoY Growth = 63.70% FY 2011 Net Income YoY Growth = 84.99% FY 2012 Net Income YoY Growth = 60.99% FY 2013(e) Net Income YoY Growth = (11.22%) FY 2014(e) Net Income YoY Growth = 34.94%
From now on I will report my EPS estimates, but additionally I will report Net Income Growth Rate (YoY), which, along with Revenue, will be my primary focus on where Apple/AAPL is headed.
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Deleted
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Post by Deleted on Aug 13, 2013 19:57:20 GMT -8
A week or so ago, i suggested to PED that, in light of the total uncertainty of shares outstanding, he query analysts for their Net Income estimates instead of EPS. That and a comment I made earlier today about Net Income got me to thinking about its growth rate vs that of EPS. Why would you suggest this, utterly negating EPS growth from a smaller share count. AAPL was hurt from the dilutive effect from employee stock options and now you want to neutralize the positive effect of share repurchases?
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Mav
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Post by Mav on Aug 13, 2013 20:23:37 GMT -8
EPS is the Gold Standard.â„¢ And since buybacks help EPS, I'm all for it in the case of AAPL. It does, in an odd way, give Apple a sort of boost that WS won't.
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Deleted
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Post by Deleted on Aug 13, 2013 20:40:48 GMT -8
A week or so ago, i suggested to PED that, in light of the total uncertainty of shares outstanding, he query analysts for their Net Income estimates instead of EPS. That and a comment I made earlier today about Net Income got me to thinking about its growth rate vs that of EPS. Why would you suggest this, utterly negating EPS growth from a smaller share count. AAPL was hurt from the dilutive effect from employee stock options and now you want to neutralize the positive effect of share repurchases? Because EPS, in an ever changing share count environment is inconsistent (can be manipulated up or down with buybacks or issuance of new shares), and is an inaccurate measure of how a Company is doing. Net Income reflects the result of pricing strategies that may increase Revenue (exactly what has been used as an argument in favor of a lower cost iPhone), but lower Gross Margins, or vice versa. If a lower cost iPhone is the right or wrong strategy, it will show up in Net Income. If something is wrong with the Company's fundamentals, it will show in Net Income. By failing to see what was happening to Net Income WE (myself included) failed to see what was driving AAPL lower and lower. It left us, as a group groping in the dark trying to explain the cause/s. I'd rather know what is really going on than continue to do that. I believe the Institutions do too. I also believe that the Institutions always move before the retailers do, because they are monitoring what counts (and that isn't the color, size, shape or price of a product). If the retail investment community was more focused on Net Income growth, than it was on EPS growth, AAPL might have gone higher, and we might have bailed sooner. As it is, changing PED's shootout parameters is going to have little impact on retail investment decisions, mostly because they just aren't knowledgable enough to understand AAPL's financials, and how they cause AAPL to do what it does. I'd love to ask PO, at the next conference call, the following question. "Peter, with the clarity of hindsight, can you explain what caused Net Income for FY2013 to drop 11% YoY, and as a followup, how is FY2014 going to be different?"
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Post by Red Shirted Ensign on Aug 13, 2013 20:50:49 GMT -8
If I own a piece of a company I want to know whether the piece I own is increasing in value ( future earnings growth discounted in a variety of ways). Net income can be variable too....for lots of reasons, some decisions that lower net income now may raise earnings in the future.
If Apple has flat or slightly negative net income but has retired 20% of the outstanding shares, why am I not better off than I was before as a shareholder? And why wouldn't the growth in earnings for my share be what I am focused on?
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Post by Deleted on Aug 13, 2013 20:51:13 GMT -8
You're not going to change Wall Street's focus on EPS, so it's a moot point, but your advocacy above supports a short position in AAPL, not a long position.
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Post by Deleted on Aug 13, 2013 20:53:21 GMT -8
If I own a piece of a company I want to know whether the piece I own is increasing in value ( future earnings growth discounted in a variety of ways). Net income can be variable too....for lots of reasons, some decisions that lower net income now may raise earnings in the future. If Apple has flat or slightly negative net income but has retired 20% of the outstanding shares, why am I not better off than I was before as a shareholder? And why wouldn't the growth in earnings for my share be what I am focused on? Yes! Thank you for that.
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Post by Deleted on Aug 13, 2013 21:36:23 GMT -8
Apple confirmed the purchase of a TV software solution "Matchma" today. It's one of the pieces to the iTV puzzle, unifying the interface for selecting programming and leveraging the social aspects of recommended content. It looked somewhat underwhelming in the 18 minute video (posted at MacDaily News), but it must have had some IP value. appleinsider.com/articles/13/08/13/apple-buys-second-screen-app-company-matchatv
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Post by Deleted on Aug 13, 2013 21:46:48 GMT -8
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Mav
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Post by Mav on Aug 13, 2013 22:06:37 GMT -8
Matcha. Hey, nothing wrong with "small" acquisitions for talent and maybe tech.
The main reason for net income decline is pretty clear IMHO. It's more complicated than how I'm putting it, of course, but Apple has decided to go for share its own way, as well as increase value to customers at its own expense (substantial gross margin decline) in its own way. For now it's most obvious in iPad mini, but iPhone 5 seemed to carry lower margins than the 4S. iPhone 5C will be the next obvious exemplar, assuming we get it (and it seems like we will). To a lesser extent, Apple's growing software/app/content revenues are also "thinning" the margin mix while growing the business and the moat.
If gross margin decline slows and revenues pick up a bit, clearly FY '14 will be different. If Apple stays aggressive and GMs dip to the low/mid 30s, AAPL should still be fine with this new groundswell of sentiment and support, and the double threat of buybacks and Icahn's backing keeping bears at bay. Low/mid 30s probably means pretty nice new initiatives and/or products from Apple, btw - for example an iPad mini retina.
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