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Cash In as This Rural Telephone Company Outsmarts the Sector Giants

As the longtime subscribers among you folks know, we love spin-offs here at Private Briefing.

These corporate breakups are a way to make market-beating returns – and at below-market risk.

It’s that penchant for spin-offs that prompted our pre-breakup recommendation of Abbott Laboratories Inc. (NYSE: ABT) back in June 2012.

  • Apple stock

  • Apple iPad Mini Doesn't Need to Be a Cash Cow to Be a Winner While it won't rake in iPhone-style profits that could drive Apple Inc. (Nasdaq: AAPL) stock to new heights, a smaller iPad - the iPad Mini - is a smart and necessary strategic move.

    The Apple iPad Mini does not yet exist, but recent reports say its arrival is imminent.

    According to Fortune, invitations to an Oct. 17 iPad Mini introduction event are expected to go out Oct. 10, with the product likely available to buy in early November.

    That was buttressed by a The Wall Street Journal story two days later that reported Asian suppliers had "started mass production" of an iPad Mini with a 7.85-inch screen.

    Instead of celebrating a fresh source of Apple profit, however, some on Wall Street aren't thrilled by a smaller iPad.

    They're worried that iPad Mini will hurt AAPL's margins, which have risen steadily along with sales of the high-margin iPhone.

    But this theory just shows how The Street is missing the big picture.

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  • Why Apple (Nasdaq: AAPL) Won't Ditch Controversial Foxconn Apple Inc.'s (Nasdaq: AAPL) position as an iconic brand, as well as a Wall Street darling, doesn't mean its image stays squeaky clean.

    The company suffered a PR headache this week when a worker riot broke out at one of the Chinese factories run by Foxconn, the company that assembles the majority of iPhones and iPads.

    The riot, which involved about 2,000 workers, occurred late Sunday at a Foxconn factory in Taiyuan. Analysts attributed the riot at least in part to the same stressful working conditions that led to several suicides in 2010.

    Complaints about long hours, low pay, and draconian management at Foxconn's many factories have persisted for years, and reflected negatively on the usually-lauded Apple.

    Although Foxconn assembles devices for most of the world's top consumer electronics companies -- including Sony Corp. (NYSE ADR: SNY), Hewlett-Packard Company (NYSE: HPQ), Dell Inc. (Nasdaq: DELL), Cisco Systems Inc. (Nasdaq: CSCO), and Microsoft Corp. (Nasdaq: MSFT) -- whenever a worker crisis erupts, the focus is all on Apple.

    The net result is that Apple - which just launched its biggest product of the year, the iPhone 5, this past weekend - gets tainted by association every time there's trouble at Foxconn.

    Over the past several years, that's happened with increasing frequency.

    "These workers must be treated with respect," New York-based watchdog group China Labor Watch said in a statement. "And both Apple and Foxconn, with billions of dollars in profits every year, have both a legal and ethical obligation to uphold the rights of these workers."

    Clearly Apple would rather avoid these nasty surprises, but a complex combination of factors will keep it lashed to Foxconn for years to come.

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  • Apple iPhone 5 Now a Golden Goose for Verizon and AT&T Since the debut of the iPhone in 2007, the profit parade has mostly been a one-way street - but after five years, the major wireless carriers finally figured out how to make money with the Apple iPhone 5.

    That means another way for you to make money from the iPhone 5, without having to buy Apple Inc. (Nasdaq: AAPL) stock.

    Apple has raked in billions while first AT&T Inc. (NYSE: T), and later Verizon Communications Inc. (NYSE: VZ), and Sprint Nextel Corp. (NYSE: S), had their margins slammed by the huge subsidies they sent to Cupertino.

    But evolving consumer habits and the Apple iPhone 5's addition of LTE network technology will soon change that in a big way.

    The carriers are hoping the much higher data transfer speeds of LTE - approximately 10 times faster than 3G - will coax iPhone 5 owners to use more data-heavy functions, particularly video.

    "With these great networks coming on, [data] usage is going to go up. Revenues will go up," AT&T Chief Financial Officer John Stephens said at recent media and communications conference.

    While the carriers will still have to fork over the same fat subsidies to Apple they always have, the new data equation means they'll make the money back much more quickly. And that will translate into bigger profits.

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  • Why the Apple iPhone 5’s Lack of Killer Features is Pure Genius Tech critics predictably pounced on the new Apple iPhone 5 yesterday (Wednesday) even before its debut event had ended.

    As often happens with Apple Inc. (Nasdaq: AAPL) product introductions, many had hoped for more whiz-bang new features.

    "Apple's Phone has been a trendsetter for half a decade. Now the question is whether it can avoid becoming a bore," lamented The Wall Street Journal.

    The Apple iPhone 5 did get a bigger 4-inch screen, 4G LTE connectivity, and a faster A6 processor. But months of rumors and speculation had raised expectations for more dramatic enhancements.

    Apple easily could have included some of those much-desired features, such as a mobile wallet chip (also known as NFC, or near-field communications), wireless battery charging, or biometric security (using your voice or fingerprint).

    Amid the din of criticism, few are asking why Apple would leave such goodies out of the iPhone 5.

    It could be as simple as the new stuff just didn't all fit in the case - the iPhone 5 is the thinnest and lightest version yet, after all.

    Maybe the technology just doesn't work right yet.

    But maybe, just maybe, Apple decided to hold a few plum features out of the iPhone 5 because it's mulling a major change to its iPhone business.

    What if Apple has decided to modify its upgrade cycle to two iPhones a year instead of just one?

    In that case, holding out a few juicy features for a late April-early May upgrade is strategic genius.

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  • Could QE3 Really Do Less for the Economy Than the iPhone 5? Investors are eagerly waiting to hear if U.S. Federal Reserve Chairman Ben Bernanke will announce QE3 this week. Bernanke speaks Thursday at the conclusion of the two-day Federal Open Market Committee (FOMC) meeting and many expect him to announce some form of stimulus to revive the struggling U.S. economy.

    But there's another huge event scheduled this week, one that could provide a tool other than printing money for boosting U.S. gross domestic product (GDP).

    Believe it or not, analysts at JPMorgan Chase & Co. (NSYE: JPM) estimate that the Apple iPhone 5, expected to be unveiled tomorrow (Wednesday) afternoon and on sale by the end of this month, will raise GDP by 0.5% in the fourth quarter of this year.

    Money Morning Chief Investment Strategist Keith Fitz-Gerald appeared on Fox Business' "Varney & Co." program Tuesday morning to discuss the possibility of this iPhone effect and what it implies.

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  • The Future Belongs to Apple's iPad The Apple iPad is more than just a great tablet; it's the single most important computing device released in more than 25 years.

    In fact, you'd have to go back to the introduction in 1984 of the Macintosh personal computer to find a machine as game-changing as this one.

    Of course, back then, the Mac grabbed only a small share of the huge PC market. But what it did do was establish Apple Inc. (NASDAQ:AAPL) as the sector's clear technical leader. It also gave birth to desktop publishing.

    This time around, however, Apple has turned the tables on its rivals in two ways...

    • First, it came up with a breakthrough approach and the ideal screen size. At nearly 10 inches diagonal - very close to the size of a piece of paper - this format feels natural to most users.
    • Second, it's a runaway success, boasting 70% of the market share.
    That leaves tech investors like us with two choices: Learn what this all means, or get left in the dust.

    You see, the PC industry is going into a long decline. It's already started. Ditto for newspapers, magazines, music distribution, and lots of other physical products that will get transformed into software.

    So says Michael Saylor, author of the hot new book "The Mobile Wave: How Mobile Intelligence Will Change Everything." As I told you yesterday, I tracked Saylor down to talk about how mobile computing fit into the Era of Radical Change. (You can read the first of my three-part series here.)

    His is hardly an academic view. See, Saylor also serves as the CEO of MicroStrategy Inc. (NASDAQ:MSTR), a leader in business intelligence.

    He believes five billion people will use iPads or a comparable device within a decade. That's roughly 75% of the population of Earth. No doubt, he admitted to me, that's a bold prediction. He added this:

    "It's a prediction upon which you can make a lot of money if you're an investor. Because if I'm right, then you will have beaten the crowds to that conclusion. And the reason I believe that is - we've reached an inflection point, where it's now cheaper to learn to read on a tablet than it is to learn to read on paper. And I think that's a very, very meaningful thing."
    Naturally, I wanted to know just what investors need to do to make money off this trend, so I could share the information with you.

    Saylor answered by sharing four key facts every investor needs to know about this market-dominating device.

    Here they are...

    To continue reading, please click here...

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  • 5 Reasons Apple (Nasdaq: AAPL) Stock Hit a New All-Time High Just when it looked like the Apple Inc. (Nasdaq: AAPL) success story had taken a detour, Apple stock suddenly hits a new all-time high.

    AAPL shot past its previous intraday high record of $644 by reaching $648.19 during Friday's session. The close of $648.11 easily broke the $636.23 record closing price set on April 9.

    Today (Monday) Apple stock is up more than 1% in early trading, reaching an intraday high of $656.35.

    That's hardly what many investors expected after Apple reported on July 24 that it missed on its June quarter earnings and offered weak guidance for the current quarter.

    After that Apple stock dipped into the $570 range several times before quietly starting its climb back to its previous high.

    Since those lows of late July, AAPL has soared 12% -- more than twice the rise of the Standard & Poor's 500 index and almost triple the performance of the Dow Jones Industrial Average.

    How can this be? Why are investors so high on a company that hasn't really done anything spectacular lately?

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  • Will Apple Buy Facebook? No, But It'll be More than a Friend It's a question that was getting asked as far back as three years ago, and seems to pop up again every time the Facebook stock price hits another new low: Will Apple buy Facebook?

    Some tech pundits think that because Apple (Nasdaq: AAPL) has so much cash -- $117 billion as of the June quarter - and lacks a presence in social media, buying Facebook (Nasdaq: FB) just makes sense.

    Those with more level heads think such a move would be a spectacularly bad idea -- and extremely unlikely.

    "I can see Microsoft making a stupid decision like this but not Apple - MSFT has a history of overpaying for questionable assets, being late to the game and having lost what truly innovative mojo they had under [CEO Steve] Ballmer's watch," said Money Morning Chief Investment Strategist Keith Fitz-Gerald.

    "I think Apple knows that the Facebook model is kaput and that it's not profitable - very similar to Google in that regard, which has held off from really rolling out Google+," Fitz-Gerald added."Shareholders would revolt...and so would the institutional money."

    But Apple Chief Executive Officer Tim Cook has strongly hinted at a cozier Apple-Facebook relationship.

    Calling Facebook a "great company" at the D10 conference in May, Cook said, "We have great respect for them. I think we can do more with them. Just stay tuned on this one."

    Why Apple (Nasdaq: AAPL) Will Not Buy FB

    Facebook's shaky business model isn't the only reason Apple would shy away from buying the social media giant.

    To continue reading, please click here...

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  • What the iCrime Wave Says About Apple (Nasdaq: AAPL) the office.

    Instead they came from a trip to the mall.

    As always, Lynch was interested in what people were buying there.

    However, according to a recent article in The Wall Street Journal by Rolfe Winkler there's a new twist to this theory: these days it also pays to keep an eye not on what consumers are buying, but what criminals are stealing.

    As Winkler claims we're suddenly in the grips of an "iCrime Wave". Not surprisingly, the products mentioned are those from Apple Inc. (Nasdaq: AAPL).

    What's also interesting is what's not mentioned.

    There are no crimes associated with Samsung, the world's largest mobile phone company who partners with Google Inc. (Nasdaq: GOOG) in the Galaxy Nexus.

    There is no report of the criminal element targeting the Blackberry from Research-in-Motion Ltd. (Nasdaq: RIMM), even though it was the first smartphone.

    And no Lumias are certainly mentioned from the partnership of Nokia Corp. (NYSE: NOK) and Microsoft Corp. (Nasdaq: MSFT).

    As Israel Ganot, the founder of Gazelle, an electronics recycler, notes, "There is insatiable demand for iPhones outside the U.S., mostly in emerging markets."

    That is certainly the case in China, where more than 20 fake Apple stores have been busted.

    Meanwhile, there no reports of stores anywhere that traffic in fake Research-in-Motion or Nokia products.

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  • Apple Earnings Miss Points to Slowing Growth Now that the Apple earnings report missed missed Wall Street expectations for the second time in a year, it has some questioning whether the company is finally coming back to earth.

    Revenue for Apple Inc.'s (Nasdaq: AAPL) third quarter was $35.2 billion, missing the consensus of $37.1 billion and only showing year-over-year growth of 23.2%. That growth rate was far below the 82% in reported for Q3 2011.

    Profit growth slowed as well. Apple earned just $9.32 per share in the June quarter compared to analyst expectations of $10.38. That put Apple's bottom-line growth at 27.5% year over year, little more than a quarter of last year's eye-popping 125%.

    Disappointed investors sent AAPL down 5% in after-hours trading.

    The Apple earnings miss was driven mostly by lower iPhone sales of 26 million, while analysts had expected 29 million, although Mac sales also were short of expectations.

    Several Wall Street analysts had lowered their expectations for iPhone sales in recent weeks, but Apple even missed those reduced numbers.

    The bleak news carried over to gross margin as well, which came in at 42.8%, short of the consensus number of 44%.

    The only positives were the iPad and iPod. Sales of the iPad were 17 million, beating the consensus of about 15 million. Sales of the iPod, which have been slowing for years, were actually up 10% to 6.8 million.

    But it was the bad news that dominated this Apple earnings report.

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  • Apple Profits Will Prove Analysts Wrong Again Recently many professional analysts have scrambled to lower their estimates of Apple profits and revenue for the third quarter, as their earnings report is due out after the markets close on Tuesday.

    As usual, those analysts will be wrong.

    The Wall Street consensus for Apple Inc.'s (Nasdaq: AAPL) June quarter is for earnings per share of $10.38 on revenue of $37.34 billion.

    But Apple has beaten the expectations of the "pros" 25 out of the past 26 quarters, and usually by an embarrassingly large margin. Back in April FactSet Research reported that over the previous 20 quarters, Apple has beaten Wall Street's consensus by an average of 22%.

    A miss by that margin for the June quarter would put Apple's EPS at a lofty $12.66.

    Philip Elmer-Dewitt, who writes the Apple 2.0 blog for Fortune, has been documenting this phenomenon for years.

    Each quarter he tracks the predictions of dozens of analysts, both pro and independent. After Apple announces Elmer-Dewitt produces a scorecard to show how each fared. The independents, he's found, hit the mark far more often than the pros.

    His current poll of 66 AAPL analysts includes 32 pros and 34 independents. For the June quarter, the average estimate for the pros is earnings per share of $10.32 on revenue of $37.3 billion. The indies, however, see EPS of $12.28 on revenue of $41.43 billion.

    Meanwhile, EarningsWhispers.com gives an EPS of $11.63.

    Where Wall Street often goes wrong is in severely underestimating Apple's product sales.

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  • How the Apple (Nasdaq: AAPL) iPhone Will Save Millions of Lives-and Make Early Investors a Bundle It's hard to believe, but it's true. The iPhone turns five years old next week.

    Since its official launch on June 29, 2007, Apple Inc. (Nasdaq: AAPL) has sold well over 180 million iPhones. Hands down, it's the most successful mobile phone ever launched.

    But what most investors don't realize is the huge impact the iPhone has had on medicine.

    The fact is, more than any other product on the planet, the iPhone is driving a whole new sector called mobile healthcare, or mHealth for short.

    With an iPhone in hand, it will redefine how doctors and other health-care pros work with their patients.

    But here's the big payoff: mHealth promises to save millions of lives as doctors use it to detect and treat diseases much more quickly than they could with old-school devices.

    These radical advances will undoubtedly make lots of early mHealth investors quite rich.

    But don't take my word for it....

    A trade group known as GSMA says the mobile healthcare sector will reach total sales of $23 billion by 2017.

    Of course, phones and tablets that use Google Inc.'s (Nasdaq: GOOG) Android operating system also could play a big role in the sector.

    But at this point the iPhone remains the clear leader in this rapidly growing market.

    It's So Much More Than a Phone

    That's why I'm glad to introduce you to a startup firm that has staked much of its future on the iPhone platform.

    To continue reading, please click here...
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  • 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.

    To continue reading, please click here...
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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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