May 13, 2011

Would You Like iKetchup With Your iFries?

As the news of Verizon offering the iPhone buzzed last December, I was working on a “fake” hedge fund project and had $1 million in pretend money to invest in the stock market.  Figuring that once the cherished iPhone would be offered by another, ahem, better, network, I banked on AT&T’s stock falling as droves of unsatisfied dropped callers made their way over to Verizon and Blackberry users “upgraded”.  Granted, I was still learning the convoluted world of buying and selling stock options and bought a put option in Apple at $260 – meaning I was putting my bets on Apple going down.  I quickly realized (like 2 hours later) that I had made the wrong move – duh, it wasn’t Apple who was going to suffer in the transition; it was the other partner in bed -- AT&T.  (I quickly got out, losing only $5K, whew.) Once Verizon announced the iPhone it was no surprise that Apple’s stock price climbed to its highest of $360.  (For reference, Apple was last at $260 around last April.  At the time of this posting, they are at about $347).  The recent launch of iPad 2, the iPhone 4 in white, and Apple’s nice performance in its second quarter earning’s announcement in April where they declared a 95% net income growth and $24B in revenue (up 82%) seems to be a perfectly executed blitz strategy for dominating 2011.

King of the Hill

According to industry data at the end of April from Yahoo Finance, Apple has exceeded Microsoft in market cap (share price multiplied the number of shares), placing second next to giant Exxon.  (Microsoft’s recent acquisition of Skype, however, could change all that in the future.  I’m curious to see the wars on this one.)

And its net earnings (albeit due to a high priced product line) shines next to its competitors. 

Data from end of April 2011

Recently, Apple surpassed Google for the number one brand spot with a brand value of $153B and a +84% increase from last year.  Translation – People like their apples more than their search engines.

And get this -- a recent editorial from MarketWatch based on Apple’s 90% growth and traditional valuation calculations argues that it should not be a surprise to anyone when Apple hits the $3 trillion mark.

$3 Trillion.  Holy S*&%.  $3 Trillion.  How many zeros is that again.  We’re getting in national debt terms now.  Really? Really!

Last year, I had the opportunity to make the switch from PC to Mac.  Tired of hearing the usual, “once you go Mac, you never go back”, I investigated.  Mac offered me features I would never have with a PC, was lightweight, and hey, I would finally be one of those people.  On the other hand, my budget was about $400 shy of Mac’s asking price and the thought of the learning curve scared me.  I needed to jump right into this thing and roll.  In the end, my comfort zone and propensity to use Word and Excel and liking how it shows up on a PC won and I got a SonyVio – which if you are staying PC, I highly recommend.  (However, I can’t lie, after starting to develop this blog, I sometimes wish I had one.)

As I watch us turn into Apple hoarding consumers, though, I can’t help but feel that something crazy is going on here – like Apple in some sense is turning into Big Brother and I’m going to be investigated for PC “thoughtcrime”.  Maybe I’m consumer paranoid or maybe I’m just upset that I don’t have the same toys as the other kids in the playground.  Maybe Apple’s success with a high priced premium business model in a recession pisses me off.  Maybe I don’t like change . . .

It makes me wonder, how long can this last?  Will Apple grey be the new black in 2012?  Is iPhone the next new word to go into Webster’s?  Or like the subprime market fiasco – can and will this communication bubble burst? 

Bottom line -- if Steve Job’s vision is every man, woman, and child owning a portfolio of Apple products, he’s on his way to 20/20.  Or as he says, “we’re firing on all cylinders”.  That you are Steve.

PS.  If you are one of the many who are in a position to trade up or horizontally with your phone, here’s a brief comparison between your smartphone options. 

Pairs well with Apple, Fennel and Prosciutto Flatbread (coming soon on a Better Spoon Part Deux!) and a little Foo Fighters

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