So, now it is CNET taking swipes at yours truly for having the audacity to doubt all things Apple (AAPL). This one is priceless…..lets delve into it..
First the post. If you do not mind name calling and bizarre analogies, read it.
So, lets address it….
The first seven paragraphs dissect and mock the following sentence of mine. “The latest estimates have “unlocked” iPhones costing Apple over $1 billion in lost revenue the next 3 years.”
He then says “Wow! $1 billion sounds like a lot. How did you come up with that number, Todd?” He then cherry picks sentences from the post to make the math seem impossible.
Where did the number come from? Apparently he has never heard of these little publications called the New York Times, or CNN or MSN Money? Too bad because had he even attempted to read them, he would have found the sources of the numbers and save a whole lot of typing and embarrassment. It is unfortunate but he based the whole article (rant) on the flawed assumption I made the number up.
Let’s move on:
He then says. “Just the other day the lovely and talented Tom Krazit pointed to a report indicating there are 400,000 unlocked iPhones in China alone. Why does Apple not have a deal in China? Because it’s trying to do something craaaazy like negotiate one of them sweet revenue sharing schemes, that’s why.”
Well, or maybe China mobile has figured they can put 400,000 iPhones on their network without paying Apple a dime, why negotiate a deal and start paying them now? US companies have been complaining about Chinese technological piracy for decades…is Apple the next to chime in?
Then he moves on to question (mock) my thought that Apple’s cutting back on component orders can only mean sales are going to slow. Timing is everything in life and had he waited 2 more days to post, he would have again saved himself the inevitable embarrassment of this being affirmed on Thursday. To quote: “Apple has slashed its 2008 NAND order forecast significantly and has informed suppliers that its demand growth will slow in 2008.” OUCH…
I know this is getting redundant but let’s go to the next one:
He then goes into some wandering diatribe about Research in Motion (RIMM) or Google (GOOG) coming out with new products somehow does not matter or should be dismissed? I can’t figure out what the point was. Does he really think that RIMM coming out with a touch screen phone or a Google product will not increase competition in the space? He gets into a whole bunch of melodrama claiming Jobs “ought not get out of bed” due to the competition.
Again, while I don’t get that I do think if you are under the impression that either of the two competitors adding products to the mix will not affect sales, well, time to go back to Econ 101.
Market share:
Not satisfied he goes into another well conceived deception. I have repeatedly said that RIMM is the clear leader in smart phone sales with Apple being #2. He trots out a “global” market share report that says Nokia (NOK) is #1, RIMM #2 and Apple #3, as of this proves anything. Here is the thing. Apple is not really a “global” seller yet of the phones. All of my statement have taken that into account and in my earlier posts on the iPhone, Apple had not sold a single phone internationally.
What to think? Let just go to “Apple Insider“. “The iPhone’s 28 percent share placed it second in the US market behind only RIM’s with 41 percent share, and well ahead of Palm, whose 9 percent share placed it a distant third. Case closed? Like I said, Apple is #2 to RIMM. Comparing Apple sales that until recently were only in the US would have been unfair. The irony here is that had I done a post that claimed Apple was a distant third in market share, I am sure his response would have been to attack me for an unfair comparison. I can see it now, “How can Mr. Sullivan have the audacity to compare Apple to global players when they do not even sell phones globally!!”
Maybe he has some study of smartphone sales in Jakarta he wants to trot out to try to prove me wrong?
He then ends with this one: “Exclusivity is a condition for the revenue sharing agreement. That’s how Apple gets the revenue sharing. You can’t say Apple’s somehow foregoing $1 billion in revenue sharing that it could never possibly get.”
ERRR wrong answer. All cell providers have revenue share agreements. They have them with software developers, providers, wireless companies etc.. it is the way the industry functions. It is the degree of the revenue share that dictates the exclusivity in Apple’s case.
It is the unlocked phones that are the forgone revenue (currently estimated at over 25% of all iPhones sold). The argument is that were the exclusive agreements not there, many more phones would be sold, and even at lower revenue share, the profits would be greater (a smaller piece of a much, much larger pie thing). Oh yea.. .the 25%? It is not my number. I gave you the link this time so you do not have to do any work to look it up or run the risk of another train wreck post .
One last thing… he has not mentioned in any of his “posts” that my call before the first phone was sold on the need to drop the price of it was DEAD ON….
Let’s remember together Mac, “drop the price to $299 and you will have something, a $599 phone will not sell no matter what it does” (May, 2007). Aren’t there rumors out there that this is exactly what is happening now after the $200 price drop some 90 days after its debut??
Better luck next time kiddo…
Disclosure (“none” means no position):Sold Apple July $280 calls in January, None in others
41 replies on “CNET’s "Macalope": Is That The Best You Got?”
Macalope seems to be a flamer who doesn’t really understand business, economics, and investments. Hopefully he can be more logical than emotional when writing about APPL.
Good job you’re doing here, Todd!
>>Hopefully he can be more logical >>than emotional when writing about >>APPL.
You’re kidding right AJ, it’s Macalope. Do the first three characters ring any bells?
You do OK in the response, but the say something stupid at the end.
Apple sold plenty of iPhones at $599, and since the price drop to $399 it has sold extremely well. To trot out your incorrect statement from last Spring that it wouldn’t sell at all at $599, is specious.
It’s almost as off base as the frequently mentioned Ballmer quote that the iPhone had no chance of appreciable sales, yet it now outsells all Windows Mobile Smartphones combined.
The fact that now, nearly a year after you made your prediction, there is a likely price drop coming is explained entirely by the product life cycle and lowered component costs.
AJ,
thank you….he really looks like a tool after this one..
anon,
“product life cycle”? are you kidding?
find me an example where the “product life cycle” called for a 40% price drop 90 days after roll out? find one!!
the apple fanatics all bought the phone enmass at the roll-out. after that sales fell off a cliff.. thus the DRASTIC price cut and rebate etc…
nice try..
if this is Mac, keep trying..
“To quote: “Apple has slashed its 2008 NAND order forecast significantly and has informed suppliers that its demand growth will slow in 2008.” OUCH…”
Um, Apple cut their forecast from 32% growth to 27%, according to CNET. In the middle of a recession, for a company selling primarily luxury (as in “something I don’t have to buy this year”) items, that’s not really an “OUCH.”
BTW, I really like how you spend time complaining about his mocking tone, but are sure to take the high road yourself.
Oh, wait…
Todd, I think you should apologize to Macalope, you may have hurt his feelings by critizing APPL. You know the saying about staying away from discussions of politics & religion. I am not saying Macalope worships APPL, but there was coolaid in his glass, and now it is gone.
If you guys are gonna remains friends (or at least civil), I believe an apology is the best thing.< /sarcasm>
anon,
I would consider a 15% cut very significant, especially when the stock trades at 30 times forward earnings…
as for the tone, dis not start this “spat” but can play the game anyway he likes…. “fight fire with fire”?
maybe he ought to go by “do unto others as you would have them do unto you”?
I learned in May of last year criticizing anything Apple will bring this type of response..
the really odd this is that with any other company i have spoken of, thus type of discourse is rare, with the Apple folks, it is the norm… odd…
vlado,
agreed……….saw your other comment over there..
nice job..
http://www.thebestpageintheuniverse.net/c.cgi?u=iphone
Hey Todd, more importantly check out this review that this guy Maddox does for the iphone. It’s hilarous and well, show’s the short comings of the “amazing” iphone.
Anonymous,
Being an Apple or Mac fan doesn’t mean you need to be emotional about APPL the stock. I’m an Apple fan! I think most of their products are great! It is just that as an investor, we need to be rational & logical… emotions certainly don’t help you get rich in the stock market!
AJ, why do you keep talking about APPELL PETE CORP stock?
You do have to admit that getting your $1 billion figure from NYT, CNN, etc. who all seem to be quoting the same nameless “analysts” without showing how that number came from anywhere other than someone’s nether regions is pretty weak. Seems to me that was the Macalope’s point. He has a disagreement with the validity of the number, and the only evidence you pulled up was something “some analysts” said.
There are some Apple nuts, to be sure. But I’d venture to say that most dyed-in-the-wool Apple users, the Macalope included, have no problem with legitimate criticism of Apple. But, much as they won’t tolerate crummy computers or consumer electronics, they also won’t put up with shoddy research and writing.
anon,
his comments was i made the number up…
clearly that is not the point
anon,
saw his “reply”
not really worth a reply..
i figure one would be coming and also though it might be a good one…
wrong..
Macalope’s comment was “How did you come up with that number, Todd?” and, to be honest, your original blog post never linked to the New York Times, CNN, MSN Money, or any other source for that figure.
You are a really terrible writer, Sullivan. You didn’t land one blow on the Macalope. You’re writing shows only two dimensional thinking. Is this really what you do for a living?
You WON’T reply to the Macalope because you CAN’T! He totally owned you.
I’m sorry, Tom, but your analysis is no better than the daily diatribes on Britney Spears and Paris Hilton. Bad news sells and I think you know that. So as a result you cherry pick data from more established news outlets, who cherry picked from “anonymous sources.”
Your stories serve an agenda. So please spare us the notion that you serve well reasoned, rational insights.
My advice to you, Todd, is to stop while you are behind. Way behind. With every word you write on this topic, you only continue to embarrass yourself. The Macalope has simply outclassed you on each and every volley. As if that weren’t bad enough, your self-righteous tone makes you look all the more pathetic. Seriously, just move on to something you understand — you are way out of your league here.
“Long-time readers may remember that as the post you’re referencing as the one where you also said that no one wanted an all-in-one device and that you wanted to be able to drive your family down the highway, listen to music and talk on the phone all at the same time.”
Have no retort for that?
In any case, the Macalope writes just for the fun of it. On the other hand, you purport to be a serious analyst giving insight on investing opportunities. And yet, your track record on explaining anything AAPL is horrendous.
I gave you the benefit of the doubt a couple of times on your previous AAPL suggestions. But you’ve proven subsequently to be a stubborn fool.
my oh, my….
let’s see… hard to keep all the “anon” folks out there straight so i will address you all..
“Long-time readers may remember that as the post you’re referencing as the one where you also said that no one wanted an all-in-one device and that you wanted to be able to drive your family down the highway, listen to music and talk on the phone all at the same time.”
“No retort for that”
not really because it is just real dumb…. if i am listening to my ipod in the car and my phone rings, i simply moot the front speakers and my kids (in the suburban) can continue to listen ti their music. if i am using the iphone, everyone listens to the conversation.. i mean really if this is the best you people got… come on..
justin,
say what you want sport but the price you will soon be able to get your precious iphone for ($299) was predict here before ANYWHERE else… pay attention..
clark,
who the hell is TOM?
“Macalope’s comment was “How did you come up with that number, Todd?” and, to be honest, your original blog post never linked to the New York Times, CNN, MSN Money, or any other source for that figure.”
now, excuse me but the analyst call ($1 billion rev. loss) was reported in every major and minor media outlet, talked about all day on FOX and CNBC and was al over the web (probably even at CNET). you would have had to been under a rock for two days not to hear it. the fact that he thought i made it up, and did not know about the news, ought to give you people serious pause at listening to anything he states as he is sorely uninformed..
“You WON’T reply to the Macalope because you CAN’T! He totally owned you.”
Ya…ok Macalope… stay on your own little blog.. 🙂
“now, excuse me but the analyst call ($1 billion rev. loss) was reported in EVERY major AND MINOR media outlet, talked about ALL DAY on FOX and CNBC and was ALL over the web (probably even at CNET).”
Now, now. No need to exaggerate.
Ahh, right then, there’s your problem. TV never has been and probably never will be a legitimate, nor respectable, research source. Just because you quote dubious figures from quotes made by “big names” doesn’t make them any less dubious; quoting quotes from TV news sources makes them More dubious.
Oh, and reading comprehension much?
you say “Then he moves on to question (mock) my thought that Apple’s cutting back on component orders can only mean sales are going to slow. Timing is everything in life and had he waited 2 more days to post, he would have again saved himself the inevitable embarrassment of this being affirmed on Thursday. To quote: “Apple has slashed its 2008 NAND order forecast significantly and has informed suppliers that its demand growth will slow in 2008.” OUCH…”
funny… so apparently you think that “sales” and “demand growth” are the same thing?
weird.
Geez. I guess this guy was right.
http://www.thebestpageintheuniverse.net/c.cgi?u=macs_cant
jeff,
it is… without demand for something, you cannot sell it..
with demand slowing, so will sales
ANON,,
LOL!!!
“say what you want sport but the price you will soon be able to get your precious iphone for ($299) was predict here before ANYWHERE else…”
Soo… You want us to be impressed because you predicted Apple would reduce the price of the iPhone? Well you see, Todd, this may come as a surprise to you, but the practice of charging a higher price to early adopters and then lowering the price in order to gain mass acceptance isn’t exactly a new or novel strategy. It happens all the time. So if that’s the kind of insight that one must come up with in order to qualify as a investing “expert,” then I think we would all be better off buying index funds.
If your analysis of other companies and markets is similar in quality to your knowledge of Apple and the prospects of the iPhone, then it’s incredible that anyone would squander their time — and potentially, their investment dollars — on anything you might talk about.
Your determination to convince yourself that you are right, even in the face of overwhelming counter-evidence, is the kind of hubris that completely destroys any and all credibility.
justin…
“product life cycle”?????????
a 60% price drop in a new product in 8 months?
what kind of “life cycle” is that?
if what you are saying is accurate (it isn’t), at this rate well be getting them for $99 by the fall..
please find me another example of this in the history of apple. i am begging….
another things…. what have I been wrong about?
i said a $599 phone would not sell “to the masses”, it didn’t
i said $399 is still too high, Apple agrees apparently…
I said AT&T would be the big winner, it has
the error would be?????
Todd, you sound so bitter!
relax.
getting all worked up and defensive makes you look silly.
Don’t feed the trolls, people.
it’s obvious that this is just another in a long string of “analysis” purely written to get the Apple-people to come out and tell this tool how wrong he is. It’s all about page-hits, not about any actual insight.
anon,
not defensive… a slow Sunday and kiddies napping so having some fun with these folks…
that is all..
So, Todd, you see no difference between “demand slowing” and “demand growth slowing”?
dean,
sure there is. but, at 30 times earnings, there is a good amount of growth baked into expectations…
when that growth slows, the multiple will contract further…
in all reality they both mean the same things, “reduce your expectations”
Todd,
So your not buying aapl at 125… I guess the proof’s in the pudding.
The guy you’re having a fight with is a buyer; you’re not.
You’re leaving money on the table friend, and your logic about Apple’s lost Billion astounds me.
I guess we’ll meet at the bank someday. Some of us will be smiling. Thanks for helping to create this buy level.
todd, you have a formidable nemesis now. the horny apple beast will haunt your every post.
i will enjoy watching the parley in the future. sharpen your sword and practice your stance, for i see a pattern emerging. en guard! the game is afoot (or ahoof!)
Haha… my mistake… AAPL. Obviously I don’t follow the stock as much as I follow their products. The stock, to me, belongs in the “too tough” pile.
Todd said: “with demand slowing, so will sales”
Demand is not slowing, it’s growing. Growing less dramatically than predicted when the economy was rosier, sure, but growing nonetheless.
dean,
“demand growth” is slowing. that means “sales growth” will slow. it also means multiple contraction on the stock.. lower price
josh,
“formidable”? not really. the fact he though i made up the $1 billion number is really sad. he is uninformed. he essentially trolls the web to mock others who actually do something…that is all..
he is good for a little entertainment on the weekend though
AJ,
forget it….that is how the apple folks do it. you could write 1000 words, miss one letter and they will jump on you for that rather than addressing the 999 words and the substance of what you wrote that was correct.
Todd;
The Macalope has won rounds 1 and 2. Here is round 3 where you lose again.