bmichaud Posted January 25, 2013 Share Posted January 25, 2013 The difference in the cash number is likely due to me taxing at 10% and backing out long term deferred revenue. I imagine on an "apples-to-apples" basis using your valuation, Apple was pretty close to this valuation last year, which was my point - why now? Perhaps the moat is larger as you say.... UCCMAL has outlined my long term concerns quite eloquently in frequent posts on this thread.....how is Apple comparable to MSFT and GOOG, which both have stable long term predictable earnings streams (for tech companies), and nobody has any clue what margins and volumes will look like for Apple five years out, which has to be relevant in order to "buy for years out". But then again, the fact that I am even questioning your purchase is likely a buy signal 8) That's funny, how are Google's margins faring the last few quarters? Funny, you must be smarter than Munger.... http://gregspeicher.com/?p=2570 Link to comment Share on other sites More sharing options...
bathtime Posted January 25, 2013 Share Posted January 25, 2013 FWIW, AAPL has a little more downside to go for a buy signal using Cara's RSI app, which I use as a sentiment indicator of sorts. http://rsi.caracommunity.com/RSIApp/RSIApp.html#aapl With DELL for example, it triggered several buys beginning at around $10.50 and on down. So the first buy was a fair bit earlier than the eventual bottom. Link to comment Share on other sites More sharing options...
Guest valueInv Posted January 25, 2013 Share Posted January 25, 2013 Another data point: http://venturebeat.com/2013/01/25/samsung-q4-2012-earnings/ Link to comment Share on other sites More sharing options...
Guest valueInv Posted January 25, 2013 Share Posted January 25, 2013 The difference in the cash number is likely due to me taxing at 10% and backing out long term deferred revenue. I imagine on an "apples-to-apples" basis using your valuation, Apple was pretty close to this valuation last year, which was my point - why now? Perhaps the moat is larger as you say.... UCCMAL has outlined my long term concerns quite eloquently in frequent posts on this thread.....how is Apple comparable to MSFT and GOOG, which both have stable long term predictable earnings streams (for tech companies), and nobody has any clue what margins and volumes will look like for Apple five years out, which has to be relevant in order to "buy for years out". But then again, the fact that I am even questioning your purchase is likely a buy signal 8) That's funny, how are Google's margins faring the last few quarters? Funny, you must be smarter than Munger.... http://gregspeicher.com/?p=2570 How much GOOG does Munger own? Link to comment Share on other sites More sharing options...
bmichaud Posted January 25, 2013 Share Posted January 25, 2013 Last I checked his personal holdings are not disclosed. Link to comment Share on other sites More sharing options...
VAL9000 Posted January 25, 2013 Share Posted January 25, 2013 Unless you have a monopoly, margins will always contract due to competition. That was always my argument with Apple when the bulls were rampant. Now, how do investors explain the difference in valuation between Google and Apple? How is Google's moat any better or worse? And then let's compare Amazon as well on a valuation basis relative to those two...which is the priciest of them all. Cheers! That's easy though. GOOG is a better business than AAPL. Relative valuation, AAPL is probably a better buy today. But as far as which will be more valuable in 10 years, GOOG is by far more likely. If you look at the very essence of Google's core business, it's this: Google is the world's most efficient method of connecting people to what they want. They own that capability. It's their core asset. As long as they maintain their lead at being most efficient, they have all the time in the world to improve the monetization model and work on profitability. AAPL doesn't have anything that is nearly as durable as that value proposition. AAPL's core technologies have been replicated everywhere. As Uccmal pointed out, the cost of switching is high but hasn't been proven by history as a true moat. By comparison, the cost of switching from Google is zero. And nobody does it, because the value of Google is just too good. Link to comment Share on other sites More sharing options...
DCG Posted January 25, 2013 Share Posted January 25, 2013 Google is the world's most efficient method of connecting people to what they want. Not entirely. I'd say Amazon is becoming the most efficient method for connecting people with the products they want, and Facebook is the most efficient method of connecting people with other people businesses. Link to comment Share on other sites More sharing options...
Guest valueInv Posted January 25, 2013 Share Posted January 25, 2013 Last I checked his personal holdings are not disclosed. Uh huh Link to comment Share on other sites More sharing options...
VAL9000 Posted January 25, 2013 Share Posted January 25, 2013 Google is the world's most efficient method of connecting people to what they want. Not entirely. I'd say Amazon is becoming the most efficient method for connecting people with the products they want, and Facebook is the most efficient method of connecting people with other people businesses. That's true. My statement was meant to be general. There are more efficient ways than Google for connecting you to most things, but for most things you don't know a way that's better than Google. Link to comment Share on other sites More sharing options...
Parsad Posted January 25, 2013 Share Posted January 25, 2013 Google is the world's most efficient method of connecting people to what they want. Not entirely. I'd say Amazon is becoming the most efficient method for connecting people with the products they want, and Facebook is the most efficient method of connecting people with other people businesses. I don't agree with the last one. I think Facebook's moat is actually more susceptible to competitors or to a new form of social interaction than Google, Apple or Amazon's moats. Facebook has a lot of people using the service, but there is no real significant way to leverage that user base into actual revenue and profits. They've struggled with this and the stickiness as soon as fees are implemented disappears. I don't think Amazon is significantly hurting Google or Apple right now, but that could change as Amazon leverages the number of homes and customers they service over time. I think Amazon could actually end up creating the biggest moat over time, but the stock reflects that right now. Cheers! Link to comment Share on other sites More sharing options...
Guest valueInv Posted January 25, 2013 Share Posted January 25, 2013 Google is the world's most efficient method of connecting people to what they want. Not entirely. I'd say Amazon is becoming the most efficient method for connecting people with the products they want, and Facebook is the most efficient method of connecting people with other people businesses. That's true. My statement was meant to be general. There are more efficient ways than Google for connecting you to most things, but for most things you don't know a way that's better than Google. People don't know Amazon or FB? Link to comment Share on other sites More sharing options...
Parsad Posted January 25, 2013 Share Posted January 25, 2013 I'm the first guy to say that Apple won't be the same without Jobs, and I've been saying it for the last year, but the market and media reaction to Apple is quite amusing. Six months ago, the company could do no wrong without Jobs...today, financially it's a stronger company financially in every metric other than gross margins, which were purposefully reduced to increase their reach, and they are asking on CNBC..."Is Apple stock broken? Will it ever be the same?" Even if Apple is just a mediocre company going forward, it will be worth considerably more over the next 5-7 years. I will go ahead and say it won't be as good under Cook, but neither will Berkshire be without Buffett. That still doesn't mean at some point you don't buy the stock if it provides good value. Cheers! Link to comment Share on other sites More sharing options...
VAL9000 Posted January 25, 2013 Share Posted January 25, 2013 That's true. My statement was meant to be general. There are more efficient ways than Google for connecting you to most things, but for most things you don't know a way that's better than Google. People don't know Amazon or FB? I said for most things you don't know a better way. Most things. Most. As in, not everything. Link to comment Share on other sites More sharing options...
SI Posted January 25, 2013 Share Posted January 25, 2013 From the cheap seats here is my view of the financial metrics: -Revenue went up $8bn and operating income shrunk year over year in the last quarter reported. -Capital intensity is up markedly(did one of the analysts ask if they plan to spend more than Intel?). -ROIC thus is down. -The single metric the market has shown the highest correlation to over time is ROIC and specifically ROIIC. Apple's ROIC is headed much lower, it may still be ample at this price if they are judicious with the cash and reinvigorate the innovation but I believe the scary thing about Apple are exactly the financial metrics: GM, OM, Cap Ex, ROIC & ROIIC. Link to comment Share on other sites More sharing options...
Parsad Posted January 25, 2013 Share Posted January 25, 2013 I was just watching Bill Gates on CNBC, and I always love his face after someone asks him "So, I understand your children aren't allowed to use Apple products." And his response with a somewhat scrunched up face, "Well, they've never shown any interest in Apple products." He just can't let it go after all these years, after all the time on top...that competitive nature is still stirring underneath. It's what Jobs had...Buffett has it...and you can really see it in Bezos and Zuckerberg. Although Buffett and Bezos are much more charming than Gates or Zuckerberg. Cheers! Link to comment Share on other sites More sharing options...
Guest wellmont Posted January 25, 2013 Share Posted January 25, 2013 the only thing wrong with apple is they don't know how to manage the capital structure. if people thought they would tender for 12% of the shares it wouldn't be trading at 7 x earnings. Link to comment Share on other sites More sharing options...
PlanMaestro Posted January 25, 2013 Share Posted January 25, 2013 The Curious Case Of Apple's Flattening iTunes Revenue http://www.businessinsider.com/itunes-revenue-2013-1#ixzz2J1pGs3aL Link to comment Share on other sites More sharing options...
Parsad Posted January 25, 2013 Share Posted January 25, 2013 From the cheap seats here is my view of the financial metrics: -Revenue went up $8bn and operating income shrunk year over year in the last quarter reported. -Capital intensity is up markedly(did one of the analysts ask if they plan to spend more than Intel?). -ROIC thus is down. -The single metric the market has shown the highest correlation to over time is ROIC and specifically ROIIC. Apple's ROIC is headed much lower, it may still be ample at this price if they are judicious with the cash and reinvigorate the innovation but I believe the scary thing about Apple are exactly the financial metrics: GM, OM, Cap Ex, ROIC & ROIIC. They can spend $10B more on capex than their nearest competitor...take your choice (GOOG, FB, AMZN, MSFT, et al)....and they will still make more than $40B in net profit in 2013. Even if you don't include the cash they have when valuing the company, it is still trading at 10 times earnings. Compare that to Google at 20 times earnings, or Amazon with normalized capex and G&A at 30-35 times earnings. The only companies of size trading at the same valuation in the technology space are INTC, MSFT and DELL. Can anyone tell me that Apple's business is as bad as those? In my opinion, and this is just my opinion because I've done the work on MSFT & DELL, as we owned both in the last two years and made very nice returns on them, is that MSFT would have to trade at $23 or less, and DELL at below $9.50 to be in the same territory as Apple's current price. And Apple is a much better company than both, with management being no worse than Ballmer or Dell. Cheers! Link to comment Share on other sites More sharing options...
Parsad Posted January 25, 2013 Share Posted January 25, 2013 the only thing wrong with apple is they don't know how to manage the capital structure. if people thought they would tender for 12% of the shares it wouldn't be trading at 7 x earnings. At the right price, they will. They've already done more conventional things that Jobs would not have done...dividend, smaller iPads, reducing margins to increase reach...and I think they will use the cash hoard at some point to buy back stock. Apple is now a more conventional company with regular management, and the market has finally priced it like that. Cheers! Link to comment Share on other sites More sharing options...
alertmeipp Posted January 25, 2013 Share Posted January 25, 2013 the only thing wrong with apple is they don't know how to manage the capital structure. if people thought they would tender for 12% of the shares it wouldn't be trading at 7 x earnings. At the right price, they will. They've already done more conventional things that Jobs would not have done...dividend, smaller iPads, reducing margins to increase reach...and I think they will use the cash hoard at some point to buy back stock. Apple is now a more conventional company with regular management, and the market has finally priced it like that. Cheers! Their stores are still busy as hell. They need better capital management for sure, maybe use the cash to buy BAC. LOL Link to comment Share on other sites More sharing options...
Guest wellmont Posted January 25, 2013 Share Posted January 25, 2013 the only thing wrong with apple is they don't know how to manage the capital structure. if people thought they would tender for 12% of the shares it wouldn't be trading at 7 x earnings. At the right price, they will. They've already done more conventional things that Jobs would not have done...dividend, smaller iPads, reducing margins to increase reach...and I think they will use the cash hoard at some point to buy back stock. Apple is now a more conventional company with regular management, and the market has finally priced it like that. Cheers! they have so many levers they can pull. since the turnaround, they've never had to focus on the stock price. they now have employees who are underwater. let's see what cookie is gonna do. Link to comment Share on other sites More sharing options...
Guest valueInv Posted January 25, 2013 Share Posted January 25, 2013 Google is the world's most efficient method of connecting people to what they want. Not entirely. I'd say Amazon is becoming the most efficient method for connecting people with the products they want, and Facebook is the most efficient method of connecting people with other people businesses. I don't agree with the last one. I think Facebook's moat is actually more susceptible to competitors or to a new form of social interaction than Google, Apple or Amazon's moats. Facebook has a lot of people using the service, but there is no real significant way to leverage that user base into actual revenue and profits. They've struggled with this and the stickiness as soon as fees are implemented disappears. I don't think Amazon is significantly hurting Google or Apple right now, but that could change as Amazon leverages the number of homes and customers they service over time. I think Amazon could actually end up creating the biggest moat over time, but the stock reflects that right now. Cheers! Parsad, what was the growth in FBs mobile advertising revenue last quarter? What was the number the previous quarter? Link to comment Share on other sites More sharing options...
Guest valueInv Posted January 25, 2013 Share Posted January 25, 2013 the only thing wrong with apple is they don't know how to manage the capital structure. if people thought they would tender for 12% of the shares it wouldn't be trading at 7 x earnings. At the right price, they will. They've already done more conventional things that Jobs would not have done...dividend, smaller iPads, reducing margins to increase reach...and I think they will use the cash hoard at some point to buy back stock. Apple is now a more conventional company with regular management, and the market has finally priced it like that. Cheers! IPad mini was agreed up on with Jobs. They have been planning it for two years. Link to comment Share on other sites More sharing options...
Parsad Posted January 25, 2013 Share Posted January 25, 2013 the only thing wrong with apple is they don't know how to manage the capital structure. if people thought they would tender for 12% of the shares it wouldn't be trading at 7 x earnings. At the right price, they will. They've already done more conventional things that Jobs would not have done...dividend, smaller iPads, reducing margins to increase reach...and I think they will use the cash hoard at some point to buy back stock. Apple is now a more conventional company with regular management, and the market has finally priced it like that. Cheers! Their stores are still busy as hell. They need better capital management for sure, maybe use the cash to buy BAC. LOL Or Amazon! ;D Cheers! Link to comment Share on other sites More sharing options...
Parsad Posted January 25, 2013 Share Posted January 25, 2013 Google is the world's most efficient method of connecting people to what they want. Not entirely. I'd say Amazon is becoming the most efficient method for connecting people with the products they want, and Facebook is the most efficient method of connecting people with other people businesses. I don't agree with the last one. I think Facebook's moat is actually more susceptible to competitors or to a new form of social interaction than Google, Apple or Amazon's moats. Facebook has a lot of people using the service, but there is no real significant way to leverage that user base into actual revenue and profits. They've struggled with this and the stickiness as soon as fees are implemented disappears. I don't think Amazon is significantly hurting Google or Apple right now, but that could change as Amazon leverages the number of homes and customers they service over time. I think Amazon could actually end up creating the biggest moat over time, but the stock reflects that right now. Cheers! Parsad, what was the growth in FBs mobile advertising revenue last quarter? What was the number the previous quarter? 49% and 36% respectively...but total revenues have only increased a little over 7% last year and about 7% next year. You don't think Apple or Google can do the same with their products or customer base? Cheers! Link to comment Share on other sites More sharing options...
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