No one is buying Apple

by,

Suzanne Coleman

Thestreet.com reported today that Apple is in talks to bring Apple Pay to China, and part of their strategy is to work with Alibaba, China’s massive online store, similar to our Amazon.  But the stock hasn’t gone up in response to this news, why not?

Maybe it’s because everyone already thought this would happen.  That makes sense, since Apple is currently focused on expanding access for the Chinese to its products and services by opening many more stores in China.

It has been previously reported that Apple makes $0.10-0.15 PER Apple Pay transaction, that is a BIG deal.  With about 62 million current iPhone users in China*, this is a big future contributor to Apple’s bottom line.  If you guesstimated 30% of those iPhone owners used Apple Pay once every 2 days, you would end up with over $531,000 a day in revenue from Apple Pay in China alone.  And Apple is increasing the number of users there as we speak.  So, basically, it’s a big deal.  I have predicted that Apple will make major moves in the finance sector here:  [https://sliceiconic.com/2015/03/16/apples-future-domination-apple-watch-applebank-and-appleplay/].  We’ll see what happens.

Maybe Apple stock has been doing so poorly, relative to its actual performance as a BUSINESS, is because everyone/every institution who wants to own the stock, already does.  That would make sense.  Its price rises before earnings due to short-term buyers hoping to cash in on a quick up and down movement, and then it drops back down to almost where it was before earnings were reported.  I’ve written on this odd behavior of investors before, here: [https://sliceiconic.com/2015/01/27/reasonability/], where I discuss the reasonableness of PE ratios and investor behaviors.

What more is there to say?  Maybe the stock price hasn’t moved significantly because everybody is waiting to hear the numbers from the Apple Watch sales?  I don’t think that’s the case since most professionals have read the analysis which suggests that even if Watches are selling as expected, those sales won’t contribute significantly to the bottom line, for now.

I currently see Apple as “the new IBM.”  It’s become the “old stalwart” of the tech boom industry.  I guess 33-40% increases in profit year-over-year is a bit stale and dusty?  Right?

Anyone?

Bueller?

Its stock price barely moves in response to stellar quarterly reports on its performance, odd.  Am I the only one who thinks this way?  Oh, no, wait, I’m not.  There is that famous guy, what’s his name?  Carl Icahn.  Yeah… maybe we’ve both got it wrong.  🙂

________________________________

NOTE:  This writer owns shares of Apple stock though she’s not really sure why anymore…

________________________________

*Based on estimates of 520 million smartphone users and a 12% market share as reported by cnet.com here:  http://www.cnet.com/news/china-likely-to-top-us-for-apple-iphone-sales/

Advertisements

YY reports it doubled revenues this quarter

by,

Suzanne Coleman

YY is China’s online social networking, gaming and music platform, similar to our facebook (FB), but with more features and it monetizes user activity as well.  YY just reported great earnings with an increase of approximately 100% year over year.  This stock just may do very well in your portfolio and I recommend that you check it out.

I’ll have you do your own research but its current price (before earnings) was about half of its estimated 12 month price.  Now that earnings are in, I would think that that 12 month estimate may increase.

I would keep in mind that for some reason this well-perfoming company has a bit of an erratic stock price history.  Also, factor in the unknowns about investing in a company in China.

This stock reminds me of Yahoo! (YHOO) back in 1996.  Time will tell the tale.

 

Apple Stock, Looking Good

by,

Suzanne Coleman

 

I think this is a good time to buy Apple stock.  It’s down quite a bit now off it’s intra-week historical highs.  It reported record increased profits last quarter of over 40% vs. last year’s holiday quarter.  The current quarter might show stronger than expected sales as well due to the popularity of the newest iPhone versions around the world.  This is particularly true in China, and they just celebrated their new year’s holiday where a part of that celebration is that nice gifts are exchanged.  Because of this some analysts have said that they think iPhone sales may show a significant boost this current quarter.

The negative news in the last few days about patent lawsuits being brought against the company is not likely to have a significant impact on the value of the company.  The judgement just laid down in Texas in favor of Smartflash (the company that brought the suit) is being challenged by Apple, and the next legal battle will take place in another court, in another area.  The original suit was tried in same area of Texas whereSmartflash is based.  It has been reported by others that this same retrial method has been used in the past in similar suits brought by Smartflash against other technology giants, and those suits ended up with verdicts that were much more favorable for the sued company after the appeal.  And while $500 million or so sounds like a lot of money, it is less than one percent of Apple’s annual revenue of about $199 billion, or about 8% of their annual profit of about $70 billion.

The new suit brought by Ericsson is a negotiating tactic (per the press).  Each of Apple and Ericsson have brought a suit against the other for the same reasons in this situation, contract term renegotiations.  In other words, they want better terms for themselves and they are playing a game of chicken suit.  Lawsuits are essentially a part of big business, at least they have been as long as I have been following business (almost 20 years).  In most cases, these suits do not result in any detrimental outcomes to either party.

The Apple Watch is looking more and more like it will be a hit, though no one can truly predict that.  Competing businesses who also make techy watches (like Pebble) have already had millions of orders for theirs.  Those watches are not as highly functioning as Apple’s and one might say that they are not as “cool” or “trendy.”  Plus, big bankers like Morgan Stanley are predicting big sales in the Apple Watch this year.  So that is another plus for the stock.

There are some people writing about how the NASDAQ’s lifetime high is “bad” and “dangerous.”  What did they think, that it would never grow?  I just don’t get it…  To me it seems more like people who are trying to manipulate the market to get the outcomes they want so that they can get a point to buy in at a lower price than the current one, and then sell it later when it rebounds.  You see this a lot with people who write about the market, putting out “news” headlines that are overly strongly worded to give the reader a negative or positive sense of urgency, but in reality, in most cases, it isn’t even news at all.  People still react to it though, to some degree.  Maybe if everyone learned not to, there would be more stability in the market.

So to present the other side of the argument.  Could Apple plummet?  Yes, it has happened before.  Could the market plummet?  Yes, especially if everyone starts panic selling based on unreasonable fears.  So, let’s not do that, ok? 😉

Apple is very well-valued with a low PE, especially for a company showing continued good growth.  See my other article on PE and “reasonability” here:

https://sliceiconic.com/2015/01/27/reasonability/

If there is one thing I have learned, it is that the stock market is both predictable, and unpredictable.  Unfortunately, that’s the way it goes.  As some have told me, it is like gambling, and I’ve come to realize these days that they are right.

 

NOTE:  I own shares of Apple stock.

 

 

Follow my blog by clicking on the blue “follow” button at the top right of this page.

Like us on facebook at http://www.faceboook.com/sliceiconic

 

%d bloggers like this: