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This Patent Portfolio "Dream Team" Just Got Even Better

When we recommended micro-cap tech play eOn Communications Corp. (NasdaqCM: EONC) last month, we told you to expect a pretty wild ride.

And that’s just what we’ve seen…

  • Apple stock

  • Apple Inc. (Nasdaq: AAPL): Winners and Losers from WWDC When Apple Inc. (Nasdaq: AAPL) announces new products or updates to existing products, it sends shock waves out into the tech world.

    Apple's ability to alter the fate of other tech companies was on full display at the June 11 WWDC 2012 keynote.

    Apple's enormous revenue - about $160 billion annually and rising - means generous and steady profits for its partners and suppliers. A new deal with Apple often gives a tech company's stock a nice pop.

    But it also explains why tech companies dread losing a relationship with Apple.

    Investors that may not want to buy Apple often use the Cupertino, CA company's partners as proxies. It can be a profitable strategy, but a risky one - Apple often drops partners with little or no warning.

    Apple's announcements at WWDC created a fresh set of winners and losers. Let's have a look at what happened:

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  • WWDC 2012: Apple (Nasdaq: AAPL) Unveils MacBooks, iOS 6 While the new laptops Apple Inc. (Nasdaq: AAPL) unveiled at WWDC 2012 may draw the most attention, it's the upgrades to its two operating systems that in the long run will mean more to the company's bottom line.

    The Worldwide Developers Conference is Apple's annual event aimed at those who write apps for Macs, iPhones and iPads.

    WWDC's "grabber" product is the next generation MacBook Pro. This very thin laptop -- 0.71 inches - features the same high-resolution Retina display technology as the iPhone 4s and the third-generation iPad. It adds ports using the new USB 3.0 standard as well as Intel Corp.'s (Nasdaq: INTC) developed Thunderbolt technology.

    Of course, all the fancy new bells and whistles come at a price - this fancy new MacBook Pro starts at $2,199.

    Apple also unveiled upgrades to the rest of its MacBook line, which were all blessed with Intel's new "Ivy Bridge" chipset in addition to USB 3.0.

    The popular MacBook Air also got something unexpected: a $100 price cut on both base models. That puts Apple's cheapest laptop at $999, a clear attempt to better compete with "ultrabooks" - the MacBook Air's Windows PC imitators.

    Contrary to rumors, a new Mac Pro desktop did not appear at WWDC 2012. Perhaps the changes are major enough to warrant a separate "Apple event" later in the year.

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  • Apple's (Nasdaq: AAPL) Patent Wars: This Little-Known Swedish Company is the Key In a single stroke, Apple Inc. (Nasdaq: AAPL) could gain the upper hand in its seemingly endless patent wars with Samsung Electronics (PINK: SSNLF) and others.

    Or the tech giant could blow its chance and wind up paying billions of dollars in licensing fees.

    The outcome hinges on how Apple deals with a little-known company based in Sweden.

    This micro-cap just happened to file a patent for the "swipe-to-unlock" touchscreen gesture in 2002 - three years before Apple filed its patent.

    The company, Neonode (Nasdaq: NEON), received its U.S. patent in January.

    Neonode holds a number of touchscreen-related patents that could become decisive in several of Apple's mobile computing patent cases.

    Already the "swipe-to-unlock" patent helped Samsung defeat Apple in a recent patent case in the Netherlands. Samsung said the patent, as well as a phone Neonode released in 2005, represented "prior art."

    "Apple just shot itself in the foot and all the blood is going to go to NEON," Jim Altucher, managing director of Formula Capital and well-known investor, wrote in a blog post Tuesday evening.

    Insiders told The Wall Street Journal in April that Samsung plans to use the Neonode patent in a similar but much more crucial case in San Jose, CA, scheduled for a July trial.

    And Altucher added a scarier prospect for Apple.

    If Neonode does indeed hold the patent trump card for "swipe-to-unlock," it could gun for a cut of Apple's profits by filing its own patent case.

    Should Apple be forced to fork over licensing fees to Neonode, it could cost the Cupertino, CA, company billions of dollars a year.

    So far all this sounds like a big mess for AAPL and a big opportunity for its patent war rivals. Not just Samsung, but also for such titans as Google Inc. (Nasdaq: GOOG) and Microsoft Corp. (Nasdaq: MSFT).

    Yet if Apple acts boldly, it could gain a crucial advantage on its mobile computing competitors.

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  • Why Apple Inc. (Nasdaq: AAPL) is Too Rich For the Dow Jones Assuming the Dow Jones Industrial Average represents the biggest, most influential companies in America, Apple Inc. (Nasdaq: AAPL) easily qualifies.

    With its massive market cap, trend-setting products, and global brand recognition, it is easy to argue Apple belongs as much or more than any of the current tech companies in the index.

    In fact, Apple has superseded all of them, particularly Hewlett-Packard Co. (NYSE: HPQ) and Microsoft Corp. (Nasdaq: MSFT).

    Yet the Dow Jones has ignored Apple while letting far weaker companies like, Bank of America Corp. (NYSE: BAC)and Alcoa Inc. (NYSE: AA) remain.

    So what gives?...

    In a nutshell, Apple stock is too rich for the Dow Jones Industrial Average.

    Because the Dow Jones is price-weighted, Apple's current $565 share price would simply overwhelm the index.

    If included, Apple stock would account for about 25% of the Dow Jones. That's more than double the 11.5% of current leader International Business Machines Corp. (NYSE: IBM).

    "It wouldn't be the Dow Jones Industrial Average," Nicholas Colas, chief market strategist at ConvergEx Group told the Associated Press. "It would be the Apple Plus Some Other Stuff Index."

    In this case, a price move of just 5% in Apple stock could push the DJIA up - or down - about 200 points.

    Looking at it another way, had Apple been added to the Dow Jones in 2009 instead of Cisco Systems Inc. (Nasdaq: CSCO), the Dow would now be over 15,000.

    That's well above the Oct. 2007 record of 14,164 and 2,500 points higher than where it stands today.

    With that kind of heft, it's no wonder the Dow has shunned Apple.

    How the Dow Jones Industrial Average Works

    But it's not just Apple. Other Dow candidates trade high in the triple digits as well.

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  • Apple (Nasdaq: AAPL) Patent War with Samsung A Fight No One Wins Like two mighty monsters in a 1950s sci-fi B-movie, Apple Inc. (Nasdaq: AAPL) and Samsung Electronics Co. (PINK: SSNLF) have locked horns for over a year in an epic patent war neither can win.

    Over the past year, the two tech titans have filed dozens of patent infringement lawsuits against each other in 10 countries. Most seek to block the sale of one or more of the other's smartphone and tablet products.

    The biggest case, filed in San Jose, CA, is scheduled for a July trial, which U.S. District Judge Lucy Koh is desperate to avoid. (She called the case "cruel and unusual punishment" for the jury.)

    Earlier this week Koh ordered the CEOs of both Apple and Samsung to meet in mediation sessions, but nothing came of the meetings.

    The mutual stubbornness makes sense when you realize what's at stake.

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  • Why is Apple Inc. (Nasdaq: AAPL) Stock Falling? Apple Inc. (Nasdaq: AAPL) investors have cringed as the stock slipped about 16% from its peak over the last two months.

    But given the absence of any catastrophic bad news, why is AAPL stock tumbling? And where will it stop?

    It's important to note off the bat that Apple's fundamentals are just as strong as they were last fall when the stock began its huge run-up from just under $400 to $636.23 on April 9 (it hit an intraday high of $644 on April 10).

    In short: Apple still expects to make a mountain of profit this year. Apple still has over $100 billion in cash with no debt. The company's price/earnings ratio is about 13.50 for the trailing 12 months and its forward P/E just 10.

    So something else must be driving down Apple stock. Some of it is logical, some of it emotional - but none of it permanent.

    Let's take a closer look:

    • A Parabolic Rise: First and foremost, AAPL simply rose too far too quickly. Rapid gains beg profit-taking.
    "It was clear to me that this kind of reversal was coming - and sooner rather than later," said Money Morning Chief Investment Strategist Keith Fitz-Gerald when the selloff started in April. "The shares had soared 75% in just five months - one analyst actually described the performance as "euphoric.'"

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  • Apple Inc.'s (Nasdaq: AAPL) "Store Within a Store" Strategy Bold But Risky Hoping to expand its reach, Apple Inc. (Nasdaq: AAPL) is testing a store-within-a-store concept with both Wal-Mart Stores Inc. (NYSE: WMT) and Target Corp. (NYSE: TGT).

    Although both retailers have already been selling Apple merchandise, the new "micro-stores" will expand the current offerings (with the exception of Mac computers) and create a product experience more akin to an Apple Store.

    Several dozen more micro-stores are planned, though the rollout will be gradual.

    Piper Jaffray analyst Gene Munster said Apple's long-term goal isn't so much to stuff a micro-store into every Wal-Mart and Target, but to place them strategically in rural areas many miles from the mostly urban, wildly successful mall-based Apple Stores.

    "We always talk about growth outside the U.S.," Munster said on CNBC recently. "The reality is, just look in our backyard. There's still a growth opportunity that no one's talking about, which is kind of outside the urban areas."

    The allure for Wal-Mart and Target is the extraordinary foot traffic Apple products can generate. They're hoping that customers who come to shop for Apple products will stick around to buy other merchandise.

    If the strategy works, both Apple and the big retailers win. But, as the saying goes, the devil is in the details.

    In fact, Apple is no stranger to what can go wrong with the store-within-a-store concept.

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  • Is Apple Inc.'s (Nasdaq: AAPL) Bet on Liquidmetal About to Pay Off? Apple Inc. (Nasdaq: AAPL) loves to think of lucrative new uses for other people's bright ideas.

    For instance, the original iPod wouldn't have been possible without Toshiba's innovative 1.8-inch hard drive.

    And when Steve Jobs learned about Gorilla Glass in 2006, he convinced Corning to revive the largely unused technology so Apple could put it in the iPhone.

    So it's no surprise that Apple has been toying with yet another breakthrough technology.

    It's called Liquidmetal.

    Liquidmetal is a family of metal alloys that combines a variety of metallic elements. It's a technique that rapidly cools the mixture into a "metallic glass" with a distinctly different molecular structure than conventional metals. It becomes amorphous, as opposed to crystalline.

    That amorphous structure is the secret behind Liquidmetal's many remarkable properties.

    Now imagine what Apple could do with a material that:

    • Is five times as strong as aluminum and twice as strong as titanium;
    • Is three times as elastic as ordinary metals;
    • Is highly resistant to corrosion;
    • Is highly resistant to scratching and wear;
    • Has a fingerprint-resistant, glossy finish that needs no polishing;
    • And can be blow-molded like glass or injection-molded like plastic.
    And while most of the basic ingredients of Liquidmetal -- zirconium, titanium, nickel, copper, and beryllium -- remain the same, adjustments to the ratios and manufacturing process can customize the alloy for many different purposes.

    Invented in 1992 as part of a joint project between NASA, the California Institute of Technology and the U.S. Department of Energy, Liquidmetal creates vast new possibilities - particularly in the hands of a company as innovative and resource-rich as Apple.

    As NASA's web page for spinoff technologies puts it:

    "In the same way that the inventions of steel in the 1800s and plastic in the 1900s sparked revolutions for industry, [this] new class of amorphous alloys is poised to redefine materials science as we know it in the 21st century."

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  • Apple Inc. (NASDAQ: AAPL) Q2 Earnings: iPhone Carries the Day Thanks to booming sales of the iPhone, Apple Inc. (NASDAQ: AAPL) Q2 earnings far outpaced Wall Street expectations.

    Apple earned $12.30 a share on revenue of $39.2 billion, compared to analyst expectations of $9.99 a share on $36.6 billion. In the year-ago quarter Apple earned $6.40 a share on revenue of $26.67 billion.

    Apple sold 35.1 million iPhones in the quarter, well beyond the 30.5 million analysts had projected.

    AAPL stock had fallen in recent days when U.S. carriers AT&T Inc. (NYSE: T) and Verizon Communications (NYSE: VZ) both reported significant declines in their quarterly iPhone sales. The reports raised concerns, unfounded as it turned out, that iPhone sales would miss.

    That's one reason why the news was greeted enthusiastically in after-hours trading. AAPL was up $41, or 7.29%, within 30 minutes of the earnings announcement.

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  • Don't Be Surprised by Apple Inc.'s (Nasdaq: AAPL) Q2 Earnings Following its extraordinary beat last quarter, expectations for Apple Inc.'s (NASDAQ: AAPL) earnings are even higher than usual.

    With Apple having such an outsized influence on the markets, even investors who don't hold the stock will be watching for Apple's Q2 earnings report after the closing bell today (Tuesday).

    Still, with its stock having tumbled 11% in the past two weeks, from its peak of $640 April 10, Apple needs to beat Wall Street expectations.

    If Apple earnings disappoint -- as occurred in the September quarter last year -- the stock will get beaten down even further. Such negative news would push the stock toward $500.

    The consensus estimates for Apple's Q2 earnings are $9.99 per share on revenue of $36.6 billion, which most analysts believe is achievable.

    In fact, just in the past week several analysts, such as Shaw Wu of Sterne Agee and Bill Shope of Goldman Sachs, again raised their estimates for iPhone and iPad sales.

    However, Money Morning Chief Investing Strategist Keith Fitz-Gerald isn't so sure.

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  • He Predicted the Apple (Nasdaq: AAPL) Sell-Off … Here’s What's Next The recent sell-off we've seen in Apple Inc. (Nasdaq: AAPL) shares came as a real stunner to Wall Street.

    But Strike Force Editor Keith Fitz-Gerald saw the sell-off coming.

    In fact, he predicted it.

    Back on March 27, Keith wrote a lead story for Money Morning in which he articulated seven very clear reasons that investors should consider shorting Apple's stock.

    And that was a couple of weeks after he detailed a "put" option strategy - in essence, a "short" trade - that resulted in a 47% profit (in just two days, no less) for the subscribers of his Strike Force trading service who followed his recommendation (a short-term reversal delivered those gains).

    I wanted to know what tipped him off that a reversal was coming - as well as what he was predicting for Apple's shares going forward.

    "BP, it was clear to me that this kind of reversal was coming - and sooner rather than later," Keith said during a private briefing late last week. "The shares had soared 75% in just five months - one analyst actually described the performance as "euphoric.' Suddenly, we're seeing all these mainstream-news-media stories explaining why Apple shares are going straight to $1,000. But I know from my own experience as a professional trader that even the shares of the best companies on earth don't go straight up. I happened to time it perfectly and help Strike Force subscribers take advantage of the reversal I just knew was in the offing."

    Key Questions for Apple Stock

    The way we see it, the Apple stock sell-off raises these three key questions for investors:

    • No. 1: What's going to happen to Apple shares in the near-term?
    • No. 2: If the stock is headed for a volatile stretch, is there any way to profit until the smoke clears?
    • No. 3: What's the long-term outlook for Apple - both the company and the stock?
    Having worked with him for five years, I've seen Keith make gutsy calls like this - and have them pay off big - time and time again. Since I knew you'd be as interested in his answers as I was, we wanted to share them with you.

    Here's what Keith had to say.

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  • Will Apple Inc. (NASDAQ: AAPL) Keep Driving Technology ETFs Higher? Despite the recent selloff, shares of Apple Inc. (NASDAQ: AAPL) have skyrocketed 48% in the first quarter, dwarfing the 12% gain posted by the S&P 500.

    Apple's astonishing rise has also helped to underpin the Nasdaq Composite, which gained nearly 19% in the first quarter -- its strongest showing since 1991.

    But that's not the only place to experience the "Apple Effect."

    Many investors who own technology ETFs -- which hold almost 4% of all Apple shares outstanding -- were rewarded with even better returns.

    For instance, theVanguard Information Technology ETF (NYSE: VGT) was up 20.85% in the first quarter.

    Even better, the iShares Dow Jones U.S. Technology Index Fund (NYSE: IYW), was up 21.77%, thanks in part to Apple.

    Now the question is: Can Apple's momentum continue to drive technology ETFs higher?

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  • The Antitrust Curse: What Apple (NASDAQ: AAPL) Can Learn From Microsoft, IBM On the surface, it would appear that Apple Inc. (NASDAQ: AAPL) has little to fear from the antitrust lawsuit filed by the U.S. Department of Justice last week.

    The DOJ accused Apple of colluding with several major publishers to fix the prices of electronic books in its iBookstore.

    The evidence was strong enough that three of the five book publishers settled before the DOJ filed the suit. Two, Macmillan and the Pearson PLC (NYSE ADR: PSO) Penguin Group, decided to fight the charges along with Apple.

    The antitrust case itself poses little threat to Apple. With $100 billion in the bank, it can afford to fight government lawyers until doomsday.

    Even losing the case wouldn't make much of a dent in Apple's pocketbook. The three publishers that settled paid a combined $51 million, hardly a concern to a company that earns an average of $120 million every day in profits.

    Likewise, a remedy that forces Apple to lower prices for e-books in its iBookstore would have almost no impact on earnings. Nearly all of Apple's profits come from sales of high-margin hardware like the iPhone and iPad. Profits from all iTunes Store segments, which include the far more voluminous sales of apps and music, account for less than 4% of Apple's profits.

    And yet this antitrust suit poses the biggest threat Apple has faced in years, as former tech kings Microsoft Corp. (NASDAQ: MSFT) and International Business Machines Corp. (NYSE: IBM) can attest.

    "This echoes back to the peak in Microsoft," Sean Udall, author of Minyanville's TechStrat Report, said in a Yahoo! Finance interview. "Microsoft had a monopoly and was doing great and was the star tech stock of yesteryear. And you can almost draw the peak of their stock when they had major DOJ issues."

    The problem with being in the DOJ's gunsight is that it distracts management, makes the company hesitant to innovate, and blemishes the company's public image.

    While antitrust woes may not have been entirely responsible for Microsoft and IBM ceding their dominant positions in tech, they were clearly a major factor.

    And worse for Apple, the e-book case could be just the beginning.

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  • Is Apple Stock (Nasdaq: AAPL) the Short of a Lifetime or the New Widow Maker? I have a confession to make.

    I believe Apple stock (Nasdaq: AAPL) is going to be world's first trillion-dollar company yet I want to short the snot out of it.

    Am I being compulsive?...impulsive?....or foolish?

    Perhaps it is all three considering that Apple has risen more than 3,000% in the last ten years, turning almost any attempt to go against the grain into a "widow maker" trade.

    I say almost because I am one of the lucky ones.

    A few weeks ago I recommended my Strike Force subscribers purchase put options on Apple, effectively shorting the stock. That resulted in a 47% profit in less than 24 hours for anyone who followed along, excluding fees and commissions.

    I'm not alone in my thinking.

    Uber investor Doug Kass, general partner of Seabreeze Partners Long/Short LP and Seabreeze Partners Long/Short Offshore LP, tweeted recently that he had covered "half his short" on Apple following the announcement of their dividend and buyback plan.

    Given that the stock had run up to nearly $608 a share before the announcement, presumably Kass had banked some gains, too.

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  • How to Earn a 9.25% Gain in 30 days While Waiting for Apple's
    (Nasdaq: AAPL) Dividend
    Although it's been one of the market's darlings for a decade now, dividend-oriented investors have long shunned computer giant Apple Inc. (Nasdaq: AAPL) because, well ... it didn't pay one.

    That, coupled with AAPL's historically high share price, has always kept me from buying Apple stock - but, as a trader, it hasn't kept me from generating income with Apple options.

    Last week, the cash-rich company finally took a step toward rewarding loyal shareholders by declaring a dividend - a quarterly payout of $2.65 a share, beginning with the fiscal fourth quarter, which runs from July 1 to Sept. 30, 2012.

    Assuming the payouts continue, which they almost certainly will, that means Apple's annual dividend in fiscal 2013 will be $10.60 a share, which sounds fairly rich - except for one thing...

    At its closing price of $599.34 last Thursday, Apple remains one of the market's highest-priced stocks, meaning the new annual dividend of $10.60 will equate to a yield of only 1.76%.

    That's decent, but it's hardly near the top of the income-stock ranks. Plus, it'll be well over a year before you can collect the full dividend.

    Fortunately, by using options, you can easily generate some significant income while waiting for Apple's new dividend to kick in - and multiply your yield at the same time.

    Let me explain...

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