Apple's (Nasdaq: AAPL) iPad Mini Will Crush Tablet Rivals

By David Zeiler
www.moneymorning.com

If Apple Inc. (Nasdaq: AAPL) does unveil an iPad Mini this fall - and fresh reports from both Bloomberg News and The Wall Street Journal indicate it will - the new device could help Apple lock up the tablet market for years.

The iPad Mini, as tech pundits are calling it, could debut as early as October. It's thought to have a 7.85-inch screen, significantly smaller than the 9.7-inch display of the three iPad models released so far.

Such a product would compete directly with Amazon.com's (Nasdaq: AMZN) Kindle Fire as well as the just-announced Nexus 7 from Google Inc. (Nasdaq: GOOG). Both sport 7-inch screens and a $199 price tag aimed at buyers unwilling to pay $499 or more for a new iPad (or $399 for an older iPad 2).

"It would be the competitors' worst nightmare," Shaw Wu, an analyst at Sterne Agee & Leach Inc., told Bloomberg. "The ball is in Apple's court."

There was no word on what the iPad Mini might cost, but in a note yesterday (Thursday) Topeka Capital analyst Brian White estimated a range of $250-$300.

"That would lure certain consumers away from these competitors with an overall better experience that includes a much more robust ecosystem," White said.

Apple's desire for generous profit margins will keep it from pricing an iPad Mini at $199. Both the Amazon Kindle and Nexus 7 lose money at $199.

With its impressive ecosystem, Apple can get away with charging more for a similar product. That ecosystem, built upon the iOS platform that runs all of the Cupertino, CA company's mobile devices, includes the iCloud remote storage service as well as 225,000 apps designed just for the iPad.

"This isn't like the old days, when it cost thousands of dollars more to buy an Apple product," Wu said. "Fifty or a hundred bucks wouldn't be enough to make someone switch."

Fear the iPad Mini

An Apple entry into the 7-inch tablet market would rob rival tablet makers of an obvious competitive niche.

The smaller form factor and much lower price gave many hardware makers (most using Google's free Android operating system) true differentiation from the previous iPad models.

The iPad Mini would extend Apple's reach much deeper into the tablet market -- and there's little competitors can do about it. It's hard to cut prices to gain market share when your margins are razor-thin or you're selling at a loss.

Even without an iPad Mini, sales of non-Apple tablets have been weak. Only the Kindle Fire has had any real success. Now both the Nexus 7 and the iPad Mini are coming for the Fire.

According to research firm IDC, Apple's tablet controlled 70% of the worldwide market in the first quarter of 2012. Analysts had been predicting that Apple would gradually lose market share over the next few years to tablets running Android and Microsoft Corp.'s (Nasdaq: MSFT) upcoming Windows 8 operating system.

But an iPad Mini would change that math. Such a product would appeal not only to cost-conscious customers in places like the United States, but also to millions of customers in less wealthy nations.

An Apple (Nasdaq: AAPL) Dominance Strategy

Note, too, the timing of the iPad Mini "leaks" to two major news sources.

Coming just days after the announcement of the Google Nexus 7 and a mere week after Microsoft unveiled its own Surface tablet, it certainly looks intentional.

Why? Putting out word that an iPad Mini is on the way will retard sales of other 7-inch tablets while consumers wait for the Apple device to arrive in the fall.

And it's the second such incident in the past week.

Last week Bloomberg ran a story based on leaked information about an iTunes upgrade mere minutes after Google announced the Google Play store would add movies, TV shows and magazine subscriptions.

So much for Apple's legendary secrecy.

A likely explanation is that the Apple of Tim Cook is determined not to repeat the mistakes of its past. The company clearly intends to do whatever it takes to prevent iOS from suffering the same fate the Mac did at the hands of Windows in the 1990s.

That includes everything from intentional leaks to the press, to patent wars, to wielding the market power of its vertically integrated ecosystem.

In a recent article for PCMag.com, Tim Bajarin, president of research firm Creative Strategies said many tablet makers fear Apple indeed has the power to "iPod" the tablet market - that is, dominate for years and years.

"The bottom line is that it's really all about the platform. At the moment, I don't see anybody creating a unified and powerful enough platform that comes close to what Apple already has in the market," Bajarin wrote. "Unless something changes dramatically in the Android and Windows camps to bring about a seriously cohesive platform, Apple could potentially "iPod' the tablet market given its initial iPad momentum and the mature platform."

Source: How the Apple (Nasdaq: AAPL) iPad Mini Will Crush Tablet Rivals:

Nanotechnology is to the 21st Century what chemistry was to the 20th Century

June 27th, 2012
by Guest Editorial
www.moneymorning.com

The word "nanotechnology" gets thrown around a lot but it still remains a fuzzy concept for most people.

From a self-aware, self-assembling grey goo that takes over the world in a Michael Crichton book, to Apple's (Nasdaq: AAPL) Nano music player or Tata Motor's (NYSE ADR: TTM) Nano car, it's hard to get a clear picture of what nanotech really is.

But as global World Economic Forum member and emerging tech guru Dr. Tim Harper explains, "Nanotechnology is to the 21st Century what chemistry was to the 20th Century."

Like plastics, computers, and the Internet before it, nanotechnology will change the world in ways that we can't even imagine now. That's how powerful the nano-world will become.

That's why every long-term growth investor needs to consider investing in nanotechnology. In terms of scale, the potential for investors is simply enormous.

That's why one company, FEI Co. (Nasdaq: FEIC) is on my list of "buys" as the top "picks and shovels" play.

The Miracle of Nanotechnology

So what exactly is nanotech?

It's a way of working with objects and materials at the atomic level, one molecule at time.

That means that in the near future, we will be able to custom design structures literally from the ground up, molecule by molecule, creating a quantum leap forward in medicine, materials, electronics, food, and fuels - practically everything we know of.

In fact, one of the biggest sectors where nanotech continues to have a huge impact is in drug development and drug delivery.

Recent nanotech developments include: cancer treatments without chemotherapy or radiation, long-dose treatment of diabetes with a single monthly injection, long-release or on-demand blood pressure medications, and textiles to build skin, bone or organs from you own cells.

Developments like these will invariably lead to big money

A recent report by Cientifica, a leading global emerging technology consulting firm predicts:

• Nanotech-enabled drug delivery therapeutics is set to grow from a current value of $2.3 billion to $136 billion by the year 2021.
• Global growth in the drug delivery market will be led by Asia with a compound annual growth rate (CAGR) of 32.5% between now and 2021.
• And the total addressable market for nanotech enabled diagnostics will reach $53.6 billion in 2021 from $2.4 billion in 2011.

But drug delivery is just a small piece of the sector. The truth is nanotech is going to impact every facet of your life someday.

Because if you look into every industrial sector from textiles to materials to electronics to energy to defense to computing to telecommunications to packaging, nanotech is the fulcrum that is moving the world.

Investing in Nanotechnology: The Leading Player in the Game

For investors that opens up a whole new set of opportunities.

And if there is one thing this new field requires, it's the ability to see what's happening to these materials at these elemental levels.

That means high-powered microscopes and scanning equipment are the picks and shovels of today's (and tomorrow's) innovators.

And when it comes to these devices, FEI Co. is one of the leading players in the game.

A five-year price chart of FEIC is a simple story of how integral modern day microscopy is to the new economy. Since cratering around 11 in early 2009, the stock has had a steady rise to around $50 today.


As you can see, even as the world financial system crumbled, the world entered the Great Recession, FEIC kept chugging along.

Part of the reason was healthcare was a pretty stable base for the company as companies poured money into new R&D projects.

But FEIC also has a Natural Resources Business Unit that does imaging for energy companies around the world, including spotting shale reserves.

As cheap oil dwindles and unconventional oil and gas become the norm, FEIC's QEMSCAN imaging system will become even more in demand. In fact, earlier this month the company announced a fee-based agreement with a major oil service company to provide on-site automated surface logging using the QEMSCAN WellSite analysis solution for a U.S. customer.

So there's little doubt this unit will be pumping a lot more revenue into the company as the years progress. It has contracts in every major oil developing country in the world already.

As for business in general, revenue is up, margins are up and net bookings are up-- all in a terrible global economy.

New electronics, new textiles, new materials, new drugs, new energy -- FEIC will be in the middle of it all.

FEIC is a "Buy" up to $50.

Source: Investing in Nanotechnology: FEI Co. (Nasdaq: FEIC) is the Top "Picks and Shovels" Play:

How the Apple (Nasdaq: AAPL) iPhone Will Save Millions of Lives-and Make Early Investors a Bundle

Michael A. Robinson, Defense and Technology Specialist
www.moneymorning.com

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. It's a company called AliveCor. Indeed, the bet has paid off so far.

Fact is, AliveCor recently raised another $10.5 million in venture funding. That brings the total raised to date to roughly $13.5 million. The company first made waves last year when it showed off its iPhone-based heart monitor at the Consumer Electronics Show in Las Vegas. Since then, AliveCor has applied to the FDA to sell it as an approved medical device.

The Alivecor product allows professionals and consumers to monitor the heart health of a person or even an animal. Its heart-tracking technology is designed to work with the iPhone, iPad and Android devices. In technical terms it's a mobile electrocardiogram (ECG) recorder. That means it measures the heart's electrical activity.

Doctors use this test to see if there are any problems with the heart they can't detect with a simple office visit. For instance, an ECG will show if the heart is not beating with the correct rhythm, which could indicate a disease or other problem. Product reviews say the AliveCor ECG will cost just $100, adding that the product is easy to use. When heart patients want to record their ECG, they open the app and hold the phone to their chests. In the blink of an eye the app shows the results. It records 300 samples per second. When finished, the app can upload the patient's ECG to AliveCor's servers. Doctors can then review the tests from just about anywhere in the world using a Web browser in a secure format. The firm says the results match those of much more costly clinical-grade gear.

Last month, AliveCor cited a study in which two doctors cross-checked the results against standard monitors in more than 60 patients. The iPhone platform proved just as accurate at a fraction of the cost, the company says. You can view of video of the device in action here.

The Market for These Apps Is Huge

AliveCor is already targeting what could be a huge market. You see, health stats show that heart disease remains the leading cause of death in the U.S. It claims nearly 600,000 lives a year. Many could have been saved had they seen a doctor before disaster struck. AliveCor's ECG would allow millions to track their heart health themselves.

Look at it this way. If the AliveCor ECG caught just 20% of the potential cases, it could save more than 1 million lives over the course of a decade. Not only that, since it allows for fewer doctor visits, the iPhone approach could have a big impact on healthcare costs. Consider that the American Heart Association predicts that by the year 2030, the cost of heart disease will more than triple to $818 billion a year.

By then, 116 million people in the U.S., or about 40%, will suffer from some form of heart disease. But remember, we've just covered one product targeting a single disease. No doubt the iPhone will find uses in many other medical applications. Taken together, these new apps will save millions of lives and help transform medical science as we know it. All it takes is cutting edge products like an iPhone and the genius of thousands of creative entrepreneurs.

When you have that there's no limit to how far you can go.

Cheers,

Michael A. Robinson, Defense and Technology Specialist

P.S. If you want to find a way to profit from the next generation of tech breakthroughs, Michael's Era of Radical Change newsletter is a great place to start.

And you can't beat the price. You can get it free by clicking here.

Further Reading....

Michael A. Robinsonis one of the top financial analysts working today. In fact, he recently called out the Wall Street Journal for what he said was "some bad and very misguided press" about the future of asteroid mining.

To find out why Michael says the Wall Street Journal is dead wrong about asteroid mining click here.

About the Author


Michael A. Robinson is one of the top financial analysts working today. His 30-year track record as a leading tech analyst has garnered him rave reviews. The first analyst to uncover the rare earth mineral crisis, he amassed cumulative gains of 990% for his readers in just 16 months. Today he is the editor of Radical Technology Profits. He also edits the Era of Radical Change e-letter that explores "what's next" in the tech investing world. Learn more about Michael on our contributors page.

View articles by Michael A. Robinson

Source: How the Apple (Nasdaq: AAPL) iPhone Will Save Millions of Lives-and Make Early Investors a Bundle:

Apple Watch: Patent Wars

June 4, 2012

By David Zeiler, Associate Editor, Money Morning

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.

How Apple Can Win the Patent Wars

What could Apple do? Well, it could consider a licensing agreement with Neonode.

Neonode's head of IP, Yossi Shain, told TechCrunch in February it was seeking licensing deals for the "swipe-to-unlock" patent and planned to contact Apple.

But the truth is such a deal would be of limited benefit to Apple. Neonode's business model is to make non-exclusive licensing agreements for its technology, so Android device makers would have equal access to the same patents.

Without exclusive control of those key patents, many of Apple's patent cases would crumble. That's what happened in the Netherlands.

So Apple needs to buy Neonode, and the sooner the better. Not only would that avoid the need to pay Neonode, it would strengthen Apple's hand in the patent wars.

Apple can easily afford NEON, even at a steep premium. Neonode stock currently trades at about $6 with a market cap just under $200 million.

And because Neonode is based outside the U.S., Apple could use some of its $74 billion in foreign-based cash to pay for it. With that kind of money, Apple could pay 10 times Neonode's valuation - about $2 billion - and hardly miss it.

In any event, buying NEON would almost certainly be cheaper than paying it licensing fees.

But most importantly, Apple needs to buy Neonode to prevent its rivals from snatching those key patents. Microsoft, Google and Samsung - each well-heeled in its own right -- would love to have them.

"One of these companies is going to have to buy NEON to get a hold of the original patents," Altucher wrote. "Not only did NEON patent the swipe-to-unlock but they patented many of the touch-sense technologies we use on tablet devices."

What the Neonode Patents Mean For Investors

For investors, the Neonode situation raises a caution flag on Apple. Should Google or Samsung snap up Neonode, the balance of power in the patent wars will shift away from Apple in a major way.

It's hard to predict just how much harm that would do to Apple's business. But the company uses those touchscreen patents in its iPad, iPhone and iPod Touch products, which together generate more than three-fourths of Apple's revenue.

Far more interesting is what this development means for tiny Neonode.

In his blog post, Altucher contends that Apple's dire position relative to the Neonode patents is "more than enough to drive NEON to $30."

Not surprisingly, Altucher's post pushed the stock up 28% in Wednesday trading.

But an acquisition is not all NEON has going for it. Neonode already has e-reader patent licensing deals with such companies as Amazon.com (Nasdaq: AMZN), Sony Corp. (NYSE: SNE) and Barnes & Noble Inc. (NYSE: BKS).

And in April Neonode announced 17 design wins where the company helped customers integrate its technology with their products. Altucher suspects some of these undisclosed products may include household appliances and auto touch panels.

Earnings for the March quarter were a mixed bag. Revenue rose 100%, while the cost of that revenue rose 61% and Neonode posted a loss of 5 cents a share.

But guidance was positive, with the company forecasting revenue of $18 million-$20 million. Revenue for the March quarter was $1.2 million.

While Neonode's prospects look tempting, particularly if it can execute, investors should note that its small market cap and low float do make it more risky and volatile.

In addition, NEON only just started trading on the NASDAQ May 1; before that it was an OTC stock. It's also worth noting that Neonode's phone-making arm declared bankruptcy in 2008.

Nevertheless, Altucher, who owns Neonode stock, accentuated the positive in his piece.

"A competitive technology can always be developed, but NEON has the significant advantage of having patents, clients in every sector, and having been through the multi-year cycles to get these design wins," he wrote.

Source: http://moneymorning.com/2012/06/04/apples-nasdaq-aapl-patent-wars-this-little-known-swedish-company-is-the-key/

Google Takes a Cue From Apple

April 18th, 2012

It looks like Google (Nasdaq: GOOG) followed my advice to keep Motorola Mobility’s (NYSE: MMI) smartphone business.

Business Insider says, “According to a person briefed on Google’s plans for the merger: While Google may have originally wanted to buy Motorola for its patents only, it has come to realize that it wants to follow Apple’s lead when it comes to smartphone and tablet computer development.”
You see, currently, Google simply designs the Android software and depends on other companies like  

Samsung and HTC (TPE: 2498) to integrate the operating system into a smartphone.
And while some amazing devices have been developed under this model, the Android experience isn’t as unified as what you’d find on Apple’s (Nasdaq: AAPL) iPhone. By designing the phone from the bottom up, however, Google could finally bring an Android phone to the market that’s just as intuitive as Apple’s smartphone on every level.

But people aren’t exactly jumping for joy over the prospects of such a move, as it runs the risk of alienating Google’s Android partners.

However, I’m still convinced that the popularity of a vertically designed Android device would light a fire under other manufacturers to develop killer smartphones to compete.
And this shouldn’t be a problem, considering CEO, Larry Page, made it clear that Google has no intention of leaving its loyal Android allies in the dark.
With the Motorola acquisition close to final approval, though, here’s why Google needs to stick to that promise…

Google’s Walking a Dangerous But Profitable Line
Some reports indicate that device makers are put off by the purchase of Motorola. And if Google ends up designing its own device, it would lead the manufacturers to overhaul the Android operating system to make it their own.

The idea is that this process, known as “forking,” would allow a hardware manufacturer to create an entirely unique experience (because it barely resembles the original Android operating system). And this differentiation could help its devices stand out from the crowd. The problem, however, is that going rogue means that the company won’t be able to implement key Google applications, like Gmail, Maps and the Google Play app market. So it creates more work for the hardware maker.

But that problem would be even worse for Google. You see, Google cashes in on applications through mobile advertising and in-app purchases. If hardware makers design their own app store alternatives, this would cut deep into Google’s bottom line. Like Bloomberg says, “Mobile advertising is one of Google’s fastest-growing markets, with industry-wide revenue projected to rise to $20.6 billion in 2015 from $3.3 billion in 2010, according to Gartner Inc. With online traffic increasingly coming through apps instead of mobile browsers, Google’s push to wring mobile ad revenue from Android could be impeded.”

Amazon’s (Nasdaq: AMZN) already shown that such a model can hurt Google with the Kindle Fire tablet. Fire owners must purchase applications through the Amazon Appstore, instead of the Google Play Store.
And a study last month by Flurry shows that developers are making more money through in-app purchases with Amazon’s marketplace than with Google’s. In January and February, for every dollar of revenue a developer made through Apple’s App Store, for instance, he made $0.89 through Amazon and $0.23 through Google. (We’re not exactly surprised, by the way, given that we pointed out a few reasons why Amazon’s app marketplace is superior to Google’s.)

Problematically for Google, Amazon’s success with forking could entice current Android partners to follow in its footsteps. Meaning Google better tread carefully as it continues along this path of exploring hardware options, keeping its Android partners in the loop the whole way.
Bottom line: Although mirroring Apple’s vertical integration strategy should boost Android’s popularity enough to where losing a smaller phone maker shouldn’t be a huge deal, losing a partner like Samsung, on the other hand, could punch a huge whole in Google’s mobile revenue.

Good investing,
Justin Fritz for the Wall Street Daily
www.wallstreetdaily.com
Source: http://www.wallstreetdaily.com/2012/04/18/google-takes-a-cue-from-apple-goog-aapl/

Apple Watch: 3 downtrend signals for NASDAQ:AAPL

Republished April 24th, 2012
Originally Published Tuesday, April 11th, 2012

The Tech Investor: Apple's recent dip and downtrend (still) doesn't represent a buying opportunity. So we would be looking elsewhere to trade apple stock. However, a long-term perspective dictates that once this stock is oversold and all the bad news is priced in, then it could be a buying opportunity. The reality is that apple is positioned to most likely become the world's first trillion dollar stock, and will eventually trade at $1,000.

We all know that Apple’s (Nasdaq: AAPL) stock has been blasting off like a rocket. Since it reported insane profits last quarter at $13.06 billion, shares jumped over 50% in less than three months’ time.
Even with this explosion in share prices, however, many analysts argue that Apple’s stock is actually undervalued. 

In fact, earlier this month, Brian White of Topeka Capital Markets claimed that shares are actually worth over $1,000, which would represent a 60% leap over today’s prices.
His estimate is already being put to the test, however, with shares taking their sharpest plunge this year – down 9% in just a week. Let’s take a look at three factors that are likely contributing to the downward momentum, and, more importantly, why you shouldn’t consider the recent dip a buying opportunity.

~ AAPL Downtrend Factor #1: iBooks Attracts a Lawsuit
According to Bloomberg, “Revenue from e-books doubled last year to $1.9 billion.” And Apple’s a growing player in the space with 10% of U.S. marketshare.
The U.S. Department of Justice has filed a lawsuit against five publishers, as well as Apple, for allegedly conspiring to fix e-book prices, ultimately leading to higher prices for consumers. Three publishers have already settled, but Apple and two publishers are willing to duke it out in court.
Apple claims that it negotiated with each publisher on terms and e-book pricing separately. But any evidence to the contrary could compromise the company’s future revenue in the space.

~ AAPL Downtrend Factor #2: Apple Security Comes Under Fire
Malicious software called “Flashback,” which disguises itself as an update for Adobe Flash Player, has recently been spotted on upwards of 600,000 Macs. And new malware known as “SabPub” has been detected over the weekend.

The company’s been catching heat for the security threats, mostly because there’ve been virtually zero threats to its computers, unlike Microsoft (Nasdaq: MSFT) Windows PCs. Like Computerworld says, “The only reason this story got the attention it did is because for more than a decade Mac OS X has not been hit hard with any major malware threat.”
Still, since this essentially proves that Apple devices aren’t as bulletproof as some consumers like to believe, investors are realizing that this could take a bite out of Apple’s computer sales.

~ AAPL Downtrend Factor #3: Subsidies Going Out the Window?
With the actual cost of the iPhone around $600, we have carrier subsidies to thank for the much more affordable $199 price tag. As you likely know, carriers like Verizon (NYSE: VZ) and AT&T (NYSE: T) foot the majority of the bill for these high-priced gadgets, and make up for that cost by charging you more for their services month to month.

That’s part of the reason why Apple has been able to snatch 29.6% of the smartphone marketshare in the United States. In other parts of the world, however – where carriers refuse to subsidize the iPhone – Apple’s marketshare is lagging behind. In Portugal, for instance, consumers must pay full price for the phone and Apple claims just 9% of the market.

U.S. mobile networks might be joining them, though, considering it could boost short-term profits and result in more attractive monthly plans for consumers. Such a shift in subsidy priority would certainly put a strain on Apple’s mobile business. As Casey Research analyst, Robert Ross, says, “Seeing as Danish telecom  

Telenor ASA (OTC: TELNY) stopped subsidizing phones in lieu of offering lower monthly rates last year, other European – and maybe even American – carriers may soon follow suit.”

Think Twice Before Buying Apple Stock
Now, even if the developments above only cause short-term, kneejerk reactions among investors, that doesn’t mean you should consider the recent pullback in Apple’s share price as a buying opportunity.
Undervalued or not, there are better ways to invest that could churn out faster gains in the months ahead.
As Wall Street Daily’s Chief Investment Strategist, Louis Basenese, pointed out to me this morning…
“If Apple’s ascent continues unchecked, it will be worth more than the market cap of all the publicly traded companies in Spain, Portugal and Greece combined! That alone should be a reason to pause when considering putting new money to work in the stock.

“If I had $50,000 to invest today, I’d rather bet on the thousands of companies in those down-trodden European nations (via ETFs) over putting all that money into Apple. No one can argue my downside would be much more limited, while my upside would be almost unlimited.”

Take heed.
Good investing,
Justin Fritz
http://www.wallstreetdaily.com
source: http://www.wallstreetdaily.com/2012/04/17/apples-dip-doesnt-signal-buying-opportunity-aapl/

Apple Watch: To Buy or Short Apple, that is the question

Tue, Apr 24th, 2012   

By Louis Basenese for Wall Street Daily
http://www.wallstreetdaily.com

Are you ready? The biggest earnings announcement of the week hits after the bell today.
I’m talking about none other than Apple’s (Nasdaq: AAPL), the world’s largest company and the market’s most widely held stock. Analysts expect Apple to report a 56% increase in quarterly profits to $9.96 per share. And sales are expected to jump 49% to $36.7 billion, according to Bloomberg data.
Of course, expectations mean nothing when it comes to Apple.

As The Wall Street Journal puts it, “The company has a history of under-predicting and blowing out the Street.” That’s no exaggeration, either. Take last quarter, for instance. Apple topped profit expectations by a whopping 36.5%. Meanwhile, the average company in the S&P 500 Index only beat expectations by 3.7%.
And over the last 25 quarters, Apple’s only missed earnings expectations once, according to Bespoke Investment Group.

Given its history of surprising so strongly to the upside – and the stock’s 11% pullback from its intraday high on April 10 – does that mean today represents a last-minute buying opportunity?
I wouldn’t be so quick to pull the trigger. Here’s why…

Even Apple Can’t Defy the Golden Rule
In the 17th century, Swiss mathematician, Jacob Bernoulli, proved that a variable reverts to a mean over a large sample of results. Applied to stocks, Bernoulli’s Law means that a company experiencing high earnings growth and a rapid rise in share price is destined to experience a slowdown, as the company grows ever larger. Don’t believe it? Consider the track record of these previous titleholders of “The World’s Largest Company”…

• In March 2000, Cisco Systems (Nasdaq: CSCO) hit a market capitalization of $557 billion. Fast-forward to today and its market cap is just $106 billion.

• In early 2002, Microsoft (Nasdaq: MSFT) ruled the world with a market cap of $276 billion. Today, it stands at $270 billion. So not counting dividends, shares have essentially treaded water for a decade.

• In 2005, General Electric (NYSE: GE) earned the top spot with a market cap of $370 billion. Now its market cap is $202 billion.

• And at the end of 2006, Exxon Mobil (NYSE: XOM) earned the title of the world’s largest company with a market cap of $447 billion. Today, its market cap is down to $402 billion.

Even a recent analysis by Eric Swarts of Market Anthropology underscores the unfortunate fate of the world’s largest companies. He found the companies “certainly did not go bust… Their valuations simply matured and loss the enormous momentum drive that propelled them to unsustainable growth trajectories.”
So betting on Apple now is betting it will be an exception. In other words, the odds aren’t in our favor. Especially when you start to dig into the actual numbers.

At its current size, Apple is almost worth the same as the roughly 500 publicly traded companies in Spain, Portugal and Greece, combined. As of April 10, the company’s market cap stood at $586 billion versus $590 billion for the debt-laden European countries, according to Bloomberg.



If Apple’s share price rallies an average of 46.6% per year for the next decade – like it did over the last 10 years – its market cap would balloon to $24 trillion by 2022. That would roughly be equivalent to the size of the entire U.S. and Chinese economies in 2011, combined!
As Robert Chira, an analyst at Evercore Partners, says, “If you extrapolate far enough out into the future, to sustain that growth Apple would have to sell an iPhone to every man, woman, child, animal and rock on the planet.”

That’s not likely. So neither is it likely that Apple’s stock price is going to keep charging higher, unabated. Especially in light of the other red flag the market’s waving…

Apple: Not a Buy At Any Price
Normally, companies that are growing at a faster clip than what’s average command a premium valuation. Apple definitely qualifies. In 2011, it increased sales and earnings by 68% and 96%, respectively.
The only problem? The stock’s not trading at a premium to the market. It’s trading at a discount.
At current prices, Apple trades for about 11.5 times forward earnings. That compares to 13.8 times for the S&P 500 Index, according to Morningstar.com.

Of course, analysts are trumpeting the fact shares are “cheap” as a justification for standing behind their “Buy” ratings. To me, though, the valuation disconnect is an obvious warning sign.

One Miss Away From the Gutter
It’d be unfair to label Apple a one-hit wonder. Even if its introduction of the iPhone stands alone as “arguably the single most important technological advance so far in the 21st century,” in the words of The New York Times.

But it’s perfectly fair to label the company a two-hit wonder. Without the iPhone and the iPad, Apple is irrelevant.

The two products now account for about 65% of revenue. And without them, Apple’s impressive sales growth of 16%, 56% and 69% in fiscal 2009, 2010 and 2011 plummets to -3%, 12% and 8%, respectively.



My point? If Apple doesn’t continue to introduce new product categories – and instantly dominate the market – its stock is destined to fail. It can’t keep growing at its current breakneck pace on the backs of the iPhone and iPad alone.

I’m sure the visionary Steve Jobs left the company locked and loaded with a few ideas before his premature death. Buying Apple now, though, is a bet that the new CEO, Tim Cook, can execute on those ideas… and that he can come up with a few more of his own.

Bottom line: Wall Street is head over heels in love with Apple. Out of 56 analysts covering the stock, only one rates it a “Sell.” But the contrarian in me views such universal enthusiasm as a warning sign.
Add in the track record of previous holders of the title of “The World’s Largest Company” and it only solidifies my conviction. An investment in Apple right now carries much more downside risk than upside reward potential.

Source: http://www.wallstreetdaily.com/2012/04/24/is-apple-really-a-buy/

What's Next for Apple (NASDAQ:AAPL)?

April 23, 2012

By William Patalon III, Executive Editor, Money Morning

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.

First and foremost (Question No. 1), Keith said he expects the near-term volatility in Apple's stock to continue.

That doesn't mean you can't make money right now (the issue I raised in Question No. 2). Keith said he's watching for new opportunities to "short" the stock and generate additional profits for Strike Force subscribers.

"Everyone's been focusing on the drop in the share price, and are worried that carriers may cut subsidies for both iPhone and iPad users - which would naturally erode overall corporate profits," Keith told me. "But the bigger story is going to be played out when Apple releases its earnings [tomorrow]. I think Apple is going to miss on key sales figures related to the iPad. If they do, it's likely to spark multiple downgrades in the weeks ahead, leading to a downside "snowball effect' as the stock corrects further" - and allowing the "shorts" to profit.

Don't think for a minute that the volatile stretch Keith is expecting will finish his interest in Apple's shares: He says the long-term outlook for this company (Question No. 3) is excellent. That's why - if the stock drops far enough, and seems to find support - Keith will look for an opportunity to turn around and become a buyer.

"If I get a sense that there's a point we can step into the fray, we'll be buying," Keith told me. "Even as we speak, institutional traders are looking to short the stock and pound the price down even more. Here's the funny thing about that: Their goal is the same as ours - to get in at a much lower price before riding the stock up to $1,000 a share. I expect that this process could take a quarter or two - but when the opportunity presents itself, you can bet that I'll act quickly."

When Keith senses that it's time to buy Apple again, it's my guess he'll nail that one, too.

source: http://moneymorning.com/2012/04/23/he-predicted-the-apple-nasdaq-aapl-sell-off-heres-whats-next/

Why Google Android Can't Compete With Apple's iPhone

April 4, 2012

By David Zeiler, Associate Editor, Money Morning

http://moneymorning.com/2012/04/04/why-google-android-cant-compete-with-apples-iphone/

There's an inherent flaw in Google Inc.'s (Nasdaq: GOOG) Android operating system. The flaw isn't a technical glitch. In fact, most agree that Google's Android is a first-rate mobile operating system that has gotten better with each update. Some even prefer it to Apple's iOS. It's not adoption either. According to recent data from Nielsen, Android's U.S. market share among smartphones has reached 48%, compared to 32.1% for Apple's iPhone. And Google says it has activated more than 300 million Android devices.

The problem is partly the result of Google Android's overall success. The biggest flaw is fragmentation and it will be what prevents Google from defeating Apple Inc.'s (Nasdaq: AAPL) iPhone in the mobile computing wars. There are simply too many versions of Android running on too many (over 1,400) different pieces of hardware. And the issue gets worse with each new version of Android, as older devices are rarely updated.

That's a huge problem for Android developers, who need to write apps that will work on a bewildering array of possible configurations. And it's starting to have an impact. According to Appcelerator's most recent quarterly survey of developers, interest in writing apps for Android phones fell 4.7 percentage points to 78.6%, and interest in writing apps for Android tablets fell 2.2 percentage points to 65.9%.

By comparison, 89% of developers were interested in writing apps for Apple's iOS, a number that has remained steady. "Massive platform fragmentation is a big reason that we're seeing this decline in interest," Mike King, Appcelerator's principal mobile strategist, told Network World. "If you look at all the other numbers such as Android smartphone market share it's on the upswing, but for app developers it's a real challenge."

It's a headache iOS developers don't share. Most Apple customers stay current with the latest version of iOS. And because Apple makes all the hardware, limited to just a handful of models, it's much easier to write an app that runs on nearly all of the millions of iPhones, iPod Touches and iPads in use.

Google Android Users Not Big Spenders

Making matters worse for developers is that Android users tend to spend less money on apps than owners of Apple devices. According to a report last year by Piper Jaffray's Gene Munster, the Google Android Market (recently renamed Google Play) generated just 7% of the revenue of Apple's iTunes App Store.
Munster estimated that in terms of dollars spent on mobile computing apps, Apple has an 85%-90% share. He expects Apple's dominance of app revenue to remain over 70% for the next three to four years.

Some defenders of the Android market claim Munster's methodology is flawed. They point out that Android apps, unlike iOS apps, are sold in multiple online stores. But that, too, creates issues for developers, who need to make sure they cover all their distribution bases with each release. Put it all together and it means Android developers need to put in more effort while making less money than iOS developers. And it's driven at least one developer to throw in the towel.

"Our Android apps aren't making money," wrote Mika Mobile, creator of such games as Zombieville USA and Battleheart, in a March 9 blog post. "Android sales amounted to around 5% of our revenue for the year, and continues to shrink. Needless to say, this ratio is unsustainable." Much of the money Mika Mobile's Android sales did generate got swallowed up by extra development costs - time spent tweaking apps to work properly on the proliferating combinations of new hardware and versions of Android.

One more thing: The lower Android app sales have pushed prices in the Android Market higher. A recent survey by Canalys showed the average cost per app for the top 100 offerings in the Android Market was $3.74, but just $1.47 for the top 100 in the iTunes App Store. The higher prices tend to further discourage buying, which in turn helps keep the prices high.

Hitting Google Android in the Apps

Despite is successes, Google needs to do something about Android's fragmentation to keep its developers from jumping ship. Google needs to make sure the developers can make money. Disenchantment on the part of many Android developers could result in a falling number of quality apps and increasing compatibility issues as older apps are no longer updated.

"Developers go where the money is. End users go where the apps are. Developers create apps where users are," writes veteran tech pundit Joe Wilcox in an article called "iPhone is Unstoppable."

Wilcox theorizes that Apple's ecosystem will be difficult to disrupt. Google will need to fix its fragmentation issues quickly to avoid the fate that Apple's Mac platform suffered in an earlier OS War. "In the 1990s, Microsoft sought to achieve a "standard' platform for developers and succeeded with Windows. Apple is quickly doing the same around iOS, iPhone and iPad," Wilcox said.

The Windows Wild Card

Speaking of Microsoft Corp. (Nasdaq: MSFT), its plans for Windows 8 gives Google something else to worry about in the mobile computing space. Microsoft, until now left on the mobile computing sidelines, will aggressively market Windows 8. And it will likely do a better job of preventing the sort of fragmentation that's stinging Android.

A wave of Windows 8 tablets and smartphones arriving in the fall no doubt will end up competing for the same cost-conscious customers that have been buying Android-powered devices. With only about 70,000 apps, the Windows Phone Marketplace is far behind the leaders, (which have over 500,000 apps each) but Microsoft plans to woo developers in an effort to catch up.

Microsoft and hardware partner Nokia Corporation (NYSE ADR: NOK) announced just last week they'd jointly invest in a $23.9 million mobile app development program over the next three years. Should Windows 8 get traction in the mobile computing market - and history shows that Microsoft is nothing if not persistent - it could further undermine Android. Still, Android isn't going anywhere. It's certainly not in danger of disappearing. But neither is it going to race to dominance, as some predicted last year.  Ultimately, Android's status in the mobile computing market largely depends on how seriously Google and its hardware partners take the fragmentation problem.

"Android is not facing an imminent crisis amongst developers," writes Jeff Duncan for Digital Trends.com. "But, looking out over the next two years, Android (and Google) are clearly going to have to move application development and revenue generation to the same priority level as [hardware] adoption and device activations, or face a stagnating software and content ecosystem."