David Fuller and Eoin Treacy's Free (Abbreviated)
Comment of the Day

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April 23 2014

Commentary by David Fuller

Apple Sales, Profit Top Estimates as iPhone Still Strong

Here is the opening of this Bloomberg report on Apple’s results which were largely responsible for reversing Wall Street’s modest decline in after hours trading: 

Apple Inc. (AAPL) took dual steps to reassure investors concerned with its growth prospects, reporting a surge in iPhone sales and giving its shareholder payout program a $30 billion boost.

The world’s most valuable company said fiscal second-quarter profit grew 7 percent to $10.2 billion and sales rose 4.7 percent to $45.6 billion after making the iPhone available throughChina’s largest wireless carrier, China Mobile Ltd. (941), earlier this year. IPhone sales were 43.7 million, topping analysts’ estimates of 37.7 million, the company said in a statement today.

Apple said it will also increase its repurchase authorization to $90 billion from $60 billion and announced a seven-for-one stock split. In addition, the company boosted its dividend. Apple said it plans to take on debt to pay for the added stock buyback and dividend plans.

David Fuller's view

The world’s biggest company in terms stock market valuations certainly played a leading role in reviving the appeal of ‘old tech’ relative to ‘new tech’, which has seen its momentum bubble burst this year.  Apple (daily & weekly) was down nearly $7 today but will soar on Thursday because in after hours trading, following the company’s statement, it reached $566 for a gain of nearly 6.5%.  

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April 23 2014

Commentary by David Fuller

Email of the day 1

On investing in a start up tech stock:

“Hi Eoin/ David, I am currently considering investment opportunity in a start up tech stock. I'm aware of tech bubble talk and also extreme tech valuations these companies can achieve in today's market so I would categorise this as high risk/ potentially high reward investment. They are in white labelling talks so I assume this is a point where valuations can potentially soar? Any opinion/ advice would be much appreciated. FYI the stock is Vopium"

 

David Fuller's view

Thanks for a very interesting email.  I think you made a good opening assessment and you are obviously aware of the high risk versus potentially high reward of such investments.  We have seen a tech bubble, in my opinion, although obviously nothing like the 2000 blow-out.   

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April 23 2014

Commentary by David Fuller

Email of the day 2

On Russia and Ukraine:

“The following article in the FT explains why Russia is determined to have direct or indirect control over eastern Ukraine."

David Fuller's view

Thanks, it does explain Russia’s concern but the problem is of its own making.  The Soviet Union collapsed in 1991 but Russia assumed that it could always lead Ukraine, its biggest defence contractor, by the nose.  I agree with the concluding sentence:

“…the invasion of Ukraine by Russia to capture production of military equipment would be a very 19th-century way of looking at a 21st-century relationship”. 

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April 23 2014

Commentary by David Fuller

April 23 2014

Commentary by David Fuller

Email of the day 3

On Japan:

“Hi David, Eoin; By reading daily the comment of the day I know you are positive in the medium term to Japan. Below please find the GaveKal comment for Japan today. I will appreciate your comments. Best,”

David Fuller's view

Thanks for your email and the copy supplied.  Investors are currently waiting to see the impact of Japan’s sales tax, which the government introduced for reasons of fiscal responsibility.  They also remain wary because Japan’s stock market was a serial underperformer during the deflationary cycle following the 1990 stock market peak (monthly & weekly)

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