Samsung's woes

Samsung to Permanently Discontinue Galaxy Note 7 Smartphone - Move halts production and sale of defective premium phone; investors digest possibility smartphone giant could abandon Galaxy Note series

Images above: screen shots of stock quotes. Screen shot from CNET article

Updated: Screen shots from Daily Mail articles:

The Link to the Burger King article

Update w more:  Samsung Galaxy Note 7 flames out: Experts react

To fight this image, Samsung has announced a permanent stop to the production of the Note 7, following a temporary stop earlier. This gives it room to redesign a brand new product.

But this will only add to Samsung's woes. It will be viewed as panic in the boardroom.

A full recall of existing Notes as well as those yet unsold will be an environmental nightmare besides being economically challenging to the entire supply chain - despite the fact that the vast majority of these phones would have remained in full working order for their working lives.

No, like Volkswagen and its diesel emissions scandal, Samsung should have stuck it out with the Note 7 until the Note 8 became available.

It still has to identify and publicise what caused the phones to overheat if it is to recover its reputation.

And it could have offered free stress tests and compensation vouchers to Note 7 owners, and have convinced the airlines the vetted handsets were safe.

The engineers could have handled the technology problem - panicking was not the solution.

Fireproof boxes for returns

Why Apple is not interested in building cars!

Forget the rumor: Apple will never build cars

Excerpt:

Manufacturing cars — like, on an actual assembly line -- is an entirely different business, and an almost indisputably worse one than the business Apple is already in. Apple’s profit margin, for instance, is 22%. Its tightly controlled lineup of a few basic products generates phenomenal scale. Apple builds almost all of its products in China and other low-cost countries, where it doesn’t have to tangle with labor unions or western-style safety and environmental rules. Its products are lightly regulated consumer gizmos that are easy to ship and rarely need to be recalled.

Comment: Image source: Apple on wheels. Minivan.

An Apple fell on Finland - Steve Jobs took their jobs

Finland Blames Apple for Economic Problems

Excerpt:

On CNBC this morning, Finnish Prime Minister Alexander Stubb pointed to Apple as a major reason for the decline of the country’s largest export industries – paper and IT/mobile, and in particular, Apple’s effect on the outlook for cell phone maker Nokia. A former leader in the space, the company’s device and services business was officially acquired by Microsoft last spring. “Paradoxically, one could say that the iPhone killed Nokia and the iPad killed the paper industry, but we’ll make a comeback,” said Stubb. .. It’s not often that you see a single company blamed for the economic struggles of an entire country. But Stubb, who was installed as prime minister at the end of June, has put Apple in the scapegoat position before. In July, he remarked at a press conference in Stockholm, “Steve Jobs took our jobs, but this is beginning to change.” Last week, financial rating service Standard and Poor's downgraded Finland's sovereign debt rating to AA+ from AAA, bringing Stubbs opinions of Apple’s impact on the Finnish economic state once again to the fore.

Comment: And Henry Ford killed the buggy whip industry! (And the Internet (and email) killed the Post Office)

Carl Icahn: Apple the "modern day [technology] Secretariat"

Sale: Apple Shares at Half Price

Excerpt:

Apple’s ecosystem has come to play an important role in the daily life of Apple users, and while Apple continues to make impressive strides to improve it, the competition falls behind in what is arguably the most important race of this technological era. Analogizing Apple to a modern day Secretariat, as this race continues, the further the distance grows between Apple and Google (and Google’s hardware partners) in the premium device category. Its leading ecosystem of products and services, added to peerless hardware design and quality, differentiates Apple from a simple hardware company. And, with its users consistently upgrading to the newest version of iOS (92% of iOS devices, iPhones and iPads, on iOS 7 prior to the launch of iOS 8), Apple is able to offer its users the most up to date software and service experience, while Android can’t because it’s hindered by relatively high fragmentation among its operating system versions. App developers appreciate the difference, which is why they often choose to make an App for iOS prior to (or instead of) Android. During a recent interview, you referred to Google and only Google as your competition, as no other operating system can gain enough scale in Apps to be relevant. Furthermore, you also described how, in contrast to Apple, Google’s business model relies on advertising, which will increasingly expose products that run Android to serious privacy concerns. Considering all of this, combined with their inability to merge a superior brand, hardware, software, services, fashion and retail stores, Google and its hardware partners will remain disadvantaged in the premium device market. As this is realized, we expect that Apple will gain market share, that those gains will translate into earnings growth in line with our forecasts, and in turn translate into multiple expansion.

Comment: Agreed. We are long on Apple. Icahn image source from Amazon.  Secretariat image source. I imagine in the image above that Secretariat is looking back at Microsoft, Google, IBM, and others!

How Major Tech Firms Failed to Appreciate the iPhone's Potential

Apple competitors still smarting from iPhone blow

Excerpt:

Back in January 2007, when Jobs first showed the new device, he pitched it as a combination phone, music player and Internet communicator. But competitors including Microsoft's (MSFT) then-CEO Steve Ballmer and Motorola's former CEO Ed Zander could barely contain their disdain. "There's no chance that the iPhone is going to get any significant market share," Ballmer said of the lineup that has since sold more than 500 million devices.

Comment: Image source .... one of many in Apple IPhone's history in pictures. I was an early crtic of the IPad ... now I've had one for 3 years. I was critical of the costs of smart phone connectivity. Today I have an IPhone with me at all times (and pay nearly $ 100 a month for that connectivity). I hardly use it as a phone ... mostly as: a computer, and a navigation device. Not so much as a camera either. My next one will probably be an IPhone 7 (skipping the 6)

Bad Day at Black[berry] Rock

Did Apple and IBM just kill BlackBerry?

Excerpt:

Apple (AAPL) and IBM (IBM) announced a partnership that will let Big Blue offer souped-up iPhones and IPads to corporate customers. Shares of BlackBerry (BBRY) plunged nearly 12% Wednesday on the news

Comment: Image Source. What I've learned about Blackberry at work: workers don't want them! When I replaced my company phone this year, I was offered (and it was pushed hard!) a Blackberry. I took a dumb phone instead. Upper execs have IPhones. I use my own personal IPhone for business calls when out of office.

The Apple stock split and even lot trading

Who Cares What Apple's Stock Price Is?
Excerpt:

... if the split doesn't have any economic impact, why bother? I've seen two explanations. One is that doing this will probably get Apple included in the Dow Jones Industrial Average.

Who cares about round lots? Historically, "trading commissions for odd lots are generally higher on a percentage basis than those for standard lots," and I suppose someone somewhere is still being charged extra to trade odd lots. But in the real world, it costs $9.99 to trade one or six or 100 or 10,000 shares of any stock; that is the price to trade stock, it has nothing to do with lots.4 Your cost to buy 100 shares of New Apple for $8,000 is the same as your cost to buy 14 shares of Old Apple for $8,000: $8,009.99. But round lots do matter, for market structure reasons. Odd lots -- orders of fewer than 100 shares -- are treated differently under the Securities and Exchange Commission's national market rules. They are not part of the national best bid or offer, and are not "protected orders" under Regulation NMS ...

The higher the dollar price of a stock, the more odd-lot trades there will be, and the wider the spread will be.8 So high dollar prices pretty directly take money from investors and give it to high-frequency traders. Now, like so many of the concerns that people have with high-frequency trading, this is a pure issue of market structure. The SEC could solve it in various ways, perhaps by getting rid of Regulation NMS entirely, or more simply by "protecting" odd lots. This recent BlackRock white paper calls for the latter solution

Comment: Interesting. Most of my trades are odd-lots. Image source

Sliced Apple - 7 to 1 Stock Split

Apple expands buybacks by $30 billion, OKs seven-for-one stock split

Apple Expands Capital Return Program to Over $130 Billion - Board of Directors also Approves Seven-for-One Stock Split

Excerpt:

The Board of Directors has also announced a seven-for-one stock split. Each Apple shareholder of record at the close of business on June 2, 2014 will receive six additional shares for every share held on the record date, and trading will begin on a split-adjusted basis on June 9, 2014.

Comment: Kathee to me ... "Well now we can maybe get to 100" (We have 11 pre-split shares). Image source. Investors happy ... see aftermarket trading below (Up $ 41):

Apple's "ITax": "[It] isn't alchemy; it's accountancy"

Apple’s Right, Corporate Income Tax Should Be Killed: Pulitzer Prize-Winnng Tax Expert

Excerpt:

Many economists and tax experts, and of course CEOs, have pushed for more drastic change – like eliminating the corporate income tax altogether.

 “I think it would make the system much simpler,” says Pulitzer Prize-winning tax expert David Cay Johnston. He spoke to The Daily Ticker's Aaron Task and Henry Blodget as Cook went head-to-head with Congress.

Johnston says killing the corporate income tax outright would immediately spur growth, investment and hiring. Plus, eliminating the tax would reduce the number of tax loopholes and make a lot of the corporate lobbying in DC moot. One proponent of far-reaching tax reform is Sen. Rand Paul, R-Ky. The anti-tax hawk – and tea party favorite – told the Senate subcommittee to apologize to Cook and Apple executives.

"If anyone should be on trial here it should be Congress ... for creating a bizarre and byzantine tax code," said Paul. "If you want to assign blame, this committee needs to look in the mirror and see who created that mess." That “mess” is still the tax law of the land. If Cook’s reform efforts gain steam, maybe they could call it the iTax.

The Apple Tax Diversion - Senators beat up a U.S. success for following the tax laws they wrote.

Excerpt:

Mr. Levin unveiled the results of his months-long investigation into Apple's corporate taxes and accused the American business success of employing "alchemy" and "gimmickry" to lower its tax bill. What Mr. Levin did not do was present any evidence of anything illegal or even inappropriate. He did prove that Apple has smart accountants and tax lawyers.

Mr. Levin is outraged that Apple subsidiaries in Ireland pay little or no corporate income tax on profits generated from Apple's international sales. Ireland has a laudably low corporate tax rate of 12.5% to attract jobs and capital, but it turns out that for certain corporations controlled by entities outside Ireland, the deal gets better.

The Apple units are based in Ireland, so U.S. law does not consider them to be U.S. corporations subject to U.S. corporate tax. But since they are managed and controlled by Apple in the U.S., Irish law doesn't consider them Irish companies and thus they are also not subject to the 12.5% Irish corporate tax. This isn't alchemy; it's accountancy. 

...... None of this required a Senate "investigation" to discover because Apple is constantly inspected by the IRS and other tax authorities. These tax collectors are well aware of Apple's corporate structure, which has remained essentially the same since 1980. An Apple executive said Tuesday that the company's annual U.S. tax return adds up to a stack of paperwork more than two feet high.

We wonder what the Irish think of the spectacle of an American Senator expressing outrage that an American company doesn't pay enough Irish taxes. As Wisconsin Republican Ron Johnson pointed out on Tuesday, Americans are better off when U.S. companies pay less in taxes to foreign governments.

That includes Americans who are invested in Apple through their mutual and pension funds. And it includes Apple's U.S. workers who benefit when the company is able to sell more iPhones and iPads overseas. Roughly 50,000 of Apple's 75,000 employees are in the U.S.

It's also amazing to behold Democrats who routinely claim that high tax rates don't matter to business behavior denouncing a business for engaging in behavior to avoid paying higher tax rates. Which brings us to the real scandal that Mr. Levin has exposed: the folly of America's corporate tax code.

Comment: The Facts:

• Congress made the tax code complex. It is complex for individuals and it is manyfold more complex for corporations!
• Has Apple broken the law? Nope! They have followed the law and explored all the loopholes available to them. I do that when I pay taxes. I minimize every tax by taking every deduction!
• The complexities introduce many inefficiencies into the economy: Accountants, Auditors, Agents, Lobbyists, et cetera. 
• All corporate income taxes are passed invisibly onto consumers. 

Apple tanks - Check out Afterhours!

Apple Plunges $50 On Short Revenue -- Bye Bye Cook, Hello Ivey
Excerpt:

Apple (AAPL) reported financial results after Wednesday’s market close that fell short of expectations. In after-hours trading the stock is down $32. And this raises questions about whether Apple, under its former supply chain guru, has lost its ability to innovate.

Comment: Glad I just have 1 share! Better Times

The Future is Apple

Windows Users Jumping Ship to Apple: Survey

Excerpt:

Anti-virus company Avast conducted a survey of Windows-based PC users the day before Windows 8 was released. The results were devastating for Microsoft (MSFT) and non-Apple PC makers. They were excellent, meanwhile, for Apple (AAPL). ...

• The survey covered 135,000 Windows users split across three versions of the operating system: Windows 7, Windows Vista, and Windows XP.
• Only a very small percentage of users--9%--said they were going to accelerate a purchase of a new computer because of Windows 8.
• Overall, 16% of those surveyed said they planned to buy a new computer 
• Of these folks, a staggering 42% said they plan to buy an Apple product--either a Mac or an iPad.
• Most of the Apple buyers (30% of the total buyers) planned to buy an iPad, suggesting that some of these planned purchases are motivated by the desire to buy a tablet. (Maybe Microsoft can save some of these with strong sales of the Surface.)
• The rest of the switchers, 12%, planned to buy a Mac.

Comment: My company will be skipping Windows 8. Image source.

IPhone 5 madness, Apple and the Dow Jones Industrial Average

First of all I wish I had more than one measly share of Apple. But I have one! (Kathee bought it for me for my birthday). News today that Apple hits it's record high. I suspect it will go higher. There's a link between the news of Apple's record high and the IPhone 5: Apple stops taking iPhone 5 orders after less than 8 hours, suggesting feverish demand.

 Jim Peet and the IPhone: I wish I had one. But I cannot justify it to myself for several reasons: 1.) I don't need it; 2.) I have a dumb flip phone provided by the company and it meets my needs (I'm not a talkative person!); 3.) And I am Mr. Frugal right now.

 My take on the IPhone 5 is that there is no competing device close to touching it. Not RIM (Blackberry)! Not Nokia (Windows 8)! Not an Android device (but close 2nd).

 And my take on Apple is that at $ 700 it is still a reasonably priced stock. Why I don't have more Apple? Elementary: I can't afford it.

 Now the other Apple news is that someone has calculated that the Dow would be above 15,000 if Apple had been added to the Dow in 2009.

 Now the Dow news: UnitedHealth to replace Kraft in Dow 30. Here's the press release:

 Excerpt:

The index change was prompted by Kraft Foods’ plan to spin-off its North American grocery business, to be named Kraft Foods Group, Inc. on Oct. 1, 2012. Following the spin-off, Kraft Foods Inc. will be renamed Mondelez International, Inc. The Dow Jones Averages Index Committee believes that Mondelez’s reduced market capitalization and projected lower percentage of revenue generated from the U.S. makes the company less representative of the U.S. Large Cap market space.

UnitedHealth Group, headquartered in Minnetonka, MN, is a diversified health care services company that provides health care coverage and benefits services to tens of millions of individuals across the U.S., and information and technology-enabled health services.

The Index Committee believes the addition of UnitedHealth Group brings added health care diversification to the Dow Jones Industrial Average, and reflects the growing importance of health care spending in the U.S. economy. The changes won’t cause any disruption in the level of the Index. The divisor used to calculate the DJIA from its components’ prices on their respective home exchanges will be changed prior to the opening on September 24. This procedure prevents any distortion in the DJIA’s reflection of the U.S. stock market.

Comment: In my own view the S&P 500 index is a more valuable indicator of the US stock market. It's not often cited but should be. Another valuable index is the Nasdaq Composite. A good way to invest in the NASDAQ is the PowerShares QQQ™. It is formerly known as "QQQ" or the "NASDAQ- 100 Index Tracking Stock®", is an exchange-traded fund based on the Nasdaq-100 Index®. QQQ is a way to buy Apple because Apple makes up 20% of the QQQ. More on the QQQ holdings here:

SPY (also known as SPDR S&P 500 ETF) is the easiest way to invest in the S & P 500.

Some people want an IPhone

iPhone 5, Dividend Payout Will Keep Investors Buying Apple

Excerpt:

Apple (AAPL) is testing April highs today on news that the soon-to-be-released next generation iPhone is driving down prices of the iPhone 4S at several national retailers. Investors, however, have not been scared off by the high share price and are buying in anyway, so Breakout welcomed Brian Sozzi, chief equities analyst at NBG Productions, and asked if there is anything that will frighten them out of the stock.

"I can see a world where you can just continue to buy the stock," says Sozzi, "because you got that dividend check. You're gonna want to go buy more Apple in front of key product launches. The stock could just continue to go higher."

Breakout's Jeff Macke argues that there was nothing wrong with what Apple was doing pre-dividend and "for the first time in their life they actually need cash to develop new product, and they're giving it to me" instead.

Comment: Saturday Kathee asked me what I wanted for my birthday ... I said 1 share of AAPL. I'm happy with the dumb simple one function (make and receive calls) phone that my company has provided me. When I retire, I'm going to have a dumb phone. I don't want to pay for the Smartphone dataplan. I don't need to be that connected.

Cisco vs Apple

Why Cisco is a Better Bet Than Apple

Excerpts:

Over the last year, Cisco's stock has fallen by more than 30%. Apple's, in contrast, has risen more than 50% — breaking the $400 barrier, in fact, in after-hours trading Tuesday following its earnings report.

Maybe the better headline would be "The Beauty and the Beast."

... glamour stocks that are as popular as Apple's is today more often than not underperform out-of-favor stocks that are as unpopular as Cisco's.

This does not mean that Cisco's earnings or sales will necessarily grow at a faster pace over the next couple of years than Apple's. On the contrary, the historical pattern is for glamour stocks' earnings and sales to continue growing faster than those of out-of-favor companies like Cisco.

The reason to nevertheless bet on Cisco is that it's unlikely to grow as slowly as its depressed stock price is discounting, while Apple is unlikely to grow as fast as the market is assuming.

Comment: AAPL / CSCO

One problem I have with Apple is the absolute cost. 10 shares would be almost $ 4000!

Byte into an Apple

Remembering 1977 With The First (Apple I) Apple Ad!

Comment: Re comment on previous post .... here's the first Apple ad.

Steve Jobs on Flash

Jobs Attacks Flash As Unfit for iPhone

Excerpts:

"Flash was created during the PC era—for PCs and mice," said Mr. Jobs in the note published Thursday. "The mobile era is about low power devices, touch interfaces and open Web standards—all areas where Flash falls short."

...

Some market watchers took issue with the points raised in Mr. Jobs' essay Thursday. "I think he's a real good spin doctor," said Jeffrey Hammond, an analyst at Forrester Research. Yes, Flash is targeted by hackers, but that's because the technology is so common, he said.

Other points raised by Mr. Jobs are just wrong, Mr. Hammond said. HTML5 is a promising technology, but "not ready for prime time yet," and Flash is as close to open as a proprietary technology can be. It's Apple, Mr. Hammond argued, that has the closed system, including the right to block any app from its store.

Dave Wolf, vice president of strategy at Cynergy Systems Inc., a Washington, D.C., design firm, calls Apple's no-Flash policy "a pain." Mr. Wolf had planned to build mobile apps for clients using the new Adobe software; the apps cost upwards of $40,000 a piece, meaning that without such a tool most customers can only afford to build apps for one device. They almost always choose the iPhone, said Mr. Wolf.

Full Essay: Thoughts on Flash

Comments: I am not a big fan of Flash or Acrobat Reader. They are constantly under hacker attack. I've never had my Mac crash with Flash. One wonders if Jobs has an agenda here! Thoughts?

That pesky Google (vs AT&T and Apple)

Is Google Voice a Threat to AT&T?

Excerpt:

In short, what Apple and AT&T have accomplished with their heavy-handed, Soviet information-control style is not to bury these useful apps. Instead, Apple/AT&T have elevated them to martyr status—and, in effect, thrown down a worldwide challenge to programmers everywhere.

"Get around THIS," they're saying.

But guess what? It won't take long. They've put a rock in the river, but the water will just find a way around it.

Already, Google says it is readying a replacement for the Google Voice app that will offer exactly the same features as the rejected app—except that it will take the form of a specialized, iPhone-shaped Web page. For all intents and purposes, it will behave exactly the same as the app would have; you can even install it as an icon on your Home screen.

What's Apple going to do now? Start blocking access to individual Web sites?

Comment: Liked this "They've put a rock in the river, but the water will just find a way around it."

Steve Jobs Macworld 2008 Keynote in 60 Seconds

Extraordinary! Great! Revolutionary!


"Being a Mac user is like being a Navy Seal: a small, elite group of people
with access to the most sophisticated technology in the world, whom
everyone calls on to get the really tough jobs done quickly and
efficiently."

Reviewed: Parallels Desktop for Mac

Breaking Down the Walls Between Mac OS X and Windows

From the Desk of David Pogue
Breaking Down the Walls Between Mac OS X and Windows
By DAVID POGUE
Published: June 7, 2007
David Pogue reviews a program that lets you run both Windows and Mac OS X at the same time on one computer.

Excerpt:

Shared Networking. I love this one a lot. In Parallels 3.0, Windows "hides" behind the Mac's networking; it's completely invisible to hacks, pings and bots on the Internet looking to infect you. Your "Windows PC" is therefore much less likely to wind up becoming a "zombie" or "bot" that does the bidding of spammers behind your back.

Comment: My co-worker Mike M brought in his son's Mac book and demo'd Parallels several weeks ago. Very cool. Sad that Windows does not have better protections built into the operating system (unlike Mac which is built on UNIX, and LINUX (Unix like))

My interest is not running Windows programs on a MAC (since I have a company laptop anyway!) but in running Linux on Parallels.

New MacBook Pros

MacBook Pros Look Like Older Models, but the Innards Are Different

Excerpt:

Technology
MacBook Pros Look Like Older Models, but the Innards Are Different
By JOHN BIGGS
Published: June 14, 2007
Apple rarely makes sweeping changes to its product line, which is why its new MacBook Pro laptops look identical to older models.

The 17-inch model, shown here, now includes a 2.4-gigahertz Intel Core 2 Duo processor along with up to 4 gigabytes of RAM. The battery lasts more than 5 hours on one charge, and it includes high-speed 802.11n wireless support and Bluetooth.