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Dec 11, 2005
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gilboman wrote: yes..but they've been dominant in enterprise for last..oh... 20+ years? and nothing is even on radar that can challenge them.

They are the exxon mobil of enterprise IT..which is the safest market that you can count on.
If you think Microsoft is the Exxon Mobile of enterprise IT then you have not been in the enterprise lately.

Everything is moving to cloud. EVERYTHING. And in cloud, Microsoft is just one of a handful of players, and not even the dominant one currently. Amazon, Google, Oracle, IBM, Salesforce, Rackspace, Microsoft. Who are the top 3? Hint: Microsoft is not one of them.

Microsoft is a lot less like Exxon and a lot more like Dell. They have everything to lose in the new "internet of things" economy, where windows plays second fiddle to iOS and Android and what brand of office software you run is not as relevant as the fact that you can run it ANYWHERE is.

I am not saying Microsoft is written off and dead, not by a long shot, but thinking they are the "Exxon Mobile of IT", or "like a utility" as the other poster put it, is the apex of hubris.
To be nobody but yourself - in a world which is doing its best, night and day, to make you everybody else - means to fight the hardest battle which any human being can fight; and never stop fighting. -- E. E. Cummings
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cartfan123 wrote: One of them aw shucks moments. The bulls can focus on they are still making a bunch of money and the bears that the growth is falling. Too bad for the bulls they didn`t want to understand the law of large numbers.

http://www.businessinsider.com/chart-of ... 0The%20Day
So are you on the bull side or the bear side? Not sure anyone said Apple could sell 100% more iPhones every year forever...did I miss a post? Also, I'm sure everyone who follows Apple or any Technology company realizes that there's a seasonality to Tech...when new products are released, they sell well and then slow down while people wait for the new product. Is this what we're seeing here, or is it the "crash of the iPhone"? It sounds like an attention grabbing headline to me, especially with no numbers in the negative in the graph, hence still growing, but still, I see what you're saying.

Lets just look back to September when the iPhone 5 came out...growth looks to be 60%, which is significantly less than previous years, but I don't think anyone would ever complain about 60% growth from any company. Now we're down to 7-8% growth, obviously slowing down, but again, still growing...now since I can't read the future, what's going to happen next fall when Apple releases the iPhone 5S or iPhone 6? Will it crash down? Or will growth jump back to the 60% area like last September? Personally, I don't care about quarterly growth since the iPhone is a product generally released once a year. I see 100%+ growth for the iPhone as dead, but I do think 15 - 25% yearly growth for the next 5 years is not out of the question...do you disagree or agree?
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Aug 25, 2010
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Vitalogy80 wrote: It depends what he's looking for...is he hoping for growth or dividends? If he's hoping for dividends, Apple is paying out 3%, increasing 15%/year with a 20% payout ratio. Can you find me another company that's doing that?

Apple is no longer a growth company...it's not going to grow EPS 100%. But facts remain that it's making more cash than anyone else, and it's now shown a willingness to deploy that cash back to shareholders. Apple added $8 Billion to its cash reserves last quarter, after paying all expenses including a 2.5% dividend. Sounds like they still have way more cash than they need.

Honestly, I wouldn't be buying Apple right now expecting it to grow EPS at a 100% clip anymore...but those of you that come here and say Apple is toast are hilarious. They make more profit than anyone else, and still own the most popular Smartphone, the most popular Tablet and it's really not even close.
Apple has essentially become a "value play" with a decent dividend. So it's a stock like a hundred others. Why (some) people seem to be so obsessed with it is beyond me.
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Vitalogy80 wrote: Lets just look back to September when the iPhone 5 came out...growth looks to be 60%, which is significantly less than previous years, but I don't think anyone would ever complain about 60% growth from any company. Now we're down to 7-8% growth, obviously slowing down, but again, still growing...now since I can't read the future, what's going to happen next fall when Apple releases the iPhone 5S or iPhone 6? Will it crash down? Or will growth jump back to the 60% area like last September? Personally, I don't care about quarterly growth since the iPhone is a product generally released once a year. I see 100%+ growth for the iPhone as dead, but I do think 15 - 25% yearly growth for the next 5 years is not out of the question...do you disagree or agree?
I agree with this thinking and it is why I am still in the stock, and why I doubled down on it.

Apple is no longer a 50% growth company. It's a 10%-20% growth company. The question is, is the current price justified for a company with 10%-20% of growth, or is it undersold, or oversold? My strong opinion is it is oversold. Compare the P/E to other consumer companies in this growth range, many without even a dividend. Apple is way way under.
To be nobody but yourself - in a world which is doing its best, night and day, to make you everybody else - means to fight the hardest battle which any human being can fight; and never stop fighting. -- E. E. Cummings
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dlhunter wrote: 397, of course. and I didn't call you names...
you can't call anybody names..because we'll just go back a few months when you were still talking when the stock was at 450 range...i mean how many foot can you stick in your mouth right? lol
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brunes wrote: If you think Microsoft is the Exxon Mobile of enterprise IT then you have not been in the enterprise lately.

Everything is moving to cloud. EVERYTHING. And in cloud, Microsoft is just one of a handful of players, and not even the dominant one currently. Amazon, Google, Oracle, IBM, Salesforce, Rackspace, Microsoft. Who are the top 3? Hint: Microsoft is not one of them.

Microsoft is a lot less like Exxon and a lot more like Dell. They have everything to lose in the new "internet of things" economy, where windows plays second fiddle to iOS and Android and what brand of office software you run is not as relevant as the fact that you can run it ANYWHERE is.

I am not saying Microsoft is written off and dead, not by a long shot, but thinking they are the "Exxon Mobile of IT", or "like a utility" as the other poster put it, is the apex of hubris.
exchange server, sharepoint etc... OS, productivity, .net etc..i'm talking about those.

cloud is one aspect, data centres are still the norm for businesses.
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gilboman wrote: exchange server, sharepoint etc... OS, productivity, .net etc..i'm talking about those.

cloud is one aspect, data centres are still the norm for businesses.
So what you're saying is that with Microsoft sitting at nearly 100% of Enterprise business, there's no where to go but down?? ;)

Sort of like Microsoft's near 100% browser rate it had a 6-8 years ago?

The Cloud is not the norm for businesses now, but in 5 years it will be.
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Vitalogy80 wrote:
The Cloud is not the norm for businesses now, but in 5 years it will be.
Cloud from who? Corp isn't going to move to icloud, sky drive or whatever... Commercial cloud players won't be dropbox
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shaolinmonk wrote: Cloud from who? Corp isn't going to move to icloud, sky drive or whatever... Commercial cloud players won't be dropbox
VMware, Amazon, Microsoft, Google, Apple...every major IT player is getting into it, who the victors will be is anyones guess. What's the requirement to stick with Exchange for everyone? Well we use all Microsoft stuff, so why not since it integrates nicely? Well what if our front end isn't all Microsoft anymore. Microsoft in almost every field they're in is never known as an innovator, they take what others do and copy and because of their scale, can put them out of business (see Netscape for an example). That might not work in the future if they're competing against Google, Apple, Amazon etc. People use Microsoft's products because they have to, not because it's the best. That's dangerous for Microsoft.
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Vitalogy80 wrote: . Microsoft in almost every field they're in is never known as an innovator, they take what others do and copy and because of their scale, can put them out of business (see Netscape for an example).
apple has done that lately. iphone5 bigger screen (samsung), ipad mini (copying kindle, playbook), etc. does that mean apple will turn into a microsoft as well? With pretty much zero returns for investors over a 10 year period?


i finally had some time to go through some of the transcript from the call... I really don't see much of a bull case from that call. if you didn't pay attention to the details then it was great news. but if you dig a bit deeper it's actually bad news (imo)
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ItechJester wrote: apple has done that lately. iphone5 bigger screen (samsung), ipad mini (copying kindle, playbook), etc. does that mean apple will turn into a microsoft as well? With pretty much zero returns for investors over a 10 year period?


i finally had some time to go through some of the transcript from the call... I really don't see much of a bull case from that call. if you didn't pay attention to the details then it was great news. but if you dig a bit deeper it's actually bad news (imo)

It's possible that Apple grows their revenues at the same pace Microsoft has done over the past 10 years...but what was Microsoft's PE in the early 2000's? Wasn't in close to 100?? So it was priced for a ton of growth, while Apple is priced at a PE of 9. What about the call specifically sounded bad? Other than they don't have products being released this summer? Apple basically said wait until the fall and 2014 and you'll be rewarded...I honestly don't think Apple is a great investment the next 3-6 months, because the comparisons year over year will be bad. That said, I don't think the downside is much past $360, while I think the upside in the next 2 years is around $600 - 700, depending on what products they release.
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And if you really want to get into the who's copying who, should we look at what Smartphones looked like before the iPhone? See Blackberry for example...now every Smartphone looks like an iPhone. Or what about Tablets? What did the Tablet market look like before the iPad? Do you think the Amazon Kindle or Playbook would be around without the original iPad? Oh nevermind, the Playbook isn't around anymore.

Samsung was the main supplier of many components for the iPad and iPhone, and then soon after told their engineers to scrap plans on the current Smartphone and make sure it's got all the things the iPhone has. Samsung has been known for years, even before ripping off Apple as a copycat company. They've done it with TV's, Appliances and pretty much everything else.
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Vitalogy80 wrote: What about the call specifically sounded bad? I don't think the downside is much past $360, while I think the upside in the next 2 years is around $600 - 700, depending on what products they release.
Disclaimer - I'm restricted from AAPL now, so I have no interest in it going up or down.

I agree with the 360. And IF everything goes well it CAN hit 700 again.... Tim Cook basically bought time with that earnings release... that's it. Like I said awhile back - that guy needs to go.

I posted an article earlier from Forbes about why they couldn't release any new products.... looks like it was pretty accurate.


Regarding the call, here are the major bull points I see ppl talking about:

Dividend
Yes they lead the tech sector, but the they are not the best company for a dividend play. Many other better ones out there. Why chose this for a dividend play?

Buybacks
Listen to the call again. The treasury will spent billions of dollars buying back shares. Typically good news, except that Apple plans on using most (read 90%) of these shares for employee/executive compensation and options. IE - they will buy shares from the open market (420), and sell it to employees at a loss (~375). It's obviously more complicated than that but it would be a lot to type....

Ask yourself, who stands to benefit from this the most? Share holders? Nope. Employees? Nope. The execs benefit the most. This is just a disguised version of compensation. The worst part is, the supply of shares won't change very much in the open market. It just makes retail investors all warm inside, while the crew at Apple line their pockets at the expense of the company. Microsoft did the exact same thing a while back.




Also, it's always a red flag to me when a business does something counter-intuitive. Why take on debt when they have loads of money off-shore? There must be a reason (and it's not just low interest rates), perhaps it is not tax-exempt if the money is repatriated. Perhaps there is a bigger problem? Something is fishy. I would dig more into this but I really don't have time
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ItechJester wrote: Disclaimer - I'm restricted from AAPL now, so I have no interest in it going up or down.

I agree with the 360. And IF everything goes well it CAN hit 700 again.... Tim Cook basically bought time with that earnings release... that's it. Like I said awhile back - that guy needs to go.

I posted an article earlier from Forbes about why they couldn't release any new products.... looks like it was pretty accurate.


Regarding the call, here are the major bull points I see ppl talking about:

Dividend
Yes they lead the tech sector, but the they are not the best company for a dividend play. Many other better ones out there. Why chose this for a dividend play?

Buybacks
Listen to the call again. The treasury will spent billions of dollars buying back shares. Typically good news, except that Apple plans on using most (read 90%) of these shares for employee/executive compensation and options. IE - they will buy shares from the open market (420), and sell it to employees at a loss (~375). It's obviously more complicated than that but it would be a lot to type....

Ask yourself, who stands to benefit from this the most? Share holders? Nope. Employees? Nope. The execs benefit the most. This is just a disguised version of compensation. The worst part is, the supply of shares won't change very much in the open market. It just makes retail investors all warm inside, while the crew at Apple line their pockets at the expense of the company. Microsoft did the exact same thing a while back.




Also, it's always a red flag to me when a business does something counter-intuitive. Why take on debt when they have loads of money off-shore? There must be a reason (and it's not just low interest rates), perhaps it is not tax-exempt if the money is repatriated. Perhaps there is a bigger problem? Something is fishy. I would dig more into this but I really don't have time
The information on the buyback is incorrect...Apple's compensation in stock float has been increasing around 1%/year, so around 9,000,000 extra units of Apple stock/year goes to employee compensation. At $400, that's worth about 3.6B/year...so in the 2.5 years, around $8Billion. That's a rough estimate, but a year ago Apple announced a 10B buyback over 3 years, which they said was implemented to prevent increasing of the share count due to employee stock grants. So the 8B over 2.5 years sounds pretty close. So that would still leave around $50B for buyback, and at $400/share, that's 125 Million shares, or 14% of the current total. If Apple reduced their float by 14%, that would bump EPS by over 15%. Of course who knows what Apple's stock will float around over the next 2.5 years, if it's less than $400, they'll buy back more shares, and if it rises, they'll buy back less.
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let’s look at some quick numbers. It’s an expansion of the existing program from last year. They’re adding 55B to that plan.

‘UP TO’ 60B on buybacks over 3 years, so to make it easier we assume 20B annually (and ignore last year since it obviously did not help the stock price). 940M float. 1B annually allocated to settle RSU’s. Historically the float due to employee comp increased 1-2%. For the sake of argument I’m gonna use 2%.
18.8 M is about 2%, at current market price of 420 (this is very generous) 20B fetches 47.6M shares (not realistic). Like you said, who knows what price the stock will float at and how much of the 60B they use. Very simplistic but you can already see the prob of 18.8 to 47.6. Don’t forget the 1B annually already set aside for RSU.

If they really want to return money to investors they issue a special dividend. 60B returned directly to investors as a special dividend would be about 60 bucks/share. Don’t forget that buy backs should increase spreads btw strike price and share value – benefitting insiders, not regular investors. Just an interesting tidbit.

60B wiped from the sheets, but how much will investors actually see? That’s my point.

Also, I forgot to mention pressure on future gross margins, and ipad cannibalization by the ipad mini. Both big issues imo.
Apple is still great, but my point was the ER was not as rosey as it’s made out to be.
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ItechJester wrote: let’s look at some quick numbers. It’s an expansion of the existing program from last year. They’re adding 55B to that plan.

‘UP TO’ 60B on buybacks over 3 years, so to make it easier we assume 20B annually (and ignore last year since it obviously did not help the stock price). 940M float. 1B annually allocated to settle RSU’s. Historically the float due to employee comp increased 1-2%. For the sake of argument I’m gonna use 2%.
18.8 M is about 2%, at current market price of 420 (this is very generous) 20B fetches 47.6M shares (not realistic). Like you said, who knows what price the stock will float at and how much of the 60B they use. Very simplistic but you can already see the prob of 18.8 to 47.6. Don’t forget the 1B annually already set aside for RSU.

If they really want to return money to investors they issue a special dividend. 60B returned directly to investors as a special dividend would be about 60 bucks/share. Don’t forget that buy backs should increase spreads btw strike price and share value – benefitting insiders, not regular investors. Just an interesting tidbit.

60B wiped from the sheets, but how much will investors actually see? That’s my point.

Also, I forgot to mention pressure on future gross margins, and ipad cannibalization by the ipad mini. Both big issues imo.
Apple is still great, but my point was the ER was not as rosey as it’s made out to be.
So 47M/shares retired per year still equals almost 150M shares over 3 years, which is more than 15% of the float. I guess it's whatever side you're on, do you value a one time dividend or a share buyback more? Warren Buffett gave his advice to Apple back a few years ago...

"I don’t own any Apple and I haven’t, though I did talk with Steve Jobs a few years ago about what they might do with the cash. [...]

When Steve called me, I said, Is your stock cheap? He said, yes. I said, Do you have more cash than you need? He said, a little. [laughs] I said, then buy back your stock. He didn’t. Now, when our stock went from $90,000 to $40,000 to $45,000, I wrote about, we wanted to buy the stock. We didn’t quite manage to. But if you could buy dollar bills for 80 cents, it’s a very good thing to do."

I would prefer Apple retire 150M shares, which each pay a 3% dividend than pay a one time dividend, which because it's a US company would cost me 35% in taxes. The 150 shares disappearing saves Apple around 1.8B per year that they'd have to pay out for dividends. Again, it's an investors choice, but I prefer a buyback over a one time dividend.

Agreed on the iPad Mini cannibalization...it's a huge hit to margins. But it was a must, because people obviously wanted 7" tablets, so what choice did they have? It's selling well, just as the iPad is. I honestly wouldn't be buying more AAPL right now, I've got a good chunk of shares and spending my investment dollars elsewhere until I get clarification in the October report on the margin trend. Will margins continue to trend down, or will they stabilize once the iPad Mini has been around for a year and the year over year comparisons are equal. Also, what will the margins be for the next iPhone? If it's a slightly specced up iPhone 5S, margins will go a lot higher like they did with the 4S...or will they take a margin hit and release a brand new iPhone with maybe another new form factor (4.5"?). There are a lot of questions right now with AAPL, and I think it's pretty cheap at these prices if margins stabilize over the next year, but if they trend down below 35% into the 20's, things will get ugly. So in other words, I'm holding my shares, not buying new ones and not selling what I have until at least October.
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ItechJester wrote: ipad cannibalization by the ipad mini.
Is it truly cannibalization if customers buy one Apple iPad instead of another Apple iPad?

The key factor is that they're all buying into the Apple ecosystem.
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ItechJester wrote: Also, it's always a red flag to me when a business does something counter-intuitive. Why take on debt when they have loads of money off-shore? There must be a reason (and it's not just low interest rates), perhaps it is not tax-exempt if the money is repatriated. Perhaps there is a bigger problem? Something is fishy. I would dig more into this but I really don't have time
Well overseas cash, you immediately have to discount it by 30-40% due to US taxes.

I suspect that a good chunk of the cash is tied up in vendor financing schemes, rather than actually 'cash'. But with some sort of accounting trick or off-balance arrangement, they've been able to convince the auditors that it is 'cash'.
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Mark77 wrote: Well overseas cash, you immediately have to discount it by 30-40% due to US taxes.

I suspect that a good chunk of the cash is tied up in vendor financing schemes, rather than actually 'cash'. But with some sort of accounting trick or off-balance arrangement, they've been able to convince the auditors that it is 'cash'.
How exactly would one go about this?

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