AMITIAE - Wednesday 30 December 2015

Cassandra: Mid-week Review - At Year-end Apple's Glass is Half empty. Or Half Full

apple and chopsticks


By Graham K. Rogers


I detest some of the reporting from Wall Street and its hangers-on. We discussed recently how in 2012 and 2013, time and time again, some analysts talked down the price of Apple shares until they were considerably under what some considered a good value. That opens the door to certain vultures who buy up the shares at advantageous prices, and either sell at a profit when the time is right (nothing wrong with that, per se), or seek control.

In using the word, "Analyst" this widens the definition somewhat, as a good analyst would look at all sides of a problem and not simply cherry-pick the useful parts that will help make headlines. There are a number of such names that appear over and over, among them Trip Chowdhry at Global Equities, Apple Contrarian Michael Blair who writes on Seeking Alpha, and Alex Cho.

Chowdhry was famous for one or two Apple-doom comments but excelled himself with the warning that if the Watch did not appear soon, then Apple would be dead. The ridicule that followed has kept him somewhat quieter these days, but there are now the occasional positive Apple grunts. Give Blair a set of figures and he will prove that Apple (or the product he is writing about) will lose to the Samsung, Microsoft, Blackberry equivalent. Apart from reading the text open-mouthed with the technological wrongness of some of what he writes, I find the Comments section rewarding as I am obviously not alone in finding his analysis wanting: and some of those commenting are industry heavyweights.

Earlier this week, I was surprised to read an article by Philip Elmer-DeWitt on Fortune in which he outlined the firing of Berenberg Bank analyst Adnaan Ahmad who had set a price of $60 for Apple shares in 2012 (remember that date?). With shares this year reaching $124, he raised the target to $85, which does look a little out of line. Philip Elmer-DeWitt includes his quote at that time, "We sense . . . that the company is over-earning, over-loved and, in our view, the stock should be 'over-and-out' soon" (I just checked, it is $108.74). Now the analyst has been "let go."

Money In linking to Philip's report, John Gruber on Daring Fireball also mentioned Per Lindberg who in a 2010 report from David Milstead on The Globe and Mail, was the only analyst out of 40 who put a "sell" on Apple stock, since which time Gruber says it has risen by about 8 times.

Alex Cho does not often have much that is positive to say about Apple and I am always wary when I see his by-line. Despite what Tim Cook said a couple of weeks ago about taxes on repatriated monies - the profits that Apple has earned via its subsidiaries in countries outside the USA - that it would cost 40% (I thought it was 30%) and would be irresponsible for him to do this, Alex Cho thinks otherwise.

Writing on Seeking Alpha earlier this week, he does admit he has been more bearish on Apple (understatement?) but thinks the cash would do better working for Apple at home and the company should take the hit. He himself writes that "Since 60%+ of Apple's cash generation comes from overseas," but he is erroneous in using the verb "comes from". The cash is generated there, and there it should stay.

I was pleased to see that later the same day, Bill Maurer, also on Seeking Alpha, was opposed to Cho's thesis with two basic, but strong reasons: The scenario involved would not work in today's market; and it would leave Apple in a low cash, high debt state. The article examined some of Cho's financial comments and found them to be wanting . He does agree that some of the money could be repatriated, but that "depleting the foreign cash pile limits the company's financial flexibility" would send the wrong message to investors. One wonders why other analysts would make such suggestions. . .

As an aside, Apple has agreed with the Italian authorities to pay the €318million ($348m) it owes for taxes there when it allegedly failed to declare earnings between 2008 and 2013 (Rich Edmonds, iMore). And I am sure that not one cent of that figure came from funds in the USA.

Sometimes the analysts take their hot news from sites in Asia that have mini-slices of data concerning output from factories. One of the most often quoted is DigiTimes; and this source is often wrong too. If a company that makes a certain chip used in the iPad reduces output, there is a presumption that iPad sales are about to fall. This is a risky business predicting such moves with the number of factories that Apple uses in Asia: there are even some here, so production can be moved about to gain the best product flows. This is something that Cook is a master at.

No matter, it has been reported widely in the last couple of days that DigiTimes says iPhone shipments are to fall, therefore, Apple is failing and the sky is falling. Tyler Durden on ZeroHedge, repeats the comment that 4th quarter shipments are expected to fall "to 72-75 million units, compared to 76-78 million units predicted earlier."

Note that; and then ask the question, Who predicted those figures? The probability is that it was the analysts as Apple does not release guesstimates of its product sales.

iPhone 6s

Then read that last item alongside an item from Chance Miller on 9to5 Mac whose article, "Apple again controls holiday sales, accounting for 49% of activations as phablets dominate" does look a little more realistic as the activations are new devices coming online: almost 1 out of every 2 devices was from Apple (against, Microsoft, Samsung, HTC, et al). The article has a lot of charts and graphs all of which draw more or less the same picture.

Add to that, an item on ZDNet (not noted for being pro-Apple), by Adrian Kingsley-Hughes, who writes that "there was no shortage of new iPhones and iPads wrapped up under trees this year." Citing Yahoo's Flurry analytics he gives a figure of 49.1% of new devices being iPhones and iPads. Then he adds an interesting comment: Remember though that the overall market is expanding.

This means that the pie is bigger and more devices than ever were sold. And Apple had 49% of "more than ever". Apple is clearly doomed under the laws of what goes up, must come down. Also reporting similar was Sarah Perez on TechCrunch.

OK, that is just Christmas and the New year sales. What about the rest of the year? Doomed of course, according to Rod Chester of NewsCorp, Australia. As there will be no new products next year, Apple will slump, adding "analysts warn" for safety to the headline. He brings in Katy Huberty whose comments were roundly dissed by several commentators early in December. For 2015, Chester lists Apple TV, the iPad Pro, Apple Music, iPhone 6S (missing the Plus version and falling into the "minor features added" trap - don't these people read the specifications, fer crissakes?), Apple Watch which is a failure or success depending on whose words you read.

iPhone 6s Plus

iPhone 6s Plus - with A9 chip, Haptic motor, Touch sensors, 12MP camera, Aluminium 7000 body, et al

Then he has 11 predictions, including the Apple Car - there's one to produce egg on many faces at prediction time - and the slowly-evolving Home Kit software. But that headline sells copy or hits.

It is also interesting to read in an item by Dan Thorp-Lancaster on iMore that Apple is looking to source OLED displays from both LG and Samsung for future iPhones (though probably not the iPhone 7).

And one more thing: while everyone is looking in the directions of USA, Europe, China, with side-glances towards India, Dennis Sellers on Apple World Today, reports that in the Middle East and Africa iPhone sales grew 133% in the third quarter of 2015 compared to the same period in 2015. The figures of total units are still low compared to those of other brands, particularly Samsung, but with technology limits of some phones, Apple "sells around ten percent of the premium, LTE smartphones".

Now that screaming Ballmer has gone from day to day operations at Microsoft, the company is beginning to evolve into something more than what it was, with a huge number of apps for iOS devices (Ballmer doesn't like that and thinks there should be more for Android, but so few Android users want to pay), and some interesting hardware. OK, I joke about the Suface and I do think Redmond is going in the wrong way here, trying to develop a desktop/laptop/tablet hybrid (or is that tribrid), but they are working at it.

They have also desperately wanted a phone for a long time. With The Elop-Ballmer disaster of Nokia behind them, MacNN reports that there is a development coming of a Surface-style phone, according to Chris Capossela, chief marketing officer. They are aware that being a ho-hum Surface phone is not just enough and there must be something about the phone to grab people. I saw that before somewhere. . . .

I do not have Adobe Flash on any of my devices and while there are some sites that complain, by switching to the iPad, if I really want to see the video, I can usually view the content without problem. Since removing Flash, stability on the Macs has been far better. At one time I was having several kernel panics a week, which magically stopped when I stopped Flash.

There have been more than 300 bugs reported in Flash this year Abhimanyu Ghoshal writes on The Next Web When I hit the link to that article, Little Snitch asked for permission to send data to something called Social Honey. I hit Deny, then after the page loaded, checked: it is a service used by publishers to find out about readership. My data. Little Snitch will sometimes report half a dozen outgoing connections from some web pages, all of which take up my bandwidth. And yours.

I have great confidence in the iPhones as photographic devices, and the iPads more-so as editing tools, particularly the iPad Pro as I can now import RAW images in double-quick time from my Nikon DSLR using the Lightning to SD Card adapter I reviewed at the weekend. I rather like the work of Jeff Carlsson who has an ongoing series of books and articles on the iPad for Photographers. I bought a digital copy of the first issue from Amazon. Now he is turning his attention to the iPad Pro which I see as a great tool, particularly for editing. I tried taking photos, but this is rather hit and miss and looks silly if you wave it about.

Lightning to SD Card adapter

Following on from my comments on command line work a couple of days ago, I was reminded of the valuable GitHub resource which has a vast number of command-line scripts and commands. A couple of notes: if the command starts with sudo that can only be run from the Admin account and may need consideration before executing; if you don't know, or are not certain, Don't. And if you do, don't blame me.

I have a high level of confidence in the ability to retain documents and images either on sites or in archives, but this is not a given. In an article on The Atlantic, Adrienne LaFrance outlines the creation and loss of a Pulitzer Prize-winning example of historical journalism that was lost when the newspaper for which it was created was shut down.

With some perseverance, the information was tracked down and recreated and The Crossing (an account of an accident that killed some 20 high school children) has now ben recreated. As the authors want to retain the original style, not only did they receive permission to use the font specific to the now defunct Rocky Mountain News, but the videos use Flash.

I have made many comments about the way governments seek our data and they have been at pains to reassure us that there is nothing to worry about. So, some have taken on the attitude that, if I have done nothing wrong, there is nothing to be concerned about. Moxie Marlinspike demolishes this idea pretty well on Wired in an article this week, by pointing out that (at least for the USA) there are thousands of laws and regulations on the books, most of which not even the lawyers know about, and if evidence comes to light later that anyone has broken one of those laws the Federal government will not accept, I didn't know.

There are also thousands of laws still on the books in the UK, such as the Town Police Clauses Act of 1824 (along with the Vagrancy Act 1824): things like stringing a line across a street, dropping a flowerpot from a windowsill, setting fire to your chimney (still used often) and any one of over 100 offences are still available for use, including laws for prostitution and being a rogue & vagabond (brought in because of begging soldiers after the Napoleonic Wars).

In the article, Moxie Marlinspike cites Justice Breyer: the laws "make it difficult for anyone to know, in advance, just when a particular set of statements might later appear (to a prosecutor) to be relevant to some such investigation."

So with nothing to fear, The Independent asked for Home Secretary, Theresa May's browsing history and Cory Doctorow reports on BoingBoing that this was rejected for being "Vexatious". I would prefer the word, hypocritical as this sort of data is exactly what May plans will be kept on anyone who uses the Internet in the UK. Mike Masnick on TechDirt also reported on this, adding that "Chris Gilmour sent in a FOIA request for May's metadata" and both he and the Independent were fobbed off with the "vexatious" remark.

Theresa May
Photo taken on 19 May 2015, with Nikon D800 camera, at ISO 640, aperture of 7.1, at a speed of 1/250 sec (manual settings), with a lens at focal length 116mm; and flash was used according to the metadata

Not so fast, this is real. It has been revealed this week that the NSA, despite promises (and rules) to the contrary, have probably been spying on Congress. Dustin Volz on National Journal examines this problem which will probably have senators and congressmen turning purple with rage. Of course, under the Wilson Doctrine, no members of the UK parliament are spied on, are they. Are they?

As a brief note, with the 30-year rule in the UK allowing the release of documents relevant to a particular year, those from 1986 are becoming available now. One early gem, concerns the failure of the government to save Westland Helicopters (the US won again) and Richard Inman reports on The Independent that it now appears a letter damaging to Defence Secretary, Michael Heseltine, was leaked to the press with PM Thatcher's knowledge (at least), but when asked about it in Parliament she had deliberately misled the House over this. She lied.

Another day, another Apple lawsuit. This time Husain Sumra on MacRumors (and many others) report that Apple is to be sued in a class action by owners of the iPhone 4s, who "became unable to use their devices after upgrading to iOS 9 as the update "significantly slowed down" their iPhones". $5 million is the asking price here.


A number of sites are reporting on Apple's new relationship with artists and the iPhones and iPads, called Start Something New, Jeff Beer reports on Fast Create. The campaign features 11 artists who use Apple products and apps in their work. There will be in-store and online galleries to provide inspiration to customers.

Two of the featured artists are Darren Pearson and William Hundley. Pearson first started using his iPhone in his work back in June, and for his images for "Start Something New" he "sketched" midair with a handheld light, taking long-exposure photos with the NightCap Pro app on his iPhone 6s. His Apple Watch acts as a viewfinder, giving him a live preview of his drawing as it takes shape.

On 7 January 7, Apple will bring five of the artists to the West 14th Street Apple store in New York to talk about their work and techniques.

Graham K. Rogers teaches at the Faculty of Engineering, Mahidol University in Thailand. He wrote in the Bangkok Post, Database supplement on IT subjects. For the last seven years of Database he wrote a column on Apple and Macs. He is now continuing that in the Bangkok Post supplement, Life.



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