News for Today/Week (4-Feb-14): Apple, Facebook, Tesla, Michael Kors

Source: crenshawcomm.com

Source: crenshawcomm.com

Well, I slacked off for a week and now have this massive update of various companies that reported earnings or had interesting tidbits over the past week (along with the crazy volatility) so without further delay, on to the updates.

Record Numbers and still a “Disappointment” (AAPL)

Source: Tech Crunch

Source: Tech Crunch

Apple Inc. (AAPL) reported Q1 2014 numbers last Monday and then promptly dropped 7-8% the next day.  Hard to imagine that investors wouldn’t have liked the record number of sales in iPhones (51MM), iPads (26MM), and Macs (4MM) which resulted in quarterly revenue of $57.6B!  Apparently, those investors weren’t so thrilled with the flat guidance provided hence the drop.  While this author has switched his iPhone 3GS to a Google Nexus 5, I find it unbelievable that investors basically are pricing the company for no growth, with the current P/E sitting at 12.6 and future P/E at 11?!  One could argue that Android phones are quickly gaining market share but the iPhone is still the number one selling phone in America.  Moreover as this article points out, while Android users quickly outnumber iOS users, Android phones are basically being used as replacement for dumb phones; and not leveraging the smart capabilities of the phone – which would also explain why all the newest apps come out on Apple products first (including the much-anticipated paper app from Facebook that I am dying to try).

So, while I may have switched to Android to get away from always having to go to iTunes to move files around, I find Apple ridiculously cheap and currently valued based on no anticipated growth.  In the last conference call, CEO Tim Cook hinted at new products coming down the pipeline which probably won’t immediately put a dent in revenue vs. iPhones/iPads but would show there are future products – after all, a company can’t really spend $5B a year in R&D on just new iPhone colours can it?  So, whether it’s an iTV labelled an iWatch, a true iWatch,  a mobile payment system, or hopefully not the iPhone 6S/C, the company has intrigued me enough to make a small investment and hope their next product line creates as much fanfare as the first iPhone did.

Record Numbers for Another High-Tech Stock (FB)

facebook ad in news feedFacebook Inc. (FB) also reported record Q4 2013 numbers last week  and were rewarded with a 20% pop.  No disappointment here – big growth across the board –  more daily and monthly active users especially on mobile and more ad revenue at a higher effective price per ad which lead to record revenue and earnings; and especially addressing any concerns of monetizing mobile with nearly $1B generated from mobile alone.  On the conference call, executives called out that investments in mobile were paying off – with user sentiments about mobile ads increasing as ad volume increased and it was great to hear the company focused on having Facebook users appreciate ads as much as hearing from friends and family.  It’s a fine line and it certainly looks like the company is spending time and effort to make the experience worthwhile.

There’s probably still a few issues to work out – as even I found out in an ad (see left image) in my own Facebook news feed which made me question if it was relevant to me or not (I am male and already married).

Some rumblings and analysis are making their way through the internet on how Facebook’s algorithms now decide what gets displayed on your news feed making it actually difficult to determine what your actual reach is when you post on Facebook.  These are all trends to watch but for now, the company looks to be firing on all cylinders.  On the more touching side, to celebrate its 10 year anniversary, Facebook has put together a video collage of personal highlights since the beginning of the company for all it’s users.

Tesla Completes Coast-to-Coast Drive, May Need New Accountants?

Source: Tesla Motors

Source: Tesla Motors

With it’s latest installed SuperCharger station in the cross country route late January, Tesla Motors Inc. (TSLA) ran a promotional event where two cars attempted to be recognized in the Guinness Book of World Records for lowest charge time for an EV travelling across the country (from L.A. to NYC).  The team just blogged completing the 3,464.5 mile journey in 76 hours.  This certainly starts addressing the range anxiety that would-be buyers of EVs have, but as the map shows below, may not have been the most direct route to go coast to coast.

Source: Tesla

Source: Tesla

However, the company expects to quickly expand to cover 98% of the population of Canada and the US by 2015:

Source: Tesla

Source: Tesla

However, a more pressing issue the company may need to address is hiring better accountants, or PR staff.  Earlier this year in another News for Today, we pointed out how Tesla reported at the Detroit auto show that 6,900 Model S deliveries were made in Q4 of 2013.  The company was quick to point out that this was a 20% improvement from prior guidance.  However, as this article points out, the previous guidance would indicate (with some math) that they expected 5,950 cars making 6,900 only a 16% improvement (unless they are under-promising and over-delivering and will provide 20% above 5,5950 which is 7,140)  In any event, we won’t have to wait long to see what the true number is as earnings get reported later this month.

Problems in Retail?  What Problems?

Source: styleblazer.com

Source: styleblazer.com

Retail is a finicky business – one season, you’re in, and the next season you could be out and it’s typically why I don’t invest in Retail/Apparel companies (The Buckle (BKE) being my only other investment in this industry).  Most retailers (including my own BKE – down nearly 20% so far year alone) struggled mightily over the Christmas season, and in many cases, reported negative same store sales and having to severely discount.  Cold climate and weather were reasons provided by other retailers to explain slow sales but this didn’t seem to deter Michael Kors’ (KORS) customers as the company reported 59% more revenue, higher margins, 77% more profit, and same store sales at a ridiculous sounding 28%!  It seems like the company continues to expect robust growth with same store sales continuing to grow at a 15-20% pace for the current quarter.  There’s no doubt that this brand is hot right now and has definitely taken over from Coach (COH) as the brand of choice for being fashionable AND affordable.  While I believe the company still has plenty of room to grow, it’s still fashion based and could turn in just one season.  I’ll be looking for my wife and female readers to let me know when the company starts to lose its luster.

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3 thoughts on “News for Today/Week (4-Feb-14): Apple, Facebook, Tesla, Michael Kors

  1. Pingback: Let’s Catch Up (for July 2014): Saying bye-bye to some favourites | Fearless Cal's Investment Journal

  2. Pingback: Portfolio Year In Review – 2014 | Fearless Cal's Investment Journal

  3. Pingback: Portfolio Update – May 2017 (+2.9%, Currency -1.0%) | Fearless Cal's Investment Journal

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