This is a video follow-up to the post I did a couple of weeks ago after the Apple earnings announcement titled "Again, The Sell Side Analysts (Even The Rock Star Analysts) Don't Seem To Understand The Mobile Computing Wars".

Initially, I was going to go the PC (as in politically correct) route and treat Mr. Munster with kids gloves, but we're all adults here and I want everyone to realize that this is not a form of character assassination, a personal or professional attack, libel, slander or even my just being rude. Gene Munster is a professional, and a seemingly intelligent one at that. It's just that he is wrong, dead wrong, and has been wrong for some time. Despite his extreme inaccuracies regarding Apple and its share price, he is the go to guy for the financial press and mainstream media, not to mention the Apple-centric blogosphere for all things Apple investment related - despite his being wrong as hell. 

First reference this quick 3 minute video..

Now reference the following graphic illustrating a search on Mr. Munster's Apple price targets...

Munster in the media Apple 1000 and beyond

Click here to subscribe or purchase this update. Paid subscribers click here: File Icon Apple 4Q2013 preliminary update. As we wait for my elfin magicians and presdigitation analysts to finsih up on the updated valuation numbers, I'm quite comfortable in recommending subscribers adhere to the latest set of valuation numbers proffered in the last Apple update. 

Subscribers, download the Q3 2013 valuation reports (click here to subscribe).

The update from two months ago is also of value for those who haven't read it. It turns out that it was quite prescienct!

See also:

What Sell Side Wall Street Doesn't Understand About Apple - It's Not The Leader Of The Post PC World!!!

 The short call - October 2012, the month of Apple's all-time high and my call to subscribers to short the stock:  Deconstructing The Most Accurate Apple Analysis Ever Made - Share Price, Market Share, Strategy and All

Published in BoomBustBlog

krugman-picsay

Paul Krugman wrote an anti-cryptocurrency Op-Ed piece in the NY Times titled the "Anti-social Network". Now, I know the Times needs to sell ad space and subscriptions, hence technical accuracy may not be exactly what they are going for, but Mr. Krugman (the classical Keynesian economist type - I don't particularly subscribe to such schools of thought, I guess I'm not educated enough) has spewed so many inaccurate statements, false facts and just plain old indications of his total misunderstanding of the subject matter one would think it would behoove the Times to either have him issue corrections (or, since it is Op-Ed after all) have someone such as my self (you know, maybe a little less academically involved) come after him and clean up a little. 

Now, where shall I start? To quote Mr. Krugman:

So how is bitcoin different? Unlike credit card transactions, which leave a digital trail, bitcoin transactions are designed to be anonymous and untraceable. When you transfer bitcoins to someone else, it’s as if you handed over a paper bag filled with $100 bills in a dark alley.

I don't think that's true Mr.Krugman. Let's refer to Wikipedia's write-up on the Cryptocurrency...

 Once validated, every individual transaction is permanently recorded in a public ledger known as the blockchain.[8] 

I believe Mr. Krugman made this error due to the accuracy of a statement made earlier in the Wikipedia description of Bitcoin, to wit:

Bitcoin (signBitcoinSign.svg; code: BTC or XBT[7]) is a peer-to-peer digital currency that functions without the intermediation of a central authority.[8] 

You see, the old school way of applied economics may very well have a big problem wrapping their collective heads around the concept of the absence of a "central authority" (read central bank) to act as the Grand Pubah, or ultimate financial intermediary. I'm just saying..

And to go on with the oh so witty comments from Mr. Krugman...

And sure enough, as best as anyone can tell the main use of bitcoin so far, other than as a target for speculation, has been for online versions of those dark-alley exchanges, with bitcoins traded for narcotics and other illegal items.

Bitcoin is a currency that's no older than 4 or 5 years. Has any other currency experienced a genesis any different than Bitcoin? The US dollar, when freshly minted was used for the spurious trade of human lives, the lives of my very own relatives several generations back, actually. It was the tool for rampant speculation as well, prone to extreme volatility and purposeful devaluations. Was it really so different from Bitcoin before it went mainstream (that is except for the purposeful devaluations part since there is no Grand Pubah to unilaterally call the market shots)? Methinks this economist may be picking and choosing his facts. For instance, look at how he started the Op-Ed missive in the first place...

Bitcoin’s wild ride may not have been the biggest business story of the past few weeks, but it was surely the most entertaining. Over the course of less than two weeks the price of the “digital currency” more than tripled. Then it fell more than 50 percent in a few hours. Suddenly, it felt as if we were back in the dot-com era.

The economic significance of this roller coaster was basically nil. But the furor over bitcoin was a useful lesson in the ways people misunderstand money — and in particular how they are misled by the desire to divorce the value of money from the society it serves.

Volatility is the name of the game with new currencies that have limited penetration and distribution, no? Why pick on bitcoin? Let's recall how the US dollar got started via the continental note, as per Wikipedia:

By the end of 1778, Continental Currency retained between only 1/5 to 1/7 of their original face value. By 1780, Continental bills - or Continentals - were worth just 1/40th of their face value. Despite efforts by Congress to reform the currency by removing the old bills from circulation and issuing new ones, the attempt met with little or no success. By May 1781, Continentals had become so worthless they ceased to circulate as money. Benjamin Franklin noted that the depreciation of the currency had, in effect, acted as a tax to pay for the war.[1] In the 1790s, after the ratification of the United States Constitution, Continentals could be exchanged for treasury bonds at 1% of face value.[2]..

Hey, it doesn't end there...

 On August 8, 1785, the Continental Congress of the United States authorized the issuance of a new currency the US dollar.

However runaway inflation and the collapse of the Continental currency prompted delegates at theConstitutional Convention in Philadelphia in 1787 to include the gold and silver clause into the United States Constitution preventing individual States from issuing their own bills of credit. Article One states they were prohibited to "make any Thing but gold and silver Coin a Tender in Payment of Debts."[4] 

 Paul then goes on to compare Bitcoin enthusiasts to Goldbugs - which was inevitable. I'm far from a Goldbug, and those that follow me can attest. Apparently Mr. Krugman isn't either, but he appears to make a specious argument, to wit:

The similarity to goldbug rhetoric isn’t a coincidence, since goldbugs and bitcoin enthusiasts — bitbugs? — tend to share both libertarian politics and the belief that governments are vastly abusing their power to print money. At the same time, it’s very peculiar, since bitcoins are in a sense the ultimate fiat currency, with a value conjured out of thin air. Gold’s value comes in part because it has nonmonetary uses, such as filling teeth and making jewelry; paper currencies have value because they’re backed by the power of the state, which defines them as legal tender and accepts them as payment for taxes. Bitcoins, however, derive their value, if any, purely from self-fulfilling prophecy, the belief that other people will accept them as payment.

I really need somebody from the academic ivory towers to explain to me the difference between paper currencies being backed by the power of the state and Bitcoins alleged self fulfilling fulfilling prophecy of the belief that other people will accept them as payment. Both of these concepts share one common theme that seems to have escaped Mr. Krugman - Belief!!! Being backed by the full faith and power of the government means nothing unless you believe that government backing has a real value. That real value, if you do believe in it, is solely a function of your level of belief in the government and the governments willingness to back the currency  and to what extent. After all, Greek bonds written under Greek law are backed by their government as well, as are Somalian bonds. So, pray tell, what's the difference between the value of those bonds and US treasuries? Belief, that's the difference! Again, a refresher from Wikipedia:  

Today, like the currency of most nations, the dollar is fiat money, unbacked by any physical asset. A holder of a federal reserve note has no right to demand an asset such as gold or silver from the government in exchange for a note.[28] Consequently, some proponents of theintrinsic theory of value believe that the near-zero marginal cost of production of the current fiat dollar detracts from its attractiveness as a medium of exchange and store of value because a fiat currency without a marginal cost of production is easier to debase via overproduction and the subsequent inflation of the money supply.

Published in BoomBustBlog

Below are additional observations regarding Apple's most recent earnings announcement. Please pay particular attention to the new video content.

Quick chain of events:

  • I explained the business strategy behind the iPad designed to allow Apple to enter the netbook fray without Margin compression it worked!

  • The iPad, a raging success, still had lower margins than the cash cow iPhone franchise but still served its purpose in allowing Apple to diversify its revenue streams for over 60 percent of its profits came from a single product - and that's dangerous!
  • I warned that Google's Android will quickly start eating Apple's lunch, which was high in margin fat. I was proven correct as Apple's tablet market share (a market that Apple ingeniously reinvented) fell from 92% to 32% in just 3 short years.

Reference: 

Sliced Apple Margins For Dinner?

Steve Jobs Calls End Of the PC, We Call The End Of The Fat Margin Tablet – Including The Pretty iPad, With Proof! 

Then go on to BGR.com: History repeats itself: Android tablet shipments blow past iPad

Whether or not people are really using Android tablets, it has become clear thatAndroid tablet shipments are absolutely exploding as Apple’s overall iPad shipments decline

iPad Shipments Decline As BoomBustBlog Time Machine Disrupts ...Jul 31, 2013

Apple's iPad Is Losing Market Share And Profit Margin As Apple Hits ...Mar 16, 2012 

  • Samsung emerged as the top Android vendor (again as forecast at BoomBustBlog, reference Deconstructing The Most Accurate Apple Analysis Ever) by offering a wide array of products, many of which offered superior performance to Apple's, due in large part to Android performance enhancements and capabilities. 


  • Samsung released 7 and 8 inch tablets which sold well. I forecast that tablet sales will continue to dwindle due to the increasing capabilities and screen sizes of cell phones. The performance and comfort of use delta is shrinking quickly.
  • Samsung released the Galaxy Note, though panned by tech critics and pundits, was a success in the market.
  • Samsung released the Galaxy Note 2 which further defined the segment and was a raging success.
  • Google launch its own branded tablet, the Nexus 7, at a cut rate price with leading performance and it was an immediate hit- confirming my thesis on the converging form factor - reference Steve Jobs Calls End Of the PC, We Call The End Of The Fat Margin Tablet – Including The Pretty iPad, With Proof! 

Apple US sales have completely stalled and growth is coming only from international sales. Those sales will be stymied in part by devices such as the Moto G on the low end and the Oppo Find 5 and N1on the high end - both with a price/performance ratio that can't be touched by a fat margin vendor - Apple or otherwise.

Subscribers, download the Q3 2013 valuation reports (click here to subscribe).

File Icon Apple 4Q2013 preliminary update

The update from two months ago is also of value for those who haven't read it. It turns out that it was quite prescient!

  1. File Icon Apple 1Q2013 update - Pro & Institutional (Technology)
  2. File Icon Apple 1Q2013 update - Retail (Technology)
Published in BoomBustBlog

 moto G

Google has fired a shot across the bow of the smartphone market, and it quivers in response

Yesterday, Google's Motorola division released the Moto G, a $179 full featured smartphone with a screen resolution and size superior to the $650 iPhone 5S, and an all day battery that bests the iPhone and Samsung Galaxy S series as well. This is a fully functional smartphone that is priced below the cost (as in the cost to build!!!) iPhone 5S and Samsung Galaxies (as in all of them!). Needless to say, this threatens to give Google significant market share in the low and mid-tiers, not to mention full vertical integration (the hardware, software, app ecosystem, cloud and services will belong to Google - leaving only the wireless pipes for it to contend with, and I would not sleep there either [Google Fiber in your diet}).

Google's cost shifting business model allows them to sell this phone below the actual cost of manufacturing and development of many if not all of its competitors. For those not familiar with the concept of cost shifting...

This is how Google did it...

For those who do not remember the importance of market share on margins, let's reminisce on post past...

Looking Through Windows To See The Big Data On Fruit - Or Android Gets 'em Again

In early 2010 I warned on Blackberry (then RIMM), with market share loss to Android being the prime determinant... . I put significant data out in the public domain to illustrate my point and put explicit price points out for subscribers, ie. RIM Smart Phone Market Share, RIP? Was I right?

Blackberry market share vs margin correlation analysisBlackberry market share vs margin correlation analysisBlack

I explained this in detail in the post "Cost Shifting Your Way To Prominence Using The Network Effect, Or Google Wins - Apple, RIM & Microsoft Have ALREADY LOST!". Failure to achieve the network effect effective is tantamount to a failure to be able to control you margins, long term. Of all people to of know this, who do you think preached it most convincingly? 

Margin compression was sure to kill Blackberry, even if they did hit their sales numbers, which they didn't and couldn't!!!

 

Related reading...

The Smallest & Liveliest Of The DeadBeat Carriers Successfully Launched Wireless WMDs

Again, The Sell Side Analysts (Even The Rock Star Analysts) Don't Seem To Understand The Mobile Computing Wars

Reggie Middleton's Apple Q4 2013 Analysis: RDF In Full Effect As Analysts & Press Go GaGa Over Garbage!

Within two years of getting the mobile computing crown (toppling Apple and insuring that Nokia and Blackberry didn’t stand a chance), Samsung is already prepping to relinquish it. I know, the hoi polloi screams from the common street analyst’s rooftop, incessantly chanting “… but Samsung is dominating handset sales, creating and literally owning categories, and essentially out Appling Apple!”

Well, the reason why I apparently out-maneuver the Street in this space (as in others) is not vastly superior intellect nor a LiPoSilica Oxide powered crystal ball borne from some extraterrestrial technology. It’s actually so much simpler than all of that.

See also...

Thumbnail 5:31 Reggie Middleton Wins The CNBC Stock Draft 21 Stocks, 7 Traders, One Winner

Buy Apple till $1000! Hurry & get this Facebook IPO while its hot! Short Google to go long Apple! Reggie Middleton shorts Wall ...
Reggie Middleton goes for his 2nd consecutive win on the CNBC Stock Draftinvestment challenge. Look at the amount of ...

Subscribers, see also... 

Subscribers, download the Q3 2013 valuation reports (click here to subscribe).

The update from two months ago is also of value for those who haven't read it. It turns out that it was quite prescient!

  1. File Icon Apple 1Q2013 update - Pro & Institutional (Technology)
  2. File Icon Apple 1Q2013 update - Retail (Technology)

 

Published in BoomBustBlog

In foillowing up on the photographic capabilities of the flagship device from Oppo, I want to make my followers aware of the following updates. I have taken a few more pictures around town and I'd like to share what I've discovered from this capable device from the Chinese Margin Compressor known as Oppo.

After takng a trip to a local AT&T store...

20131110 150752

Now, as you may recall from my post yesterday (A Thorough Look At The Oppo N1's Photographic Capabilities: Low Margin, High OEMs That Can Threaten Apple & Samsungregarding the N1's dissappointing camera performance I believe this hardware can do better. As you can see above, if the subject is saturated with light the N1 outperforms in terms of realism if not resolution. I mailed the company yesterday (Sunday) early evening and they replied early this morning (remember, the company is based in China, I'm in NYC). This is the reply: 

We'll be sending out a firmware update on Nov. 14th (subject to change) and you should see improvements with both the camera and the battery life. Will confirm that date when I can. Thanks for sending in that post!

Maybe I'm a little cynical, but I doubt very seriously I can get a turnaround that fast from Samsung, LG, Apple, Nokia/Microsoft or Apple. I have a problem getting samples of the product sent over. Let this be and example of how hungry and responsice this little manufacturer of high end equipment is. When you raise the bar on performance and drop prices, what does it mean????

image078

On the topic of battery life, the N1 has the biggest battery that I'm aware of in a cell phone. Here's the results of my first day of usage. For those who don't speak Android, I used this phone for 22 and half hours taking photos and videos, VOIP phone calls, surfing the web, etc. and still had 19% battery left. Oppo says there's an update coming out in 3 days that will further extend battery life. How do they achieve such a long lasting battery? A 3,600mAH battery (the largest in the industry) coupled with a CPU chip that is frugal, no LTE (but it does have penta-band HSPA+) and optimized and above all, light, customization to the Android OS.

Regarding the picture below, the phone was plugged into a car charger between 10 to 20 minutes in the middle of the day, and although the cellular radio was on, no SIM chip was installed. Instead I used VOIP while tethered to my other phone throughout the day. Most other sensors and radios were on and I took extensive full resolution pictures with and without the flash.

thumb CAM00105 copyo

Why am I focusing on the camera so much?

When the  first camera appeared on cell phones in Japan in 2000 and shortly thereafter in the states, photography from the phone was a novelty. The pictures were grainy, blurry and very low resolution. It was at this time that the camera manufacturers should have caught on. Alas, like practically any other successful industry, they rested on thier laurels as cell phone and then smart phone manufacturers steadily increased the performance of their devices. Fastforward ten years and these cell phones have all but decimated the once powerhouses in point and shoot photography. Ask KodakOlympus, Polariod and Minolta if you doubt me, or reference Put your point-and-shoot in a museum, next-gen phones have finally...

Now, we have the heavy weights of the photography industry - who have all gove digital - and they are exhibiting the same hubris as the smaller point and shoot guys - you know, the guys who are all but out of business. Reference To Save Itself, The DSLR Market Should Look To Smartphones And Revalue Each Press Of The Shutter or reference the WSJ report claiming DSLR camera shipments could fall 9.1 percent by the end of 2013, versus 2012, according to research firm IDC. As you might imagine, DSLR diehards poo poo this notion, but then again so did the executives of the point and shoot industry 5 years ago. Don't worry fellas, I know - "But... But... But... It's different this time!"

From the N1 without the software patch... 20131110 155251 9411IMG20131110151456 1IMG20131110152940IMG20131111015705IMG20131111024856

{youtube}MgiituhsRsg{/youutube}

Subscribers, download the Q3 2013 valuation reports (click here to subscribe).

The update from two months ago is also of value for those who haven't read it. It turns out that it was quite prescienct!

See also:

What Sell Side Wall Street Doesn't Understand About Apple - It's Not The Leader Of The Post PC World!!!

 The short call - October 2012, the month of Apple's all-time high and my call to subscribers to short the stock:  Deconstructing The Most Accurate Apple Analysis Ever Made - Share Price, Market Share, Strategy and All

Published in BoomBustBlog


smartphones-picsay

Last week I aggressively chided rock star sells side analysts for daring to say that Apple's reported slide in gross margins weren't real reduced margins. Those who know the industry well know that Apple is being sucked into matching the efforts of the market king Microsft and the uber aggressive challenger Google in the offering of free office productivity software. Of course, this brings about #MarginCompression for all but Google since the other two companies actually sell this software while Google always gave it away for free.

Well, last week we say Apple write down nearly a billion dollars on this event, and today we can expect the same from Microsoft, again potentially couched in the effect of its weakening but still apparent reality distortion field. To wit, ZDnet publishes: Microsoft improves its free online Office

Where's Office for the iPad? Maybe you're looking in the wrong place. Today, Microsoft released its latest batch of Office Web App updates, pushing its free offering well past the feature set offered by its rivals.

Office is Microsoft's fattest cash cow. It's even more profitable than the ubiquitous Windows franchise. Pray tell, what happens when you materially increase functionality while simultaneously drop and/or maintain pricing at ZERO?

Once again, why is this happening?

For paying subscribers:

Published in BoomBustBlog

Inflation vs deflation vs stagflation

The primary business of banks is lending.

  1. In a recession, not many people and businesses borrow, hence lending tends to be a poor business.
  2. In order to make money off of lending assets you need a reasonable return.
  3. When ZIRP (Zero Interest Rate Policy) is applied, said reasonable return does not exist unless banks dramatically mark up the cost of the loan which brings up back to point one.

In the states I made this point when most analysts insisted that ZIRP was good for the banks, to wit...

Now remember, I've been very bearish on the EU and thier banks and sovereign debt in particular, since Q! 2010 - way before most - reference Pan-European sovereign debt crisis. Yesterday morning if you were to Google the term EU recovery, you would see something like this in return... 

Well, somebody better tell Draghi, as per Bloomberg: ECB Cuts Key Rate to Record Low to Fight Deflation Threat

The European Central Bank cut its benchmark interest rate to a record low after a drop in inflation to the slowest pace in four years threatened its mission to keep prices stable.

Policy makers meeting in Frankfurt today reduced the main refinancing rate by a quarter point to 0.25 percent. The decision was predicted by three of 70 economists in a Bloomberg News survey. The ECB kept its deposit rate at zero and trimmed the marginal lending rate to 0.75 percent. ECB President Mario Draghi will hold a press conference at 2:30 p.m.

The ECB now has just one more quarter-point cut left before reaching zero, increasing the likelihood of unconventional tools such as quantitative easing or a negative deposit rate if prices slow further or the economic recovery stalls. Euro-area inflation is less than half the ECB’s target and unemployment is at the highest level since the currency bloc was formed in 1999.

“There comes a point where inflation is so weak, and coming in weaker than anticipated, that the case for loosening policy becomes too hard to resist,” said Richard Barwell, senior European economist at Royal Bank of Scotland Group Plc in London, who predicted the cut. “Bad unemployment numbers only make the case stronger.”

Does it seem like I've predicted the future hear once again as that Financial Nostradamus Dude???

Quantitative Easing

A Fed-style quantitative easing program has repeatedly been ruled out by ECB policy makers. The central bank is barred by European Union treaties from financing state debt, making large-scale purchases of government bonds open to a legal challenge.

While Draghi has floated the prospect of a negative deposit rate, the rate for commercial lenders who park excess cash at the central bank, policy makers have said that its effects can’t be adequately predicted. A negative deposit rate could hurt banks’ profitability by lowering money-market rates, potentially hampering credit supply to companies and households and reducing banks’ incentive to lend to other financial institutions.

“If inflation stays low, as seems likely, and the threat of inflation expectations becoming unanchored to the downside increases significantly, then all the tools in the box can come into play,” said Ken Wattret, chief euro-area economist at BNP Paribas SA in London. “But knowing the way the ECB operates and how long it has taken to try and get support for a refi rate cut, doing the big stuff could take some time.”

Well, I believe QE has already been implemented by the ECB accepting trash sovereign debt as marketable collateral, but that's a discussion for another day. Just listen to the Financial Nostradamus dude when he warns what happens when a larger, admitted QE program is instituted. For one, you'd probably eliminate that inflation problem... replacing it with...

Published in BoomBustBlog

deadbeat2 

Bloomberg reports: T-Mobile Sales Beat Analysts’ Estimates as Subscribers Surge. So, how did BoomBustBloggers know this would occur? Well, It started last year with the article "Deadbeat Carrier Creative Destruction In The Ongoing Mobile Computing Wars". You see, US wireless carriers are running one of the biggest Ponzi schemes around. The buy overpriced hardware from manufacturers on contract (see Have We Reached "Peak Premium Smartphone"?) mark up said hardware and then offer it at heavily and usurious financing rate otherwise called a subsidy. The US consumer buys these overpriced devices for a relatively small downpayment and then proceeds to pay through the nose to the carrier a very, very margin rich wireless fee for what amounts to a commodity service of dumb virtual pipes through the airwaves.  Not only does the carrier recoup its outlay for the device purchased en masse from the OEM, the carrier also tacks on and collects a very large premium for its post paid wireless services as well.

There are 4 major national carriers in the US, basically two big ones two smaller ones. The smallest of the 4, T-Mobile, consistently go beat up - losing out on the right to subsidize the iPhone at a loss (like AT&T used to and Sprint still does) and basically losing subscribers. Then they decided to do something about it. They said, "Hey, let's stop being deadbeats!". By changing their pricing plans and eliminating subsidies and instead selling pure access to their virtual pipes (like a carrier is supposed to) combined with actual "real" financing of the hardware (at competitive rates, nonetheless) they essentially committed DeadBeat Carrier Blashphemy. The only issue was, it worked, to the chagrin of the competition - reference:

 Reggie Middleotns Carrier Cost ComparisonReggie Middleotns Carrier Subsidy Cost Comparison

Now, back to the Bloomberg article whose substance we predicted this time last year: T-Mobile Sales Beat Analysts’ Estimates as Subscribers Surge

T-Mobile US Inc. (TMUS), the fourth-largest U.S. wireless carrier, reported third-quarter sales that exceeded analysts’ estimates as its cheaper service plans and phone-upgrade strategy attracted customers.

Sales rose to $6.69 billion, an increase of 8.7 percent when adjusted to account for T-Mobile’s merger with MetroPCS Communications Inc., according to a statement today from the Bellevue, Washington-based company. Analysts projected $6.58 billion, the average of estimates compiled by Bloomberg.

T-Mobile, which combined with MetroPCS in May, added 648,000 new monthly subscribers, topping the 401,000 average estimate and gaining for a second straight quarter. 

T-Mobile, which merged with MetroPCS six months ago, added 648,000 new monthly subscribers, topping the 401,000 average estimate and gaining for a second straight quarter. T-Mobile has benefited from offers such as zero-down financing on phones and a $10-a-month service that lets customers upgrade their devices more often -- a program that rivals such as Verizon Wireless, AT&T Inc. (T)and Sprint Corp. (S) have now adopted. 

Umm... Margin Compression!!!??? Remember we called this in the telecomm space a few months ago... Deadbeat Carriers Compete, aka #MarginCompression!!!

The net loss was $36 million, following a second-quarter net loss of $16 million. The average phone bill for monthly subscribers shrank about 3 percent to $52.20 from the second quarter as more customers opted for cheaper plans. Analysts had projected $52.86, according to a survey of seven estimates by Bloomberg.

... T-Mobile rose 1.7 percent to $28.83 at 9:42 a.m. in New York. As of yesterday, the shares had climbed 72 percent since May 1, following the MetroPCS merger. Deutsche Telekom rose 0.6 percent to 11.82 euros in Frankfurt.

Who in the hell is behind this rampany wave of #MarginCompression? Oh yeah! Google Has Officially Gone On Record To Confirm Reggie Middleton's "Negative Margin Business Model" Tactics. Google has created an atmosphere and environment that is primed to drive down the cost of computing and Internet access even further. I will discuss that in detail in my next article on this topic. In the meantime and in between time, read: 

Subscribers, this is directly relevant to both the Apple and the Google valuations. 

Recent Apple Valuation Reports

Subscribers, download the Q3 and Q4 2013 valuation reports (click here to subscribe).

The update from two months ago is also of value for those who haven't read it. It turns out that it was quite prescienct!

Recent Google Valuation Reports

Published in BoomBustBlog

Note: The next three annual subscriptions (professional or higher) will get the opportunity to purchase their own pair of Google Glass Explorer Edition, through the Glass referral program. Click here to subscribe, and if you want to be referred to purchase your own pair of Glass then email me after payment.  

smartphones-picsay

Last week in Reggie Middleton's Apple Q4 2013 Analysis: RDF In Full Effect As Analysts & Press Go GaGa Over Garbage! I wrote:

Apple Still Has The Business and Financial Press Mesmerized With It’s RDF (Reality Distortion Field)

For some reason when I read management comments and financial statements I seem to see something totally different from Sell Side Analysts and the financial and business press. This is an excerpt from “Business Insider” on Apple’s Q4 earnings results:

The stock initially tanked after the numbers were out thanks to weaker than expected margin guidance. Apple guided to 36.5%-37.5%, which suggests a flat margin despite a new iPhone. 

On the company's earnings call, it explained why margin was lighter than expected and the stock came roaring back. At last check it was down slightly in after hours trading. 

Apple's margin will be hit by a combination of factors. It is selling new iPads that cost more to make, new laptops, foreign exchange issues, and most importantly, a $900 million sequential increase in deferred revenue thanks to all the software it is giving away with iOS and Macs. 

On the earnings call, Gene Munster of Piper Jaffray said the real margin would have been closer to 38.5%, and Apple basically confirmed it. This sent the stock climbing. 

Apple's margins have been and will be hit harder as I've predicted.  This non-sense about the deferred revenue from giving away software and Gene Munster's "real margin" comments are utter nonsense. Apple's reported margin IS ITS "REAL MARGIN"! The reason it is giving away its core software products for free is to compete with the entry and the threat of Microsoft's Surface 2 tablet that comes bundled with a real, the real, office suite - Microsoft Office. This makes it real deal contender in the enterprise, where Office is not on the de facto standard - it is the standard. It also has to compete with Google's Android who bought Quick Office and is now giving that office suite for free. For those who don't think that makes a difference, what OS do you think took the iPad from 92% market share in 2010 to 32% market share last quarter?

Let me add to this since both Gene Munster and I are both frequent CNBC guests:

gene munster aapl forecast

On the same network, I recommended an Apple short:

If you did this investment thing to actually make money, who do you think CNBC should have on more regularly???

Well, my analysis has been vindicated once again, as per the NextWeb

KitKat ships with Google’s Quickoffice, bringing Microsoft Office editing out of the box to all new Android users

With Android 4.4 KitKat, Google’s biggest blow to Microsoft isn’t against Windows Phone. It’s against Microsoft Office. You see, KitKat ships with Quickoffice, letting you edit Microsoft Office documents, spreadsheets, and presentations on the go, without paying a dime, straight out of the box.

This tidbit was largely lost in the news yesterday, given the large number of improvements and new features that KitKat offers. Yet it’s a very big deal: every Android user that upgrades to KitKat will get Google’s Quickoffice, and every new Android device (starting with the Nexus 5) that ships with KitKat or higher will get access to Quickoffice.

office anywhere 730x457 KitKat ships with Googles Quickoffice, bringing Microsoft Office editing out of the box to all new Android users

Google acquired Quickoffice back in June 2012. In December 2012, the company released Quickoffice for iPad, making it exclusively available for free to its Apps customers. In April 2013, it followed up with free Android and iPhone versionsfor Apps customers as well. Last month, Google released Quickoffice for free, making it available to all Android and iOS users.

Here’s what we wrote at the time:

Microsoft shot itself in the foot here. Sure it finally released Office Mobile for iOS in June and Office Mobile for Android in July, but there was one small problem: an Office 365 subscription was and still is required.

In other words, Microsoft matched Google’s deal. Now Google has hit back and undercut Microsoft once again, and this blow might be the biggest yet.

image078

Click here to subscribe or purchase this update. Paid subscribers click here: File Icon Apple 4Q2013 preliminary update. As we wait for my elfin magicians and presdigitation analysts to finsih up on the updated valuation numbers, I'm quite comfortable in recommending subscribers adhere to the latest set of valuation numbers proffered in the last Apple update. 

Subscribers, download the Q3 2013 valuation reports (click here to subscribe).

The update from two months ago is also of value for those who haven't read it. It turns out that it was quite prescienct!

See also:

What Sell Side Wall Street Doesn't Understand About Apple - It's Not The Leader Of The Post PC World!!!

 The short call - October 2012, the month of Apple's all-time high and my call to subscribers to short the stock:  Deconstructing The Most Accurate Apple Analysis Ever Made - Share Price, Market Share, Strategy and All

Published in BoomBustBlog

The 20 page preliminary report is ready for download to all paying subscribers. It tells the "truth" about Apple. This report does not contain an updated valuation section just yet. I'm still working on that for it is a bit more involved and complicated than I originally anticipated. Considering how quickly all of the sell side came up with thier updated valuations and marking their historical accuracy to market as compared to mine, one would think the prudent investor would be given pause. 

image078

Click here to subscribe or purchase this update. Paid subscribers click here: File Icon Apple 4Q2013 preliminary update. As we wait for my elfin magicians and presdigitation analysts to finsih up on the updated valuation numbers, I'm quite comfortable in recommending subscribers adhere to the latest set of valuation numbers proffered in the last Apple update. 

Subscribers, download the Q3 2013 valuation reports (click here to subscribe).

The update from two months ago is also of value for those who haven't read it. It turns out that it was quite prescienct!

See also:

What Sell Side Wall Street Doesn't Understand About Apple - It's Not The Leader Of The Post PC World!!!

 The short call - October 2012, the month of Apple's all-time high and my call to subscribers to short the stock:  Deconstructing The Most Accurate Apple Analysis Ever Made - Share Price, Market Share, Strategy and All

Published in BoomBustBlog