Steve Jobs

Last September, when we exposed the heretofore unknown entity actively managing Apple's $100 billion+ in offshore held cash (and thus untaxed in the US), we made the following "bold" prediction: "with the topic of finding effective tax loopholes which are perfectly legal, yet which apparently are unfair, serving as the basis of the entire presidential race to date, what Apple can be absolutely certain of is that once the farce culminating on November 6 is over, the government's eye will finally turn to minimizing "externalities" among such companies which have been able to pass through corporate tax savings to end consumers by abiding within the legal system that countless other muppet congressmen, senators and presidents have developed over the ages. Because while AAPL may have built the iPhone, very soon it will be only fair that it share its profits acquired over the years, and thus its cash balance...with the general public." Or in other words, in September we predicted the Apple "tax witchhunt" would take place shortly after Obama won his reelection. Today, it has officially begun.

Mitt Romney's net worth of $250 million is well-known by virtually everyone in America: after all, it was the primary campaign offensive used by the Obama team against his presidential challenger in an election run largely down wealth, and social class lines, and whom "Democrats targeted in ads and speeches as being out of touch with most Americans." What many may not know is that staunch democrat Al Gore's own personal wealth, has soared from virtually nothing in 1999 to a staggering $200 million according to an analysis conducted by Bloomberg.

Last time it issued bonds was in 1996, when it flirted with bankruptcy. But now a new era is dawning.

With today's cap-arb market frenzy focused on the latest development out of Cupertino, where Tim Cook moments ago announced that Apple's Goldman-syndicated bond issue would be $17 billion, the biggest ever for a corporate issuer (basically representing a circular cash flow stream where hedge funds give AAPL cash, so that AAPL cash pay them cash in return), some are wondering: is locking in a sub-4% yield for 30 years the best idea for a company which may not exist long before that? And with the stock recently having crushed the Apple collective, plunging 40% from its all time highs in a few short months, leaving many bottom and momentum-chasing hopefuls explaining just how they get to throw good monopoly money after bad monopoly money time after time, some are looking at alternative means of expressing their affection for the computer/cell phone/tablet company preferably coupled with a juicy ROI. One such suggestion comes from Germany's Auction Team Breker, which last November made news for selling an original 1976 Apple I computer for the world record price of $640,000 (€492,000). Considering the Apple I originally sold for $666.66 in 1976, this represents a jawdropping CAGR of 20%+ over 37 years, a return which trounces virtually every other asset's return over the same time horizon, or most other time horizons.  On 25 May 2013 collectors, capital appreciation chasers and Apple-aficionados will have the chance to buy another of the 6 surviving Apple I computers still in working order. Expected price $260,000-$400,000.

Who could have thought, one year ago, that we would one day see an AAPL bond prospectus for floating and fixed rate notes (due between 2016 and 2043). And yet here we are, as the preannounced AAPL bond prospectus goes live and proves what we said months ago: that some $100 billion of the company's offshore held cash is non-US recourse courtesy of repatriation taxes, forcing the company to raise even more cash to fund US-based capital decisions. Perhaps the most surprising (or least) thing is who the lead underwriter would be. No surprise anymore: Goldman Sachs.

The term “Story stock” used to mean a company with little more than a sheaf of press releases and a glitzy narrative about its future prospects.  Now, ConvergEx's Nick Colas notes that pretty much any stock with a fighting chance of outperforming needs to have a “Story” to cut through the clutter of a noisy macro-driven market.  Story-less equities where the valuation is cheap simply dawdle, while theoretically expensive story stocks sizzle loudly.  So what makes a good story?  The answer is not only “Blowin’ in the wind,” it is as old as the hills.  CEOs matter intensely – they tell the story, and in the best cases they are the “Hero” at the center of it.  Other types of narratives: “New Blood”, “Resurrection”, and “Conan the Barbarian.”  And even with all these categories, Colas reminds us that we can’t forget that the U.S. equity market is essentially one large story stock, driven by a “Hero” figure – even if you don’t consider Chairman Bernanke is the same league as Moses or Ironman. Of course, we don’t know how this particular “Story” will end.  We don’t call someone a “Hero” until they finish the cycle and return with their gifts and teachings. After all, if creating +$2 trillion out of thin air isn’t some powerful magic to fight off the forces of evil, we don’t know what is.

Bhutan's guiding national policy is Gross Domestic Happiness, as a reference point for Net Value. Here in the U.S., we give lip-service to all these values, but ask yourself: where do we spend most of our time? Serving our masters in the State/market economy, creating Net Worth for ourselves or someone else. Yes, we all still need to earn a livelihood, but imagine a society constructed around generating Net Value and Gross Domestic Happiness instead of Net Worth. The power structure would collapse because none of these activities or accomplishments generate enough profits or taxes to keep the Machine operational. A brush with mortality has a way of stripping away the superficial and the false. How many ghosts are we living with while our real lives have been abandoned as insufficiently ambitious and net-worthy?

I see many pundits on CNBC commenting on Apple. I believe they are ALL wrong! To begin with, nearly all of them are coming up with revaluations after the fact - which is simply too late and lacks credibility. Second, Apple has someserious steps to take if it is to get back into the mobile computing race.

The most anticipated earnings release of the quarter has come and it has been a dud, at least judging by the market's expectations and its response. Because while EPS beats just barely (a far cry from the epic EPS beats of Steve Jobs days) coming at $13.81 on expectations of a $13.53 print, revenue outright missed, coming at $54.5 billion on expectations of a $54.9 billion Q1 2013 result. Furthermore, fears about profit margins were proven correct, with total gross profit coming in at $21.1 billion, which alas was 38.6% of revenue, well below the vaunted 40% threshold (as a reference margin was 44.7% a year ago, and 40.0% a quarter ago). And finally, the breakdown by components in the iPhone 5 release quarter was just, well, meh.

In what may be very disturbing news for the AAPL-borg collective and the broader Hotel AAPLfornia, WSJ is reporting that Apple is working on a lower-end iPhone, a move which it dubs "a big shift in strategy as its supremacy in smartphones has slipped." To call this a big shift is a major understatement: no longer will Apple have the premium, ultra-luxury, aspirational product cache, which for a broad selection of its customers was the primary reason to keep buying iteration after iteration of the company's releases and lining up in droves around the block on release day. Especially since anyone seeking a "cheaper" iPhone could just buy a previous generation iteration of a gadget whose new product launch cadence is now jumping to twice a year, soon thereafter three times, and so on. Yet saddest for all those who have watched the progress of this iconic company over the past decade from the sidelines regardless of sentiment, the consumer products "Ferrari" that Steve Jobs built, just announced it is launching its own Yugo.

Things change fast in the technology world. 

Presenting Dave Collum's now ubiquitous and all-encompassing annual review of markets and much, much more. From Baptists, Bankers, and Bootleggers to Capitalism, Corporate Debt, Government Corruption, and the Constitution, Dave provides a one-stop-shop summary of everything relevant this year (and how it will affect next year and beyond).

Steve Jobs' EUR150mm yacht has been confiscated by a court in Amsterdam following Jobs' heirs decision not to pay the designer of the boat. As Holland's Nu.nl reports, the famous designer Philippe Starck had an 'agreement' with Steve Jobs that he would receive 6% of the price (or EUR9mm) of creating the yacht as his payment for designing the epic 80-meter, 27-iMac-controlled behemoth. Unfortunately, the 'agreement' was not on paper as the two men were 'friends' and so the heirs to Steve Jobs fortune have decided that the EUR6mm that Starck has received is quite enough. The yacht remains moored in the Port of Amsterdam under bailiff control. Must be a tough life eh?

The 20th century gave us Marcel Duchamp and "Fountain"... The 21st century gives us Steve Jobs and Hobo with iPhone.

Back in the 1960s, a clever but financially disadvantaged fellow placed a small ad in a national magazine that read something like: Money needed. Please send $1 to the address below. Do it today! No specific need was given, and nothing was promised in return, so that fraud could not later be charged. Yet within a few months, thousands of dollars arrived in his mailbox, a considerable sum in those days. Or so the urban legend goes. A half-century later, many things have changed, but one thing remains unchanged: People still need money, and they have not ceased to innovate ways in which to get it. Clearly there are a lot of new and imaginative ways of moving money around that vie for our attention. Many of them would be considered crowdfunding. Crowdfunding, if thought of merely as the pooling of resources for a common cause, is as old as human groupings. But that isn't the way it's thought of nowadays. The current king of the hill, Kickstarter, launched in April of 2009, has been a great success. So, is crowdfunding the future capital source for every new venture under the sun? Well, probably not... although we can't say for sure, because it does sometimes seem that way as new and imaginative ways of moving money around vie for our attention.