Comments on: SchmApple.

By: baruch

baruch — Sat, 01 Dec 2007 22:18:03 +0000

wcw, I don’t know if you have read other posts on this site, but if you have you would realise we do things differently around here: we don’t believe in standard deviations and are sceptical of mean reversion. Multiple analysis is an argument from mean reversion, at its heart. It is circular; it is lumping, and we are splitters. We revile sharp ratios. Please refer to the following link. I apologise for the excess use of (brackets) in the posting, I was younger then.
http://ultimibarbarorum.com/2007/06/24/standard-deviation-as-a-deviation-from-reality/

After a long period of anti-RIMM-ishness I had a damascene conversion moment, where after having my arse kicked by another brilliant quarter I realised that in 2015 RIMM would probably have over 100 million users, and right now has the mobile email market pretty much to itself. MSFT has failed in wireless, and smaller rivals got bought out by Nokia and Moto, never to be heard of again. Growth rates seem to be accelerating, not declining. Unlike peers, it has a lot of recurring revenue. I use a standardized DCF approach and have quite a detailed model of my own of RIMM, both of which tell me it should be worth about USD200-250; if you must express it in price-sales, adjust your P/S for growth, but growth which persists at high double digits for many years still to come. I don’t know many other companies with that potential for persistent growth.

By: wcw

wcw — Sat, 01 Dec 2007 17:31:17 +0000

If you doubt AAPL’s continued growth, why reach for RIMM and its momentum trading and teens P/S? Your thought experiment can go long pokier NOK at 2x sales and be a much purer paired trade. If right (and I suspect you are), that likely will deliver a much nicer Sharpe ratio.

I guess if you really think RIMM has a monopoly, it’s worth the volatility to own those tasty monopoly rents. I simply don’t see it, but I’m open to argument. Do tell. If they really are going to be MSFT 1992-2002 for the next decade in their space, I want to be long, tens P/S be damned.

But please, no argument be anecdote, or I’ll tell you which company’s products every last one of the developers at my place of employ covet. They’re not the market any more, and neither are your or your other commenters’ buddies.

By: Felix

Felix — Sat, 01 Dec 2007 16:40:45 +0000

I don’t get it. If I want a Blackberry without a qwerty keyboard, I’ll get an iPhone. No, what my poker buddies want is the Curve (which IS an enterprise phone, btw — they all work for big companies and get given it by the IT dept) but just with icons you can tap, Treo-style, rather than having to use that cute little ball thingy.

I simply don’t believe that RIMM is capable of making a mobile web browser better than Safari for the iPhone, which is really excellent. So why compete on that?

By: baruch

baruch — Sat, 01 Dec 2007 09:15:05 +0000

Well touchscreens aren’t easy. I recently learnt exactly how they are made and its a pain in the arse, but probably harder is coming up an intuitive interface that doesn’t obviously rip off Apple. But it is not impossible, and handset guys are expert in “copying with pride”, as Nokia puts it.

Tell your poker buddies RIMM has a touchscreen unit coming out, maybe before Nokia, and probably with wifi in it too.

http://www.alleyinsider.com/2007/11/research-in-mot.html

By: Felix

Felix — Fri, 30 Nov 2007 22:33:13 +0000

I pretty much agree with all of this, I’m mildly aggrieved to admit. I’m not a huge fan of Apple these days, although I do adore my iPhone. Their pro-level computers are ridiculously expensive; the Mac Mini doesn’t support 2 screens; Leopard is the least revolutionary OS they’ve ever shipped; and the expected opening up of the iPhone firmware doesn’t seem to be happening (STILL no copy-and-paste; STILL an insane amount of tapping to get to a text message you’ve just received).

On the other hand, my phone-obsessed poker group, which has long since moved on from the iPhone and now uniformly has Blackberry Curves, are all going gaga for the iPod Touch. And if touchscreens are so easy, why doesn’t the Curve have one?

The big thing though is that clearly Apple is targeting the US audience first and foremost, and Europe is an afterthought for them. I think they’ll do well domestically, and that you’re right, they’ll get whacked by NOK in Europe. But I don’t see Nokia really doing well in the US.