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Surprise, Surprise: The Mainstream Media is Picking Up On The Apple Margin Compression Thesis
After nearly a year of showing nearly incontrovertible evidence that
Apple has seen its heyday, the mainstream media is catching on. First a
quick overview of my thoughts...
- Look & Listen Closely As The Solitary Margin Compression Theory Slowly Bears Fruit: Apple to Drop Flagship iPad Prices?
- How
Google is Looking to Cut Apple’s Margin and How the Sell Side of Wall
Street Will Enable This Without Sheeple Investor’s Having a Clue. - Steve Jobs Calls End Of the PC, We Call The End Of The Fat Margin Tablet – Including The Pretty iPad, With Proof!
- Is The Evidence For An Apple Margin Collapse Now Incontrovertible?
- I
Absolutely Dare Anyone To Read This And Still Not Consider The
Probability (Not Possibility) Of Apple Suffering From Margin Compression - Looking at the Results of Google's "Negative Cost" Business Model Employed Through Android
Now an excerpts from the Mainstream media:
CNBC: Japan Woes Force Scrutiny of Apple's Margins
Monday, 18 April 2011 11:18 PM ET
Apple may provide the first signs this week that the Japanese crisis is pressuring margins, clouding what should otherwise be another dazzling second quarter for the makers of the iPad and iPhone
The Street.com: 8 Knocks on Apple's Stock
Tech
stocks in general have not enjoyed much appreciation from Wall Street
in 2011, but Apple, a long-time favorite in the group, has had an
unusually rough ride. June has been particularly hard for the tech
giant, whose shares are down 8% so far this month.... Here are some of
the highlights from the checklist of bearish themes on Apple.
- Product Vacuum
Oppenheimer
is the latest shop Tuesday to warn that the next iPhone will be later
than expected. And as first reported by TheStreet, the upgrade this year
is minor with the fully-powered 4G LTE iPhone in development for next year. - It's the Economy
The
U.S. may or may not be in a double-dip recession and Greece's debt
continues weigh heavily on European economies. "I believe investors are
scared of a European recession," said MKM Partners Tero Kuittinen, who
points to a slowdown in first-quarter phone sales in Europe. - It's Technical
Some technical analysts have studied Apple's charts and found that the stock has
fallen through key support levels. For these chartists, the patterns
point to continued drops until the stock reaches a price where buyers
have been willing to move in before. - Google's Android
While Apple has been selling year-old weakling iPhones, Google Androids have muscled-up with dual-core processors and 4G LTE wireless connections.
"The Android camp had a huge May in Europe -- Samsung in particular is coming back in a big way, threatening to undercut the aging iPhone over summer months," said Kuittinen.
- Facebook Apps
Apple's iron grip on iPhone and iPad apps may have been broken with Facebook's development of its own Web-based programs. Buying Facebook apps from Facebook using an iPhone threatens to remove Apple from the transaction.
- J.C. Penney's Gain
Apple's retail brainiac Ron Johnson is off to turn J.C. Penney's(JCP_) business around as its new CEO in November. The departure could threaten the continued success of Apple's retail unit,which boasts $3.2 billion in annual sales and 90% growth.
- Steve Jobs
Apple's
CEO is on his third medical leave since his bout with pancreatic
cancer, but, as he proved earlier this month at Apple's developers'
conference, Jobs is still very much around. This proved once more that
Jobs, the inspiration behind Apple, remains both ill and irreplaceable. - De-Risking
Fearing
those great Apple gains over the years could vanish, investors are
cashing in their positions and banking their proceeds. Given the
uncertainties of the market, and how strong Apple has been, people
aren't eager to risk it.
And there you have it,
logic and common sense. Lower prices will lead to lower margins. For
those that are paying attention, it is evident that it is already
happening. Let's reference the model behind the subscriber document 
Apple - Competition, Cost Structure and Forensic Valuation
and go through the basic fundamentals, step by step for the iPad and
iPhone (together nearly 80% of Apple's profits) are very strategic
segments for both Apple and the industry. The Apple short called in the
beginning if the year has not been a blockbuster, but was a profitable
call nonetheless. If things go as planned, Apple's stock will see some
dramatic downside movement at the same time Google moves to take over
hte mobile computing space sans legal or regulatory hurdles.
Now, I've told you before, and I'm telling you again, and I'll probably have to tell you several times in the future...
It Should Now Be Common Knowledge That Goldman’s Investment Advice Sucks???
I'm
not going to bother to mention that Goldman advised clients to by
European banks in direct contravention to my Pan-European Sovereign Debt
Crisis research (hopefully, you see how that ended). An equally
egregious offense is daring to go against the BoomBustBlog grain on
Apple...
- “Goldman’s
$430 Target, Screaming Buy On Apple At Its All Time High Is In Direct
Contravention To Reggie Middleton’s Logic – Who’s Right? Well, Who Has
Been More Right In The Past?“ Tuesday, December 14th, 2010 - “Reggie
Middleton Takes The Challenge To Goldman Sach’s Apple Proclamation One
Step Farther, Apple’s Closed System Risks Failure!” Wednesday, December 15th, 2010
Of
course, that doesn't necessarily mean that there is any credibility in
said proclamations, though. Reference this priceless nugget in light of
the links above...
-
Goldman
Sells Nearly Half $Billion Of Apple Stock Directly Into Their Client’s
Conviction Buy Recommendation: Guess Who Really Agrees With Reggie Now! Friday, May 27th, 2011
Fear
not, oh ye deprived consumers of the truth! Subscribers can access
unfettered, unbiased analysis on Apple's situation and prospects, by the
numbers: Apple – Competition and Cost Structure Forensic Analysis and accompanying Apple iPhone Profit Margin Scenario Analysis Model – suggested use with Apple Earnings Guidance Analysis
Go to the 40 second marker for my take on Apple in October of 2010 via Herb Greenbergon CNBC.
- advertisements -
And the headline is correct. I have been saying that Apple will be facing heavy competitive pressures for a year, and they have. iPhone (70% of Apple's profits) market share growth has slowed to a near standstill as its main competitor's is skyrocketing. That is not the same as "go short the stock". Thus far, I have been absolutely, 100% correct about the market share movements and cost efficiencies. That is not to say that I will be right in the future, but let's not discount the past and the present, shall we.
You see, these mistakes and misunderstandings only seem to occur when I write about Apple. As the commenter below mentioned, Apple has a nearly fanatic following that apparetnly causes many to detach from critical analysis. It doensn't help that Apple is pumped by the sell side and the media relentlessly, even when the sell side sell into their pump and dump recommendations.
iphone is going to kill it with RIMM tanking, droid will too, but the iphone is a better device
i can't even get my droid incredible to hang up after a phone call
in general I am an index guy because I can't due the due dill to really look into a stock. I also don't like idiosyncratic risk, but keep enough powder dry for when a company has a disaster, like the bp rig. then I buy. tepco for instance. for me then they are cheap options.
I trade long short a number of indexes with double inverse etfs. my skill is better tops and bottoms.
oh I never buy something hot, esp driven by a single man who is sick as crap. I don't believe the competitive advantage can be sustained. now rim down 50% is more interesting to me.