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Investors should give Apple's Q1 2013 call 'another look,' Barclays says

post #1 of 58
Thread Starter 
Though sentiment following Apple's earnings call for the first quarter of fiscal 2013 was overwhelmingly negative, one analyst believes the call deserves a second look to highlight the positives, including the company's strong cash flow.

Barclays


Ben Reitzes of Barclays issued a note to investors on Tuesday in which he declared Apple's most recent quarterly earnings call as one that "deserves another look." Barclays has an "overweight" rating for AAPL stock with a price target of $575.

Reitzes noted that while investors have shown concern about competition and execution, he believes there were "major positives" during the earnings call. In particular, he noted Apple's strong cash flow, and a conservative margin outlook that he believes could "grow on investors now that the damage is done."

He believes Apple could hold an event by April to debut new iPads and Macs, as well as potentially preview the next version of iOS. Reitzes also expects that Apple will ship two new iPhones this summer, as recent rumors have suggested, though he doesn't expect that either model will feature a screen larger than the 4-inch display on the iPhone 5.

Reitzes also said that investors may not fully appreciate the opportunity for growth that Apple has in China. He noted that sales for the iPhone doubled in greater China during the December quarter, even though the iPhone 5 was only available for a portion of the quarter.

Barclays


And another positive for the company comes from the fact that demand for the Apple TV remains strong despite what he characterized as an aging product. During the December quarter, Apple sold more than 2 million units ? an increase of 60 percent year over year.

"The current iteration of Apple TV was introduced in September 2010 with a performance update in March 2012," he said. "We believe the product's performance in the December quarters shows that the TV interest is there and there is demand for an Apple presence in the living room. We are looking for Apple to release a more comprehensive television solution based on services that are integrated with hardware sometime in the next year."

Some analysts have come out in support of Apple after the stock took a tumble following last week's earnings report. On Monday, Chris Whitmore of Deutsche Bank issued a note to investors saying he doesn't believe the company's current stock price accurately reflects the "stickiness" of Apple's iOS platform, which will keep users buying Apple devices in the future.

"iOS users have made a significant investment in time and dollars into the iOS platform, and as a consequence the switching costs are remarkably high," Whitmore said.
post #2 of 58
That graph sucks!
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Long on AAPL so biased
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post #3 of 58
At least someone has some common sense.
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post #4 of 58
Duh. What a keen insight to the obvious.

When will this analyst "herd" ever learn? They need to understand they are not the experts they think they are. As a business owner, I would have taken one look at Apple's Q1 results and been very satisfied. When you look at revenue and profit share, Apple is still in command of their business and shows little sign of backing off. Maybe the days of exponential growth are slowing down, but Apple finally has a solid foundation to rely on. After the results were reported, some of these so-called analysts would have you believe Apple is going out of business tomorrow. My favorite absurdity was the statement that confidence in Apple is at a 10 year low. That is so off it's not even funny. If you want real entertainment, just keep watching what these "analysts" say about Microsoft.

And that's just my humble non-expert non-analyst opinion.
post #5 of 58

AMZN up almost 11% now in AH!

 

They missed every damn metric on their earnings, yet the stock rises like crazy!

 

Q4 EPS - .21 - .06 worse than analyst estimate of .27!    MISS

 

Revenue $21.27 Billion, consensus estimate = $22.27 Billion    MISS

 

Net Income decreased 45%!     MISS

 

WTF!!!!

 

What kind of retards and crack heads are there on Wall Street!?

 

Strong companies like Apple get punished, weak, crappy companies that miss their earnings and are extremely overvalued keep getting rewarded, even though they keep reporting embarrassing and crappy results.

post #6 of 58
Quote:
Originally Posted by Apple ][ View Post

AMZN up almost 11% now in AH!

 

They missed every damn metric on their earnings, yet the stock rises like crazy!

 

Q4 EPS - .21 - .06 worse than analyst estimate of .27!    MISS

 

Revenue $21.27 Billion, consens us estimate = $22.27 Billion    MISS

 

Net Income decreased 45%!     MISS

 

WTF!!!!

 

What kind of retards and crack heads are there on Wall Street!?

 

Strong companies like Apple get punished, weak, crappy companies that miss their earnings and are extremely overvalued keep getting rewarded, even though they keep reporting embarrassing and crappy results.

LOL, I was just about to post this. Can't wait to see AMZN latest P/E. I'm guessing it went up.

post #7 of 58
After Christmas, I've been to the local Apple Store to see how much different the foot traffic is, and I talked to a buddy that works there, and he said it's calmed down a little during the week, but it's STILL packed wall to wall with people on weekends. But it seems like they are getting more serious buyers than the kids just playing around. The times i've been there, I surveyed mostly people in their 40's to 60's and they were buying systems, phones, tablets. Pretty much everything seemed to be selling. It wasn't slanted towards one product or another. I also noticed PCs being brought in to have the data transferred. I don't know what it looks like all over, but it does make sense that things would calm down in certain places. From what I've read, the bigger stores in the bigger cities are packed regardless. But the iPod business drys up since those are popular Christmas stocking stuffer type items.

I think Apple should release products every month or two if they could instead of waiting to release everything once a quarter.
post #8 of 58
Quote:
Originally Posted by ifij775 View Post

Quote:
Originally Posted by Apple ][ View Post

AMZN up almost 11% now in AH!

 

They missed every damn metric on their earnings, yet the stock rises like crazy!

 

Q4 EPS - .21 - .06 worse than analyst estimate of .27!    MISS

 

Revenue $21.27 Billion, consens us estimate = $22.27 Billion    MISS

 

Net Income decreased 45%!     MISS

 

WTF!!!!

 

What kind of retards and crack heads are there on Wall Street!?

 

Strong companies like Apple get punished, weak, crappy companies that miss their earnings and are extremely overvalued keep getting rewarded, even though they keep reporting embarrassing and crappy results.

LOL, I was just about to post this. Can't wait to see AMZN latest P/E. I'm guessing it went up.

 

Yep!  AAPL took the fall, and the referees are making a makeup call for AMZN.

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post #9 of 58
Quote:
Originally Posted by "Apple 
[" url="/t/155705/investors-should-give-apples-q1-2013-call-another-look-barclays-says#post_2267486"]AMZN up almost 11% now in AH!

They missed every damn metric on their earnings, yet the stock rises like crazy!

Q4 EPS - .21 - .06 worse than analyst estimate of .27!    MISS

Revenue $21.27 Billion, consensus estimate = $22.27 Billion    MISS

Net Income decreased 45%!     MISS

WTF!!!!

What kind of retards and crack heads are there on Wall Street!?

Strong companies like Apple get punished, weak, crappy companies that miss their earnings and are extremely overvalued keep getting rewarded, even though they keep reporting embarrassing and crappy results.

I think it's funny to compare the full report:
http://www.thestreet.com/story/11825971/1/amazon-revenue-soars-22-stock-surges.html?puc=CNNMONEY&cm_ven=CNNMONEY

Note that Apple's revenues increased more than Amazon's.
Apple exceeded guidance and consensus. Amazon did not.
Apple's forward guidance was down slightly, but still for a profit. Amazon's forward guidance was down considerably.
Apple's profit increased, Amazon's did not.
AMZN's bread and butter (physical book sales) had its worst quarter in years - up only 5%. Apple's bread and butter (phones) was up by double digit amounts.
Before the earnings announcement, AMZN's P/E was over 3500. Apple's was around 10 (even before adjusting for cash).

Yet AAPL plummets and AMZN soars.

Absolutely amazing.
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post #10 of 58

You know, I find this to be Onion-level shit right there. It's as if we're looking for the 'silver lining' with a company that just announced a horrible quarter. 

 

Apple just announced the most successful quarter of any company in HISTORY. They made more revenue than any other company on the planet has EVER made in a quarter. They sold more shit than any technology company has sold in history. Yet we're advised to "take another look", as if there's maybe some sliver of redeemable news buried under catastrophic news, as if the company posted a loss. "Highlight the positives"? They need highlighting, really? The greatest quarter in history needs highlighting?  Simply unreal. 

 

Oh, and I love that hilariously misleading graph. It's like they tried so fucking hard to come up with something visually that looks bad, and settled on a misleading linear graph plotting exponential growth, which is just beyond insane. Guess what? It's alot easier for me to make $1 and double my performance tomorrow and make $2. It's a bit tougher to continually double when I'm making $40,000,000,000 a quarter. 


Edited by Slurpy - 1/29/13 at 2:10pm
post #11 of 58
Quote:
Originally Posted by jragosta View Post


I think it's funny to compare the full report:
http://www.thestreet.com/story/11825971/1/amazon-revenue-soars-22-stock-surges.html?puc=CNNMONEY&cm_ven=CNNMONEY

Note that Apple's revenues increased more than Amazon's.
Apple exceeded guidance and consensus. Amazon did not.
Apple's forward guidance was down slightly, but still for a profit. Amazon's forward guidance was down considerably.
Apple's profit increased, Amazon's did not.
AMZN's bread and butter (physical book sales) had its worst quarter in years - up only 5%. Apple's bread and butter (phones) was up by double digit amounts.
Before the earnings announcement, AMZN's P/E was over 3500. Apple's was around 10 (even before adjusting for cash).

Yet AAPL plummets and AMZN soars.

Absolutely amazing.

 

 

You have to remember, the same thing happened with Exxon (and other gas stocks) when gas prices skyrocketed a few years ago.  Now it's AAPL.  Anytime you have a stock on top, it's a prime target for speculators.  Pair that with zealous analysts and the results you get are fairly wide swings in stock that don't follow your typical stock patterns.

 

Amazon isn't on top, so it won't be treated as a speculative stock like AAPL is. 

 

Bottom line, it's criminal and stock speculations have a way of redistributing wealth back from the bottom (average investors) to the top (speculators).

post #12 of 58
Quote:
Originally Posted by drblank View Post

After Christmas, I've been to the local Apple Store to see how much different the foot traffic is, and I talked to a buddy that works there, and he said it's calmed down a little during the week, but it's STILL packed wall to wall with people on weekends. But it seems like they are getting more serious buyers than the kids just playing around. The times i've been there, I surveyed mostly people in their 40's to 60's and they were buying systems, phones, tablets. Pretty much everything seemed to be selling. It wasn't slanted towards one product or another. I also noticed PCs being brought in to have the data transferred. I don't know what it looks like all over, but it does make sense that things would calm down in certain places. From what I've read, the bigger stores in the bigger cities are packed regardless. But the iPod business drys up since those are popular Christmas stocking stuffer type items.

I think Apple should release products every month or two if they could instead of waiting to release everything once a quarter

 

While anecdotal, that's good to hear.

 

I think that Apple is going to try to release products as the technology becomes available, and... and it makes business sense! No sense replacing a product that is selling well.

 

I suspect that Apple will release a new Mac Pro and upgraded Final Cut Pro early April -- to coincide with NAB.  There, also could be some Retina iPad iOS/App announcements around NAB.

 

We could see an iPad Retina in March, technology permitting.

 

WWDC in July should bring iOS 7.

 

There are opportunities for:

  • updated/new AirPort Base Station with 802.11ac
  • updated/new AppleTV
  • updated/new TimeMachine
  • new HomeServer
  • combos of the above

 

Bumps to Macs and iDevices to add 802.11ac (or activate it in already released devices)

 

An iPhone 5S

 

A new low-price iPhone and/or a special iPhone for China Mobile

 

Anyway, there are a lot of things that could happen through July...

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post #13 of 58
Originally Posted by ifij775 View Post
LOL, I was just about to post this. Can't wait to see AMZN latest P/E. I'm guessing it went up.

 

3479.68 today.

post #14 of 58

I am hardly an expert on the subject, but then again, neither are most of those clowns on Wall Street.

 

Somebody should release a book outlining how to choose and pick successful stocks and how to profit.

 

Step 1 - invest in companies that are more overvalued than even the price of tulips in Holland, 1637. If this company happens to be losing hundreds of millions of dollars each quarter, then that's a huge benefit for you as a shareholder. You should go out and celebrate each time this company misses it's quarterly results. You have found a winning company and you will be richly rewarded.

 

Step 2 - Whatever you do, make sure to stay away from unsuccessful companies like Apple, that only bring in tens of Billions of dollars each quarter and continues releasing innovative and disruptive devices that have completely changed many industries, devices that every other competitor on the market envies and tries to copy, though rather unsuccessfully.

 

If a 16 year old high school kid comes home with F- grades and he tells his parents that he also happened to get a girl knocked up, would the father go out and buy his son a Corvette? Well it seems to me as if AMZN is that 16 year old kid, and I have no idea who the dumbass father is, but I am glad that it's not me.

post #15 of 58
Quote:
Originally Posted by jragosta View Post


I think it's funny to compare the full report:
http://www.thestreet.com/story/11825971/1/amazon-revenue-soars-22-stock-surges.html?puc=CNNMONEY&cm_ven=CNNMONEY

Note that Apple's revenues increased more than Amazon's.
Apple exceeded guidance and consensus. Amazon did not.
Apple's forward guidance was down slightly, but still for a profit. Amazon's forward guidance was down considerably.
Apple's profit increased, Amazon's did not.
AMZN's bread and butter (physical book sales) had its worst quarter in years - up only 5%. Apple's bread and butter (phones) was up by double digit amounts.
Before the earnings announcement, AMZN's P/E was over 3500. Apple's was around 10 (even before adjusting for cash).

Yet AAPL plummets and AMZN soars.

Absolutely amazing.

I rarely short a stock... but this insanity has to come crashing to reality soon.   Amazon will not become the new Sears, and Apple is not Gateway Computer.

 

Both Apple and Amazon have amazing eyeball and credit card stickiness.  The Market fears that Apple isn't sticky enough to keep the growth in iDevice sales, and Amazon can just print money with every ebook sold, and people will read more books than the cans of pop they drink in a year, and then amazon will sell them weightloss ebooks as well.

 

 

Yes, Amazon's reach is basically endless... You can sell, or help sell, just about everything on Amazon.  But there is such a thing like competition, and the walmarts and the targets and the tesco's of the world aren't rolling over and dying at the sight of Amazon's 'growth' (or lack thereof).  Bezos however sells Amazon as selling anything to anyone.   Limitless.

 

Apple's issue is that its reach has a self-defined limit.  It won't sell something to everyone.  It will make its one (or 10) things useful to as many people as possible. and not one more.  For those people who buy these things, there will be other things that will make it more useful (apps, music, media, and books), and make you buy an upgraded device From Apple in a couple years when your device becomes obsolete.  But that makes the market scared that Apple won't try to sell $9.99  iAir to people who can't afford $19.99 iRocks, who can't afford an iPod shuffle, and woe to Apple if their overall margins slip if they do.

 

The market sees the barrier to entry for Apple is too high for the other 5Billion people that haven't bought an iDevice, and that Android, and BB10, and Win8 will be so cheap that people will immediately go to Amazon and buy stuff with the savings.

 

At least that's the only story that makes sense.


Edited by TheOtherGeoff - 1/29/13 at 2:44pm
post #16 of 58
Doesn't this put AMZN's earnings negative for TTM? No pesky PE to worry about now!!
post #17 of 58
Dupe... doh...
post #18 of 58
Quote:
Originally Posted by Apple ][ View Post

I am hardly an expert on the subject, but then again, neither are most of those clowns on Wall Street.

 

Somebody should release a book outlining how to choose and pick successful stocks and how to profit.

 

Step 1 - invest in companies that are more overvalued than even the price of tulips in Holland, 1637. If this company happens to be losing hundreds of millions of dollars each quarter, then that's a huge benefit for you as a shareholder. You should go out and celebrate each time this company misses it's quarterly results. You have found a winning company and you will be richly rewarded.

 

Step 2 - Whatever you do, make sure to stay away from unsuccessful companies like Apple, that only bring in tens of Billions of dollars each quarter and continues releasing innovative and disruptive devices that have completely changed many industries, devices that every other competitor on the market envies and tries to copy, though rather unsuccessfully.

 

If a 16 year old high school kid comes home with F- grades and he tells his parents that he also happened to get a girl knocked up, would the father go out and buy his son a Corvette? Well it seems to me as if AMZN is that 16 year old kid, and I have no idea who the dumbass father is, but I am glad that it's not me.

Or, consider a different step: unless you have short-term liquidity needs (in which case, I would feel very badly for you), develop a little patience, and have a longer horizon. 1smile.gif

 

I have no doubt that both AAPL and AMZN will adjust to their long-run equilibrium value within some reasonable horizon (especially the latter, as they try to hit the EPS for the next fiscal year implied by their Forward P/E ratio -- watch it come down with a thud). 

post #19 of 58
Quote:
Originally Posted by TheOtherGeoff View Post

But there is such a thing like competition, and the walmarts and the targets and the tesco's of the world aren't rolling over and dying at the sight of Amazon's 'growth' (or lack thereof).

Moreover, Amazon's sales tax advantage is slowly, but surely eroding in state after state.

post #20 of 58
Originally Posted by Apple ][ View Post
AMZN up almost 11% now in AH!

 

They missed every damn metric on their earnings, yet the stock rises like crazy!

 

Q4 EPS - .21 - .06 worse than analyst estimate of .27!    MISS

 

Revenue $21.27 Billion, consensus estimate = $22.27 Billion    MISS

 

Net Income decreased 45%!     MISS

 

WTF!!!!

 

What kind of retards and crack heads are there on Wall Street!?

 

Strong companies like Apple get punished, weak, crappy companies that miss their earnings and are extremely overvalued keep getting rewarded, even though they keep reporting embarrassing and crappy results.

 

"weak, crappy companies..."  You know how uninformed and childish you come across writing that about Amazon?  Amazon, in it's own way, is as revolutionary as Apple.  Has the share price gotten ahead of the fundamentals? Obviously, but to ignore the fact many consider it the main future competition for companies like Visa and MC, and that it has put other companies out of business is ridiculous.  

post #21 of 58
Quote:
Originally Posted by tkell31 View Post

"weak, crappy companies..."  You know how uninformed and childish you come across writing that about Amazon?  Amazon, in it's own way, is as revolutionary as Apple.  Has the share price gotten ahead of the fundamentals? Obviously, but to ignore the fact many consider it the main future competition for companies like Visa and MC, and that it has put other companies out of business is ridiculous.  

Share price gotten ahead of fundamentals? Surely you jest. Their share price has been stratospheric for years - and there are no fundamentals to speak of. They've earned less than $5 B in their entire history. Apple earns that much in a good month.

Revolutionary? Like no one ever thought of selling books online before? No one ever had a massive distribution system (ask Walmart to show you their distribution system sometime).

Your post is a prime example of how ridiculous the evaluations are. Amazon gets a free ride for no good reason while Apple gets torn down no matter how well they do.
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post #22 of 58
Quote:
Originally Posted by anantksundaram View Post

Moreover, Amazon's sales tax advantage is slowly, but surely eroding in state after state.

Excellent point. A large part of Amazon's success was that people saved 3-9% of the purchase price when they didn't charge sales tax. That gave them a significant cost advantage over local retailers. With the tax advantage disappearing, their competitive advantage is smaller.
Quote:
Originally Posted by Tallest Skil View Post

3479.68 today.

That was before the earnings release. Profits are down and stock price is up, so the P/E will be much higher than that.
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post #23 of 58
Quote:
Originally Posted by anantksundaram View Post

Or, consider a different step: unless you have short-term liquidity needs (in which case, I would feel very badly for you), develop a little patience, and have a longer horizon. 1smile.gif

 

I have no doubt that both AAPL and AMZN will adjust to their long-run equilibrium value within some reasonable horizon (especially the latter, as they try to hit the EPS for the next fiscal year implied by their Forward P/E ratio -- watch it come down with a thud). 

Oh, I know, and I do of course agree with you. For the long term, Apple is obviously the far better company. I am just temporarily frustrated by the recent AAPL action, which I'm sure a lot of people are, and it doesn't make it easier when you see ridiculous stuff that makes no sense happening. 

 

But you're right, patience is a good thing to have.

post #24 of 58
Quote:
Originally Posted by "Apple 
[" url="/t/155705/investors-should-give-apples-q1-2013-call-another-look-barclays-says#post_2267548"]Oh, I know, and I do of course agree with you. For the long term, Apple is obviously the far better company. I am just temporarily frustrated by the recent AAPL action, which I'm sure a lot of people are, and it doesn't make it easier when you see ridiculous stuff that makes no sense happening. 

But you're right, patience is a good thing to have.

Yes, but it's a question of how long one must be patient for.

AMZN's P/E has been stratospheric for years - which means that the investors keep telling themselves that it's going to get better soon. You'd think that after 10 years of sky-high P/E ratios that they'd finally stop believing what the management is telling them.
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post #25 of 58
Quote:
Originally Posted by jragosta View Post


Share price gotten ahead of fundamentals? Surely you jest. Their share price has been stratospheric for years - and there are no fundamentals to speak of. They've earned less than $5 B in their entire history. Apple earns that much in a good month.

Revolutionary? Like no one ever thought of selling books online before? No one ever had a massive distribution system (ask Walmart to show you their distribution system sometime).

Your post is a prime example of how ridiculous the evaluations are. Amazon gets a free ride for no good reason while Apple gets torn down no matter how well they do.

 

I wonder what Barnes and Noble and Best Buy would say about that?  I wonder why people say it is real threat to MC and VISA? It generates half the revenue of Apple at one quarter the market cap and you are going to pretend any company could match it now?  Like no one ever thought of selling smartphones before Apple?  What should it be?  $10 a share because the EPS is so low?  You think margins will never improve and its foray into the cloud will fail as well?  Lol, very far sighted of you.

 

Geez, I own Apple, I wish some other men did to. This board is like a bunch of children crying about everything.    Amazon gets a free ride WAHHHH!  Apple gets torn down.  Boo hoo, it's investing not a playground.  Your post is a primary example of what big babies post here.  

 

Ultimately time will tell who was right to invest in which stock and if Apple continues to execute the share price will reflect it so why are your panties in a twist?  You want to sell next week? next month or next year?  Should have sold in Sept if that was the case.

post #26 of 58
Only thing I took away from the call was no increased dividend. No increased buyback. Basically a "we do not care about shareholders" message from the executives. On that answer alone I sold my stock after 5 years. I do not align with management that does not hold significant stakes in the company they work for and displays a lack of shareholder friendliness. I strongly believed this conference call would be one where shareholders were rewarded. Not so much
post #27 of 58
And brokerage houses are complicit in it, e.g. by changing the margin requirements in the midst of it, say by lowering the house margin requirements from 40% to 35% and forcing people to sell stock in the process, increasing pressure on the stock price, such that their speculators in the same company can cash in on their options, particularly when they dump all the forced margin sales on the market in one heap, causing shock waves, driving prices down even further, triggering more forced margin sales, etc.

What happened in the last few months would be worthy of some SEC investigation....
post #28 of 58
Quote:
Originally Posted by tkell31 View Post

 

I wonder what Barnes and Noble and Best Buy would say about that?  I wonder why people say it is real threat to MC and VISA? It generates half the revenue of Apple at one quarter the market cap and you are going to pretend any company could match it now?  Like no one ever thought of selling smartphones before Apple?  What should it be?  $10 a share because the EPS is so low?  You think margins will never improve and its foray into the cloud will fail as well?  Lol, very far sighted of you.

 

Geez, I own Apple, I wish some other men did to. This board is like a bunch of children crying about everything.    Amazon gets a free ride WAHHHH!  Apple gets torn down.  Boo hoo, it's investing not a playground.  Your post is a primary example of what big babies post here.  

 

Ultimately time will tell who was right to invest in which stock and if Apple continues to execute the share price will reflect it so why are your panties in a twist?  You want to sell next week? next month or next year?  Should have sold in Sept if that was the case.

 

Good post, finally, a little bit of common sense.  

post #29 of 58
Quote:
Originally Posted by rcfa View Post

And brokerage houses are complicit in it, e.g. by changing the margin requirements in the midst of it, say by lowering the house margin requirements from 40% to 35% and forcing people to sell stock in the process, increasing pressure on the stock price, such that their speculators in the same company can cash in on their options, particularly when they dump all the forced margin sales on the market in one heap, causing shock waves, driving prices down even further, triggering more forced margin sales, etc.

What happened in the last few months would be worthy of some SEC investigation....

 

Don't want to face a margin call?  Don't trade stocks on margin.  

 

And you certainly shouldn't be speculating on tech stocks on margin, you should be day trading or something...  

post #30 of 58
Quote:
Originally Posted by jragosta View Post


Yes, but it's a question of how long one must be patient for.

AMZN's P/E has been stratospheric for years - which means that the investors keep telling themselves that it's going to get better soon. You'd think that after 10 years of sky-high P/E ratios that they'd finally stop believing what the management is telling them.

 

Look at Amazon's balance sheet...  They're in good shape.  EPS and P/E isn't everything...  

post #31 of 58
Quote:
Originally Posted by Mikeb85 View Post

Look at Amazon's balance sheet...  They're in good shape.  EPS and P/E isn't everything...  

Sure. Let's look at balance sheets:

AMZN
Total assets: $25 B'
Total liabilities: $18 B
Shareholder's Equity $8 B
Market cap: $118 B (14.7 times Equity)

Book value per share: $20 B
Price per share: $282 (14.4 times BV)


AAPL
Total assets: $176 B'
Total liabilities: $58 B
Shareholder's Equity $118 B
Market cap: $430 B (3.6 times equity)

Book value per share $ 135 B
Price per share: $457 B (3:4 times BV)


Please explain again how Apple is overpriced but AMZN is not.
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Gatorguy 5/31/13
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"I'm way over my head when it comes to technical issues like this"
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post #32 of 58
Quote:
Originally Posted by jragosta View Post


Sure. Let's look at balance sheets:

AMZN
Total assets: $25 B'
Total liabilities: $18 B
Shareholder's Equity $8 B
Market cap: $118 B (14.7 times Equity)

Book value per share: $20 B
Price per share: $282 (14.4 times BV)


AAPL
Total assets: $176 B'
Total liabilities: $58 B
Shareholder's Equity $118 B
Market cap: $430 B (3.6 times equity)

Book value per share $ 135 B
Price per share: $457 B (3:4 times BV)


Please explain again how Apple is overpriced but AMZN is not.

Did I ever say Apple is overpriced?

post #33 of 58
Quote:
Originally Posted by Apple II 
What kind of retards and crack heads are there on Wall Street!?

The kind that get rich off other people's money without any liability while other people wonder why it doesn't make sense. It makes perfect sense - the house always wins.
Quote:
Originally Posted by TheOtherGeoff 
The Market fears that Apple isn't sticky enough to keep the growth in iDevice sales, and Amazon can just print money with every ebook sold, and people will read more books than the cans of pop they drink in a year, and then amazon will sell them weightloss ebooks as well.

With Apple being one of the wealthiest companies in the world, it would leave some to wonder how much better they can get to justify the share value going up.

However, Apple didn't do anything to justify the price dropping from where it was. I can understand if it topped out around $700 and fluctuated but to drop so much in such a short period of time doesn't match up with the health of the company.

Amazon does have that perpetual attractiveness to a massive variety of shoppers so I can see why people would be positive about it but it would surely have to show signs of making a massive profit. I know people said they could just flip a switch and start making loads of money but not without making themselves less attractive to shoppers.

Amazon is popular because of the price but that price means their profits are low - 5 year average net margin is 2.7% (currently 0.2%), Apple's is 23%. Anybody can sell products cheap. Putting in place a system that will allow you to sell anything cheap for a long time without going out of business takes effort and it could end up working better than Apple trying to keep delivering products people are willing to pay more for but there's no evidence of that yet.

Share price should be directly tied to company earnings. If a company is doing well, they don't need the investment so it doesn't matter if the buy price is high. If a company is struggling, their share price drops and people can choose to invest or let it die. That would keep the whole thing much less volatile but that isn't what everyone would like because it's the volatility that keeps the big profits rolling in.
post #34 of 58
Quote:
Originally Posted by Marvin View Post

Share price should be directly tied to company earnings. If a company is doing well, they don't need the investment so it doesn't matter if the buy price is high. If a company is struggling, their share price drops and people can choose to invest or let it die. That would keep the whole thing much less volatile but that isn't what everyone would like because it's the volatility that keeps the big profits rolling in.

 

Tying share price to earnings is similar to what happens with dividend stocks.  The dividend paid out is a certain percentage of earnings, and the share price adjusts according to the supply/demand of the market, generally in the 4-8 percent (yield) range.  If Apple wants to maintain their share price, they need to increase their dividend, otherwise Apple shares will remain a speculative buy.  

 

Furthermore, your second sentence makes no sense.  Companies generally don't finance after their IPO, most new shares on the market are the ones granted to employees.  Share price doesn't affect a companies' financial situation whatsoever.  When you 'invest' in a company you're simply buying shares from another seller in the market, not the company itself (unless it's an IPO).    

 

People who don't understand the market should stay out of it, and if they want to learn, they shouldn't cry foul when something happens that they don't understand.  

post #35 of 58
Quote:
Originally Posted by Marvin View Post

Amazon does have that perpetual attractiveness to a massive variety of shoppers so I can see why people would be positive about it but it would surely have to show signs of making a massive profit. I know people said they could just flip a switch and start making loads of money but not without making themselves less attractive to shoppers.

Amazon is popular because of the price but that price means their profits are low - 5 year average net margin is 2.7% (currently 0.2%), Apple's is 23%. Anybody can sell products cheap. Putting in place a system that will allow you to sell anything cheap for a long time without going out of business takes effort and it could end up working better than Apple trying to keep delivering products people are willing to pay more for but there's no evidence of that yet.
 

 

Here's a financial indicator for Amazon that might help explain why investors love it.  From their results yesterday, Operating Cash Flow for the quarter was 5.1 billion, or 24% of revenue, which was a staggering 21 billion dollars.  Also, on their balance sheet, cash and cash equivalents is at 8 billion dollars, and they repurchased 960 million dollars worth of shares in the last 12 months.  

post #36 of 58
Quote:
Originally Posted by jragosta View Post


Sure. Let's look at balance sheets:

AMZN
Total assets: $25 B'
Total liabilities: $18 B
Shareholder's Equity $8 B
Market cap: $118 B (14.7 times Equity)

Book value per share: $20 B
Price per share: $282 (14.4 times BV)


AAPL
Total assets: $176 B'
Total liabilities: $58 B
Shareholder's Equity $118 B
Market cap: $430 B (3.6 times equity)

Book value per share $ 135 B
Price per share: $457 B (3:4 times BV)
 

 

Another thing worth mentioning is that marketcap over shareholders' equity is not a financial indicator.  How many shares are outstanding is not a measure of a companies' success, in fact, less outstanding shares is generally preferred.

post #37 of 58
Quote:
Originally Posted by Mikeb85 View Post

 

Here's a financial indicator for Amazon that might help explain why investors love it.  From their results yesterday, Operating Cash Flow for the quarter was 5.1 billion, or 24% of revenue, which was a staggering 21 billion dollars.  Also, on their balance sheet, cash and cash equivalents is at 8 billion dollars, and they repurchased 960 million dollars worth of shares in the last 12 months.  


Amazons Balance sheet is far from being ideal.  You mention 8 bil in cash.  But you fail to mention that Amazon has 19 billion in current liabilities (cash they own in less than one year) and another 5 billion in long term liabilities.

 

Their current assets (cash,inventory, receivables, short term invest) only total 21 billion

Their current liabilities total 19 Billion.

That's a net of only 2 billion

 

The 5 billion in operating cash flow is more attributed to Amazon not paying their vendors quickly and deferring expenses (capital expenditures)

 

So how about Amazons 8 billion in owners equity?  That to is a joke. 7 billion is from property/plant/equipment and another 2.5 billion is Goodwill.  Goodwill = price Amazon paid in excess to what a company is worth.

 

So basically on the Balance sheet side when you buy Amazon all you are buying is Property/Plant/Equipement and BS Goodwill.

 

You can make the argument that Amazon is GROWING amazingly.  But that's also false.

 

Amazon Revenue Growth for year 2011 = 41%

Amazon Revenue Growth for year 2012 = 27%

Apple Revenue Growth for year 2012 = 44%

 

So Amazon's revenue growth dropped 34% from 2011. 

Apple Purchases last 12 months - iPhone 5S (two), iPhone 6, iPhone 6+ (two), iPadAir, iPadAir2, iPadMini2, AppleTV (two), MacMini, Airport Extreme, iPod Classic.
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Apple Purchases last 12 months - iPhone 5S (two), iPhone 6, iPhone 6+ (two), iPadAir, iPadAir2, iPadMini2, AppleTV (two), MacMini, Airport Extreme, iPod Classic.
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post #38 of 58
Quote:
Originally Posted by Mikeb85 View Post

 

Here's a financial indicator for Amazon that might help explain why investors love it.  From their results yesterday, Operating Cash Flow for the quarter was 5.1 billion, or 24% of revenue, which was a staggering 21 billion dollars.  Also, on their balance sheet, cash and cash equivalents is at 8 billion dollars, and they repurchased 960 million dollars worth of shares in the last 12 months.  

 

The 5.1 billing in Operating Cash Flow is another joke.

 

4.9 billion of the 5.1 billion was attributed to an increase in Accounts Payable.  So basically if Amazon had to pay their vendors on time their operating cash flow would be $0.

 

Another huge chunk of the operating cash flow is from depreciation and accured liabilites (over 2 billion).  These are REAL expenses that Amazon has but are subtracted from the cash flow statement.

Apple Purchases last 12 months - iPhone 5S (two), iPhone 6, iPhone 6+ (two), iPadAir, iPadAir2, iPadMini2, AppleTV (two), MacMini, Airport Extreme, iPod Classic.
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Apple Purchases last 12 months - iPhone 5S (two), iPhone 6, iPhone 6+ (two), iPadAir, iPadAir2, iPadMini2, AppleTV (two), MacMini, Airport Extreme, iPod Classic.
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post #39 of 58
Quote:
Originally Posted by sog35 View Post


Amazons Balance sheet is far from being ideal.  You mention 8 bil in cash.  But you fail to mention that Amazon has 19 billion in current liabilities (cash they own in less than one year) and another 5 billion in long term liabilities.

Their current assets (cash,inventory, receivables, short term invest) only total 21 billion
Their current liabilities total 19 Billion.
That's a net of only 2 billion

The 5 billion in operating cash flow is more attributed to Amazon not paying their vendors quickly and deferring expenses (capital expenditures)

So how about Amazons 8 billion in owners equity?  That to is a joke. 7 billion is from property/plant/equipment and another 2.5 billion is Goodwill.  Goodwill = price Amazon paid in excess to what a company is worth.

So basically on the Balance sheet side when you buy Amazon all you are buying is Property/Plant/Equipement and BS Goodwill.

You can make the argument that Amazon is GROWING amazingly.  But that's also false.

Amazon Revenue Growth for year 2011 = 41%
Amazon Revenue Growth for year 2012 = 27%
Apple Revenue Growth for year 2012 = 44%

So Amazon's revenue growth dropped 34% from 2011. 

In the end, it doesn't matter WHAT metric you use. AAPL is far better than AMZN. Earnings, P/E, price/book, price/sales, price/equity, growth rates, profitability, virtually any metric you could choose. Even future guidance for AAPL is better.

So the question is why people are willing to pay so much for a company which has only had one profitable year in its history and has such dismal financials while punishing AAPL for a record quarter and better prospects.
"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
Reply
"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
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post #40 of 58
Quote:
Originally Posted by jragosta View Post


In the end, it doesn't matter WHAT metric you use. AAPL is far better than AMZN. Earnings, P/E, price/book, price/sales, price/equity, growth rates, profitability, virtually any metric you could choose. Even future guidance for AAPL is better.

So the question is why people are willing to pay so much for a company which has only had one profitable year in its history and has such dismal financials while punishing AAPL for a record quarter and better prospects.

You can't compare the two because Apple is valued at 4 times what Amazon is.  I'm merely trying to illustrate why people do value Amazon at ~100 billion, and why some may have chosen to sell Apple stock.  That doesn't mean Amazon is a better company, I'm just trying to illustrate why the market moves the way it does - because it is entirely rational.  

 

If you want to simply rationalize losing money (if you even have money in the game) then be my guest, I'll continue making money on all the stock exchanges I trade on...  

 

Save being a fanboy for your favourite sport team, or stock up on iDevices at home, but stock markets are no place for emotional attachment...  

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