Finally I'm getting my IPad!
It was almost a year ago when I said to members on Dec 30th: "AAPL just announced a deal to do Ebooks on IPhones and ITouch and that is the intermediate step towards the IPad, which should be a 2-3x size version of the IPhone that takes the place of a Kindle or a laptop or a notepad or…"
At the time AAPL was trading at a paltry $86 a share and we were BUYBUYBUYing. The context of that chat comment was AAPL had been under attack on the Steve Jobs health concerns and Jim Cramer was "fomenting" a rumor that AAPL was going to issue a warning on Q4, which I referred to as "typical pre-holiday BS…. Day before a holiday, little chance of getting a confirmation or denial from AAPL as key execs aren’t reachable." As AAPL continued to fall, we continued to buy because IT DID NOT CHANGE OUR FUNDAMENTAL OUTLOOK ON THE COMPANY. I went on to say:
Notice the timing of this article that hit the Mac Daily News at 12:09, just ahead of the rumors. This way, the hyenas who plant the rumors cause GOOG to bring up a "legitimate" news story concerning Jobs’ health to make the whole thing seem legitimate. Don’t forget MacWorld is next week and these attacks often occur ahead of AAPL events.
Here’s some real news on AAPL, IPhone browser share jumped 36% Christmas week. 57% of all mobile browser requests came from IPhones, up from 42% the week before Xmas so either a lot of people opened up IPhones under the tree or they are just so darn usesful that people who are home for the holidays use their IPhone like a computer.
If you want the real lowdown on the Cramer conspiracy, don't take my word for it, Apple Insider got the goods on him by March 13th of this year but, by then Apple was back at $95 and on it's way back to $170 already. As fundamental investors, you just have to know when to put your foot down! Apple Insider is a great read but here is the part you MUST know if you want to understand why we love to go against what the Crookmeister General says to his sheeple on TV. This is a great view of how the guy "who just wants to educate you" really operates:
Following the original iPhone pre-launch rumors Cramer talked about in The Street video clip, his site continued a merciless attack on the iPhone over the next year, including a "report" by Brett Arends which claimed that buying the iPhone would actually cost users $17,670, followed up by Arends' lists of reason not to buy it, many provided directly by industry flacks working for competing companies. (Brett has denied this claim by Apple Insider – see his comments below).
Cramer himself floated a false story immediately after the iPhone's launch that Apple's wireless partner Cingular (later renamed as AT&T) would provide a year and a half of free mobile service for the iPhone. The story was picked up by blogs and widely publicized on syndication sites like Digg. A myth busting report on the scam noted, "Saying that Cingular will give away $1440 worth of free service to perhaps ten million subscribers in order to earn just $480 from them across two years is an insane prediction."
The Street's Scott Moritz also served as a willing accomplice in filing dubious reports aimed at nailing Apple's stock, including the idea that Apple's spectacular launch weekend was actually disappointing because the company had really intended to ship a million units within three days, citing unnamed "whisper" sources.
In reality, legitimate analysts had actually expected Apple to ship 150,000 to 350,000 iPhones at launch; Apple reported selling 270,000 in the last two days of June quarter which made up most of the launch weekend. However, Moritz described a bleak scenario where Apple had failed to sell out its inventory, despite very constrained availability of the iPhone at most of Apple's 200 retail stores and many of AT&T's outlets over the first month. Because of this supposed failure to launch, Moritz insisted, "There’s a lot of rejoicing at Sprint, Verizon and T-Mobile."
The Street would also frequently take factual reports and add a hysterical, frantically panicked spin, sometimes to directly bring the stock down and other times to create impossible expectations invented to cause a temporary bubble. One suggested that Apple's AT&T revenue sharing deal was "unheard of," despite the fact that similar revenue sharing had long been underlying RIM's BlackBerry success. That provided Cramer with the timing to announce "I am being abject and adamant: Sell some Apple ahead of earnings."
We knew Jobs was sick but that didn't take away from the fact that AAPL was a great company. 85% of the S&P 500 companies have survived the death or retirement of their founders and AAPL has been an innovator since it was founded in a garage in 1976 by 2 guys. Now it's a company with 32,000 employees and $35Bn in global sales (over $1M per employee!). As much as we do love and respect Steve Jobs, we also respect the organization he has built and don't see it as some house of cards that will collapse on his death. Panicking investors driving AAPL down to a p/e of 15 was a fantastic reason for us to jump in and buy back in December no matter what Cramer and his henchmen had to say about it.
So we are happy, happy AAPL owners and Piper Jaffray's Gene Munster thinks AAPL can sell 2M units of the IPad at $600 each to generate an additional $1.2Bn in revenues in 2010 and I think he's low. Also, it should be noted that we went with GLW back in December on the premise that millions of touch-screen IPads would use a lot of high-end glass – that was another big winner as they are up 77% since then and all we had to do is a little fundamental research to connect the dots!
Huge IPad discussion on TechMeme (thanks to YCharts for links) if you want to follow up:.
Kara Swisher / BoomTown: The Jesus Tablet Will Walk on Water and Turn Fishes Into Moneyinternetnews.com: Apple Touchscreen ‘iPad’ Could Take on Netbooks Eric Slivka / MacRumors: New Analyst Mockup and Sales Estimates for Apple’s TabletThe Mac Observer: Analyst: Apple Tablet Worth $1.2 Billion Derek Thompson / The Atlantic Business Channel: Apple Tablet: Super E-Reader or Super Mini-Computer?
Brett Arends response to above quote from Apple insider (via Email):
I think it was Mark Twain who once said a lie can make it half way round the world before the truth has put on its running shoes. I am sorry to see you are repeating, uncritically, the same nonsense about me that one or two Mac fanatics made up.
Every article I have ever written about the iPhone was correct. My 2007 "reasons I don't want an iPhone" was not only bang on the money, it was prescient: Apple set about fixing every one of the issues I identified. Oddly enough, the same Mac Fanatics who had insisted the issues were non-existent when I identified them then hailed Steve Jobs as a genius for fixing them.
I have never been given any talking points on Apple from industry rivals, competitors, or flacks. The idea is ridiculous. Your sources say I have been "fed" information by people I have never heard of. I do my own research.
Oh, and if I were part of some anti-Apple conspiracy there must be a reason why I was recommending the stock when it was at the lows last Christmas. Double bluff, perhaps?
I want to assure Mr. Arends I do work very hard to check facts. He did not send us links to confirm his side but we'll take his word for it. The article Brett is referring to was here at TheStreet.com but the article Apple Insider is referring to in my quote is the one on the right. I did Google this great article by Dan Dilger called "The Street's Flaccid Campaign Against the IPhone" from July,2007 that had this classically altered photo of Brett (sorry Brett but it's too funny not to print now that we're devoting a whole section to you). You will notice the ridiculous, sensationalistic title, which is typical of a Street.con hack job, that I must say sort of threw me off the track of thinking maybe Brett is just misunderstood and needs his name cleared. When I did do my fact checking on that sentence, I do admit that I came up with such a mind-numbing amount of hits villifying him that I didn't put in a lot of effort to find alternate versions of the story that would put him in a better light.
I think after checking into Brett and seeing "Who's paying Brett Araneds to malign Apple" as well as reading Brett's July 2007 article in the WSJ titled: "Despite Profits, Apple Is No Investment Opportunity" (which was not so wrong 18 months later, in Dec of 2008, but did miss quite a run from $120 in July 2007 to $200 that December (66%) and is, of course, wrong again now), that I sort of ran out of fact-checking gas on this issue and for that I apologize to Brett. Clearly he did learn his lesson by December 2008, when he not only recommended the stock in the WSJ but also went out and bought himself a Mac – talk about a conversion! Brett's recent article have me a little confused like this one from July 27th and I can relate to getting attacked for my views as I still have scars from my own criticisms of investment banks, oil speculators, market manipulators, FSRL, TSO, RIMM and anything to do with Jim Cramer…
Speaking of Cramer, I only want to say to Mr. Arends that if you are going to be accepting checks from a guy like Cramer who is on videotape gleefully telling people how he used to manipulate the markets and gives would be manipulators instructions on how to start rumors just to make stocks go up and down for his personal profit – that it is always going to be possible to have your noble motives questioned, even when you insist: "I have never been given any talking points on Apple from industry rivals, competitors, or flacks."
Brett should keep in mind that Mark Twain also said:
It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so.