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| 2012-01-25 08:43 |
APPLE AND SOUR GRAPES
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I watched the State of the Union address and thought it was flat; in spite of polite interruptions, there wasn't
any passion. Sure, President Obama tried to muster up emotion and that typical crescendo, but even for stuff he really believes in I found it wanting.
Of course media types from all stripes called it great and magnetic, but it was like Michael Jordan scoring 23 points in his prime when scoring
anything under 33 points would have been considered an off night. If Jordan's team won then his performance could be overlooked. I think America lost
last night, and it remains to be seen of Mr. Obama won; we'll know in November. By the way did anyone catch what is the state of the union or is it
just a rhetoric title these days?
Overnight there were other things happening that serve as real life examples on what works and what doesn't
work.
Apple blew them away again. I remember ridiculing the iPhone 4S as a half-baked excuse for not having the iPhone 5 ready, but it's
proven to be one of the most popular devices in the history of mankind. In all, the company's revenues soared 74% to $46.3 billion, beating consensus
of $38.76 billion while profits clocked in at $13.1 billion crushing the consensus estimate of $10.07 billion. The stats are simply
mindboggling.
iPad sales up 111% to 15.43 million - consensus estimate 13.2 million
iPhones up 128% to 37.04 million - consensus estimate
30.2 million (some thought 34m+)
Mac sold 5.2 million - consensus estimate 5.0 million
Apple's gross margin surged to 44.7%, well above
estimates that ranged from 38% to 42% as the average selling price of the iPhone was $660.0. Apple now sells in 90 countries through 110,000 locations
as international sales made up 58% of total company revenue. Apple is sitting on more than $97.0 billion of cash. This company is the poster child for
American innovation and how a great idea can become a great ... maybe the greatest, company. The company is entering new markets while we have pushed
off easy trade deals for years and have flimsy commerce arrangements with the rest of the world. Apple hires people around the world based on
economics and skill, and we are now going to punish companies that follow that path.
Apple is a cautious steward of money while America is now
$16.2 trillion in debt. There are so many lessons we can learn from Apple as a successful business, yet the administration is pushing policies that
are the exact opposite. We need to embrace greatness as a nation and stop with this whining about income inequality. The game plan of artificially
lowering income for skilled workers to artificially increase income of unskilled workers promotes mediocrity. I heard nothing last night about
striving for true greatness.
As for the notion that we are all soldiers and must have each other's back, I work until 10 PM most nights. If 99% of
the population has already been home, knocked back a couple and voted for their favorite on American Idol then I'm in that foxhole alone. Let's be
real, we are connected as citizens and the best thing we could do is be our best selves and allow others to do the same. The SOTU was flat but still
made me sick. Lots of promises made, lots of threats made, lots of expenses proposed and lots of nonsense in general. It's a good thing Apple reported
before the SOTU; it was a reminder of America's greatness and the perfect example of resolve for continued greatness.
Apple v
Administration
Today Apple becomes the most valuable company on the planet based on market capitalization. But the company would have never
become without investment capital that is now under attack in this country. If you think taxing investment income at 30% will increase investments
you're not being logical.
If Obama's plan had been in place a few decades ago, some of today's great American businesses wouldn't be a reality
today.
Last night I interviewed Jim Clifton, CEO of Gallup and author of "The Coming Jobs War." He made the excellent point that we must
promote entrepreneurship even more than the notion of innovation in this country. Just think, without Gates, Jobs, Grove, Whitman, Zuckerberg, Brin
and Page there would be none of the magic from Microsoft, Apple, Intel, E-Bay, Facebook and Google. There is something special about entrepreneurs
that should be coaxed, nurtured, and encouraged. If we are to believe the rhetoric of the SOTU and this campaign season, government can replace
entrepreneurs and incubate the next great American business. It can't.
Sun Setting on Japan
While I've had this epiphany that the
administration's economic plans are based on fascist economic policies (Mussolini gave speeches that were not unlike last night's SOTU), we are also
mirroring the demise of Japan as a great world economic super power. The land of the rising sun posted its first annual trade deficit since 1980 as
exports in December dropped 8% from a year earlier while imports climbed 8.1%. The nation held to a plan of bailing out failed businesses, massive
debt and money printing and is now a slave to a cheap currency. Making matters worse, the kids, particularly young adult males, just don't have the
heart anymore to be great.
There are so many examples of how to dismantle greatness and many begin with somehow leveling playing fields and
attacking successful portions of a society.
Apple hires the best and the brightest, and they pay them very well. It is money earned for
success that is the envy of the world. America earned its greatness but now could destroy it because of envy and greed for power in the Executive
branch.
Outside of Apple and its long coattails the market is opening under pressure in part to disappointment in Boeing and other
mega-companies that have posted results. This looks to be another tug-of-war session but there is more pressure to cash out some chips so we aren't
going to force the issue this morning.
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Disclaimer: Securities Operations Forum is providing this research to assist investors in determining when to buy and when to sell. All investment decisions are yours and as a result you could make or lose money. Securities Operations Forum, its employees and/or its affiliates and family members may from time to time take positions in the open market or otherwise with respect to the securities discussed, but not have stock ownership equal to or greater than 1% of the outstanding stock of the covered company nor does any employee of Securities Operations Forum sit on the Board of Directors of any covered company. The statements made herein include information obtained from sources believed to be reliable, but no independent verification has been made and we do not guarantee its accuracy or completeness. The statements made herein contain general information and do not constitute an offer to buy or sell any security. |
