Apple is in the news for losing its rank for a time on Wednesday as the most valuable publicly-traded U.S. stock. And now Henry Blodget — who first became famous for the gap between his bullish reports on tech stocks and his bearish emails about them — is touting seven reasons why Apple is a buy.
From: http://www.forbes.com/sites/petercohan/2013/04/18/7-reasons-apple-is-more-doomed-than-you-think/
By Adam Levine-Weinberg, The Motley Fool
Filed under: Investing
Last September, Apple released its latest smartphone, the iPhone 5, to great fanfare. Nevertheless, many pundits claimed that the new iPhone was a disappointment; it didn’t seem innovative compared with its predecessors. The iPhone 5 is thinner and lighter than the iPhone 4S, has a bigger screen (4 inches, as opposed to 3.5 inches), provides LTE support, and offers an upgraded camera and processor. However, to many observers, these features seemed like minor tweaks. The result was hysteria about whether innovation at Apple had died along with Steve Jobs. Apple’s stock subsequently dropped 40% in less than six months.
Apple Price Chart: 9/21/12-3/21/13; data by YCharts.
Strictly speaking, Apple critics may be right that the company’s smartphone designs won’t be as innovative in the future as they were in the past. However, that’s primarily because Apple began with a great concept, so that the iPhone quickly became the gold standard among smartphones. By the time the iPhone 4 was released in June 2010, there wasn’t much left for Apple to improve on. (And that explains why the iPhone 4 remains so popular; demand outstripped supply in the fall quarter.)
Since 2010, Samsung and other vendors of Google Android phones have made significant progress to catch up with the iPhone. Recently, BlackBerry has taken a great leap forward as well. However, a look at the most recent product launches on rival platforms — Samsung’s Galaxy S4 and BlackBerry’s Z10 — suggests that Apple isn’t the only smartphone maker for which innovation is reaching a dead end. Smartphones are all converging toward a common look and feel, with similar capabilities.
From left to right: Samsung Galaxy S4, iPhone 5, and BlackBerry Z10. Images from the manufacturers.
That doesn’t necessarily spell doom for smartphone makers. There are plenty of people who still don’t own a smartphone, or who have a low-end smartphone but will eventually want a better one. And as Henry Blodget recently argued, significant improvements to battery life could persuade many smartphone users to upgrade. Finally, smartphones don’t last forever. Manufacturers should see strong replacement cycles over time, because of the recent increase in smartphone penetration.
An iPhone clone?
When the BlackBerry Z10 was introduced in January, many observers quickly noted its visual similarity to the iPhone. Its 4.2-inch screen makes it just slightly bigger than the iPhone 5, and the Z10 is an all-touch device, differentiating it from most previous BlackBerry phones. While the user interface is significantly different from iOS and Android, the general experience is similar: It’s all about apps.
BlackBerry has talked up the differentiating features of its BB10 OS, such as the Hub (a collection point for emails, texts, social media messages, and so on) and BlackBerry Balance (a feature to separate personal data from work data). Still, most observers agree that there aren’t enough differences to persuade iOS or Android users to switch in significant numbers. In other words, it’s different, …read more
Source: FULL ARTICLE at DailyFinance
By The Huffington Post News Editors
You might think Henry Blodget would be thrilled that an exhaustive profile in this week’s New Yorker touts his Business Insider for building an audience of 24 million unique visitors a month with its tabloid spin on the day’s business news.
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Source: FULL ARTICLE at AOL
By Jake Zamansky, Contributor During the stock research scandal of 2000, the world was amazed that Merrill Lynch superstar stock analyst Henry Blodget would actually put in writing that he considered the stocks that he was touting to retail investors as “pieces of s_ _t” and “pieces of junk.” The revelation of those e-mails resulted in a lifetime ban from the securities industry for Henry Blodget and hundreds of millions in damages paid by his employer, Merrill Lynch. In addition, the starkness of those e-mails and the spotlight that they shined on ugly truths about stock touting and deep-seated conflicts of interest on Wall Street shocked investors and destroyed investor confidence for a decade. …read more
Source: FULL ARTICLE at Forbes Latest
By Karl Smith, Contributor Justin Fox comments on Wall Street’s willingness to give Jeff Bezos whatever he wants But what’s really going on is that Jeff Bezos has trained elements of the investment community to expect that low profits (or big losses) now represent investments that will eventually pay off, not signs of trouble. How has Bezos done this? Well, he’s a hedge fund veteran who has always taken a skeptical view of Wall Street, treating it more as a loopy rich uncle than the efficient information processor of standard finance theory. When Uncle Wall Street (also known as Mr. Market) is in a generous mood, Bezos is always ready to take advantage by putting investment ahead of profitability. Fox is dismissive of finance theory, but goes on to give an explanation ready made for Bob Lucas could love. And so Amazon thrived in the crazy late 1990s, when Henry Blodget made his name as an analystby making outrageous guesses about how high Amazon’s stock price would go and seeing them come true long before he expected. It also thrived right through the gloomy early 2000s, when bond analyst Ravi Suria made his name picking apart Amazon’s balance sheet and worrying that the company wasn’t generating enough cash to make its bond payments (along with the 690 million euro issue in 2000, the company had sold $1.25 billion in bonds the year before). Suria was wrong about that. In fact, Amazon retired the last of the $1.25 billion bond issue just before the debt-market meltdown of autumn 2008. Nice timing, huh? Impeccable. If we think that Broker-Dealers rationalize market prices and what broker dealers value is an asset which generates cash precisely when Broker-Dealers are themselves short of cash then Bezos is better than the US Government. The US Government gets to borrow money for less than free, because Broker-Dealers know that when worst comes to worst you can always trade T-Bills for cash through Open Market Operations. Bezos apparently gets equity investments for free largely on the same terms. The deal works like this. When there is plenty of money to go around Jeff can always find a way to spend it. Yet the moment cash dries up, Amazon’s massive revenue stream will become your ATM, providing you with a life line of dollar-dollar bills. And the more Amazon-dependent Bezos can make consumers the more this works. Key to this strategy is that the percentage of revenue Amazon deploys in internal investment has to be higher than the fraction of revenue its likely to loose during a recession. One way to do that is simply to have an insane rate of investment. Then even if revenue collapses, you can always pullback more on investment. The other approach is to stabilize revenues so that even as consumers spend less overall, they don’t spend less than you. The later runs into diminishing returns to scale, but the second actually experiences increasing returns to scale. Income is more volatile than Consumption because Investment generally is more volatile than consumption. And inside of consumption, expensive long lived durables such as cars soak up much volatility. Thus, if Bezos sold Americans everything-but-cars-and-houses he is guaranteed a revenue stream that is more stable than National Income. To the extent Amazon was able to pull this off, rational shareholders would be willing to accept a negative real return on equity. Amazon, then isn’t a charity, but an insurance product for Investment Banks.
Source: FULL ARTICLE at Forbes Latest
