Apple shares slip, regroup following Morgan Keegan downgrade

[AppleInsider]

Shares of Apple Inc. briefly surrendered most of Monday's gains but then battled back in early afternoon trading after Morgan Keegan downgraded its rating on the company from Market Perform to Underperform, citing weakness in consumer technology spending both stateside and abroad.

Analyst Tavis McCourt said that although his firm is a long-term believer the Apple growth strategy, reductions in consumer spending across the United States and Europe are likely to dampen the company's Mac growth and share price as the year progresses, which should yield a "more attractive entry point" for long-term investors.

Specifically, McCourt zeroed in on Education, where he said state and local budget constraints suggest a slowdown in spending is likely this year, lasting for as long as two years if the previous recession is of any indication.

"During the last economic slowdown, Apple's conference calls were full of commentary around a weak spending environment in the education vertical due to state and local budget constraints," he wrote. " However, higher than expected sales in the education vertical was mentioned as part of the reason for Apple's strong performance last summer and, at the very least, we suspect growth in this vertical will not be as high as 2007, which has its biggest impact on the June and September quarters."

The analyst also highlighted a number of recent reports that suggest a rapid deterioration in technology spending on the part of consumers, such as poor handset sales from Sony Ericsson in Europe, weak handset trends at Sprint, and slower sales of home theaters, MP3 players, and televisions at Best Buy.

"In any event, we believe that growth is likely still robust in Apple's Mac business," he advised clients. "However, with demonstrable slowdowns in MP3 players, PNDs, wireless handsets, LCD TVs, and almost every other consumer technology category we can think of, we believe that PC and Mac growth will slow substantially from the levels exiting 2007."

McCourt also acknowledged Apple shares are disproportionately impacted by ongoing iPhone rumors, but noted that the handset is likely to account for less than 10 percent of the company's total sales for fiscal year 2008. However, he sees Apple emerging as "a significant niche player in the mobile handset space over the long term," and as such has factored the iPhone into his model as becoming a $10 billion+ annual business over the next five years.

"This is no small feat when one considers that [BlackBerry maker] Research In Motion only just surpassed $6 billion in revenues in its most recent fiscal year, despite experiencing substantial success in the consumer market and having much broader distribution than Apple," he noted. "In the near term, however, any weakness in the Mac and/or iPod lines would financially dwarf iPhone successes."

The Morgan Keegan analyst in his report Tuesday outlined three scenarios for Apple shares through fiscal 2008, with the "Realistic" scenario pegging the Cupertino-based company's share price at $133, based on 33 percent Mac growth, 10 percent iPod growth, and a gross margin of 34 percent.

"Our conclusion is that with any decrease in Mac unit growth or gross margins, [per-share earnings] at Apple is negatively impacted," he added. "Given the macroeconomic environment, we believe it is more likely that Mac growth trends slow down throughout the year rather than continue at a 40 percent-ish pace (although we believe March is fine)."

[ View this article at AppleInsider.com ]

[Flounder]

I find it hilarious that a post at 11:27 AM EDT could characterize something as happening this afternoon.

Where do you hide the crystal ball?

Originally Posted by AppleInsider

battled back Tuesday afternoon

[satchmo]

However, he sees Apple emerging as "a significant niche player in the mobile handset space over the long term,"

Isn't this an oxymoron?
If it's significant, then how can it be niche?

[Rot'nApple]

Originally Posted by AppleInsider

Shares of Apple Inc. briefly surrendered most of yesterday's gains but then battled back Tuesday afternoon after Morgan Keegan downgraded its rating...

"...battled back Tuesday afternoon..." I am reading this story before noon (EST) Tuesday, here on the East Coast and I see it was posted at 11:25 AM EST. Was afternoon a slight oversight or did I miss something (which is entirely possible)?

[tbsteph]

Classic example of an analyst basing an opinion on GIGO (garbage in garbage out). Sounds like he is more interested in driving down the price of AAPL, in order to generate a better "buy" entry point, than providing any worthwhile insight about the company's future (Unless, of course, he does have a crystal ball.)

[Feynman]

Originally Posted by Rot'nApple

"...battled back Tuesday afternoon..." I am reading this story before noon (EST) Tuesday, here on the East Coast and I see it was posted at 11:25 AM EST. Was afternoon a slight oversight or did I miss something (which is entirely possible)?

AppleInsider has outsourced their writing staff to India.

[SpamSandwich]

So much hype and ballyhoo over the past two days.

Outrageous, irrational statements regarding the stock's fluctuations are totally uncalled for. Is there at least a basic belief in responsible journalism?

You guys can't have it both ways. Don't cry about your people being "hard at work" putting stories together, then expect us to give AI a free pass on featherweight stories.

Please do a better job of reigning in fabulist journos', or at least call in to question the statements of analysts who clearly stand to benefit from the biased opinion pieces they float your way.

[Bageljoey]

Originally Posted by satchmo

However, he sees Apple emerging as "a significant niche player in the mobile handset space over the long term,"

Isn't this an oxymoron?
If it's significant, then how can it be niche?

I suppose you could have a niche player that makes garbage phones and sells to 5 percent of the market that doesn't affect the market as a whole very much. Or, you could have a niche player that has about 5% of the market and generates interest and knockoffs and has a great deal of influence in the market. Both would be "niche players" when compared to Nokia or Erricson, but only one would be significant.

It may be an oxymoron--the terms do appear to contradict--but that does not mean that it is invalid.

[Tailpipe]

When it comes to analyst predictions, I am the first one to weigh in when i think they're talking garbage. For instance, Gene Munster's pathetic attempt to finesse Apple's share price through bullish announcements about the iPhone etc. earlier this week were easy to see through. This was clearly an example of Piper Jaffray trying desperately to claw back some respect after their clients took a bath shortly after Christmas. Munster rated the stock a buy when it was near $200. What a joke.

However, Tavis McCourt on the other hand seems to speaking sense. I agree with him. Tech spending is certainly suffering in the light of the downturn. Any softness in iPod sales WILL surely pour cold water over any iPhone profits. And the he's right about educational sales taking a dip too.

There are four variables that may show just how robust Apple is in the longer term. One is that Apple is starting to crack the corporate market again. Not just design firms and ad agencies, but also larger corporatations, including a few law firms, are starting to look at the serious TCO numbers that increasingly stack in Apple's favour. The real point to make here is that Vista's total failure to deliver has played right into Apple's hands. Leopard is so slick, reliable and user-friendly in comparison.

The second variable is the iPhone, especially with enterprise software for email now also having an effect on corporate customers. Blackberry outages like Vista's failures have also helped Apple's cause. Whatever anyone says about the iPhone, it is going to get better and better.

The third vairable is Apple's expertise in hardware. We need to remember that Apple's core profit driver is its laptop range. Both the MacBook and MacBook Pro line-ups are due to be properly refreshed this year and I don't expect Apple to disapppoint. In short, i think we'll all be stunned at how they improve. new products should really kick-start sales ahead of the back to college and holiday seasons.

We also need to remember just how much cash Apple is sitting on. It will be investing it in timely upgrades for all important products. Any delay is simply to extract maximum value from existing designs and inventories.

The fourth variable is iTunes movie rentals. I think everyone has been a bit slow to see just how big this going to be. I think it is only a matter of time before the film companies invest in WiFi networks at airports, for example, so we can rent movies prior to boarding a plane. (Anyone with recent expereince of Heathrow Terminal 5 will appreciate such a thing.) One thing is sure, electronically downloaded entertainment is big and here to stay.

Still, Apple's stocked is somewhat over-valued based on its P/E ratio. Investors be cautious. Sure Apple is a great company, the problem is that everyone knows it is a great company.

And...oh! ... i nearly forgot another huge variable. Steve Jobs health. Is he truly cured forom cancer? i pray that he is for his and his family's sake. But if it returns, expect share price melt-down.

[mdriftmeyer]

Originally Posted by Tailpipe

When it comes to analyst predictions, I am the first one to weigh in when i think they're talking garbage. For instance, Gene Munster's pathetic attempt to finesse Apple's share price through bullish announcements about the iPhone etc. earlier this week were easy to see through. This was clearly an example of Piper Jaffray trying desperately to claw back some respect after their clients took a bath shortly after Christmas. Munster rated the stock a buy when it was near $200. What a joke.

However, Tavis McCourt on the other hand seems to speaking sense. I agree with him. Tech spending is certainly suffering in the light of the downturn. Any softness in iPod sales WILL surely pour cold water over any iPhone profits. And the he's right about educational sales taking a dip too.

There are four variables that may show just how robust Apple is in the longer term. One is that Apple is starting to crack the corporate market again. Not just design firms and ad agencies, but also larger corporatations, including a few law firms, are starting to look at the serious TCO numbers that increasingly stack in Apple's favour. The real point to make here is that Vista's total failure to deliver has played right into Apple's hands. Leopard is so slick, reliable and user-friendly in comparison.

The second variable is the iPhone, especially with enterprise software for email now also having an effect on corporate customers. Blackberry outages like Vista's failures have also helped Apple's cause. Whatever anyone says about the iPhone, it is going to get better and better.

The third vairable is Apple's expertise in hardware. We need to remember that Apple's core profit driver is its laptop range. Both the MacBook and MacBook Pro line-ups are due to be properly refreshed this year and I don't expect Apple to disapppoint. In short, i think we'll all be stunned at how they improve. new products should really kick-start sales ahead of the back to college and holiday seasons.

We also need to remember just how much cash Apple is sitting on. It will be investing it in timely upgrades for all important products. Any delay is simply to extract maximum value from existing designs and inventories.

The fourth variable is iTunes movie rentals. I think everyone has been a bit slow to see just how big this going to be. I think it is only a matter of time before the film companies invest in WiFi networks at airports, for example, so we can rent movies prior to boarding a plane. (Anyone with recent expereince of Heathrow Terminal 5 will appreciate such a thing.) One thing is sure, electronically downloaded entertainment is big and here to stay.

Still, Apple's stocked is somewhat over-valued based on its P/E ratio. Investors be cautious. Sure Apple is a great company, the problem is that everyone knows it is a great company.

And...oh! ... i nearly forgot another huge variable. Steve Jobs health. Is he truly cured forom cancer? i pray that he is for his and his family's sake. But if it returns, expect share price melt-down.

AAPL, GOOG and others took a bath because the Financials were being purged and set out to the back shed to be shot. The backlash of the the economy disruption hit Technologies across the board.

Apple has shown resilience, not because of analysts telling us this, but because they actually are surpassing their estimates projected from last quarter. In a quarter where many companies are laying off, Apple is expanding.

In short, it doesn't take a financial genius to see that Apple will once again surpass sales and profit estimates this upcoming quarterly report.

[TCWillis]

Let's all remember that this is the same guy who told you to sell RIMM back in Early December. Just two weeks before they reported Blowout earnings. RIMM's share price on Dec 3rd - $103. Rimm's price today right around 120.

RIMM isn't the only company this guy has been dead wrong. Right around the same time he Recomended PALM. This guy is a Joke!

See below for the link.

http://blogs.barrons.com/techtraderd...r/?mod=BOLBlog

[VinitaBoy]

Tell me this, Tailpipe. What would you call OTHER analysts (than Piper Jaffray) when they recommended Microsoft at 37.50 late last winter when IT dropped to 26.80 earlier this year? That TOO is about a 30% drop in its stock price, when AAPL's was about 40% in the same period. MSFT has bounced back all the way to 28.75 now (WOW!), while AAPL is back to 153 or so.

If you do, indeed, have the courage and financial resources to invest in equities right now, you might want to look further into MSFT . . . 'cause that dog is going nowhere. NOWHERE! It hasn't for the past eight years and it won't in the next eight! Windows 7 has already--already--been delayed until 2010 or 2011 (I'd bet 2012), and the "Big Ass Table" is already the joke of the industry. The Zune? The iPhune? HA! Being the industry behemoth, and having Ballmer/Gates at the helm, that company has absolutely NO CHANCE to grow in this or any other future decade. None.

There's only one way for MSFT and DELL to go now . . . and that's down. Maybe not enough to make true lovers of innovation happy, but down nevertheless.

Yes, AAPL is vulnerable in these troubled times (WHO ISN'T?), but the course they're presently on is so much more exciting--and potentially profitable--I'm happily keeping my 5700 shares.

[bugsnw]

I think tailpipe pretty much summed it up. There is upside, no doubt about it. The 3G iPhone probably has enough pent up demand behind it to provide some nice upside movement.

The corporate market, back-to-school sales of the newly designed MacBook (if rumors hold), movie rentals, and the wave of switchers picking up even more steam.

It looks great. The unknowns are the economy and Steve's health.

Either has the potential to cause panic and 'meltdown' is exactly what happens once that sets in.

Investing wouldn't be fun without unknown variables!

[melgross]

Originally Posted by tbsteph

Classic example of an analyst basing an opinion on GIGO (garbage in garbage out). Sounds like he is more interested in driving down the price of AAPL, in order to generate a better "buy" entry point, than providing any worthwhile insight about the company's future (Unless, of course, he does have a crystal ball.)

What he's saying makes perfect sense. Why do you think Apples shares dropped to under $120?

Apples shares dropped more than the market because of the issues he brought up. With Apples Mac sales growing the way they did in February, in particular, and with the SDK and enterprise additions for the iPhone being announced in March, the stock has risen faster than the market.

The only thing we can fairly argue about in the article is whether Apple's sales will follow the expectations cited, or whether they will weather this recession storm.

iPod sales seem to have been impacted by recession news. The question is what else will be affected.

I can talk about school purchasing a bit. School budgets are being cut all over the country. Where will they be cut? I would think and hope that teachers won't be cut, though I'm seeing sme of that already.

So, it's most likely that programs that deliver technology will be hit. If so, that affects Apple. We'll have to see by how much.

[minderbinder]

Originally Posted by melgross

Why do you think Apples shares dropped to under $120?

I think because of irrational paranoia with very little basis in the actual situation. But feel free to disagree with me.

[eldernorm]

You said, "With Apples Mac sales growing the way they did in February, in particular, and with the SDK and enterprise additions for the iPhone being announced in March, the stock has risen faster than the market."

Yes, but when Apple posted reasonable sales for the next qtr the market dropped stock price like a rock. WTF??? A great company, with great products, with great innovation, a market leader all around and the stock price drops like a rock.

It sure sounds like power brokers are manipulating the price with crazy stories, up and down.

Apple just passed Walmart as the largest music seller, iPhone SDK full release in June, education sales upcoming, yes the 3g iPhone this year, and the end of the year sales.

Apple value is exploding. So I fully expect the stock price to follow, I am guessing right back up to $200 or more. And those sudden dips........ just great buying oppertunities. :-)

Just a thought. :-)

[melgross]

Originally Posted by minderbinder

I think because of irrational paranoia with very little basis in the actual situation. But feel free to disagree with me.

I don't disagree, because that's how the market operates in the short term. That's why I rarely sell my stock when the market overall forces my own stocks down. In fact, I bought more shares when Apple dropped to about $173, and bought more around $125.

The one thing we can see though, is Apple's purchase of NAND. That's down a great deal, unexpectedly. No doubt due to the recession, and the lower than expected iPod sales.

[minderbinder]

That's almost exactly what I did, at 161 and 135. I was a bit worried for a time afterwards, but at this point I'm not really regretting either. It will be a tough call whether to sell some off if apple hits a certain point, or just hang onto it long term.

[melgross]

Originally Posted by eldernorm

You said, "With Apples Mac sales growing the way they did in February, in particular, and with the SDK and enterprise additions for the iPhone being announced in March, the stock has risen faster than the market."

Yes, but when Apple posted reasonable sales for the next qtr the market dropped stock price like a rock. WTF??? A great company, with great products, with great innovation, a market leader all around and the stock price drops like a rock.

It sure sounds like power brokers are manipulating the price with crazy stories, up and down.

Apple just passed Walmart as the largest music seller, iPhone SDK full release in June, education sales upcoming, yes the 3g iPhone this year, and the end of the year sales.

Apple value is exploding. So I fully expect the stock price to follow, I am guessing right back up to $200 or more. And those sudden dips........ just great buying oppertunities. :-)

Just a thought. :-)

First of all, let's tackle the idea of stock manipulation. while that does occur, it's not going to drop the price of the stock of a company the size of Apple more than a few points. Institutional investors hold most of Apple's stock, and they don't get that flustered. But, shares go down over a bit of time, as they have done, because daily trading prices can be unduly influenced by a large number of smaller trades. Remember that only a very small percentage of shares for a given company are being publicly traded any day. Much larger blocks of shares are traded privately, and don't always affect the price.

Apple has, along with MS, a history of under representing what they think the next quarter will bring. That's expected to a certain extent, and is incorporated into the stock price by most traders. But, if Apple predicts a lesser amount of sales and profits than expected, the shares will go down, because people are thinking that Apple must know something that they don't. If Apple posts a prediction thats higher than expected the shares will go up for the same reason.

We have to remember that we are in a recession. We can't avoid that. I'm hoping that sales will be resilient, but, we'll see.

Predicting the future is a hopeless task. Correct guesses are far fewer than incorrect ones. I've been disappointed by economists over the years, as economics is not a science, despite all of the Nobel prizes awarded. Economists are far better at explaining what happened in the past than they are at predicting what will happen in the future.

We just have to wait for it to happen.

[melgross]

Originally Posted by minderbinder

That's almost exactly what I did, at 161 and 135. I was a bit worried for a time afterwards, but at this point I'm not really regretting either. It will be a tough call whether to sell some off if apple hits a certain point, or just hang onto it long term.

I've been holding since mid 2004, but have bough more at times.

If you have a good company, then selling isn't always the best option, esp. if it's a growth company.. It's too bad Apple has no dividends at all.

[His Dudeness]

Originally Posted by satchmo

However, he sees Apple emerging as "a significant niche player in the mobile handset space over the long term,"

Isn't this an oxymoron?
If it's significant, then how can it be niche?

Apple's been a "niche" company for what, 30 years now? When are people going to stop classifying Apple's stuff as "niche"? They can do anything and everything a Windows computer can or a Blackberry can. They're not niche.

[Chris_CA]

Originally Posted by Flounder

I find it hilarious that a post at 11:27 AM EDT could characterize something as happening this afternoon.

Where do you hide the crystal ball?

And where is the time machine?
The article was published: 11:25 AM EST, not EDT.

[satchmo]

While there has been an understandable downturn in iPod sales...look for an upturn over the next few years with people upgrading to a whole new generation of "touch' based iPods.
It's inevitable...

[Tailpipe]

Originally Posted by VinitaBoy

Tell me this, Tailpipe. What would you call OTHER analysts (than Piper Jaffray) when they recommended Microsoft at 37.50 late last winter when IT dropped to 26.80 earlier this year? That TOO is about a 30% drop in its stock price, when AAPL's was about 40% in the same period.

In the UK we have a marvellous word to describe such people it starts with C and ends in T. I risk getting banned if i spell it, but it is most apposite. I remember well what happened to MSFT and it wasn't pretty. I find it unbelievable that Reputable Wall Street firms allow people to churn out such unsubstantiated garbage as if they could genuinely predict future earnings. Walt Mossberg is a much better Apple analyst than most of the professional analysts. Perhpas it is because when people look at companies for the long-term rather than short-term gain that they seem to be more objective.

There is no doubt that Apple is a great company, with great products and a great future. it is also very good at managing investors' expectations. Unfortunately, these factors are alreadybuilt into the share price. The sheer buzz around the company artificially inflates the stock price above its 'real value'. That makes it much more volatile in times of uncertainty.

My advice to would be Apple investors is to buy Apple for the long-term. We haven't had the last blip in the market this year so there may well be other excellent buying opportunities. That said America,, unlike the sad excuse for a socialist led counry i now live in, has a reputation of turning out billion dollar company after billion dollar company. There are some great stocks out there.

[palomine]

People, the money is in the stock market volatility.

There are power brokers behind the scenes pulling huge swings$$ in exotic and barely legal instruments. Yeah, and Mac people aren't very financial (they think!).
Actually, the financial instruments (of money) are so complex the institutions themselves don't understand them. That's why credit is froze up, because nobody wants to trade what they can't evaluate (derivatives, SIVs, etc.).

I bet the story is yet to come out about rogue traders in some major institutions. And we will see more of their crap until congress can get its head around it and pass comprehensive laws--which is probably darn near impossible.

I watched a lot of TV last year while laid up with an injury, and I've noticed how Apple was scarcely mentioned at all on TV, CNN, stock channel etc. The newscasters (and Cramer!) would throw out a teaser line 'big news about Apple!!' and come back with, yes they posted good numbers, 'wow, we love Apple' (in unison, from the anchors). Precious little was ever said about Apple. It could be up 8% and it would be up on the display, but the anchors would skip over it!

Do you think maybe they couldn't mention Apple because they were HOLDING the stock?

Traders can make more during this volatility in a week than they normally make in a year.
They probably think they have total cover to do anything they want, after all, who is looking at Apple? Yeah, good old Apple. Shake and short that tree.

WE ARE WATCHING YOU. Traders better be careful or one of these days they will get caught for stock manipulation.

[Flounder]

Originally Posted by Chris_CA

And where is the time machine?
The article was published: 11:25 AM EST, not EDT.

Say What?

The U.S. is currently on Daylight Time and has been since the second Sunday in March. It is, in fact, EDT. I don't know what it says on your computer, but on mine it says 11:27.

[hankvaccaro]

So AAPL was downgraded from Market Perform by Morgan Keegan's analyst Tavis McCourt. Not having heard of him, I checkout out their MK's Analyst Performance disclosure for Q4 ("Transparency of Analysts' Performance Q4:07).

He rated 16 stocks, including Apple (AAPL) at Market Perform on 10/3/07 and Research in Motion (RIMM) at Outperform on 10/2/07.

After he rated it, AAPL lost 0.2% and RIMM was up 22.6% counted from the close of the day following his report to the close of 4/7/08. They both outperformed the market over that period. The change in S&P was -10.9%.

Of the other 14 stocks, he rated 7 as Market Perform. They went down on average 28.5% after his ratings. He missed that pretty badly, but so dod a lot of amateurs like me. But his 7 stocks rated "Outperform" really got to me. They were down an average of 27.3% -- pretty much the same as his Market Performers".

I can't can't put much faith in his analyses and ratings. Most of us could have done as well with a coin toss. But he sure did move the price of AAPL down this morning!

[anantksundaram]

Originally Posted by Feynman

AppleInsider has outsourced their writing staff to India.

What does India have to do with it? (Doesn't even make sense time zone-wise, since 11.25 AM on the US east coast is night there).

[anantksundaram]

Originally Posted by melgross

It's too bad Apple has no dividends at all.

I am not sure. It runs the (non-trivial) risk of sending a very strong signal to the market that it is not a 'growth' company anymore.

[anantksundaram]

Originally Posted by hankvaccaro

So AAPL was downgraded from Market Perform by Morgan Keegan's analyst Tavis McCourt. Not having heard of him, I checkout out their MK's Analyst Performance disclosure for Q4 ("Transparency of Analysts' Performance Q4:07).

He rated 16 stocks, including Apple (AAPL) at Market Perform on 10/3/07 and Research in Motion (RIMM) at Outperform on 10/2/07.

After he rated it, AAPL lost 0.2% and RIMM was up 22.6% counted from the close of the day following his report to the close of 4/7/08. They both outperformed the market over that period. The change in S&P was -10.9%.

Of the other 14 stocks, he rated 7 as Market Perform. They went down on average 28.5% after his ratings. He missed that pretty badly, but so dod a lot of amateurs like me. But his 7 stocks rated "Outperform" really got to me. They were down an average of 27.3% -- pretty much the same as his Market Performers".

I can't can't put much faith in his analyses and ratings. Most of us could have done as well with a coin toss. But he sure did move the price of AAPL down this morning!

Nice.

[Chris_CA]

Originally Posted by Flounder

Say What?

The U.S. is currently on Daylight Time and has been since the second Sunday in March. It is, in fact, EDT. I don't know what it says on your computer, but on mine it says 11:27.

Right. 11:27 EST, not 11:27 EDT.
Look at the time the original article was published.

"Apple says Time Machine over AirPort Disk is unsupported feature

By AppleInsider Staff

Published: 04:00 PM EST"

http://www.appleinsider.com/articles...downgrade.html

[melgross]

Originally Posted by anantksundaram

I am not sure. It runs the (non-trivial) risk of sending a very strong signal to the market that it is not a 'growth' company anymore.

Depends. Besides, if it is a growth stock, it will continue to rise.

At some point, stockholders will want some of the money they're hoarding unless Apple can show a very good reason why they should keep it. Don't forget MS had to give about $30 billion back to the shareholders. Apple's hoard is much smaller, but it's still pretty big relative to the size of the company, and will only grow.

[quinney]

Originally Posted by anantksundaram

I am not sure. It runs the (non-trivial) risk of sending a very strong signal to the market that it is not a 'growth' company anymore.

Right. Dividends are a characteristic of "value" stocks. People comparing AAPL
and MSFT should keep this in mind when evaluating MSFT's performance since it
started paying dividends.

[melgross]

Originally Posted by quinney

Right. Dividends are a characteristic of "value" stocks. People comparing AAPL
and MSFT should keep this in mind when evaluating MSFT's performance since it
started paying dividends.

That's not true. Look at some of the biggest and most sucessful companies around, you will see that many offer dividends.

And what you're forgetting is that for most of the time it's been around, MS was the biggest growth stock anywhere, and they had dividends throughout most of that period.

[quinney]

Originally Posted by melgross

Depends. Besides, if it is a growth stock, it will continue to rise.

At some point, stockholders will want some of the money they're hoarding unless Apple can show a very good reason why they should keep it. Don't forget MS had to give about $30 billion back to the shareholders. Apple's hoard is much smaller, but it's still pretty big relative to the size of the company, and will only grow.

The point was it will risk being perceived as not a growth stock if it pays dividends.

Stockholders can get some money out of the stock many ways, including:

1.sell far out of the money calls with short expiration dates. With the high volatility
of AAPL, their options are always overpriced.

2.sell a small percentage of your shares (which you have posted repeatedly are in the money)

I think some Apple exec (Jobs?) stated that Apple will use its cash to continue R&D while
other companies are cutting back, thus gaining ground on its competitors. I believe this will
be better for AAPL stock in the long run.

[cameronj]

Originally Posted by Tailpipe

In the UK we have a marvellous word to describe such people it starts with C and ends in T. I risk getting banned if i spell it, but it is most apposite. I remember well what happened to MSFT and it wasn't pretty. I find it unbelievable that Reputable Wall Street firms allow people to churn out such unsubstantiated garbage as if they could genuinely predict future earnings. Walt Mossberg is a much better Apple analyst than most of the professional analysts. Perhpas it is because when people look at companies for the long-term rather than short-term gain that they seem to be more objective.

I sure wish people complained this vehemently when analysts were positive about Apple. As it is, they're only idiots when they are negative, which makes it clear that they reason people think they are idiots is because what they are saying goes against what people want and believe.

[quinney]

Originally Posted by melgross

That's not true. Look at some of the biggest and most sucessful companies around, you will see that many offer dividends.

And what you're forgetting is that for most of the time it's been around, MS was the biggest growth stock anywhere, and they had dividends throughout most of that period.

Name a few of these big successful dividend-paying companies and I think you will find
they are considered "value" rather than "growth" companies.

MSFT started paying dividends in 2003, during which year their stock price ranged from
about 22.5 to 30. It is still there. Most of its growth was before the tech bubble burst in
early 2000. (and before it started paying dividends)

[mh71]

Originally Posted by melgross

The one thing we can see though, is Apple's purchase of NAND. That's down a great deal, unexpectedly. No doubt due to the recession, and the lower than expected iPod sales.

John Gruber commented on this earlier today.

Analysts predict NAND spending is going to increase by a fantastic amount.
Apple anounces it expects to spend 1.4B on NAND.
Analysts note that Apple is "slashing" NAND orders.
However, the amount that Apple reported is actually up 12% from the previous year.

The real kicker, though, is when you combine this with the sudden drop in NAND prices. A 12% increase is actually a much greater increase.

[melgross]

Originally Posted by quinney

The point was it will risk being perceived as not a growth stock if it pays dividends.

Stockholders can get some money out of the stock many ways, including:

1.sell far out of the money calls with short expiration dates. With the high volatility
of AAPL, their options are always overpriced.

2.sell a small percentage of your shares (which you have posted repeatedly are in the money)

I think some Apple exec (Jobs?) stated that Apple will use its cash to continue R&D while
other companies are cutting back, thus gaining ground on its competitors. I believe this will
be better for AAPL stock in the long run.

One could do those things, but it's not the point I was making.

Apple hasn't increased their R&D budget as a percentage of sales in any significant way in years. They even cut it a short while ago.

I wouldn't mind if they took down some of the cash for R&D.

[melgross]

Originally Posted by quinney

Name a few of these big successful dividend-paying companies and I think you will find
they are considered "value" rather than "growth" companies.

MSFT started paying dividends in 2003, during which year their stock price ranged from
about 22.5 to 30. It is still there. Most of its growth was before the tech bubble burst in
early 2000. (and before it started paying dividends)

GE, IBM, Exxon-Mobile, to name a few.