Well, it looks as if my Apple ruminations and research have come to Fruition - and rather accurately at that. Since Apple has such a cult following, I will set the facts straight right here in a nifty little timeline as Apple tumbles in real time. This is to correct those who are comprehension challenged in saying that I've been crying to short Apple for 400 points. To begin with, I run a subscription site, I generally don't give away actionable advice for free, I charge for it. I have warned about Apple's macro and business conditions - yes, but whether to go long or short on the stock,I only opined in public once. Read below to see how that turned out. My next post will start revealing some of my actual subscription materials in order to make public the accuracy and prescience therein. Is it time for 1000s and 1000s of rose colored #iPhone sporting #iSheep and #fanbois to issue kudos to the BoomBust???
Spring 2010 - I declare the mobile computing wars are on and Google looks to be the front runner (light years ahead of the sell side)...
The Creatively Destructive Pace of Technology Innovation and the Paradigm Shift known as the Mobile Computing Wars!
- There Is Another Paradigm Shift Coming in Technology and Media: Apple, Microsoft and Google Know its Winner Takes All
- The Mobile Computing and Content Wars: Part 2, the Google Response to the Paradigm Shift
- An Introduction to How Apple Apple Will Compete With the Google/Android Onslaught
- Don’t Count Microsoft Out of the Ultra-Mobile Computing Wars Just Yet
In October of 2010, I warned that Apple would face margin compression and make a short candidate. I DIDN'T say it should be short at that time, but I did say within 4 to 8 quarters competitive realities would catch up with it...
So, what happened exactly 4 quarters later? Oh yeah, Apple misses on margins, the stock drops - Reggie Middleton Wasn't the ONLY Openly Apple Bear in the .. This was the only time where I publicly stated I would short Apple. Announce contrarian short candidate - company misses and the stock dropped, right on the 4 to 8 quarter schedule! Sounds pretty good to me. Go to 2:20 in the video for a clear description of the margin compression illustrated below...
In the mean time, here are some updated margin charts to support what was said in the video and the extant Apple research for subscribers to review.
Yes, Apple is the vast majority of the desktop computer equity market capitalization!
Apple has, in just a few short years, morphed from a computer computer to a smartphone and tablet company, which essentially are just new age computers anyway. It's just that no one sees Motorola, RIMM or Nokia that way!
iphone marginsiphone margins
As the key revenue drivers see there margins compress (and I told you so two years ago), entity level margins will drop as well:
Which Is The More Sustainable Business Model - Selling The World's Information or Selling Shiny New Things???
Below is my latest on Apple, showing whether I believe this is the time to short and what I think Apple is really worth. I feel I have been on the forefront of the Apple issue AND have been rather accurate as well.
Click here to subscribe. After subscribing, I wish all newcomers to download the very simply and quick Apple margin model below to put your most optimistic assumptions in to see how they may look in terms of product sales.
- Apple 4Q2012 update professional & institutional
- Apple 4Q2012 update - retail
- "iPhone Margin worksheet - blog download
Industry Leading, Subscription Based Google Research
Google still exhibits the likelihood that they will control mobile computing for the balance of the decade.
Google Final Report 10/08/2010
A couple of bits from our archives...
The table of contents outlines how we have broken Google down into distinct businesses and identified both the individual business models and the potential revenue streams, as well as valuation for each business line.
Page 57 of the analysis shows a sensitivity table which outlines the various scenarios that can come into play and how it will change our outlook and valuation opinion.
Professional/institutional subscribers can actually access a subset of the model that we used to create the sensitivity analysis above to plug in their own assumptions in case they somehow disagree with our assumptions or view points. Click here for the model: Google Valuation Model (pro and institutional). Click here to subscribe or upgrade.