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Value Advisory founder Howard Rosencrans , Capital Advisory managing director Channing Smith, and Enderle Group president Rob Enderle on their outlook...
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And I spent our first -- Howard Rosen print you started shorting -- somewhere around to see in -- 600 dollar range you'd probably maybe it won't sit on there too bad habits are not gonna cover until you see that price start with a three why does that.
You've got two factors here OK people -- focused one on the major business and that's really why wanna focus my attention I don't wanna focus on the valuation.
Stocks follow.
Estimates they follow margin to be look what's happened to this company over the past 69 months you've begun to see significant margin pressure at the end of the day -- they have a great operating system that will keep you.
In the ecosystem for all of the apple products.
The margins are going to be significantly compressed.
You're -- -- you're ready mature and some of the major markets now you have to go what these other markets in the major markets who supported by the carriers he supported by AT&T and Verizon.
Who will pay apple 600 dollars for the product.
Only charge 200 dollars eat a 400 dollar loss in the other markets -- not working with prepaid so here prospects for growth of -- limited.
Other competitors are coming in they're introducing better o'clock.
Acts by Jenny Smith you're still bullish on apple though despite the fact that admittedly those profit margins are coming way down.
Well they have and again unit we've had this discussion before.
Margins gone down -- a look at why did they come down and reason they came down we had the largest apple product refresh we've seen in years so we had that we -- supply constraints.
That also pressured margins.
As we move into the coming quarters are gonna start to see.
That economies of scale build and -- -- serious price pressures diminished somewhat.
If you look at where management was on gross margins they're guiding to 37 and a half.
To 38 and a half for the march quarter they're usually very conservative so.
Look I'm not disagreeing with -- margins are gonna get down I think what we're disagreeing on is -- trajectory of that I actually think margins can go up in the coming year OK before they start coming down somewhat.
Parnell and I want to point out -- you have -- -- on this stop what is -- 700 dollars a share except in September.
We where we lowered our allocation in new money but -- -- in the stock in the hundreds we've been long term shareholders.
That's the -- cannot be anything what would it take you to put -- -- on the -- Chang communities should stick with this and -- this maybe only got into the 300 where Howard says it's going.
You know we we don't expect -- again and 300 range.
What would concern us new products like -- I TV.
That would be a concern we have you know where the margins really could get hit okay we wanna see this -- is stick with what's working.
And dad and margins are gonna get down what you're gonna technology cycle this happens is -- -- -- now.
Let's figure we've done let's go to rob literally the tech guy because he'll delicate product margins and and and figures on paper -- look at it gadgets is it true.
That apple no longer is -- clearly the coolest best Smartphone in the world are they get better Samsung -- Well I think that what you're seeing here is Apple's being forced to compete with Samsung was a large scale manufacture used to.
Selling -- white goods and very thin margins which is forcing this.
Response which is driving apples margins down and as you point out -- no longer driving this market that they have a small -- and everybody else is going big.
Most of the technology advancements -- are coming from the android ecosystem up for the most part and the end result loses as a leader.
Apple traded as a leader now they're not a leader.
I they're clearly now adjusting to the market's adjusting the fact that Apple's not a leader and right recognize that Apple's lead.
By visionary micromanaging Matt micromanaging visionary Steve Jobs.
The company is still designed around that particular function and Tim Cook is not that guy in Tel and -- the company adjusts.
For the executive change in the loss of staff they've had over the last couple months.
They're not coming back debt.
You know Howard one thing that says I thought that whenever and said Apple's going to be fine with Steve Jobs is gone I thought how -- apple honestly worth as much money with a brilliant Steve Jobs gone as it was move would be worth -- when he was there.
In turn the stock though look at profit up.
The rumors of -- stock split often when a company splits like ten for one the way apple might.
It opens the market for how many people can afford to buy that stock now new demand comes in price goes up will this hurt your short.
Scenario at the end of the day -- stock split doesn't change the value of the company.
That may be some retail buying some enthusiasm but it's not gonna move the -- the real thing that can change the story -- Is -- -- become much more aggressive in their financial engineering if they do this sort of things that David Einhorn is talking about.
They may make sense for apple -- frankly I think that makes sense for a lot more companies I think that's exactly what Dell should be doing per cent because I don't see app.
Apple as the cash cow because their margins are going to be pressed.
But if you want to change the real trajectory get me to cover -- gonna have to get the margins going up otherwise estimates are going down.
And the stock -- got my that 137 billion dollar hoard of cash does apple need to give away to its shareholders and spin off and somewhat related with the need to do.
For him to please you the -- -- can give away all of -- they're generating fifty dollars a share in cash every year.
They could give away all of it.
That would that would begin to change my feeling at the margin they're not gonna do that they're not gonna be that aggressive part chanting and tell us the biggest thing that's -- -- Howard wrong -- his apple pessimism.
Writing congratulations sour on -- short.
Here's what I -- why would be a little concerned one expectations have gotten beaten down considerably.
The stock down 37% Aaron -- analysts' estimates have come way down so that's a concern.
And secondly you know Howard's right if we saw apple say.
That they're gonna increase the dividend by forty to 60%.
Analysts -- -- given yield becomes three and a half to 4%.
You might attract -- value investors still not playing an apple.
Now we seeing a growth investor go away but if they do something like that I think that's a big risk to Howard -- you could have a lot of inflows comment from value investors and -- -- stock price up.
OK wait a thousand guys on the street who was still bullish about 55 analysts to cover this stock forty shopping -- there's still a lot of growth thesis in the store I don't believe the growth guys are all right and rob and -- -- -- -- -- -- What can apple do.
To prove.
May make Howard lose some money here.
Well I mean that we we have dubbed the I watch coming we have supposedly a night TV thing coming if they can execute with a set top box strategy united TV to watch itself -- -- pretty compelling -- being overshadowed by Google last.
I think they actually have to address that head mounted display thing as well they want to move forward.
But the end of the day that they have to showcase they can innovate.
After showcase they can lead the market beginning get Samsung chasing them as opposed to looking like they're chasing Samsung that's volatility and that brings them back Behr premium class vendor.
In what has traditionally been -- a mainstream -- like market.
A right now they're trending to be a shabby they need to get the market chasing them as the counter market and up and until that happens it's -- -- Wolf that's -- -- like products and and the wrist -- thing that we need to make up rebound there in trouble with both those products to sound superfluous and silly to me.
Could be wrong but then you very much for being well that's a great -- from all there rob Howard and -- But could step.
