Edible Apple

Check out this great synopsis on what the new Facebook Search is all about and the challenges and opportunities it presents from the always insightful Danny Sullivan from Search Engine Land.

Need a good plumber? An electrician? Someone to do your taxes? A doctor? A dentist? These are all typically questions that are great to ask friends. You trust friends. With Facebook Graph Search, there’s the promise of asking all your friends this at once without actually having to ask them. You can just search and discover professionals like this that they like.

That all depends, however, on whether those professionals themselves have created a presence for themselves on Facebook. In turn, it also depends on whether those who use them have also liked them. Without those connections, there’s nothing to mine.

Earlier this week, a somewhat suspect story leaked claiming that Apple was reducing its iPhone 5 display orders by a factor of 50%. Since then, some folks are shouting that Apple’s best days are behind it while others are suspecting that there may be a bit of stock manipulation at work ahead of Apple’s earnings release for the 2012 holiday quarter.

One person who isn’t buying such theories is Business Insider’s Henry Blodget.

I’m sorry to disappoint diehard Apple fans, but it is the height of reality distortion to believe that a 30% fall in the stock of the world’s most valuable company is just “stock manipulation.”

Doesn’t stock manipulation only manifest itself with a significant bump or decline in share price? In other words, the very objective of stock manipulation is to cause huge swings in a company’s valuation. For a company as controversial as Apple, 30% is certainly do-able with the right rumor.

No one has the power to “manipulate” Apple’s stock to that extent. Apple is one of the most liquid stocks in the world. The folks who trade millions of shares of Apple stock every day are a highly diverse group of investors. Bad information can temporarily move stocks, yes, but the market is very good at sorting out whether new information is bad information or weak information and discounting it accordingly. So if, say, last week’s report that Apple had cut its iPhone orders in half was, in fact, inaccurate, the market has long since factored that possibility into the stock price.

Complete BS. Jim Cramer not too long ago explained just how easy it is to manipulate the share price of a company like Apple. Furthermore, the market is HORRIBLE at sorting out which information is bad and which is good. The most recent story regarding Apple scaling back its iPhone 5 display orders raised more questions than answers and was relayed by the Wall Street Journal, which subsequently made a number of amendments to its initial report. In other words, the market at large is highly susceptible to market misinformation, and truth be told, the notion that the story may be off-base has not yet been factored into Apple’s share price because most folks are accepting it as gospel without apply any requisite context.

Blodget goes on to make, surprisingly, a number of cogent points regarding Apple’s future prospects and its current share price.

That notwithstanding, the timing of this week’s iPhone 5 display rumor is highly curious, even more so given how it was scant on specific details.

Lastly, it’s ironic that Blodget, who was not too long ago charged with civil securities fraud and who is now banned from the securities industry altogether, is so certain, of all people, that the recent downturn in Apple’s share price has nothing to do with stock manipulation.

Related: The motivation to keep Apple shares down until January 19

via Business Insider

The Apple bears are singing songs of victory these days, with recent reports that Apple recently reduced the number of iPhone 5 displays it wants delivered. The presumable take-away is that iPhone 5 demand is on the decline, Apple’s days are numbered, and let’s all greet our new Samsung overlords with open arms.

But not so fast, folks.

The truth is that no one knows the full story behind Apple’s reduction in display orders. Indeed, some analysts are exclaiming that there’s nothing to worry about, with some even theorizing that the reduction in screen orders is the result of improving yields on the extraordinarily hard to manufacture iPhone 5 LCD displays.

To that end, JP Morgan analyst Mark Moskowitz recently noted:

In our view, the potential order cuts are a direct result of manufacturing yields improving following the fast-and-furious product roll-outs of the iPhone 5 as well as new iPads and Macs.

Echoing that, Sterne Agee analyst Shaw Wu wrote that Apple’s reduced demand for displays is a function of Apple’s component suppliers becoming more skilled and efficient at manufacturing them.

And if you recall, yields on the iPhone display were very low when the iPhone 5 first launched.

Network World notes:

The iPhone 5 utilizes in-cell touchscreen displays which provide for a thinner screen as the touch sensors are embedded onto the LCD itself. The iPhone 5 was the first time Apple utilized in-cell touchscreen technology and manufacturing said screens quickly proved to be “painstaking” for Apple’s partners. Of course, with any new technology comes some growing pains, especially when making something complex and thin even thinner.

And highlighting the serious nature of the low yields on the iPhone 5 display, you might recall that Apple reportedly bumped up trial production of the iPhone 5S precisely due to the low yields experienced when manufacturing the iPhone 5 displays.

It seems strange that the iPhone 5 – Apple’s most successful product launch to date – would suddenly experience a lowering of demand, seemingly out of nowhere. While Apple, by all accounts, did cut back on its display orders, there are a bevy of reasons as to why it chose to do so.

When Apple releases its earnings in a few days and issues its guidance for the next quarter, we’ll hopefully all have a better grasp as to the state of actual iPhone 5 demand.

A few weeks ago, a court threw out Apple’s claim of “false advertising” it had levied against Amazon over its use of the phrase “app store” in its Amazon Appstore. Still, Apple’s claim for trademark infringement remained as the case remains in the discovery stage of litigation with trial anticipated for later this Summer.

Bloomberg is now reporting that the two sides have been ordered by the court to engage in settlement talks in the hopes that they’ll be able to come to an amicable agreement without having to go through the entire legal process.

U.S. Magistrate Judge Elizabeth Laporte in San Francisco directed the companies to confer on March 21 and to bring their lead attorneys and people who have full authority to negotiate and settle the case, according to a court filing today. A trial is scheduled for August.

Interestingly enough, Amazon in its filings has noted that Apple executives (from Tim Cook to Steve Jobs) have in the past made reference to competing “app stores”, thereby signifying that the term is generic and not subject to trademark protection.

Let’s take a break from all the hullabaloo surrounding Apple’s share price and alleged weak demand for the iPhone 5 to take a look at some of Apple’s upcoming products.

Of course, Apple keeps its product roadmap a tightly guarded secret, but KGI Securities analyst Ming-Chi Kuo has proven rather adept at predicting future Apple products. So with one of the best track records in the business, Kuo is at it again, this time forecasting Apple’s 2013 product roadmap.

Let’s take a gander.

iPhone

First off we have Apple’s 2013 iPhone lineup. Kuo anticipates Apple will introduce an iPhone 5S (shocker) sometime in June or July – so basically Apple will be reverting back to their original iPhone refresh cycle. But that’s not all, folks. Apple, according to Kuo, will also be releasing a newly designed iPhone 5, which perhaps is the lower-cost iPhone that has been making the rounds in the rumor mill lately.

As for the iPhone 5S, Kuo notes that it will sport Apple’s A7 chip and will feature a long-rumored fingerprint sensor. Notably, the camera quality will remain about the same. Also of note is that it will run on TD, China’s proprietary network utilized by China Mobile, even more evidence that the company’s nearly 800 million subscribers will soon have access to the iPhone.

Notably, the bill of materials on the new iPhone 5S will run form $230-$250, a smidge higher than the $210-$230 BOM used on the iPhone 5.

And as for the newly designed iPhone 5, that will have a BOM of $180-$200 (there’s the more economical model right there), and will be heavier by about 18 grams, which would indicate that Apple will in fact use cheaper, and heavier, materials for the device (i.e plastic). Kuo also believes that the more economical iPhone will come in a range of 6 colors. It will also not have a fingerprint sensor and will house the same A6 processor as the original iPhone 5.

iPad

With respect to Apple’s tablet lineup, Kuo expects Apple to refresh the iPad and iPad Mini during the third quarter of 2013 with the iPad Mini being given the Retina Display treatment. Also of note is that the fifth-gen iPad, according to Kuo, will be slimmer and lighter than the current 4th gen iPad.

Macs

As for Apple’s Mac line, Kuo anticipates Apple will get rid of non-Retina MacBook Pros in 2013 and that slightly tweaked models may be on the way as well.

As for the MacBook Air, a refresh may be possible during the second quarter of 2013 and that Retina Displays will not grace the Air this year due to design challenges.

And then we have the ole’ iMac, which will likely not receive a Retina Display in 2013. Expect just internal upgrades for Apple’s iconic desktop machine this year.

Everything else

Kuo writes that Apple will discontinue the 4th gen iPod Touch and will introduce a 8GB version of the 5th gen iPod Touch. Note that this means that Apple’s entire mobile lineup will now be using 4-inch screens. And the Apple TV, and anything TV related, Kuo says Apple’s little black hockey puck will receive a minor upgrade in 2013 and that Apple’s HDTV effort is not going to manifest itself in 2013, “with content issues and a lack of experience in the television set industry pushing things back until 2014.”

via MacRumors

Key retail executive Jerry McDougal, Apple’s VP of Retail, turned in his papers last Friday according to a report from ifoAppleStore. As opposed to Ron Johnson who wanted to go pursue other opportunities, McDougal’s departure is reportedly nothing more than him wanting to spend more time with his family. The report notes that Apple, not surprisingly, requires its executives at the headquarters level to spend an inordinate amount of time on the job.

McDougal was Johnson’s right-hand man from the moment the chain was conceived in 2000, and there was speculation he might replace Johnson. However, CEO Tim Cook selected outsider John Browett of UK-based Dixons for the position. When Browett was fired last October, speculation again focused on McDougal and others for the Sr. VP position. Instead, McDougal has now departed, and the company says it continues to search for Browett’s successor.

In the meantime, it’s being reported that 15-year Apple veteran Jim Bean (not Beam) will be moving up from his VP Finance position to take on McDougal’s role.

And so, Apple’s search for a new retail head marches on, with one of the leading candidates now out of the picture. If you recall, it was just a few months ago that Apple let go of John Browett who had assumed the head retail position after Ron Johnson left for JC Penney. Browett’s tenure at Apple barely lasted a few months and he was canned just a few months in.

via ifoAppleStore

As projected by Apple CEO Tim Cook on his recent visit to China, Apple on Monda announced that both the WiFi and cellular models of the iPad Mini and the fourth-gen iPad will launch in China this Friday.

Apple today announced the Wi-Fi + Cellular versions of iPad mini and the new fourth generation iPad with Retina display will be available in China on Friday, January 18. iPad mini and the fourth generation iPad are currently available in more than 100 countries worldwide including the US, Australia, Canada, China, France, Germany, Japan and the UK.

The device will of course be available in Apple’s growing number of retail stores in the country. In the last 10 months alone, Apple has nearly doubled the number of retail stores in China with Cook noting that Apple will have nearly 25 retail outlets in the country sometime in the future.

via Apple

With all of the controversy and speculation surrounding Apple’s cutback in iPhone 5 display orders, some skeptics are alleging that this is simply nothing more than a classic “lets manipulate Apple’s share price before earnings” type of game.

To that end, John Gruber directs us to this interesting piece from Joe Springer back in November.

So here is our logic to being patient. It is threefold:

1. Apple had an enormous amount of call options speculation related to its Summer surge
2. A huge share of this was calls with a strike of around the current price of $550 and higher that expire January 19 2013
3. The institutional money managers that wrote those call options and bought common stock to cover will make a lot of money if a) those options expire worthless, and then b) Apple runs after that expiration date

What kind of money are we talking? Let’s use the more than 60,000 calls with a $600 strike price. If Apple goes to $700 before January 19, then those options have an intrinsic value of:

60,000 (call options) X 100 (shares per option) X $100 (intrinsic value per share) = $600,000,000

Six hundred million dollars not in the institutional call writers’ pockets. Whereas, if Apple stays put, then runs to $700 after the expiration date, the call writers get the capital gain from the common stock they covered with, AND the entire amount for which they sold the option. And this is only one strike price we calculated – together this is billions of dollars for a two month delay in an Apple surge.

So basically there is an incentive for the forces that be to keep shares of Apple down as much as possible in the leadup to January 19.

Food for thought.

And whadya know, shares of Apple are now trading in the $485 range. As it stands now, Apple has  P/E ratio of 11.1. Incredible.

Not too long ago, Apple ran afoul of the law in Italy on account of its warranty’s for AppleCare. Specifically, Apple was chastised for selling such warranty’s to consumers because the law in Italy – and the entire EU for that matter – dictates that a two year warranty should come standard anyhow.

Now Apple is running into a similar problem in Belgium where a consumer group called Test-Aankoop/Test-Achats is alleging that Apple is not following the local warranty laws and has misled consumers in the process by not informing them that AppleCare warranty’s aren’t really needed at all.

The decision to pursue legal action comes only after Test-Aankoop/Test-Achats decided to join up with 10 other Europe-based entities to make complaints about how Apple operates its warranties, but now the group feels it is time to escalate to a court case after efforts to petition the Mac maker have gone unheard.

In Italy, Apple was eventually forced to pay a $1.4 million fine and also changed its business practices in the Italian market as well.

via TechCrunch

Digitimes adds new details to its previous reports concerning Apple’s plans to release an entry level and more economical iPhone model. A few weeks ago the publication relayed that Apple will release a larger, and yet cheaper, iPhone device that will be targeted for emerging markets.

This report was soon corroborated by the WSJ which noted:

While Apple has explored such a device for years, the plan has been progressing and a less expensive version of the flagship device could launch as soon as later this year, one of the people said.

The cheaper phone could resemble the standard iPhone, with a different, less-expensive body, one of the people said. One possibility Apple has considered is lowering the cost of the device by using a different shell made of polycarbonate plastic.

“Apple’s rumored entry-level iPhone reportedly may adopt plastic for its chassis instead of reinforced glass or unibody metal as in the company’s standard iPhone models, to save cost”, according to the latest report from Digitimes which was sourced from the upstream supply chain.

At the same time, Digitimes relays another rumor wherein this rumored entry level iPhone will utilize a chasis comprised of both plastic and metal, “with the internal metal parts being able to be seen from outside through special design, the sources noted.”

Intriguing. The rumored device may drop during the second half of 2013, according to the report.

via Digitimes

Is the story regarding Apple cutting its iPhone 5 display orders bad news? Could this be an attempt to manipulate the stock ahead of a blockbuster earnings release?

BusinessInsider thinks as much, and points out the following stories going as far back as December 5 which reference a cut in Apple’s March quarter iPhone orders.

• December 5: DigiTimes reports Apple’s iPhone orders will fall in Q1.
• December 14: Apple drastically cuts iPhone orders, says Jefferies.
• December 16: Citi cuts Apple target, cites slowing demand and supply orders.
• December 20: Susquehanna says production was cut.

Meanwhile, investors aren’t terribly enthused as Apple has dipped down below $400 for the first time since last February.

Who says expectations are too high?