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Obama Brings the Stick to Apple-Samsung Patent War

By , Managing Editor, Money Morning -

President Barack Obama added an unexpected twist to the patent wars when he took the extraordinarily rare step of vetoing the International Trade Commission's own trade sanctions against Apple Inc. (Nasdaq: AAPL) last week.

The trade commission had ruled that Apple violated some of Samsung Electronics Co. Ltd's patents, and the commission was set to ban outright several key Apple products, such as the iPhone 3GS, iPhone 4, and the iPad 2 and 3G models - all sold by AT&T Inc. (NYSE:T), among others.

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What Should Apple Do with its $137 Billion Stockpile of Cash?

By , Money Morning -

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Apple Inc.'s (Nasdaq: AAPL) been in the news a lot of late as its stock plunged. Meanwhile, the company sits on a cash pile of $137 billion.

When Apple stock was soaring, investors were happy. But since its stock value plunged some 35% since September, many investors have suggested Apple should share some of itsaccumulated wealth. Fund manager and investor David Einhorn went so far as to sue the company to try to force it to share more of its cash with shareholders.

Money Morning Chief Investment Strategist Keith Fitz-Gerald was asked on FOX Business what Apple (Nasdaq: AAPL) should do with its stockpile of money: Should the company pay dividends to shareholders, pursue major acquisitions or just keep its large cash position for future investments or other costs?

Check out what Fitz-Gerald and other panelists said on the FOX Business report in this accompanying video.

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The China Smartphone Brand That's Beating Apple (Nasdaq: AAPL)

By , Contributing Writer, Money Morning -

Most investors who pour money into smartphone makers look to dominant players like Apple Inc. (Nasdaq: AAPL) - but they're missing a bigger part of the market.

The global smartphone industry is changing dramatically, as China surpassed the United States in 2012 to become the world's largest smartphone market by volume. Smartphone shipments to China in the third-quarter of 2012 hit a record 60 million.

Apple has noticed this shift. In fact, Apple CEO Tim Cook recently told Chinese-run Xinhua News Agency that he believes China will become the company's biggest market in the future.

But for now, it's the domestic brands that have won.

"Chinese brands have taken more than half the Chinese smartphone market this year, and they will take much more," Sandy Shen, the head of consumer research at technology research company Gartner in Shanghai, told the Financial Times.

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The Apple Stock Drop: What You Need to Know (Nasdaq: AAPL)

By , Associate Editor, Money Morning • @DavidGZeiler -

As Apple Inc. (Nasdaq: AAPL) stock continues its seven-week tumble, investors want to know what is likely to happen next.

Since hitting an all-time high of $702.10 on Sept. 19, Apple stock plunged $155.04 --more than 22% to close at $547.06 on Friday.

Investors have gotten little help from Wall Street analysts, who have offered diametrically opposed opinions on where AAPL is headed.

Among the prominent bears is Doubleline Capital CEO Jeff Gundlach, who predicted on Thursday that Apple stock would continue all the way down to $425. He said that's about where AAPL was when it started its dramatic climb in January, and he expects it to return to those levels.

Gundlach is down on Apple because he thinks the Cupertino, CA-based company's new products are no longer cutting edge.

"I'm really struck by this mini iPad thing as if that's any kind of a product innovation," Gundlach told CNBC."Once you just start changing the size of your products, I really think you're not exactly innovating."

Meanwhile, some Apple bulls insisted the stock will not only bounce back, but eventually will reach beyond $1,000 a share.

Brian White, an analyst with Topeka Capital Markets, said in a note to clients on Thursday that he's keeping his $1,111 price target on AAPL.

"We believe that those investors that have missed the Apple rally over the past year are presented with a very attractive entry point heading into the strong holiday news season," White wrote.

So which story are Apple investors to believe?

To figure that out, let's take a closer look at what's been going on.

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Forget Q4: Apple (Nasdaq: AAPL) Earnings Must Deliver in December

By , Associate Editor, Money Morning • @DavidGZeiler -

Even though Apple Inc.'s (Nasdaq: AAPL) earnings for Q4 aren't yet out - they'll be announced after Thursday's market close - the company is much more concerned with beating last year's spectacular December quarter, the company's fiscal first quarter.

Apple's Q1 earnings last year blew past all expectations. Apple earned $13.87 per share - more than doubling the profit from the year-earlier quarter -- by selling a record 37 million iPhones and 11 million iPads.

And Apple is going to need the profits from every gadget it can sell if it hopes to top that benchmark.

That's why all eyes were focused on the long-anticipated iPad Mini yesterday (Tuesday), but the real story was the avalanche of product updates unleashed just in time to supercharge for its critical December quarter.

In addition to the Apple iPad Mini, the special event in San Jose, CA, included the surprise announcement of the fourth generation iPad, a revamp of the iMac and Mac Mini desktops, and a the upgrade of the 13-inch MacBook Pro laptop to a high-res Retina display.

"We're not taking our foot off the gas," said Apple CEO Tim Cook.

When taken together with the iPhone 5 launch and the upgrades to the iPod Touch and iPod Nano just last month, it adds up to an uncharacteristic bunching of product updates.

It means lots of fresh Apple gear in stores for the holidays, historically the company's biggest quarter of the year.

Why Apple (Nasdaq: AAPL) Needs Great Q1 Earnings

In a sense, Apple has become a victim of its own success.

The explosive growth of Apple earnings, driven by the explosive growth of iPhone sales (and that product's huge profit margins), has made huge earnings increases routine.

But Apple knows the tough comparisons to year-ago quarters will get Wall Street's attention.

And as Apple's growth rate slows, so will the rise of the stock.

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Why Apple (Nasdaq: AAPL) Won't Ditch Controversial Foxconn

By , Associate Editor, Money Morning • @DavidGZeiler -

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 Demand Alone Will Push Stock Price Past $800

By , Associate Editor, Money Morning • @DavidGZeiler -

If the Apple iPhone 5 turns out to be the blockbuster product that nearly everyone expects, it should easily carry the company's stock to $800 and beyond.

The long-anticipated next-generation iPhone is expected to debut at an Apple Media Event Sept. 12 and go on sale Sept. 21.

Rumored improvements such as a bigger 4-inch screen and 4G LTE network compatibility have heightened consumer anticipation, even slowing sales of the current iPhone 4S.

A recent survey of more than 4,000 American consumers by ChangeWave Research indicated that many can't wait to give their money to Apple Inc. (Nasdaq: AAPL).

"Advance demand for the iPhone 5 is strikingly higher than we've seen for any previous iPhone model," Paul Carton, ChangeWave's vice president of research, told Computerworld.

In addition, extraordinarily positive guidance from several iPhone component suppliers hints that Apple has ramped up production like never before. Cirrus Logic (Nasdaq: CRUS) forecast a 70% sales increase for the current quarter. Omnivision (Nasdaq: OVTI) said it expected revenue to jump 38%-50%.

[ppopup id="70925"]Six ways you can make money as the masses flock to Apple for the iPhone 5. [/ppopup]

And with Apple's huge patent case victory over Samsung two weeks ago casting a cloud over the iPhone's Android-based competitors, conditions are ideal for a huge iPhone 5 launch.

In a note last month, Piper Jaffray analyst Gene Munster, predicted the Apple iPhone 5 would be "the largest consumer electronics product upgrade in history." He forecast the iPhone 5 will sell 6-10 million units within its first 10 days.

Another analyst, Horace Dediu of Asymco, has projected iPhone 5 sales of about 170 million units over the next year, which would beat first-year sales of the iPhone 4S by about 70%.

Given that the iPhone contributes more than half of Apple's profits, any large increase in iPhone sales will deliver a mammoth boost to the bottom line. And those rapidly rising profits will keep pushing AAPL higher.



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5 Reasons Apple (Nasdaq: AAPL) Stock Hit a New All-Time High

By , Associate Editor, Money Morning • @DavidGZeiler -

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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Apple's (Nasdaq: AAPL) Patent Wars: This Little-Known Swedish Company is the Key

By , Associate Editor, Money Morning • @DavidGZeiler -

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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How Apple Inc. (Nasdaq: AAPL) Became the Vampire Squid of Tech

By , Associate Editor, Money Morning • @DavidGZeiler -

Business partnerships with Apple Inc. (Nasdaq: AAPL) produce abundant profits - but usually only for Apple.

Using its clout as a vendor of highly desirable consumer technology, Apple secures extremely favorable deals with suppliers, providers of goods and services, and retailers.

Such deals are a major reason behind Apple's extraordinary profits.

"Can Apple continue to roll through industry after industry, soak up all the profits, and leave everything it touches as a smoking wreckage?" Craig Moffett, an analyst at Sanford Bernstein & Co. told the Los Angeles Times.

Despite increases in business volume, many companies that deal with the Cupertino, CA-company discover it's usually a one-sided relationship when it comes to profits.

Apple has, in effect, become the technology world's "vampire squid" -- a term coined by Rolling Stone Matt Taibbi in 2009 to describe Wall Street behemoth Goldman Sachs (NYSE: GS).

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If I'm an Apple (Nasdaq: AAPL) Investor, I Want a Dividend

By , Money Morning -

Now that their stock is up more than 20-fold in the last ten years, Apple Inc. (Nasdaq: AAPL) investors have had a wonderful ride.

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.

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Apple's Server Farm Hints at Cloud-Based Ambitions

By , Associate Editor, Money Morning • @DavidGZeiler -

Apple Inc. (Nasdaq: AAPL) has secretly built a massive server farm in Maiden, North Carolina that should come online any day now, if it hasn't already. The facility is five times larger than Apple's existing data center in Newark, California.

Apple has been typically cagey about the purpose of this data center, which ultimately could cost as much as $1 billion.

"North Carolina is on schedule," Apple Chief Financial Officer Peter Oppenheimer said during the July earnings conference call. "We expect to complete it by the end of the calendar year and begin to use it."

Much of Apple's existing business relies heavily on content delivery already, but building a 505,000 square-foot facility - which ranks it among the largest in the world - hints at far more grandiose plans.

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Will New iPhone Give Boost to Verizon (NYSE: VZ) and Apple (Nasdaq: AAPL) Shares?

By , Contributing Writer, Money Morning -

The buzz surrounding the long-awaited release of a Verizon Communications Inc. (NYSE: VZ) iPhone is reaching a fevered pitch as it appears the telecom giant is ready to bring the device to market.

Verizon is expected to confirm it will start providing service for the iPhone early next year, according to a report last week in The Wall Street Journal.

January may be a strange time to launch the much-anticipated product, but AT&T (NYSE: T) reportedly convinced Apple Inc. (Nasdaq: AAPL) to give it one last holiday season as the iPhone's exclusive U.S. provider, according to a report in Tech News World.

With millions of frustrated AT&T network users making noise and millions of loyal Verizon customers anticipating the iPhone's release, investors are wondering if the iPhone could give shares of both Apple and Verizon a shot in the arm.

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