How Steve Jobs Buys a Company and Why Apple Bought Lala

[Towhead]

Please explain.

I agree that without Google the Internet would be a very different, and arguably less useful place. Google revolutionized search and forced every other player to adapt or die.

Anyone else remember the smattering of search engines one used to employ for different types of searches before Google came along and changed everything? I do.

Still, I can't really see how a Google-less world would have any significant effect on Apple. Well, except without Google Microsoft might still be relevant and Apple fanboys would still be fighting Microsoft fanboys...

The reason I started using Google originally, and I suspect many others, is because they didn't have a bunch of graphics to load and display on a 56K Dialup over SLIP.

Instead of typing http://altavista.digital.com, it was google.com. Instead of waiting for the big graphics to load, I entered the words. And instead of a new page with yet more graphics, I was presented with text. It was much faster and efficient to use Google. And not only was Google the winner in the usability department, they had a catchy word - Google simply sounds like a search engine.

Does anyone remember Richie Rich comics, and how the comic explored the word Google? Google was a play on words where there was one followed by a hundred (japanese) zeros (as in war planes). I wonder if the comic is the real inspiration to the name of the company we know today.

 

[aliciadear]

Not relevant to the Steve Jobs argument everyone seems to be having, but I've actually met and spoken with Bill Nguyen a couple times and the guy is full of ideas. I was part of a special beta test group for COLOR at my university and he came and spoke to us and we got to know one of the girls from COLOR during the testing time frame. When Bill spoke to all of the testers, he talked about his experiences with different incredibly successful programs and it was clear that he had many more ideas in his head. I think Bill Nguyen is someone that Apple sees a lot of value in. Even though COLOR was a failure, he's sure to have some new big idea that Apple will be able to purchase later on. As an invited Beta tester, if we completed the month test period to certain requirements, we were given $200 Apple gift cards. There were at least 100-150 people invited to the original group and while I don't know how many people actually completed the test, that's a lot of money to be giving out. COLOR paid for my iPhone 5 though and that is fine with me

 

[Mr. Retrofire]

This is false...

You have no proof.

There's a reason AAPL (~468 bln) is more than 2x the size of GOOG (~231 bln).

And this reason is?

 

[MacDav]

I made no argument in favor of large government, but thanks for trying.

You're a slippery little devil aren't you?

 

[wesker]

Non sequitur. Outstanding shares doesn't affect market cap.

Uhhhhhhh.

en.m.wikipedia.org/wiki/Market_capitalization

Market capitalization (or market cap) is the total value of the issued shares of a publicly traded company; it is equal to the share price times the number of shares outstanding.

 

[peterdevries]

And it remains to be seen what a third consecutive earnings miss might do to the stock.

Apple hasn't had an earnings miss in the past 5 years and probably longer. They beat their own guidance each time.

You are mixing analyst estimations up with Apple's own guidance.

 

[the8thark]

3) Google is selling the customers information, which may eventually piss off the customer. Some people like privacy.

This is exactly why I dislike google. They do have some good products/services. But this point you make, really stops me from using them.

 

[KnightWRX]

The reason I started using Google originally, and I suspect many others, is because they didn't have a bunch of graphics to load and display on a 56K Dialup over SLIP.

Instead of typing http://altavista.digital.com, it was google.com. Instead of waiting for the big graphics to load, I entered the words. And instead of a new page with yet more graphics, I was presented with text. It was much faster and efficient to use Google. And not only was Google the winner in the usability department, they had a catchy word - Google simply sounds like a search engine.

Does anyone remember Richie Rich comics, and how the comic explored the word Google? Google was a play on words where there was one followed by a hundred (japanese) zeros (as in war planes). I wonder if the comic is the real inspiration to the name of the company we know today.

The comic ? no. The comic used the word googol, a representation of a very big number. The same inspiration used for Google, which is a misspelling of the name according to David Koller :

Origin of the name of Google

Sean and Larry were in their office, using the whiteboard, trying to think up a good name - something that related to the indexing of an immense amount of data. Sean verbally suggested the word "googolplex," and Larry responded verbally with the shortened form, "googol" (both words refer to specific large numbers). Sean was seated at his computer terminal, so he executed a search of the Internet domain name registry database to see if the newly suggested name was still available for registration and use. Sean is not an infallible speller, and he made the mistake of searching for the name spelled as "google.com," which he found to be available. Larry liked the name, and within hours he took the step of registering the name "google.com" for himself and Sergey (the domain name registration record dates from September 15, 1997).

Googol is an actual word :

goo·gol
/ˈgo͞ogôl/
Number
Equivalent to ten raised to the power of a hundred (10100).

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Apple hasn't had an earnings miss in the past 5 years and probably longer. They beat their own guidance each time.

You are mixing analyst estimations up with Apple's own guidance.

Earning miss refers to a company missing analysts' average estimates. The reason Apple can beat its guidance yet have an earning's miss is that Apple's guidance is usually (has been for very long) conservative and they beat it by quite a big margin.

What happened the last 2 quarters is they barely made their guidance, which is abnormal for the company. Hence why analyst's expectations were higher than the company performance, because the analysts were basing their estimates on past company performance of beating their guidance by XX%. Apple failed to do that.

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This is exactly why I dislike google. They do have some good products/services. But thus point you make, really stops me from using them.

For the umpteenth time, Google. Does. Not. Sell. Customer. Information.

Google sells ad placement based on customer information acquired through analytics. Selling the actual information is not a sustainable model.

 

[SvK]

If Steve were alive, he'd be invited to sit with Obama to figure a way out of the Finacial mess this country is in..... He maybe couldn't fix it right away, but there would be some unique ideas thrown out there, I'd bet !

President Obama and his team are doing just fine fixing the economy.

 

[cappadonna]

Earning miss refers to a company missing analysts' average estimates. The reason Apple can beat its guidance yet have an earning's miss is that Apple's guidance is usually (has been for very long) conservative and they beat it by quite a big margin.

What happened the last 2 quarters is they barely made their guidance, which is abnormal for the company. Hence why analyst's expectations were higher than the company performance, because the analysts were basing their estimates on past company performance of beating their guidance by XX%. Apple failed to do that.

I think Apple's guidance it's just becoming more realistic. After all, it's not like their sales and revenue and profit are declining. If that happens, that's when Apple needs to worry.

If it was any other company who beat their guidance by single point percentages, they would be lauded. With Apple it indicates a failure of sorts. Of course, people expect far more from Apple so it's not a surprise, but strictly numbers wise, Apple is doing more than fine.

 

[AidenShaw]

...but strictly numbers wise, Apple is doing more than fine.

You'll already seen next Wednesday's numbers?

 

[cappadonna]

You'll already seen next Wednesday's numbers?

You could not have possibly thought that's what I'm talking about right?

 

[AidenShaw]

You could not have possibly thought that's what I'm talking about right?

But you said "After all, it's not like their sales and revenue and profit are declining. If that happens, that's when Apple needs to worry.".

How would you know if things are not declining, unless you've already seen what Apple will announce in a few days?

I'd also add "margins" to your list - investors are easily spooked if margins decline.

 

[cappadonna]

But you said "After all, it's not like their sales and revenue and profit are declining. If that happens, that's when Apple needs to worry.".

How would you know if things are not declining, unless you've already seen what Apple will announce in a few days?

I'd also add "margins" to your list - investors are easily spooked if margins decline.

Exactly. "If" that happens that's when they'd have to worry. That indicates I don't know what's going to happen on Wednesday. I'm not sure where the confusion came from...

 

[KnightWRX]

I think Apple's guidance it's just becoming more realistic. After all, it's not like their sales and revenue and profit are declining. If that happens, that's when Apple needs to worry.

Actually, the first miss was based around a channel inventory mishaps with iPhones. 35 million units that had shipped in Q2 had left 4 extra million units on shelves at the beginning of Q3, lowering orders for the quarter. This was explained by Tim Cook during the conference call.

Apple has no reasons to go with more realistic guidances. Conservative guidances have been serving them well for the last decade.

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But you said "After all, it's not like their sales and revenue and profit are declining. If that happens, that's when Apple needs to worry.".

How would you know if things are not declining, unless you've already seen what Apple will announce in a few days?

I'd also add "margins" to your list - investors are easily spooked if margins decline.

Wednesday's numbers will be fine, based on predictions for unit sales done by both IDC and Gartner. Apple's revenues are 90% related to unit sales of their devices and as long as those are healthy, no need to worry.

 

[cappadonna]

Actually, the first miss was based around a channel inventory mishaps with iPhones. 35 million units that had shipped in Q2 had left 4 extra million units on shelves at the beginning of Q3, lowering orders for the quarter. This was explained by Tim Cook during the conference call.

Apple has no reasons to go with more realistic guidances. Conservative guidances have been serving them well for the last decade.

The only reason I could think of is the change in CEO. Maybe Cook prefers conservative guidance? After all, the guidance has been closer since and only since Cook took over, right?

When Steve had the helm, I'm sure he lowballed it (laughably so) to make Apple appear stronger (not that it was weak). And the noob investors were reeled in hook, line and sinker. Which explains why these same people are shorting now.

I'm long with Apple and just bought 250 shares. I try not to let emotions get in the way of my investing. Unfortunately for me, I'm a rare breed, so investing in Apple almost HAS to be based off silly emotions and those who actually research the stock end up getting screwed when the noobs sell off because some unnamed source creates a frenzy.

All that being said, I agree with you that Apple's numbers will be more than fine on Wednesday. AidenShaw, that doesn't mean I'm psychic or that I've seen the numbers, it simply means based on what we know, there's no indication whatsoever that Apple is in any trouble for the holiday quarter.

 

[johnhurley]

All that being said, I agree with you that Apple's numbers will be more than fine on Wednesday. AidenShaw, that doesn't mean I'm psychic or that I've seen the numbers, it simply means based on what we know, there's no indication whatsoever that Apple is in any trouble for the holiday quarter.

A whole bunch of new apple stuff in my family ... sales must be big big BIG!

 

[KnightWRX]

The only reason I could think of is the change in CEO. Maybe Cook prefers conservative guidance? After all, the guidance has been closer since and only since Cook took over, right?

No, guidances have been closer for the last 2 quarters only, Cook has been CEO for 4 and interim CEO for another 4 before Steve finally officialised his departure from Apple.

So 6 quarters with the same guidances nad then a sudden switch without making sure analysts knew what to expect ? That would be quite a dumb move. If Apple were to modify its guidance policy, you can be sure they would state so during their conference call to make sure next quarter analysts knew what is coming.

They had 2 misses, I don't get why you're so much affected by it and trying to deny it so much. It's business, it happens. Apple has been doing great, don't sweat this stuff.

 

[cappadonna]

No, guidances have been closer for the last 2 quarters only, Cook has been CEO for 4 and interim CEO for another 4 before Steve finally officialised his departure from Apple.

So 6 quarters with the same guidances nad then a sudden switch without making sure analysts knew what to expect ? That would be quite a dumb move.

The first quarter where it would have been Cook as full time CEO with guidance would be the FQ1 2012, which was their blowout quarter. Since then their revenue guidance has been getting closer to the actual. If you want to go back four quarters before that their revenue guidance was still getting closer and closer (relatively speaking as opposed to the Steve days when they were going laughably low which again is what got the noob investors to bite). My point was that their guidance has been getting closer for every quarter since Cook has been full-time CEO with the exception of FQ1 2012. So it's not a "sudden" switch...it's been happening for about a year now and I'm sure it will continue when he announces guidance for FQ2 2013 on Wednesday.

Their gross margins guidance has been relatively accurate for about a year and a half now...

Apple is simply becoming more realistic with guidance since Cook has taken over. The numbers don't lie.

If Apple were to modify its guidance policy, you can be sure they would state so during their conference call to make sure next quarter analysts knew what is coming.

They did, at least in one case, that being the last earnings call when Oppenheimer specifically stated that their costs were going up what with the launch of the Mini (margins much lower than average), the 5 and the fast rollout of the devices in the quarter and that that was the reason for their lowered guidance. It's not like they just lowered guidance and then avoided the question when asked why....

He did the same thing for Q2 2012 and I'm sure any other qtr where they've lowered their guidance. Oppenheimer can't exactly just not answer the questions when asked or explain why they're doing what the did...

They had 2 misses, I don't get why you're so much affected by it and trying to deny it so much. It's business, it happens. Apple has been doing great, don't sweat this stuff.

I own stock that's why it affects me. I don't get why you're affected by the fact that they've lowered their guidance? They're still outperforming every other company out there, so a lowered guidance means nothing UNLESS their sales, profits, revenue starts to suffer and it hasn't and we've yet to see if it will on Wednesday but as you and I both know that seems unlikely based on what we know.

Sure, they missed the WS estimate, I never denied it, so I don't know why you're trying to say I did. I was simply giving a possible explanation for their lowered guidance.

 

[Bubba Satori]

President Obama and his team are doing just fine fixing the economy.

Sure.

http://online.wsj.com/article/SB10001424127887323353204578127374039087636.html

 

[iGrip]

Even at its peak of $700, AAPL was still undervalued compared to the companies I mentioned (MSFT, IBM, GOOG).

The reason it dropped over the last few months is very simple: the stock ran up VERY fast on increasing revenue and no matter how good a stock is, there are people who bought low that will sell to take profits. It is a technical correction, simple. Every stock experiences it, especially ones that nearly double in value in a year even if earnings completely justify it.

Nothing goes up in a straight line forever, there are always corrections in general trends.

In the short term the stock market is all about taking money away from other people. I myself sold call option spreads against AAPL in July and August and came out ahead 40% on those positions as AAPL dropped.

People who bought the stock between $600-$700 are now selling their stock back to the smart money at these levels.

On long term timeframes AAPL is on very strong support levels and fundamentally their sales and revenue are better than they ever were.

Historically low PE combined with their highest sales ever and strong technical price level support tells me that at the very least, I wouldn't be going short from here. That time has long passed, and I myself bought additional shares between $490-$520 (my overall dollar cost average is around $130).

By all means though, put your money where your mouth is and take a short position here, see where it takes you.

Put my money where my mouth is? I said: "Maybe it is now finally undervalued,". Why on earth would shorting the stock be an example of putting my money where my mouth is?

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You're a slippery little devil aren't you?

Only if "saying precisely what I mean" = "being slippery".

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Apple hasn't had an earnings miss in the past 5 years and probably longer. They beat their own guidance each time.

You are mixing analyst estimations up with Apple's own guidance.

I am positing that the analysts expectations are what investors respond to.

And Apple has missed them twice in a row. I repeat: It remains to be seen what a third consecutive earnings miss would do to the stock price.

 

[cappadonna]

I am positing that the analysts expectations are what investors respond to.

And Apple has missed them twice in a row. I repeat: It remains to be seen what a third consecutive earnings miss would do to the stock price.

It will plummet again...damn analysts...

Things like this are just further indication that stock valuation has nothing to do with a company's financials. Unfortunately, that means absolutely nothing because investors invest purely on analyst expectations and that makes AAPL such a ridiculously lopsided stock when comparing actuals to perceived.

 

[taptic]

Well.......... it's been unusually quite on rumors of late.... maybe Apple has revised their secrecy methods...

 

[iGrip]

It will plummet again...damn analysts...

Things like this are just further indication that stock valuation has nothing to do with a company's financials. Unfortunately, that means absolutely nothing because investors invest purely on analyst expectations and that makes AAPL such a ridiculously lopsided stock when comparing actuals to perceived.

Let's say that a company is profitable and that their financials are good.

Let's say that the analysts alert investors that their biggest competitor has just gotten financing and is prepared to double production and reduce costs, thus likely destroying the company's potential for significant future profits.

Tell me why the analyst expectations are less important than the company's financials in this situation.

 

[cappadonna]

Let's say that a company is profitable and that their financials are good.

Let's say that the analysts alert investors that their biggest competitor has just gotten financing and is prepared to double production and reduce costs, thus likely destroying the company's potential for significant future profits.

Tell me why the analyst expectations are less important than the company's financials in this situation.

Because the company's financials are not declining. It's not a 1:1 relationship when it comes to AAPL. All indications are that Apple has a monster qtr, but "unnamed sources" are driving the stock down.

If apples numbers on Wednesday justify the drop in stock price, then ok. But there's no indication that that's the case other than these unnamed sources.

Att said they had a record qtr for iPhones.

Verizon says that had a "higher mix" of iPhones sold in the qtr

Apple sold five million phones in three days in the US

Apple sold two million phones (without China mobile) in three days in China

Apple had the fastest rollout in their history for the iPhone 5

The mini is a huge hit as verified by apple

With all these confirmed sources, why is the stock down?

Like I said, if they start reporting declines in sales, revenues, profits then yes it's time to worry. But apple may be the only company in the planet that can make 8 billion dollars/qtr and still be a "miss"