The Blog That Could Have Saved That Investment Bank - Or - Beware Of Those Poison Apples!!!

Reggie Middleton's picture

 In the post After My Contrarian Calling Apple's 3rd Miss Accurately, I Release My Apple Research Track Record For 2 1/2 Years, I came clean with the historical performance of my Apple research. Of course, many a hater had their hearts crushed as math and common sense once again ruled the day. Still, we see herd mentality and brand loyalty effect even those who're really supposed to know what they're doing - to wit: Rochdale Trader Made Unauthorized Purchases Of As Much As $1 Billion In Apple Stock Last Month

... a trader at Rochdale Securities made unauthorized purchases of $750 million to $1 billion in Apple stock last month and now the firm is seeking a lifeline. 

It's unclear when the unauthorized stock purchases took place, but shares of Apple have dropped around 11.5% since Oct. 1.

Stamford, Connecticut-based Rochdale, which employs noted bank analyst Dick Bove, is looking for a possible deal to recapitalize such as a capital injection or a merger, Bloomberg reports citing sources familiar. 

Well, it's obvious the brokerage didn't buy that trader a subscription to BoomBustBlog. I've been following Apple for roughly two years now and have been one of the (if not the) most accurate fundamental pundits on said matter, with my valuations hugging Apple's share price rather tightly for the entire time I have followed it.

aapl research accuracy copy

Reference Apple - Competition and Cost Structure 05/16/2011, which is now available for download to all due to its dated nature - even those who do not subscribe. Please note that this report only includes base case scenarios, while the latter reports included base, optimistic and pessimistic scenarios - which is much more realistic. Although some of the later reports are also stale-dated, they contain valuable knowledge that I'm not prepared to release to the public for free at this time.

On Friday, 12 October 2012 I posted A Review Of The Accuracy Of Last Quarter's Apple Earnings Notes where in I went over the true value of my last quarterly review of Apple's performance. Please note that this was before the Q3 earnings release:

A subscriber convinced me to post the 1st quarter's valuation bands (subscribers, see Apple Margin & Valuation Note 03/15/2012) for Apple to squelch the comments of those who are guessing what's behind the firewall. Our base case scenario was right on target, and  during the target and after the earnings release I realized that we underestimated international (especially Asian) sell though and shifted the weight towards the optimistic band which also proved fairly accurate. As all can notice, the pessimistic band is not shown, and that is where the value lies here. I am now shifting my bias towards (that's towards, not to) the pessimistic band, for I feel Apple has now started to feel the competitive and margin pressures that I warned of, and has done so right at the deadline that I gave in 2010 (this is just as much a factor of luck as it is skill, alas, if it bears fruit it bears fruit). The latest valuation bands can be accessed by paying subscribers below (click here to subscribe):

Apple 4Q2012 update professional & institutional
Apple 4Q2012 update - retail
"iPhone Margin worksheet - blog download

Just to make this perfectly clear, I've been stating that Apple had margin compression stemming from extreme competition coming for two years now. That does not mean that Apple will collapse. As a matter of fact, I've included my stale Apple reports and a graph that shows I've pretty much been on target with Apple's share price the whole while. And for those who are so concerned with timing, I've highlighted in bold font where I've told subscribers to turn pessimistic on Apple's share price. This was October, roughly 12% ago in share price and many tens of billions of dollars in market value.


Keep the following in mind as you peruse this post...

apple product chart growth

I discussed this in detail with Lauren Lyster on Capital Account. The margin discussion started at 7:55.

For those who haven't heard my description of Apple's arch competitor, Google's, business model, look here:

See Right On Time, My Prediction Of Apple Margin Compression 8 Quarters From My CNBC Warning Landed Right On The Money! for more on the mechanics of the margin compression theory for Apple.

The latest Apple valuation bands (including the advanced pessimistic bands) can be accessed by paying subscribers below (click here to subscribe):

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Zero Govt's picture

Ye Olde Boring Apple-Hater Comedy Clown Series No. 126.

Ere we go....againzzzzzZ

"..margin compression theory for Apple.."

How's your margin compression theory coming on GOOfy Reggie, it's veeery delayed, when's this turkey due bud?

Where were you, your crystal ball, your trumpet and your fiery sword of truth on GOOn's Ad Revenue model going down, down, down... and having to prop it up, up, up with sub-prime interest rates??

Where were you, your crystal ball, your trumpet and your fiery sword of truth on GOOn's Android-Not-4-Profit mega-losses, compounding, day-after-day, year-after-year, profit nowhere in sight?

GOOfy's so desperate they've had to dump their walking-dead-zombie Android software with zero price tag, swimming in red ink ......this isn't a commercial operation like Apple who makes profits on every product (remember that Reggie?) ...this is a GOOn biz model which like Tesla makes turkeys and chucks the zombies into a commercial marketplace... a desperate and pretty pathetic way to conduct business, you'd agree there yes oh man-of-maths-and-pure-logic? 

Will GOOfy ever claw-back their R&D and upgrade costs or is this a total turkey on countdown to Christmas Tesla?

Nobody minds your accuracy on Apples figures me old chum/p, it's your comical deathly silence on GOOns EVEN BIGGER troubles ahead. Hard to shut you up but never a squeek from you on GOOfy hitting the skids, just gets stuck in your throat does it Reggie?.

Try to answer the above questions you've been deliberately ducking and diving on ZH instead of your usual narcistic-loop of answering your own softball questions to make yourself look good. 

"These 2 products represent over 70% of Apples earnings"

Oh scary. Have you taken a looky at which 2 products represent over 70% of GOOfys earnings, they're even scarier'er'er?

GOOn don't earn anything from your beloved market beating (cough) product of the living dead Zombie-Android. It's a commercial dud. A black hole in the GOOn balance sheet. You're a man of financial analysis and yet you eulogise this loss-making turkey. What happened to your maths, pure commercial un-biased (cough) logic Reg?

And now it's double-trouble-time as GOOns other leg, Ad Revenue, their one and only profit centre is in decline. So GOOfy is in even WORSE position than Apples 2 profit centres. They have only 1 model (leg to stand on) which is being subsidised in the future from earnings of the past (good biz model Reg?) as their other commercial 'success' (how do you measure success in red ink Reggie, please explain?) is a blood-sucking zombie.

And we all know you'd be blowing turkeys out your arse if Apple were subsidising iPhone sales with their cash mountain... but Apple aren't that fucking desperate, no it's your hero that's scraping the bottom of the biz model barrel.

Your trumpeting of Apple problems but it's the GOOn squad that's in worse shape than ever. You must be holding out for Tesla being turned from another GOOfy turkey into a golden goose yes Reg?

This gets scaierie'er and scarier'er'er'er'er. Partuclarly for you Reggie, coz you and your big fat trumpet haven't got a leg to stand on, everything you diss about Apple just comes flying back to knock you off your nackered wheezing nag of a high horse.

But you think you're doing an "accurate" job? A man of financial analysis that loves a loss-making turkey like the walking-dead-product Android.. like all men of 'logic' and 'maths' it didn't take you long to shove your head up your arse... biased and blinkered masquerading as Mr Commercial Logic.

With Christmas comig up and turkeys getting scarier and scarier'er'er the only issue is which XMas you and in BIG trouble, only ONE leg left standing GOOfy will be getting stuffed