Even in the fast-paced world of high tech, 10 weeks is a short amount of time. And yet, as recently as early September, many industry analysts were saying Apple Inc. (Nasdaq: AAPL) had lost its innovative edge in the global smartphone war. That's when the Silicon Valley legend launched the iPhone 6 with two larger […]Apple Inc.
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You'll Be the Winner of This Blue Chip Battle
Even in the fast-paced world of high tech, 10 weeks is a short amount of time. And yet, as recently as early September, many industry analysts were saying Apple Inc. (Nasdaq: AAPL) had lost its innovative edge in the global smartphone war. That's when the Silicon Valley legend launched the iPhone 6 with two larger […]iTunes Revamp Will Fortify Apple (Nasdaq: AAPL) Ecosystem
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"People with direct knowledge of the matter" confirmed to Bloomberg News last week that Apple's biggest overhaul to iTunes since 2009 will appear before the end of the year.
According to the Bloomberg report, changes include the addition of music sharing features, better integration with Apple's iCloud remote storage service, and easier ways to discover new apps, music, and movies.
The upgrade is long overdue.
Launched as a mere music jukebox in 2001, iTunes has gradually added chores like media content management, an online store and syncing. As a result, it's evolved into a Frankenstein that fails to uphold Apple's legendary ease-of-use ideal.
"At some point, you've got to sit down and say, 'How do we create a really good, easy experience for consumers that doesn't involve them wading through endless tabs and subsections of the site," Carl Howe, research director at theYankee Group, told MacNewsWorld.
Although the iTunes Store generates a relatively small portion of Apple's overall revenue -$1.9 billion out a total of $39.2 billion in the March quarter - the software is a main ingredient of the glue that holds the Apple ecosystem together.
An iTunes revamp will tidy up the cluttered ecosystem that helps drive sales of iPhones, iPads and Macs - AAPL's real revenue generators.
With that in mind, it's also easy to see the iTunes overhaul as a defensive move.
It's surely no coincidence that the Bloomberg story appeared mere minutes after Google Inc. (Nasdaq: GOOG) announced an upgrade to the Android ecosystem. The Google Play store added movies, TV shows and magazine subscriptions - just like the iTunes Store.
What to Expect from an iTunes Revamp
While the details remain veiled in secrecy, the recent leaks offer several clues about what Apple has in mind for iTunes.To continue reading, please click here...
Why Investors "Sell in May and Go Away"
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And like anything having to do with people, there are rhythms to the stock market that are a function of time-- whether it is the time of the trading day or a particular time of year.
One of these seasonal rhythms is so strong it has given birth to its own adage. Every investor knows it.
It's the admonition to "Sell in May and go away," and it's a proven strategy that results in gains for investors.
According to Sy Harding, author of the book "The Bear: How to Prosper in the Coming BearMarket:" "Over the long term, the market makes most of its gains each year in the winter, and when there is a serious correction, it most often takes place in the summer. We've known about that pattern for decades. The pattern has been confirmed by independent academic studies."
The Logic Behind "Sell in May and Go Away"
There are a myriad of reasons for this, most having to do with the cash flow aspects of the business calendar.
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Don't Be Surprised by Apple Inc.'s (Nasdaq: AAPL) Q2 Earnings
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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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Will Apple Inc. (NASDAQ: AAPL) Keep Driving Technology ETFs Higher?
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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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If I'm an Apple (Nasdaq: AAPL) Investor, I Want a Dividend
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On top of that the company has amassed a $97.5 billion cash hoard that would be the envy of any small nation.
However, as a dispassionate observer with experience of past such glorious valuations, I will tell you: If I were an Apple shareholder I'd want a cash dividend.
In fact, I think investors should certainly demand payout of at least three quarters of that cash hoard.
Simply put, a dividend is the best way for Apple shareholders to get real value out of their investment.
Here's why.
If Apple decided to pay out a $25 billion dividend per annum, allowing shareholders to benefit directly from the company's profits, it would be less likely to diversify unwisely in the future.
By receiving such a dividend, Apple shareholders would find their capital value preserved and their income increased.
However, the temptation of the $97.5 billion cash hoard would remain and management would still dream of the $100 billion acquisition that could revolutionize Apple's prospects.
That's why besides an annual dividend of $15-$20 billion (giving a 3.75%-5% yield on a $400 billion capitalization), shareholders should demand that the cash hoard itself, or the great bulk of it, be paid out to them, by a special dividend of maybe $100 per share.
By doing that, the diversification risk would be removed, and Apple would retain only enough earnings to guard against the onset of recession.
The Larger Case for an Apple Dividend
But that's not the only reason why Apple should do the right thing and start paying a dividend.To continue reading, please click here…
Apple's (Nasdaq: AAPL) Meteoric Rise is Distorting Everything
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The meteoric rise in Apple Inc.'s (Nasdaq: AAPL) stock price is distorting the major benchmark indexes, including the Nasdaq-100, the Nasdaq Composite, and the S&P 500.
That is still true even though the Nasdaq executed a "special rebalancing" of its Nasdaq-100 tech-heavy index to reduce Apple's 20% weighting down to 12% last April.
With Apple's impact on the Nasdaq 100 now approaching 17% (that's greater than Google Inc. (Nasdaq: GOOG), Amazon.com Inc. (Nasdaq: AMZN) and Intel Corp. (Nasdaq: INTC)...combined), it's only a matter of time before another rebalancing takes a bite out of Apple's influence on this important index.
The problem isn't that Apple's share price has been so strong.
It's that investors may be unaware that the Nasdaq 100's rise and the Nasdaq Composite's jump to new 10-year highs wouldn't have been remotely possible without Apple's 60%+ gain since last summer.
Instead, investors need to understand Apple's impact on these market barometers and pay more attention to the core movements in those markets, not just the shine of a single stock.
Apple's Gigantic Impact
Apple's outsized impact on the Nasdaq-100 (NDX), which is a 100-stock index of the largest domestic and international non-financial companies listed on the Nasdaq, impacts in equal measure the popular $32 billion PowerShares QQQ Trust (Nasdaq: QQQ). The QQQ is an ETF based entirely on the NDX.Apple's nearly 17% weighting in the NDX causes the NDX and the QQQ ETF to be closely correlated to Apple's stock whenever it makes a big move up or down.
The NDX (and by extension the QQQ ETF) is also a sub-set of the Nasdaq Composite Index.
The Nasdaq Composite Index (COMP) measures all of the domestic and international common stocks listed on The Nasdaq Stock Market. The COMP is one of the most widely followed and quoted major market indices.
Apple's weighting in the Nasdaq Composite is 10.6%. Thanks in no small part to this heavy weighting, the COMP is now approaching 3,000 - a level it hasn't seen since November 17, 2000.
But it's not just the tech-heavy NDX and COMP where Apple has an impact.
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Buy, Sell or Hold: 100 Billion Reasons To Buy Apple Stock
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Cupertino, CA-based Apple just released one of the best earnings reports in the history of capitalism.
In short, they crushed it-sending Apple stock to a fresh 52-week high.
Take a look:
In a record setting first quarter, Apple sold an astounding 73 million devices, including:
- 5.2 million Macs.
- 15.4 million iPods.
- 37 million iPhones.
- And 15.4 million iPads.
All told, it's a remarkable growth story - and one that's far from over.
But that is only part of why you should buy Apple stock. Its balance sheet boasts 100 billion more reasons showing the company is a solid "Buy."
Ironically, Apple has so much cash its stock could actually be considered cheap.
Apple reported $97.6 billion in cash, but given the rate the company was selling products in the fourth quarter, that figure is surely higher now.
Today, Apple's cash-on-hand has to be around $100 billion. This mounting pile of cash has been the source of much speculation in recent years, and the issue was again raised by analysts last week during the earnings conference call.
Judging from Chief Financial Officer Peter Oppenheimer's response, it was clear the company has plans for it.
According to Oppenheimer:
"We're examining all uses of our cash balance, what we might do in the supply chain, what we can do from an acquisition perspective and otherwise. Since I don't have any perspective to share with you today, specifically on dividends or buybacks, other than again, we are actively discussing the cash balance."It's my expectation Apple will...
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List of Apple Inc. (Nasdaq: AAPL) Suppliers
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But for investors, the list of suppliers is a potential a treasure trove. Although many of the names on the list were known, some are new and represent possible ways to play Apple without paying the premium for Apple stock.
Apple was compelled to release the list of suppliers to mollify critics who accused the Cupertino, CA,-based company of being complicit in questionable workplace practices in parts of its Asian supply chain.
According to Apple, the list of suppliers represents "97% of Apple's procurement expenditures for materials, manufacturing, and assembly of Apple's products worldwide."
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Seven Reasons the Apple iPad Will Remain King of the Tablets
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Indeed, while most of its competitors have yet to release even their first tablet attempt, Apple is already at work on its third, which shows just how entrenched Apple's lead is in this relatively new and fast growing market.
The debut of the iPad last year ignited a tablet market that had languished for nearly a decade. Apple sold 3 million iPads in the three months following the device's April release, compared to just 2 million total tablets sold in all of 2009.
As with the iPod and iPhone before it, the iPad transformed its market and established Apple as its trendsetter.
Research firm IHS iSuppli (NYSE: IHS) expects sales of media tablets like the iPad to skyrocket from 17.4 million units worldwide in 2010 to 202 million in 2015. It sees the overall tablet market (which includes "PC-type" tablets with more robust computer abilities) to grow from 19.7 million in 2010 to 242.3 million in 2015.
With so much potential in this relatively new market, competitors - such as Samsung Electronics Co. Ltd. (PINK: SSNHY), Hewlett-Packard Company (NYSE:HPQ) and Research in Motion Limited (Nasdaq: RIMM) - are releasing tablets of their own.
However, the iPad's competitors, even those using Google Inc.'s (Nasdaq: GOOG) Android operating system, face an uphill battle in their quest to knock Apple from its early dominant position in the tablet segment of mobile computing.
It's true that the iPad's share of the tablet market dropped to 75% in the fourth quarter of 2010 from an unsustainable 95.5% in the third quarter. But it's likely that iPad sales will stabilize at a high level, with Apple holding at least 50% of the market for years to come.
Here are seven reasons why...
Apple Inc.'s (Nasdaq: AAPL) "Thunderbolt" Could Ignite Intel Corp. (Nasdaq: INTC)
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It may be no accident that Apple Inc. (Nasdaq: AAPL) is also expected to upgrade its MacBook Pro line of laptops today, with a Light Peak port - re-branded as "Thunderbolt" - said to be a key new feature.
The Light Peak introduction follows another major Intel announcement. Last week the company unveiled plans to build a $5 billion chip manufacturing facility in Chandler, Ariz. Intel said the factory, slated for completion in 2013, will allow it to build faster, more efficient chips.
Light Peak, which Intel would like to establish as new connectivity standard, transmits data at 10 gigabits per second. Intel says it could be ramped up to far higher speeds - up to 100 gigabits per second. That would be 250 times faster than USB 2.0 common on today's PCs.
iPhone Technology: It's Like Buying "B" Shares In Apple Inc. (Nasdaq: AAPL)
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The sector's overall revenue is already projected to advance by 60% in the next three years.
But you have a chance to do even better.
You see, thanks to visibility it gained from its inclusion in the iPhone and iPad, this microchip technology - known as Micro Electronic Mechanical Systems, or MEMS - represents a ground-floor profit play with a big, and sustained, payoff.
"For the global MEMS market, the iPhone 4 was a breakthrough product," Jérémie Bouchaud, director and principal analyst for MEMS and sensors at market-researcher iSuppli Corp., told Money Morning this week in a telephone interview from Munich.
There's a hefty profit potential from this iPhone technology, especially if you focus on the smaller players whose sales are growing at double- and triple-digit rates.
But one stock in particular packs a promising profit punch. In fact, this company's technology was so crucial to the success of the iPhone and iPad that buying its stock would be like owning "B" shares in Apple.
For the one "MEMS" stock to play now, please read on...
Hot Stocks: Windows Phone 7 Will Give Microsoft a Boost
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The new operating system, which it spent two years developing, is the software giant's latest assault on the crowded smartphone market, where it has struggled to gain a foothold.
Microsoft's earlier mobile software was based on the design and interface of Windows desktop operating system. Although those phones showed early promise, the system's growth slowed dramatically as the company was upstaged by competitors like Apple Inc.'s (Nasdaq: AAPL) iPhone and Google Inc.'s (Nasdaq: GOOG) Android software.
Hot Stocks: Adobe Systems Inc. Drives Investors Away With Weak Forecast and Disappointing Growth Outlook
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The software maker fell as much as 21% Wednesday, at one point hitting a new 52-week low of $25.81. It closed at $26.67, a 19.03% drop.
The company on Tuesday announced that it's predicting a flatter fourth quarter than investors and analysts had hoped due to fewer than expected sales of its core Creative Suite 5 software. The CS5 package includes popular Photoshop, Illustrator and Dreamweaver programs. The stock had already slipped 10% so far this year before Wednesday's trading.
Nokia Needs More Than New CEO Stephen Elop to Reverse Its Steep Market Decline
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The world's largest mobile phone maker said Chief Executive Officer Olli-Pekka Kallasvuo will step down and Elop, head of Microsoft's business software unit, will take the reins Sept. 21. The move represents a drastic shift for Nokia, which until Canadian Elop had never hired a non-Finnish executive for the top spot. But the company needs a strategy and management overhaul to compete in the profitable future of smartphones.
The move should appease Nokia's frustrated investors who have watched its market value slip 70% in the past three years as Apple Inc.'s (Nasdaq: AAPL) iPhone, Research in Motion Ltd.'s (Nasdaq: RIMM) BlackBerry, and phones using Google Inc.'s (Nasdaq: GOOG) Android platform stole the smartphone spotlight.
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