Q2 2013 and investing in Apple

On Tuesday Apple reported a pretty solid set of financial results for Q2 fiscal 2013. Revenue was $43.6 billion, which is up 11% year over year. But it?s also fair to point out that earnings were down year over year. In fact Apple posted EPS of $10.09 which is a decline from $12.30 last year.

There are plenty of industry observers and stock market pundits who are pointing out that ?Apple is not a growth company anymore?. Factually, I think it?s better to say that Apple did not achieve earnings growth this quarter. They did achieve revenue growth (and quite reasonable growth), but they didn?t grow the bottom line.

Question is - can they get back to delivering growth? I think they can and I think they will. Let?s remember this is a long term game.

Before we get too far into this, let?s look at how Wall Street reacted. The stock climbed in after hours trading to the tune of about 5%. The market likes the numbers, and let?s remember that the market is all about the short term.

Why like the numbers? Because iPhone and iPad sales were pretty solid. Apple sold 37.4 million iPhones and 19.5 million iPads. In particular the iPad sales are up from 11.8 million a year ago. Most of this growth was driven by the iPad Mini, which the company says is being sold to mostly first-time iPad owners, proving that it?s not just cannibalizing the more expensive full sized iPad. It?s bringing Apple brand new customers.

And let?s stay focused on the prize. The market has shifted from PCs to mobile computing. Whereas Apple had single digit percentage market share in PCs for so long, it not stands up with Google as one of two ginormous leaders in mobile computing.

This is a huge growth market. Still. Tim Cook talked about the industry analyst estimates on the call. Specifically, IDC estimates the smartphone market will double between 2012 and 2016, growing to 1.4 billion units annually. Gartner estimates the tablet market is growing even faster, rising from 125 million units in 2012 to a projected 375 million by 2016.

Kinda puts things in perspective as to why Apple?s CFO, Peter Oppenheimer, would be quoted as saying, ?We're willing to make short-term trade-offs in profits for long-term growth." This is important stuff. Wall Street hates it when companies sacrafice short term profitability, but in the end none of what Wall Street thinks matters. And Tim Cook made it very clear that they?re running Apple to deliver great products for the customers. In the end, the market follows. It does not lead.

In China, for example, there seems to be pretty heated demand for the iPhone 4. Cook points out that China is an interesting market where there is an overwhelming percentage of first time smartphone buyers. In a market like this, it makes sense to aggressively sell the iPhone 4. Get people hooked on the Apple product experience and keep them hooked as they upgrade later. It?s smart business. Same goes for having a lower cost iPad Mini.

So overall, I?m happy to see that Apple is still posting very solid revenue growth, especially when adjusting for the massive channel inventory build they had to do last year, which they didn?t repeat this year.

If I thought Apple?s gross margins were on a constant trajectory down, I?d be more worried. But I think it?s more accurate to say their margins have normalized. They are not going to pull in close to 50% margin like they did last year. There is too much global competition to allow for this. but can they sustainably generate mid 30% margins? Yes, I think so. Apple has a long history of pricing its products at a premium and generating solidly above-average margin.

My focus is on Apple?s constantly growing top line. And so far, they?re constantly growing.

Before I wrap up I?ll touch on Apple?s plans to use cash to buy back stock and raise the dividend. I think they?re doing exactly the right thing. Instead of massively raising the dividend, they?re raising it 15%. This puts the yield at about 3%, which is attractive but not insane. Yet it leaves tons of cash on the table for Apple to buy back its own stock.

To me this speaks volumes about management?s confidence. They?re telling us the stock is undervalued. As Cook said, they are ?investing in Apple?. But in reality they are taking advantage of information they have about the company?s long term product roadmap that Wall Street doesn?t have as much faith in.

I?m not worried about the stock one bit.

Source: http://feedproxy.google.com/~r/TheIphoneBlog/~3/RZHuLf2htt0/story01.htm

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News Corp settles shareholders' legal action for $139m | Media ...

News Corporation has agreed to a $139m (?91.2m) settlement of a legal action by the company's shareholders. They claimed in a lawsuit that the board had turned a blind eye to phone hacking at the News of the World.

Insurance covering News Corp's board, including chairman Rupert Murdoch, will fund the settlement that sought to hold directors accountable for the scandal.

A joint statement by the company and the shareholders stated that the money - said to be the largest cash settlement in a derivative lawsuit - will go into the company's funds rather than to individual investors.

The lawsuit also related to News Corp's ?415m acquisition of Shine Group, the media company previously owned by Murdoch's daughter, Elisabeth, in 2011.

According to Delaware chancery court filings, News Corp agreed as part of the settlement to tighten up the oversight of the company's operations and to set up an anonymous whistle-blower's hotline for tips about misconduct.

Shareholders who sued had alleged that the board's lax oversight allowed wrongdoing to flourish at the company and harmed its stock price.

In its suit, Amalgamated Bank claimed that some board members knew as early as 2009 that News of the World reporters routinely hacked into phones and bribed British police for stories.

That allegation about a cover-up was hotly disputed by News Corp's lawyers at a hearing last year in Delaware. They denied that board members had participated in a cover-up because they were beholden to Murdoch and his family.

"Rather than ignoring and covering up these matters, the evidence shows the board moved to address the scandal quickly and openly," a News Corp attorney told the court.

Amalgamated Bank greeted the settlement by issuing a statement in which its CEO, Edward Grebow, said: "We are proud of this historic settlement, which continues the 20-year-history of Amalgamated Bank encouraging corporate reform and improved corporate governance."

Based in New York, Amalgamated is the largest union-owned bank in the US, and holds more than 455,000 News Corp shares through its trusteeship of LongView Funds. Its action was supported by the Central Labourers Pension Fund and City of New Orleans Employees' Retirement System,

The settlement, which is still subject to approval by the Delaware court, is part of News Corp's push to put the hacking scandal to one side. As company spokesman Nathaniel Brown said: "We are pleased to have resolved this matter."

Sources: Delaware Court of Chancery/Amalgamated Bank/News Corp/Bloomberg/Business Wire

Source: http://www.guardian.co.uk/media/greenslade/2013/apr/22/news-corporation-usa

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Verizon expanding San Francisco Innovation Center, currently working on cross-carrier HD Voice support

2011 sure doesn't feel like that long ago, but it's evidently long enough for Verizon to realize that demand for innovation is booming in Silicon Valley. Not quite two years after the company cracked open the doors to its San Francisco-based Innovation Center, it's already looking to expand. During a briefing today at its other Innovation Center -- the one located just outside of Boston -- we were told that plans are underway to expand the SF facility. Presently, the Waltham, Mass. center is the vaster of the two, and it's Verizon's goal to stretch the California edition to (roughly) match the original location.

We were also told that the company has looked at a variety of other cities where potential Innovation Centers could be planted, and while "three to four" undisclosed metropolises are in play, the company wants to nail the execution of its first two before hastily expanding into new locales. According to Praveen Atreya, director of Verizon's Innovation Program, there's just too much involved in the incubation and launch process to not devote the proper amount of manpower to it. In other words, there's more to launching a product than just design and manufacturing; a lot of TLC goes on in order to make something have a successful shelf life.

Filed under: Cellphones, Networking, Mobile, Verizon

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Source: http://feeds.engadget.com/~r/weblogsinc/engadget/~3/KThoiIastxY/

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Reeling elsewhere, labor poised for Minn. gains (The Arizona Republic)

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Spainish terror suspect reportedly praised Boston bombings

MADRID (AP) ? Police have arrested two suspected members of al-Qaida's North African branch in Spain, one of whom Spanish authorities alleged praised the Boston Marathon bombings, but neither of whom was known to possess any explosives or be planning any attack.

Interior Minister Jorge Fernandez Diaz asserted to reporters Tuesday that there was "sufficient grounds" to warrant the arrests, adding that they were made to avoid "greater risks." He said the two suspects ? an Algerian and a Moroccan ? were acting as "lone wolves."

Fernandez Diaz also said that one of the two arrested had praised the Boston attacks. The private news agency Europa Press, citing the minister, said this was found in a document seized by police during the arrests.

Madrid is to stage its own marathon on Sunday. Authorities on Monday said that while no risk or threat had been detected, 1,100 police and security personnel would be on duty.

Two explosions near the finish line of the Boston Marathon on April 15 killed three people and wounded more than 200 others. One suspect in the attacks was killed during a standoff with police, while a second was later arrested after being wounded.

A Spanish Interior Ministry statement said Nou Mediouni, an Algerian, was arrested in the northeastern city of Zaragoza, while Hassan El Jaaouani, a Moroccan, was arrested in the southeastern city of Murcia.

Officials are not aware of any connection between the two suspects and had no information that they possessed explosives or were planning any attack, a ministry spokeswoman said. She spoke on condition of anonymity because ministry rules do not allow her to speak on the record.

The ministry alleged the two were suspected members of a cell linked to al-Qaida in the Islamic Maghreb, or AQIM, a branch of the terrorist network that operates in northwest Africa. The ministry said they regularly visited an Internet website used by AQIM to recruit members.

It said Mediouni had tried to travel to the north of Mali to be trained as a jihadist fighter but international police pressure prevented him from making the trip. A statement from the ministry also said that upon returning to Spain, Mediouni had expressed "frustration at not being able to 'die like a martyr.'"

The ministry further alleged that El Jaaouani, the Moroccan detainee, had made direct contact with a person in Mali suspected of having been involved with the kidnapping and killing of two French citizens in Niger in January 2011.

Police have been watching the two for the past year and had been working in conjunction with authorities in France and Morocco, the ministry said.

Source: http://news.yahoo.com/spain-2-terror-suspects-held-were-lone-wolves-122252203.html

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Bank of England's cheap credit scheme to be extended -reports

LONDON (Reuters) - A scheme to get more credit flowing in Britain's stagnant economy will be expanded to include specialist lenders and will run for a year longer than planned, the Sunday Telegraph newspaper reported.

The Bank and the Treasury have been working on plans to extend the 80-billion-pound Funding for Lending (FLS) scheme, and the newspaper said an announcement could come as early as this week.

Chancellor George Osborne is under pressure to do more to foster growth after Britain lost its AAA credit rating - the top grade - from two agencies and the International Monetary Fund said the government should consider slowing the pace of its deficit-cutting programme.

The Financial Times reported on Sunday that Treasury officials hoped the introduction of a second stage of the FLS scheme might give the IMF reason not to criticize economic policy when it carries out an annual review next month.

Osborne said on Friday the government and the central bank would announce "fairly shortly" changes to the scheme, which provides banks and other lenders with cheap financing if they keep or raise lending to households and businesses.

The FLS was launched last year but so far it has not resulted in much more borrowing by small and medium-sized companies.

The Telegraph said the FLS, originally due to end in January next year, would be extended by a year to 2015.

The newspaper said the scope of the scheme would be expanded to include specialist institutions such as asset-based lenders, invoice finance houses and leasing firms in an attempt to ease the credit crunch still felt by small firms.

A Treasury spokesman declined to comment on plans to change the FLS beyond what Osborne had said on Friday.

Asset finance allows businesses to borrow against invoices and machinery.

Since coming to power in May 2010, the Conservative-Liberal Democrat coalition has introduced austerity measures to try and reduce a record peacetime deficit, but persistently weak growth has frustrated the government's economic plans.

(Reporting By Estelle Shirbon and William Schomberg; Editing by Erica Billingham)

Source: http://news.yahoo.com/bank-englands-cheap-credit-scheme-extended-reports-140612501--sector.html

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George W. Bush's Reluctant Re-Emergence on the Political Scene

A few weeks into his post-presidential life, George W. Bush flew off with an old friend to launch the arduous task of raising a half-billion dollars to build his library and refurbish his tattered legacy.

After a successful pitch to a wealthy prospective donor over dinner in Lexington, Ky., his traveling companion arrived at Bush?s suite next morning to find the 43rd President in a wistful mood.

?First time I?ve had to pack my own bag in 14 years,? Bush said with a wry smile reflecting the altered reality all former Presidents experience -- one day leader of the free world, the next grubbing for money.

Now, three days before his library and ?freedom institute? are dedicated in his home town of Dallas, Bush?s future -- though not necessarily his standing with history -- are far more inviting.

His lifestyle is beyond comfortable -- corporate jets and hefty six-figure speeches as often as he chooses; weekly golf rounds at Brookhollow Country Club (despite a back still healing from disc surgery); the ham and cheese souffle at Rise, an Inwood Village bistro; hunting and fishing expeditions, and ministering to wounded U.S. warriors and AIDS victims in Africa.

His second career as a self-styled ?beginner painter? has become an unexpected passion: he paints upstairs at his North Dallas home and keeps another easel busy at his Crawford ranch near Waco, exhibiting a discipline surprising even his closest pals. Friends say he?s getting better, beginning to master the intricacies of composition with regular visits by an accomplished local artist.

?I?m done with politics but I?m not done with life and I?ve got a real good life,? he recently reminded a political ally, not for the first?time.

?He?s very content, and his new granddaughter is the exclamation point,? echoed Brad Freeman, one of his closest friends, referring to Margaret Laura ?Mila? Hager, born in New York City April 13.

?He?s enjoying the hell out of life, ? a close friend told National Journal. ?He?s his loosey-goosey self again, the way he used to be.?

Various confidants describe 43 as ?mellow,? ?serene? and ?tranquil,? happy with his self-imposed exile from the political grind he never really liked and ecstatic with his new life below the radar.

?You have no idea how relieved he is to be out of the game,? one of his oldest friends said. ?He doesn?t miss politics even a little.?

This week?s two days of festivities on the campus of Southern Methodist University, Laura Bush?s alma mater, mark his somewhat reluctant re-emergence into the national spotlight since leaving Washington in 2009. President Obama and the three living Presidents will join 15,000 guests to celebrate the dedication of the George W. Bush Presidential Center.

The center comprises a Presidential library housing 43,000 artifacts and millions of documents from the eight years of 43?s tenure. The adjoining think tank, informally known as the ?freedom institute,? will preach the gospel of Bush?s conservative vision to future generations.

The institute is also designed by Bush as the vehicle to rehab and burnish his legacy with future historians and posterity.

?Of course he?s confident? about turning around his reputation, one longtime counsellor told National Journal. ?How else could he be? But he?s got a ways to go to mending his record - if it can be done.

?There?s a lot of baggage to deal with -- Iraq, Afghanistan and most of all the (excessive) spending - and at the moment, the trajectory isn?t going in the right direction.?

Bush, by contrast, is the classic half-full politician when pondering his legacy, which he seldom does. He likes to say he?ll be long dead when history sorts his ledger out, so why dwell on it? Meanwhile, he?s convinced his presidency ultimately will get higher marks than contemporary assessments, which generally place him at the low end of the ratings.

Bush has also told friends and political associates that his success keeping the homeland safe after the 9/11 attacks will be awarded greater weight by history. That?s why it?s no coincidence the centerpiece of the library?s exhibit hall is a 17-foot, 2-ton piece of steel from the Twin Towers.

Displayed vertically, the mangled, blistered remnant is ?impact steel? -- experts have determined it was actually struck by one of the terrorist-piloted jetliners. From a distance the hallowed relic looks like a piece of modern art, but as visitors draw closer the impact of its origin has already moved some to tears.

While time is known to heal some wounds and Presidential legacies, money doesn?t hurt, either. The institute is bulging with cash, allowing its board to hire like-minded academics and pay some executives more than $650,000 a year.

Bush?s $500 million fundraising target was originally scaled back to $300 million given the unpopularity of his second term. But Obama?s unpopularity in his first two years helped loosen Republican checkbooks, and the half-billion target has been reached -- to the amazement of many in the Bush orbit.

One Bush family friend, Dallas billionaire Ray Hunt, gave his elk-hunting buddy $25 million.

Understandably, Bush and his successor don?t have much of a relationship. Despite campaigning in 2008 against what he termed Bush?s failed Presidency, Obama is said to feel a kinship with 43 from the shared responsibilities of the world?s most daunting government job and their membership in the country?s most exclusive men?s club. But calling their policy differences vast is a gross understatement.

Bush supports Obama?s aggressive escalation of drone strikes to take out terrorists but thinks the administration has made a mess of relations with Afghanistan and Pakistan and projects weakness in dealing with adversaries like Iran and North Korea. He also disdains Obama?s attempts to raise taxes on the wealthy, his soaring budget deficits and landmark health-care law.

When asked about Obama in Q&A sessions after his frequent lectures, however, Bush meticulously takes the high road, politely declining to criticize his successor. His stock answer: ?I want my President to succeed because when my President succeeds my country succeeds, and I want my country to succeed.?

Brothers Jeb and Marvin are incensed that Obama continues to blame their older sibling for assorted policy headaches four years after inheriting them. Their mother Barbara Bush is also known to be irked. But 43 ?is perfectly willing to turn the other cheek? about the brickbats, a friend who speaks with him regularly said.

Obama political handlers deny they?re still making Bush the poster child for saddling Obama with two unpaid wars, an unfunded Medicare prescription drug benefit and the 2008-09 financial meltdown.

?The President thinks he did what he thought was best for the country and we respect that,? a senior Obama adviser countered, lauding Bush as ?a gracious ex-President.?

?As time goes by Bush will benefit from the comparison with Obama,? Victor Davis Hanson of Stanford?s Hoover Institution predicted. ?If Obama had been a Bill Clinton-like figure he would have made Bush look like the caricature his opponents have suggested. But Obama has been a great gift for Bush - he?s as polarizing a figure as Bush was.?

As politicians and academics parse his historical net worth in perpetuity, Bush is delighted to remain on the sidelines.

?He loves his granddaughter, he loves playing golf, he loves making money and he loves making a difference,? a Bush stalwart said. ?And he enjoys the hell out of saying what?s on his mind without a microphone being stuck in his face anymore.?

?

Source: http://news.yahoo.com/george-w-bushs-reluctant-emergence-political-scene-060008062--politics.html

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