I think that many accross America were shocked to find out that their Microsoft Zune media players were experienceing Y2K-like problems on January 1, 2009. However, it was even more of a shocker to find out that this mysteriousn "bug" was caused by "The Man" AKA Aaple.
Confronted by a variety of Internet sources, Apple Inc. executives are admitting that the bug which crashed Microsoft Zune music players on New Year's Eve was the work of pranksters within their organization -- and say more tricks may be coming.
"Microsoft really needs to get a sense of humor," said an Apple executive, who spoke to CAP News by phone yesterday under condition of anonymity. He declined to say exactly how they executed the Zune crash, other than to say it involved a massive circuit board, some very skilled hackers and "lots of fuzzy navel Jell-O shots."
He did say that Apple did not have anyone "on the inside" at Microsoft to help them execute the prank. "We can't stand dealing with anybody over there," he said. "You know the PC in our Mac and PC commercials? They're all just like that."
Zune owners are crying foul over the crash, particularly given that it kept them from using their Zunes on New Year's Eve. "Yes, we're sure all the Zune owners were crushed at not being able to hear their ABBA and Carpenters songs when the clock struck 12," said the Apple exec. "I'm rolling my eyes now."
There were reports of complaints, however, including several New Year's Eve gatherings of Zune-owning accountants, engineers, IT technicians and others that had to go without music.
"We wound up just breaking the party up around 10 p.m.," said Neal Smerlitz, who plans the annual New Year's Eve gala for the Chess Lovers of San Bernadino, a California hobbyist group, all of whose members are Zune owners. "Although come to think of it, that's when it ended last year too."
The Apple executive also admitted that other pranks may be in the works. These include a plan to make Microsoft Word programs around the world type "Macs rule, PCs drool" no matter what letters are keyed in. Also, an Internet Explorer bug will make every Web page point to a video of Rick Astley singing "Never Gonna Give You Up."
"Let's face it, that never gets old," chuckled the exec.
He said they also considered a bug that would make the Vista operating system slow, clunky and incompatible with a score of programs, "but Microsoft did that themselves already!" The executive could then be heard cracking up and high-fiving his friends in the room.
Apple CEO Steve Jobs declined to comment on the Zune crash specifically, but did admit that Microsoft is notorious for its lack of humor. "Did you see those commercials with Jerry Seinfeld?" he asked. "They were about as funny as whatever disease it is that I have."
Next time Apple employees use company resources to take down their reval, let's hope the rest of Silicon Valley doesn't find out.
Monday, January 5, 2009
Tuesday, December 30, 2008
Eat Fruit
Over the past few weeks Apple (AAPL) has lost around 15% of its stock value. That makes this a good time to buy, and buy big. Apple is a bit price, its around $88/share, but when the market gets back to fundamentals it will climb up over $115/share.
Right now AAPL has 25 billion in the bank, and that is a nice stockpile to fund its research and development operations. While speculation continues about Steve Job's future role in the company, he has created an anti-establishment, anti_Microsoft juggernaut. Some of that R&D money is already paying dividends, like the improved iPod Nano. The new Nano has a great screen, better backlight, and an improved interface.
The other big news out of AAPL is the fact that they are now selling iPhones for less than $200 at Walmart. We believe that if Apple's push into Wal-Mart stores goes successfully, it will be creating a situation "to sell a relatively complex piece of computing to folks who may never have touched a computer, or who didn't think they'd ever want to carry one around with them." Further, this could drive a wedge between Apple and competitors Research In Motion and Palm, as the latter two have so far had a tough time selling their smartphones to non-corporate consumer types, a market which, for the most part, is dominated by Apple.
All of this is bad news for Blackberry and even worse news for Palm. The new Palm Centro has had a big marketing push over the Holidays, but it wont matter. The lack of push technology makes its too inefficient.
Also, a recent demographic shift in smartphone users from corporate users to individual consumers has created a margin issue at Research In Motion. As more than half of RIM's new subscriptions are now coming from consumers, the company now sees its gross profit falling from 45.6% to in the range of 40-41%.
Shares of Research In Motion are now down nearly 3% this week alone. Elsewhere in the sector, shares of Palm are down 3.4% to $3.10 and Nokia stock is also down 3.4% to $14.93. Meanwhile, shares of Apple, which initially traded up as much as 2%, are now up about 0.5% to $86.23.
Right now AAPL has 25 billion in the bank, and that is a nice stockpile to fund its research and development operations. While speculation continues about Steve Job's future role in the company, he has created an anti-establishment, anti_Microsoft juggernaut. Some of that R&D money is already paying dividends, like the improved iPod Nano. The new Nano has a great screen, better backlight, and an improved interface.
The other big news out of AAPL is the fact that they are now selling iPhones for less than $200 at Walmart. We believe that if Apple's push into Wal-Mart stores goes successfully, it will be creating a situation "to sell a relatively complex piece of computing to folks who may never have touched a computer, or who didn't think they'd ever want to carry one around with them." Further, this could drive a wedge between Apple and competitors Research In Motion and Palm, as the latter two have so far had a tough time selling their smartphones to non-corporate consumer types, a market which, for the most part, is dominated by Apple.
All of this is bad news for Blackberry and even worse news for Palm. The new Palm Centro has had a big marketing push over the Holidays, but it wont matter. The lack of push technology makes its too inefficient.
Also, a recent demographic shift in smartphone users from corporate users to individual consumers has created a margin issue at Research In Motion. As more than half of RIM's new subscriptions are now coming from consumers, the company now sees its gross profit falling from 45.6% to in the range of 40-41%.
Shares of Research In Motion are now down nearly 3% this week alone. Elsewhere in the sector, shares of Palm are down 3.4% to $3.10 and Nokia stock is also down 3.4% to $14.93. Meanwhile, shares of Apple, which initially traded up as much as 2%, are now up about 0.5% to $86.23.
Wednesday, December 17, 2008
stay bullish
Yesterday was not real. Goldman Sachs Group Inc., the securities firm that reported its first quarterly loss yesterday, fell 2.7 percent in Germany, while
International Business Machines Corp., the world’s largest provider of
computer services, dropped 2.9 percent.
I am bullish on GS, mainlly because it is over-valued, and not by a small amount, y at least 25%. If you can take a short position on the stock.
Futures suggested the S&P 500 will decline after a 5.1 percent rally
yesterday spurred by the Fed’s move to cut its benchmark interest rate
to as low as zero. The central bank’s decision came after simultaneous
recessions in the U.S., Europe and Japan dragged the S&P 500 down
almost 45 percent from its 2007 record.
Following interest-rate cuts you always see an initial reaction and
then you get back to your senses. All the structural indicators, such as the economic cycle and profit outlook, remain negative.
International Business Machines Corp., the world’s largest provider of
computer services, dropped 2.9 percent.
I am bullish on GS, mainlly because it is over-valued, and not by a small amount, y at least 25%. If you can take a short position on the stock.
Futures suggested the S&P 500 will decline after a 5.1 percent rally
yesterday spurred by the Fed’s move to cut its benchmark interest rate
to as low as zero. The central bank’s decision came after simultaneous
recessions in the U.S., Europe and Japan dragged the S&P 500 down
almost 45 percent from its 2007 record.
Following interest-rate cuts you always see an initial reaction and
then you get back to your senses. All the structural indicators, such as the economic cycle and profit outlook, remain negative.
Friday, December 12, 2008
GM?
The collapse of the automobile bailout plan raises the prospects of bankruptcy for General Motors and Chrysler.
The Dow Jones Industrial Average tumbled 135.96 points (1.59 per cent) to 8429.13 in opening trades and the Nasdaq composite fell 14.45 points (0.96 per cent) to 1493.43.
The broad Standard & Poor's 500 dropped 13.43 points (1.54 per cent) to 860.16. ANd guess which stock is actually up, General Motors. AFter taking a beating early this morning, GM bounced back up, almost as if the market knew that a bailout (in some form) was on its way. Sahers should have taken a big hit, but they didn't, why? If GM were in Illinois I would assume corruption, but this time I think it is more global, simply put - speculation.
The White House said on Friday it would consider tapping a $US700 billion ($1.04 trillion) financial rescue fund "to prevent a collapse of troubled automakers" after lawmakers failed to pass an alternative.
On Wednesday Sen. George V. Voinovich, Ohio Republican and a leading supporter of the emergency measure, said that the bill didn't have the necessary Republican votes to pass Congress. And he was right.
If you are an average investor stay away from GM right now, it is not trading on fundamentals, its more emotion. If you are looking to short GM, stay away from it, because you just can't tell what will happen next. If you are an options trader, avoid GM like Bird Flu, it is toxic.
The Dow Jones Industrial Average tumbled 135.96 points (1.59 per cent) to 8429.13 in opening trades and the Nasdaq composite fell 14.45 points (0.96 per cent) to 1493.43.
The broad Standard & Poor's 500 dropped 13.43 points (1.54 per cent) to 860.16. ANd guess which stock is actually up, General Motors. AFter taking a beating early this morning, GM bounced back up, almost as if the market knew that a bailout (in some form) was on its way. Sahers should have taken a big hit, but they didn't, why? If GM were in Illinois I would assume corruption, but this time I think it is more global, simply put - speculation.
The White House said on Friday it would consider tapping a $US700 billion ($1.04 trillion) financial rescue fund "to prevent a collapse of troubled automakers" after lawmakers failed to pass an alternative.
On Wednesday Sen. George V. Voinovich, Ohio Republican and a leading supporter of the emergency measure, said that the bill didn't have the necessary Republican votes to pass Congress. And he was right.
If you are an average investor stay away from GM right now, it is not trading on fundamentals, its more emotion. If you are looking to short GM, stay away from it, because you just can't tell what will happen next. If you are an options trader, avoid GM like Bird Flu, it is toxic.
Thursday, December 11, 2008
When do you shower?
It seems to me that those American's who take a shower before they go in to work, like bankers and stock brokers got a better deal than those who shower after they get off of work, like can manufacturers. The Banks got $700,000,000,000+ and it has not helped the average American taxpayer one bit.
For a total cost of $450 billion (a savings of 250b) the US government could have given EVERY household in America a $150,000 stimulus check. Additionally, they could have taxed that money at a rate of 30%, thereby generating a 135b in tax revenue. Additionally, they could have put restrictions on how the funds were spent. For example, they could have mandated that no less than 50% of the gross amount be spent on existing debt. If a person had no existing debt then they would be forced to place the money into a government savings plan for a period of not less than 2 years.
Had the US government done this, the majority of American's would be current on their mortgages right now, and there would be no foreclosure crisis. Additionally car repossessions would go way down.
The remaining 50% of the gross stimulus amount could be used as the Household saw fit. I am confident that many people would buy new cars. That would help boost the auto industry.
But my bright ideas aside, the automakers are forced to beg for 15b (400 times less then what the Banks got) and they have a new Car Czar. Where is the Bank Czar? I guess the fact that the auto industry employees 3x as many people in America as the banking industry was not factored into the equation. This is not just about the manufacturing jobs, or the nation's ailing steel industry, which relys on the Big Three, or the scientist who invent new technologies like new soy-based foam.
Its clear that the government did not do this to save the economy, but rather to save big business, nsamely the banking business. There is no reason why billions of dollars is being spent and people are still being forced out of their homes. And better yet, why dont the banks lend money to the car makers?
For a total cost of $450 billion (a savings of 250b) the US government could have given EVERY household in America a $150,000 stimulus check. Additionally, they could have taxed that money at a rate of 30%, thereby generating a 135b in tax revenue. Additionally, they could have put restrictions on how the funds were spent. For example, they could have mandated that no less than 50% of the gross amount be spent on existing debt. If a person had no existing debt then they would be forced to place the money into a government savings plan for a period of not less than 2 years.
Had the US government done this, the majority of American's would be current on their mortgages right now, and there would be no foreclosure crisis. Additionally car repossessions would go way down.
The remaining 50% of the gross stimulus amount could be used as the Household saw fit. I am confident that many people would buy new cars. That would help boost the auto industry.
But my bright ideas aside, the automakers are forced to beg for 15b (400 times less then what the Banks got) and they have a new Car Czar. Where is the Bank Czar? I guess the fact that the auto industry employees 3x as many people in America as the banking industry was not factored into the equation. This is not just about the manufacturing jobs, or the nation's ailing steel industry, which relys on the Big Three, or the scientist who invent new technologies like new soy-based foam.
Its clear that the government did not do this to save the economy, but rather to save big business, nsamely the banking business. There is no reason why billions of dollars is being spent and people are still being forced out of their homes. And better yet, why dont the banks lend money to the car makers?
Tuesday, November 11, 2008
Why Amex Became a Bank
Futures are down as Asia and then Europe opened down. Get ready to hear a lot more economic stimulus plans from many governments. The dollar is up, commodities are down roughly 2 percent, and the bond market is closed.
Elsewhere:
1) Sign of the times: American Express' application to become a bank holding company was approved by the Federal Reserve.
What does this mean? Several analysts noted that it means AmEx [AXP 22.97 -1.01 (-4.21%) ]is assuming that the funding difficulties everyone is experiencing will be longer and more protracted than many expected.
By becoming a bank holding company, they are trying to broaden their funding sources, and will gain greater access to capital under the current and any future government-sponsored programs. And they do need capital. In the next six months, AmEx will need $4 billion in net commercial paper and $7 billiion of long-term debt.
Now they can turn to the real issue: stemming the losses coming from their consumer credit card division.
2) Las Vegas Sands [LVS 5.20 -2.80 (-35%) ]reported earnings below expectations, more importantly several projects are being delayed to preserve capital, and they are about to announce a $2.1 b capital raise. MGM [MGM 11.38 -1.28 (-10.11%) ]and Las Vegas Sands down 7 percent pre-open.
3) Here is is the type of news we WANT to be seeing. Citigroup [C 10.93 -0.28 (-2.5%) ]is joining JP Morgan[JPM 36.44 0.03 (+0.08%) ] by offering mortgage refinancings. Reducing consumer debt burdens is a key part of getting the economy going; expect to see more of this in the very near future.
Citigroup to Rework Thousands of Mortgages
This will have long-term positive effects for a variety of reasons (reduced foreclosures, increased confidence, reworked mortgage terms could be favorable) and while it may not be moving the needle this morning, as time goes on this news has a greater effect that its being given credit for this morning.
4) REITS. Lots of discussion on the Street yesterday about the fallout from the Circuit City bankruptcy, believed to be the latest of several bankruptcies coming. Impact on the REITs was profound, with many mall REITs down ten percent or more.
Credit Spreads
Pros Say: Currency Trends in Reverse
Credit Crunch Timeline
It's not just poor fundamentals killing REITs: they are experiencing higher capital costs as well. Interest rates are higher, the underwriting criteria has become much stricter, and loan-to-value ratios are dropping. It means that a lot of companies are going to de-leverage.
Speaking of funding difficulties: the Yellowstone Club, an exclusive mountain retreat in Montana which boasts former VP Dan Quayle and Bill Gates among its members, filed for bankruptcy Monday because they could not secure new financing.
Elsewhere:
1) Sign of the times: American Express' application to become a bank holding company was approved by the Federal Reserve.
What does this mean? Several analysts noted that it means AmEx [AXP 22.97 -1.01 (-4.21%) ]is assuming that the funding difficulties everyone is experiencing will be longer and more protracted than many expected.
By becoming a bank holding company, they are trying to broaden their funding sources, and will gain greater access to capital under the current and any future government-sponsored programs. And they do need capital. In the next six months, AmEx will need $4 billion in net commercial paper and $7 billiion of long-term debt.
Now they can turn to the real issue: stemming the losses coming from their consumer credit card division.
2) Las Vegas Sands [LVS 5.20 -2.80 (-35%) ]reported earnings below expectations, more importantly several projects are being delayed to preserve capital, and they are about to announce a $2.1 b capital raise. MGM [MGM 11.38 -1.28 (-10.11%) ]and Las Vegas Sands down 7 percent pre-open.
3) Here is is the type of news we WANT to be seeing. Citigroup [C 10.93 -0.28 (-2.5%) ]is joining JP Morgan[JPM 36.44 0.03 (+0.08%) ] by offering mortgage refinancings. Reducing consumer debt burdens is a key part of getting the economy going; expect to see more of this in the very near future.
Citigroup to Rework Thousands of Mortgages
This will have long-term positive effects for a variety of reasons (reduced foreclosures, increased confidence, reworked mortgage terms could be favorable) and while it may not be moving the needle this morning, as time goes on this news has a greater effect that its being given credit for this morning.
4) REITS. Lots of discussion on the Street yesterday about the fallout from the Circuit City bankruptcy, believed to be the latest of several bankruptcies coming. Impact on the REITs was profound, with many mall REITs down ten percent or more.
Credit Spreads
Pros Say: Currency Trends in Reverse
Credit Crunch Timeline
It's not just poor fundamentals killing REITs: they are experiencing higher capital costs as well. Interest rates are higher, the underwriting criteria has become much stricter, and loan-to-value ratios are dropping. It means that a lot of companies are going to de-leverage.
Speaking of funding difficulties: the Yellowstone Club, an exclusive mountain retreat in Montana which boasts former VP Dan Quayle and Bill Gates among its members, filed for bankruptcy Monday because they could not secure new financing.
Tuesday, November 4, 2008
Credit Default Swap
I am sure you have all heard about these credit products, so now I will explain them in lay terms. Credit Default Swap (CDS) contracts have been compared to insurance, because the buyer pays a premium, and in return receives a sum of money if a specified event occurs. However, this is a slightly misleading comparison because the buyer of a CDS does not need to own the underlying security; in fact the buyer does not even have to suffer a loss from the default event.
Basically one company agrees to insure the assets of another company at the insured party pays the insuring party a yearly fee or premium. Lets say an asset management (Company A)firm owned a $10m Lehman Brother bonds and that that bond carried a A+ rating. Now a smaller firm (Company B)agrees to insure that bond in case of default at a rate of 5% per year for a period of two years.
If the Lehman bond went into default after one year, Company A would have paid Company B $500,000, however Company B would owe Company A the balance of the insured bond or $10,000,000.
Critics of the huge credit default swap market have claimed that it has been allowed to become too large without proper regulation, and that because all contracts are privately negotiated, that the market has no transparency. Furthmore there have even been claims that CDS's exacerbated the 2008 global financial crisis by hastening the demise of companies such as Lehman Brothers and AIG.
In the case of Lehman Brothers it is claimed that the widening of the bank's CDS spread reduced confidence in the bank and ultimately gave it further problems that it was not able to overcome. However, proponents of the CDS market argue that this confuses cause and effect; CDS spreads simply reflected the reality, that the company was in serious trouble. Furthermore they claim that the CDS market allowed investors who had counterparty risk with Lehman Brothers to reduce their exposure in the case of their default.
This works except when the bond defaults and company B only have $5,000,000 and therefore can not afford to pay Company A what it is owed. No we have a loose-loose situation and neither party is made whole.
All of this came during the Asian financial crisis of 1997. Some very smart bankers at JP Morgan Chase decided that they needed to "hedge" against double losses.
Basically one company agrees to insure the assets of another company at the insured party pays the insuring party a yearly fee or premium. Lets say an asset management (Company A)firm owned a $10m Lehman Brother bonds and that that bond carried a A+ rating. Now a smaller firm (Company B)agrees to insure that bond in case of default at a rate of 5% per year for a period of two years.
If the Lehman bond went into default after one year, Company A would have paid Company B $500,000, however Company B would owe Company A the balance of the insured bond or $10,000,000.
Critics of the huge credit default swap market have claimed that it has been allowed to become too large without proper regulation, and that because all contracts are privately negotiated, that the market has no transparency. Furthmore there have even been claims that CDS's exacerbated the 2008 global financial crisis by hastening the demise of companies such as Lehman Brothers and AIG.
In the case of Lehman Brothers it is claimed that the widening of the bank's CDS spread reduced confidence in the bank and ultimately gave it further problems that it was not able to overcome. However, proponents of the CDS market argue that this confuses cause and effect; CDS spreads simply reflected the reality, that the company was in serious trouble. Furthermore they claim that the CDS market allowed investors who had counterparty risk with Lehman Brothers to reduce their exposure in the case of their default.
This works except when the bond defaults and company B only have $5,000,000 and therefore can not afford to pay Company A what it is owed. No we have a loose-loose situation and neither party is made whole.
All of this came during the Asian financial crisis of 1997. Some very smart bankers at JP Morgan Chase decided that they needed to "hedge" against double losses.
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