cdhowe

http://www.blackfriarsinc.com/blog

10 Comments

    • iPhone Earnings Could Push Apple Above $200/Share [view article]
      Overall, I think you've got the direction right, but the magnitude wrong because of Apple's April accounting decision to defer iPhone revenue.

      Apple has announced that it will amortize iPhone sales dollars over 24 months to avoid accounting issues associated with providing future software upgrades. The result: While Apple will garner billions in sales from the iPhone in FY2008, it will actually only recognize about $800 million in iPhone revenue in FY08; the rest of the value of those sales will end up on the balance sheet. You can read my analysis of this accounting change as part of my April Analyzing Apple report here and here.

      I believe iPhone will be huge, but Apple's going to show most of that on its balance sheet instead of its income statement for several years.

      Best,
      Carl
      blackfriarsinc.com/blo...       Jun 14 10:23 AM
    • Why Wall Street Didn't Like Job's WWDC Apple Leopard Keynote [view article]
      No worries, guys. Half the fun is that everyone interprets these events differently and puts their money on what they believe to be true. And truth be told, ET's commentary is far below the worst I've had thrown at me.

      Regarding gaming, Apple has gone hot and cold on gaming over the years. We'll see if it pans out this time. I used to analyze gaming, so I know the territory. Only problem: it's never driven any significant revenue for Apple -- yet. I look forward to being proven wrong on overlooking that.

      I completely buy your point that Jobs was underplaying his hand yesterday, and in fact, that's the point of the article.

      So I think we agree more than we disagree. I just need to get some better looking shoes to go with my tux. ;-)
      Carl       Jun 12 02:45 PM
    • Microsoft/Yahoo Merger Rumors Reek of Foul Play [view article]
      For a theory of why this story might have been leaked, read my article here on SeekingAlpha.com.
      -C       May 09 10:03 AM
    • Apple's P-to-P Movie Downloads To Eclipse Wal-Mart and BitTorrent [view article]
      I hear your point about the MD5 hashes, but disagree that the user has to be responsible for checking them or keeping them intact. In a traditional BitTorrent environment, the client has no knowledge or control over the content being delivered. However, in Apple's case, it COULD control both the seeded content and the means by which it is distributed and decoded. By controlling all three points of distribution: the original content, the clients that redistribute that content, and the final decoder, Apple does not need to succumb to the limitations of today's BitTorrent world.

      Regarding wanting to download Wal-Mart's or Apple's content from their servers, that's a personal decision. The Internet, after all, is a system whereby you use other people's networks -- in many cases without compensation to the network owners -- to get to those servers, and you don't seem to have any problems with that. Similarly, we don't seem to have any issue with buying stuff from Amazon that has never set foot in an Amazon warehouse. So why are servers any different from networks or stores? You're buying the end product, not the transportation system.

      People said open source businesses would never work -- and Microsoft recently ended up paying Novell millions for compatibility with its open source systems. Open networks require different thinking and business models. This is just another example of using an open model to deliver business value. And as I point out in the article, Apple's one of the very few companies that can prove the model valid -- and provide a template for less innovative companies to follow.

      Carl       Nov 29 07:56 PM
    • Headlines Aside, Internet Advertising Growth Has Stalled [view article]
      We don't have online sizing data for last year, because we only started tracking online advertising separate from offline in January 2006. However, marketing spending overall in Q3 is significantly below where it was last year, as you can see here:

      blackfriarsinc.com/m06...

      We expect that online advertising has declined similarly. We'll know more about the middle of December when we publish our Q3 actuals for 2006.       Nov 15 07:56 PM
    • Microsoft's Current Situation: Like IBM in the '80s [view article]
      Great comments all. To Blue vg, the Wall Street Journal article cited actually notes that many firms actually want to move away from Microsoft; interestingly, that was not the case with IBM when Microsoft attacked it with Windows.

      Regarding hardware versus software, frankly, I don't think it matters. IBM had just as firm a lock on the IT market in the 1980s as MIcrosoft does today. It also had a similar pattern of behaviors, such as preannouncing products to freeze the market and using its strength in mainframes to drive all-IBM purchases. And yet, change happened.

      Google buying its way into markets? Yes, it is trying, and so far without huge success. Search and advertising remain its bread and butter according to the latest earning reports, and yet it still doesn't have a monopoly there, with only 50% market share.

      I think Saul's points were particularly good, that new markets are built from the bottom up, not from the top down. And I do believe MSFT's size has a lot to do with it. I wrote a memo in 1999 to the judge to swing the axe on MIcrosoft because it was the only way it was going to regain any nimbleness and innovation. He did, but MSFT resisted. Now, they are paying the price.

      I reiterate my point in the article: name three profitable technologies Microsoft has launched with its $20 billion in R&D over the last five years. It hasn't even been able to update its own monopoly products. If that isn't evidence of stagnation, I don't know what is.

      Again, thanks for the dialog and your observations,
      Carl       Jul 27 07:13 AM
    • Consumer Electronics Stocks To Acquire - And Avoid - In 2006 (AAPL, MOT, MC, LPL, GRMN, PIO, VZ) [view article]
      Actually, I know about TomTom, and I love their products as well. But at the moment, Garmin is the big player in the space, so I went with them. Again, I eliminated any stocks that weren't traded on American Exchanges, and that kept me away from TomTom.

      Still, if they keep growing and satisfying customrs, they'll be global before you know it. So thanks for the comment, and keep those great ideas coming.

      -C       Jan 18 02:45 PM
    • Another iPod Production Line, Or an Overblown Analyst Estimate? (AAPL) [view article]
      Yes, the company is capable of expanding production and of stockpiling product in advance of Christmas. But both of the iPods this Christmas are new, and other company's estimates are saying that Apple grew its production capacity by more than all of its production capacity for Christmas 2004 in one quarter. Yes, it is possible. But given that retailers like Best Buy and Target are running out of stocks of iPods, it doesn't sound like there's lots of product to go around, indicating that there are supply constraints somewhere.

      There's no question these are estimates. I'll be thrilled if Apple sells 12 million iPods this Christmas. I'm simply noting that if they do, they added some additional production capacity somewhere that isn't obvious from their existing contracts. But for the moment, I'm assuming that they are a bit supply constrained and unlikely to more than double production this year. 50% volume growth quarter over quarter is pretty good no matter how you look at it, particularly when you are talking millions of units. And I think a lot of analysts discount how hard it is to manage this type of supply chain. Look at Microsoft -- they plan to sell 6 million XBox 360s in six months and they are struggling to make even a million in six weeks. If you believe the 12 million estimate put out by UBS, Apple will sell that many iPods in one week this Christmas.

      Thanks for the comment! If you are right, Apple's going to deliver a very nice surprise this Christmas.       Dec 08 07:52 AM
    • Apple Instant-on Computers? Not Likely, But Here's Another Idea (AAPL) [view article]
      As I noted in the article, I agree with you about Powerbooks being instant-on already, which is why I'm looking for another reason they did this deal. No matter what products you plan to develop, $1.25 billion is not chump change. You don't spend that kind of money without a plan. The question for us is, "What's the plan?"

      Keep thinking, though; we should be able to figure this out.

      -Carl       Nov 25 08:55 PM
    • Catching The 'Fifth Wave' of Tech -- But Heading For A Wipeout? (MSFT, CSCO, INTC, QCOM, AAPL, VZ) [view article]
      Actually, yes there is data. I went to the Consumer Electronics Show Preview in NYC last week, and got some of the data from the Consumer Electronics Association about this year and this holiday season. The bottom line: while unit sales will be about flat this year, revenues for consumer electronics will be up about five to nine percent. Why? Because average prices are going up, driven by products like Apple iPods displacing CD players and plasma TVs displacing CRTs. You can read a longer writeup at my blog. There are also some pictures of other cool CE devices there too. Nov 23 11:56 AM
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