Bill Eccles: January 2013 Archives

Ω Why AAPL is a Bad Stock to Trade

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Because Apple is notoriously secret.

Because Wall Street and the mainstream media will believe and regurgitate nearly anything the rumor mill produces.

Because the stock’s value is not tied to reality.1

Because Wall Street AAPL analysts are used to asking for a Red Ryder BB gun and getting a pony instead.

Because Wall Street AAPL analysts are disappointed when they ask for a Red Ryder BB gun and get a Red Ryder BB gun (with a compass in the stock) instead.2

Because Apple hasn’t dominated the China market yet.

Because it might never go back up to $700 per share.

Because Steve Jobs died and Tim Cook is obviously failing.

Because Apple has only had several record-breaking quarters in a row.

Because Windows Phone will surely dominate the market.

Because the iPhone 5 hasn’t been replaced by a bigger iPhone yet.

Because Apple is only selling more phones in a day than Google sells in two months, because Android is taking over the world, and because nobody makes money from it.

Because the Apple HDTV hasn’t started shipping yet.


1 None are, really, but AAPL less so than most.

2 Christmas morning at their houses must be interesting.

Ω The "Say Hey" Verbal Tic

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Am I the only person who recognizes and loathes the verbal tic “Say, ‘Hey…’”?

An example:

Bob: So we could get together and say, “Hey, what’s wrong with the part?”

If you notice yourself doing it, you could simply eliminate the entire fictitious dialog.

The example again, improved:

Bob: We could get together and discuss what’s wrong with the part.

I responded to an article posted on Forbes.com which is generating a lot of traffic and is being cited far and wide. Unfortunately, the original article is fraught with problems, not the least of which is that neither the subject MIT professor nor the author is an expert in the systems in question—or even aviation, for that matter—and that they are both speculating about the cause, the fix, or the likely result is nothing more than fortunetelling. You’d do better to use a Magic 8 Ball.

Here is my response:

I am disappointed in this reporting. It is sensationalistic, purely speculative, and does not deserve the bandwidth it is generating on the internet.

While Professor Sadoway certainly has the credentials to understand and comment upon Li-ion batteries, he has no firsthand knowledge of the failure. Though the article says as much, it is clear that this professor and Mr. Cohan are seeking an ill-deserved spotlight.

Mr. Cohan regurgitates Sadoway’s speculation about a total redesign of the battery pack to incorporate a different technology—without mentioning that other technologies are also fraught with problems such as high levels of self discharge, perhaps not a desired characteristic of a backup battery. Boeing or its subtier supplier almost certainly considered all available technologies and weighed the benefits, risks and costs of each one. Professor Sadoway, unless he was directly involved in these decisions (which neither his publications nor partnerships implies he was), probably should not be speculating on what Boeing should or should not have done.

Furthermore, Mr. Cohan implies that Boeing is being cheap in its choice of pack design without understanding the design considerations which were required of the pack. (“More holes” does not necessarily mean “less expensive.” It just means there are more holes.) He further implies that a few pounds here or there is insignificant without considering the weight targets promised to the airlines and the trades required to meet these targets—and the financial penalties of not meeting those targets. Though these assertions should be made if indeed they are true, consulting a battery expert whose knowledge of the event and of the design is limited (at best) and whose expertise is not in the field of the assertions is poor reporting practice.

Mr. Cohan is listed as a contributor to Forbes.com and has quite a list of credentials, and I do not question either his or Professor Sadoway’s expertise in their respective fields. However, the result of a financial expert’s quoting a battery expert about a subject on which neither is an expert nor of which either has first-hand knowledge is tantamount to journalistic malpractice. Even though Mr. Cohan is not necessarily a credentialed member of the press, given that this article is being quoted far and wide, it is incumbent upon the editors of Forbes.com to vet this sort of reporting and ensure that it is either improved with substantial facts or is deleted for lack of substantive content.

(Disclosure: I am an electrical engineer working for a major aerospace corporation—and I hold a long position in the corporation—which has significant content on the 787. I do not, however, have any direct involvement in the event. I’m not even sure who makes the pack; my company may make it, for all I know. That having been said, my point here is purely regarding the lack of journalistic quality found in this article, and I will not veer off into technical territory because I have no experience or knowledge of the matter.)

This is the same speculative reporting that the Wall Street Journal took part in when citing unsubstantiated rumor about the iPhone 5 production cuts in the last few months, and it drives me absolutely nuts.

(Magic 8 Ball says “Reply Udvar-Hazy, try again”.)

And Apple shares tumble 5% in after-hours trading… because Wall Street traders are idiots.

Apple beat their estimates. iPhone 5 sales beat the low end of their estimates. Earnings were “flat” even though they increased.

Weird.

It’s about time. These three guys are the hardest-working, most fan-oriented, best musicians in the business.

Ω Eccles Rates AAPL a "Buy a lot!"

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Citing nothing more than a seat-of-the-pants hunch, Eccles Chief Analyst and Bottlewasher Bill Eccles upgraded his rating of Apple Incorporated from “Wow!” to “Buy a lot!” In keeping with the Wall Street Analyst Code of Conduct, though, he cited meaningless statistics and rumor to validate his change in rating.

Eccles said, “I see about half of Wall Street saying it’s a ‘hold’ (Wall Street lingo for ‘Run for the exits!’) and the other half of Wall Street saying ‘buy’ (Wall Street lingo for ‘Buy’). With this kind of volatility, I’ve got to cover my shorts and longs and encourage people to buy the stock. You know, because I have some skin in this game, too.” He further cited the incredibly strong sales of iPhones of all models, which are meaningless unless you look at the profit they generate for Apple (which has not commented and will not comment until later today), as further evidence that Apple is doing just, as he put it, “hunky dory.”

Discounting the naysayers who clearly don’t have a clue and are debunked thoroughly about Apple’s product cycles, he added, “Look, it’s all about consumer sentiment. iPhones are still the hottest product out there and they have nothing but room to grow. While Samsung is making inroads into the market, the average consumer doesn’t see this as a zero-sum game, as ‘If Samsung wins, Apple loses’. No, this is more about an ever-expanding market for smartphones in which both Samsung and Apple can win.”

When asked about Microsoft’s phones, he replied, “Microsoft? They make a phone?”

He went on to say that the iPad mini’s dominance in the marketplace has not undercut iPad sales, either. “You buy the one you want.” Citing as evidence he stated, “My mom just got an iPad 4. (Hi, Mom!) With 64GB of storage, too. I mean, she could have bought a mini, but she went all out and bought the full pull. In a family of cutting-edge technologists, this is clearly evidence that the iPad is alive and well.”

When it was pointed out that he has a hand-me-down iPad 2, “which is nothing to sneeze at,” he replied that “I am my own prediction’s fulfillment. APPL has nothing but upside.”

When asked about Microsoft’s tablet, he replied, “Microsoft? They make a tablet, too? Sheesh, the things you learn…”

This statement may contain forward-looking statements derived from Magic 8-Ball or other sources and should not be construed as investment advice.

Since micro-outsourcing refers to small companies who outsource, I hereby introduce the term nano-outsourcing, which refers to when a single worker outsources as this guy did.

Quite frankly, about the only reason the guy should be fired that I can find is because he broke just about every rule in the intellectual property, export control and IT departments’ books. But otherwise…

So true:

Public debate in Washington has deteriorated into Sesame Street sing-a-longs.

Whereas “We [will] take real steps to make our kids and our communities safer”;1 and

Whereas media and the entertainment industries play a central role in glorifying the violence in our society, in popularizing the violence being exhibited in our schools, and in making combatting this problem nearly impossible anywhere other than the front lines; and

Whereas student populations in schools cannot possibly be protected by signs declaring schools to be “gun free zones”; and

Whereas gun controls have been shown to be largely, if not completely, ineffective in stemming the tide of gun-related deaths;2 and

Whereas the most effective means of protecting our school children is likely to be armed personnel stationed in the schools; and

Whereas the Connecticut state budget is already stretched to the limits and cannot withstand the costs of armed guards in all schools;3 and

Whereas the states of Massachusetts and New Hampshire have found that state troopers are a costly requirement at road construction sites;4 and

Whereas the guarding function at a road construction site does not require the deterrence of an armed person:

Now, therefore, be it therefore resolved that armed Connecticut State Troopers shall be moved to schools as part of their regular duties in an undercover capacity where they will provide a deterrent to would-be assassins.

Be it further resolved that the troopers shall rotate among the schools in a secret and random fashion unknown to all but the principal; and

Be it further resolved that the troopers shall visit classrooms and demonstrate upright moral behavior and be good role models for our children such that would-be assassins will never know when a well-trained, armed individual with legal and moral authority to eliminate threats to our children may be present within a school with the sole purpose of doing bodily harm to said threat.

Sounds about right to me.


1 Gov. Dannel Malloy as quoted by the Newtown Patch

2Cato institute

3Common knowledge

4A Better Framingham

Conservatives are giving Al Gore a hard time for selling Current TV to the oil barons of Al Jazeera for $500M because it’s hypocrisy. Al’s other real hypocrisies aside (the jet, the mansions, etc.), I think he’s trying to do the right thing by selling the oil barons a steaming pile of nothing+ for $500M.

If he takes their money and gives them nothing in return, hasn’t he helped his so-called “global warming initiative”?


+ I suppose you’ve watched Current TV? No? I rest my case.

Ω Facebook vs. Christmas Letters

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I just realized that the Christmas letter (you know what they are: the missives which update you on the activities of a family over the past year) is being replaced by Facebook for Gen X and later.

Dan Frommer points out on SplatF that Time Warner Cable has an app for its own subscribers which allows you to stream TWC onto your TV for the cost of a Roku (about $50). He makes a couple of good observations:

It’s now technically plausible to watch hundreds of channels of TV using Internet Protocol (IP)…

It’s a Big Cable attitude change: Now permitting, not fighting, the idea of streaming TV channels to an actual TV.

But I think he misses the biggest point: how long will it be before competing cable providers begin offering their content to non-subscribers and what will the monopoly carrier be able to do about it? Currently, both Dish and DirecTV provide TV service into monopoly areas, so why couldn’t the cable companies do the same thing?

I love Ben Stein. You should read his latest missive in its entirety.

The men and women who sacrifice for us — military, police, prosecutors, fire fighters, teachers, nurses, parents — are the bedrock of the nation — and the military wife is the backbone of the entire free world.

Amen to that, Mr. Stein.

Ω Dizzybigdog

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Ω A Big Dog in My Lap

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