Steve Jobs

Had to cross post this discussion with my brother Michael Whalen from The Institutional Risk Analyst. The past articles in The IRA require a $99/yr subscription, but the most recent is free. 

Also note link to comment by Barry Ritholtz on The Big Picture re: the Facebook IPO.  Actually Goldman Sachs led the covert IPO and hype festival last year, but the folks at the SEC and FINRA were sound asleep.  

Chris

• Angela Merkel casts doubt on saving Greece from financial meltdown (Guardian)
• Germany Rejects ‘Indecent’ Call to ECB on Greece, Meister Says (Bloomberg)
• Obama Calls for Higher Taxes on Wealthy (Bloomberg)
• Fed set to push back timing of eventual rate hike (Reuters)
• Recession Looms As UK Economy Shrinks By 0.2%, more than expected (SKY)
• King Says BOE Can Increase Bond Purchases If Needed to Meet Inflation Goal (Bloomberg)
• When One Quadrillion Yen is not enough: Japan's first trade deficit since 1980 raises debt doubts (Reuters)
• Sarkozy to quit if he loses poll (FT)
• U.S. Shifts Policy on Nuclear Pacts (WSJ)
• ECB under pressure over Greek bond hit (FT)

SOTU Post Mortem:

The best news possible: "Nothing will get done this year, or next year, or maybe even the year after that." Barack Hussein Obama
The worst news: Everything else.

Here is the text of President Barack Obama’s State of the Union Address as prepared for delivery at 9 p.m. ET. "Jobs" 33 vs. "Fat Cats" 0, Rich 3 vs Poor 1, Hope 2 vs Unicorns 0, Change 9 vs Tooth-Fairy 0, Mortgages 5 vs Apple 0, Main Street 1 vs Wall Street 3, China 4 vs Europe 1; DEBT CEILING 0

Without trying to take away from Apple's blow out earnings, a quick look at the Apple data sheet breaking down revenue and unit sales by geography points to something rather curious. While unit sales in Q4 were fine, with a modest drop in the US, even as European sales posted the biggest sequential increase on record at 306K (from 1,176K to 1,482K), one wonders just how sustainable this in itself is, now that Europe has officially entered a recession, especially since the incremental revenue in Europe in Q4 was also a record $3.9 billion (of the total $18 billion sequential increase). Yet nowhere was this quarterly surge more evident than in the US: the increase in American sales was a unprecedented $8.1 billion sequentially, from $9.7 billion to $17.7 billion (which means margins are blowing out: how long until FoxConn has something to say about this?). While most of this is to be attributed to the iPhone 4S launch in the quarter, the question then is just how sustainable is the new trendline growth if one normalizes for product cadence (yes, we hate that word too), or the ability of the company to reinvent itself quarter after quarter. With the iPad 3 expected this quarter, and the iPhone 5 the next, will Apple be a "product to product" company going forward, and what happens with baseline revenue growth ex-new product innovation? Or how about self-cannibalization? Not like we are saying anything new here, but the value of Apple is in product innovation, which is nowhere better seen than in the sequential Q4 revenue. Will this innovation ability stay with the new management? And how much of the Q4 sales surge was, sad to say it, the Steve Jobs death factor? Finally, the fact that in Q4 AsiaPac revenues were less than a year prior, does this mean that even with the 4S release, Apple has now lost the Asian market to cheaper, pirated, or Google-based competition? Finally, in a tried and true tradition of instant gratification (credit funded naturally), how much of the explosion in the December 31 quarter sales is simply a "cash for clunker"-like forward shifted of purchases that would have otherwise happened in the first quarter of 2012?

The real outlook of Monetary Easing vs Treasury Yields

We have now entered the fifth year of this Fourth Turning Crisis. George Washington and his troops were barely holding on at Valley Forge during the fifth year of the American Revolution Fourth Turning. By year five of the Civil War Fourth Turning 700,000 Americans were dead, the South left in ruins, a President assassinated and a military victory attained that felt like defeat. By the fifth year of the Great Depression/World War II Fourth Turning, FDR’s New Deal was in place and Adolf Hitler had been democratically elected and was formulating big plans for his Third Reich. The insight from prior Fourth Turnings that applies to 2012 is that things will not improve. They call it a Crisis because the risk of calamity is constant. There is zero percent chance that 2012 will result in a recovery and return to normalcy. Not one of the issues that caused our economic collapse has been solved. The “solutions” implemented since 2008 have exacerbated the problems of debt, civic decay and global disorder. The choices we make as a nation in 2012 will determine the future course of this Fourth Turning. If we fail in our duty, this Fourth Turning could go catastrophically wrong. I pray we choose wisely. Have a great 2012.

Our tribute to Steve Jobs..

You’ve undoubtedly heard by now that Steve Jobs passed away yesterday after a long battle with cancer; it’s been all over the news with wall-to-wall coverage, and iCandle vigils have sprung up all over the world. Jobs is being remembered as a pioneer, a technological revolutionary, a visionary.  Rightfully so. But it’s important to give credit where credit is due, and the world owes a tremendous debt to Steve Jobs for something else. He was perhaps the greatest living example of ‘philanthropy’ in action. While people like Warren Buffet are pleading with the government to raise their taxes and give away their wealth to sycophantic bureaucrats, Jobs showed time and time again that the best way to improve people’s lives is to create value and be productive.

Steve Jobs has passed away, may he rest in peace

Our thoughts are with Steve.

The market is not taking the Steve Jobs news well for now.

To the Apple Board of Directors and the Apple Community...

With Apple due to report earnings after the close, everyone is focusing on the stock whose market cap at this rate of growth will surpass $1 trillion within a few short years. While we wish Apple all the best in that questionable pursuit, especially if it wishes to avoid a Volkswagen-Porsche type short squeeze, it is interesting to note that the WSJ has reported that "some directors" are pondering the succession of the iconic Steve Jobs, who until 2 years ago was perceived as instrumental and the vision behind what has become the "coolest" brand in technology. The surprising finding is that this may be happening behind his back. From the WSJ: "Since Steve Jobs went on medical leave this winter, some members of Apple Inc.'s board have discussed CEO succession with executive recruiters and at least one head of a high-profile technology company, according to people familiar with the matter. The conversations weren't explicitly aimed at recruiting a new chief executive and were more of an informal exploration of the company's options, said these people. The directors don't appear to have been acting on behalf of the full board, some of these people said. Apple has seven directors, including Mr. Jobs." Jobs response was not very agreeable: "It is also unclear whether Mr. Jobs was aware. "I think it's hogwash." However, while we assume that no voicemails were hacked in the procurement of hits article, we do tend to believe the WSJ, especially with Jobs' frail health in the last few months. Will it impact the stock as it did once upon a time: probably not. Or at least not until such time as the absence of Jobs does change the precarious ecosystem balance of geeky, techy and cool. Finding a replacement will not be easy.

The Apple RDF (reality distortion field) is running at full tilt, and the pop tech media serves as an outsourced marketing arm for the firm. Actual reporting of the news, not to mention any real analysis, is simply non-existent. I debunk the following Apple.myths - Supply chain lockup = unassailable pricing, customers prefer iPads over everything else, & iPads perform better. Best of all, I actually take it to the streets to let real people decide the truth once and for all. Oh yeah, & here comes that margin compression countdown in 4 quarters, 3, 2, 1!!!

Jobs also says that he will continue as CEO and be involved in major strategic decisions for the company. As a reminder Apple accounts for about 20% of the Nasdaq. As a further reminder, the last time it was even rumored the COO was leaving, the stock tumbled $20 in the span of a few milliseconds. German listed Apple shares fall 1.8% following the news.