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Old Nov 21, 2012, 03:43 PM   #126
FluJunkie
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Originally Posted by IJ Reilly View Post
When, ironically, it made perfect sense. I have rarely seen any stock that didn't drop when the company failed to beat the street, unless the guidance for the next quarter was so strong that it mitigated any fears of a declining rate of earnings growth. Unfortunately Apple's guidance was not overly optimistic, even taking into account their history of offering very conservative guidance. All in all, Apple had a pretty awful month, and the markets overall also had a bad month, taking the averages back to where they were in mid-summer. AAPL isn't immune from either bad news or market pull-backs and not especially when they hit several walls at once.

But again and again, I have to notice that none of the conspiracy theorists address these issues, or even acknowledge their existence. But that's the appeal of conspiracy theories -- since they can never be totally disproved, they must be correct. It's impossible to argue with this sort of logic.
In context, it was "Apple makes a fistfull of cash, but misses expectations and drops. Amazon, on the same day, once again fails to make money, and trades up on a valuation that needs three digits to express.
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Old Nov 21, 2012, 04:10 PM   #127
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In context, it was "Apple makes a fistfull of cash, but misses expectations and drops. Amazon, on the same day, once again fails to make money, and trades up on a valuation that needs three digits to express.
Amazon is a pretty big growth story right now, but you have to wonder if any growth story is big enough to support a PE of 2,800 (135 forward). In any event stocks go through momentum phases, both on the upside and downside and they often can't be explained by any means but mass psychology, over the short term anyway. The economic news over the last couple of months is the best we've had in years, and yet the markets swooned, as everybody looks down the road and places bets on what things will look like 3-6 months from now.

As for AAPL, it was one of the greatest corporate growth stories of all time for about ten years (with PEs to match). Everybody with an ounce of rationality (or history) knows this kind of thing can't continue forever, so every sign that it might be tailing off is taken seriously by investors. Nobody wants to be the last one out the door. Eventually the same thing will happen to AMZN. A great ride, if you catch it near enough to the first stop.
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Old Nov 21, 2012, 04:17 PM   #128
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Amazon is a pretty big growth story right now, but you have to wonder if any growth story is big enough to support a PE of 2,800 (135 forward).
Here's the issue: if you fuel growth with zero-margin sales, at what point can you jack up prices to become profitable? Didn't Dell and HP downwardly price themselves into oblivion? Isn't the no-profit model what fueled - and subsequently imploded - the dot com bubble?

Why do investors believe that this time things will be different with Amazon? Is Amazon hoping to destroy all brick & mortar competition so they can eventually charge whatever they want? Is that the grand vision?

As a consumer, I'm suspicious of any business that gives their stuff away. This includes Google as well.
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Old Nov 21, 2012, 04:38 PM   #129
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Here's the issue: if you fuel growth with zero-margin sales, at what point can you jack up prices to become profitable? Didn't Dell and HP downwardly price themselves into oblivion? Isn't the no-profit model what fueled - and subsequently imploded - the dot com bubble?

Why do investors believe that this time things will be different with Amazon? Is Amazon hoping to destroy all brick & mortar competition so they can eventually charge whatever they want? Is that the grand vision?

As a consumer, I'm suspicious of any business that gives their stuff away. This includes Google as well.
Throw in Microsoft while you're at it. I don't totally get the Amazon story myself, but I believe the crux of it from a growth standpoint is based on the Kindle. They aren't giving them away by any means, but they are making most of their money on the "consumables."

All of the PC hardware makers were in essentially a commodity business from the very start, with the low margins that implies. This sad fact was papered over for about 15 years by the huge unit growth in the PC market. Even though all the really big profits went to Microsoft, the hardware manufacturers made it up in volume. The moment unit growth wasn't so hot, we started seeing consolidation, and the ones who are left find themselves in a really pretty awful business without a lot of great options.
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Old Nov 21, 2012, 04:38 PM   #130
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Originally Posted by LagunaSol View Post
Here's the issue: if you fuel growth with zero-margin sales, at what point can you jack up prices to become profitable? Didn't Dell and HP downwardly price themselves into oblivion? Isn't the no-profit model what fueled - and subsequently imploded - the dot com bubble?

Why do investors believe that this time things will be different with Amazon? Is Amazon hoping to destroy all brick & mortar competition so they can eventually charge whatever they want? Is that the grand vision?

As a consumer, I'm suspicious of any business that gives their stuff away. This includes Google as well.
The growth story for Amazon is largely that - when retail is a barren wasteland with only Amazon left standing, they have a license to print money.
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Old Nov 21, 2012, 04:45 PM   #131
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Throw in Microsoft while you're at it.
Microsoft never gave their stuff away (exception: Xbox) - they just let the poor schmuck hardware makers do it for them. Didn't matter if Dell sold a $1500 PC at a profit or a $500 PC at a loss, Microsoft still got their $50 (or whatever the OEM license deal was).

What's amazing is that they (Dell, HP etc.) just keep on doing it, year after year. Take it in the shorts while Microsoft rolls its wagon full of cash to the bank.

And then Microsoft has the gall to blame them when their software (Win 8) isn't selling well. Guess who was left holding the bag on the HP Slate fiasco? Yep, HP of course. Ballmer gets to grin on stage while the hardware maker gets to cry himself to sleep at night. And now Microsoft is really sticking it to them, selling their own hardware (Surface) while claiming they're just trying to "inspire" their hardware "partners." What a pack of weasels.

Microsoft is like the abusive lover that the woman just can't bear to walk away from. Sad.
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Old Nov 21, 2012, 05:12 PM   #132
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Microsoft never gave their stuff away (exception: Xbox) - they just let the poor schmuck hardware makers do it for them. Didn't matter if Dell sold a $1500 PC at a profit or a $500 PC at a loss, Microsoft still got their $50 (or whatever the OEM license deal was).
Sure they did; in fact, the IE giveaway figured prominently in U.S. v. Microsoft, as it was one of the tactics they used to rid themselves of the Netscape threat. They'd taken the position that anything they chose to bundle into Windows was legitimate competition. The judge in the case thought otherwise, and the courts in the EU were were even less impressed by that argument.

Anyway, yes... the OEMs are screwed. They have been for a long time, but it has only become painfully apparent in the last ten years. The only good news is it is now more difficult for Microsoft to strong-arm them. Not so long ago any Windows OEM that tried to offer a competing platform (like the Slate) would have been taken to the woodshed just for thinking non-Microsoft thoughts.
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Old Nov 21, 2012, 05:13 PM   #133
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Sure they did; in fact, the IE giveaway figured prominently in U.S. v. Microsoft, as it was one of the tactics they used to rid themselves of the Netscape threat.
I stand corrected. I've managed to put IE out of my mind. Permanently.

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Not so long ago any Windows OEM that tried to offer a competing platform (like the Slate) would have been taken to the woodshed just for thinking non-Microsoft thoughts.
I think you meant the HP TouchPad?

Last edited by LagunaSol; Nov 21, 2012 at 05:19 PM.
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Old Nov 21, 2012, 06:12 PM   #134
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Sigh.
I can sigh too...Sigh
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Old Nov 21, 2012, 07:56 PM   #135
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I think you meant the HP TouchPad?
Right, whatever it was. In the not-so-old days, the Windows OEMs would never have dared to try something like that. It's up to them to succeed or fail now, in a way. Most of them will stick to the safety of their relationship with Microsoft but others will be more adventurous.

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I can sigh too...Sigh
Oh, nice. Let me know when you are prepared to respond to something I actually said and we can talk without sighs.
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Old Nov 26, 2012, 06:12 PM   #136
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As an Apple fan (and an AAPL fan), I suppose I should resemble that remark.

In any case, I think I will stick to my policy of only responding to arguments I've actually made. It tends to wind discussions down pretty quickly.
Taken literally, that would mean you only reply to posts where you create the .0 original.

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