Lombardi: Stock Market Commentary & Forecasts, Financial & Economic Analysis Since 1986

Microsoft

Microsoft Corporation (NASDAQ/MSFT) is a technology company that has been around since 1986 and was founded by Bill Gates. With a market cap of close to $300 billion, Microsoft is one of the largest companies in the world. The maker of the widely popular “Windows” operating system has run into difficulties due to competition, but its expansion into smartphones, tablets, and the “Xbox” gaming and entertainment system is driving renewed interest in Microsoft.

U.S.-Listed Israeli Companies the Next Big Buying Opportunity?

By for Profit Confidential

Three U.S.-Listed Israeli Growth Stocks Worth a LookIsrael has grown to become a key producer of technology and medical devices companies outside of the United States and Canada. We are talking about a very small country of less than eight million people, but which has become known as the “Silicon Valley of the Middle East.”

In fact, after China and Canada, Israel-based companies are the third-most-listed on U.S. stock exchanges as far as international listings, and they may be offering a buying opportunity.

Contrary to companies emerging out of China, Israeli companies have, so far, been quite clean as far as reporting reliability and confidence in the financial results, something that has escaped Chinese stocks that make them untrustworthy to investors. (Read “Chinese Stocks Promise Higher Potential Gains?”)

While there are major big-cap companies out of Israel, such as biotech Teva Pharmaceutical Industries Limited (NUSE//TEVA), there is also an excellent speculative buying opportunity in some of the small-cap stocks emerging from the country.

I have listed three speculative Israeli stock plays that are worth a closer look as a buying opportunity.

In the small-cap technology space, another buying opportunity is Israel-based Magic Software Enterprises Ltd. (NASDAQ/MGIC), which has been providing information technology services for more than 30 years. The company has built ventures with key software partners, including International Business Machines Corporation (NYSE/IBM), Microsoft Corporation (NASDAQ/MSFT), and Oracle Corporation (NYSE/ORCL).

In 2013, the company was ranked 37th on the Deloitte Israel Technology Fast 50 list.

Magic Software is profitable, with higher sequential earnings in six straight years, from 2006 to 2012, prior to a small decline in 2013. The valuation is reasonable at 14.66 … Read More

Microsoft’s Deal with Apple a Lucrative Move?

By for Profit Confidential

Microsoft Impressing Investors with New FocusThe business climate appears to be changing at Microsoft Corporation (NASDAQ/MSFT), as the company attempts to evolve from its roots as a maker of operating systems for personal computers (PCs) to a more dynamic business focused on the surging mobile sector.

It has been a long time coming for this former Wall Street star. Out with former Microsoft CEO Steve Ballmer and his lack of vision and execution in acknowledging the significance of the mobile sector. The new leader at the helm, Satya Nadella, appears to be steering Microsoft out of troubled waters and into the new realm of mobile.

The stock is at a new 52-week high and looking higher on the charts—finally rewarding shareholders and institutional investors after years of miscalculations.

Instead of focusing on the “Windows” operating system and PCs, Microsoft has shifted its focus to smartphones, tablets, entertainment gaming consoles, and now, it’s creating applications that could be used on the Apple Inc. (NADSAQ/AAPL) “iPad.”

Microsoft announced it would be offering as a downloadable app from the Apple App Store its widely used “Office” suite, which includes the popular “Word,” “Excel,” and “PowerPoint” applications. This strategy is a sharp contrast to the past years, when Microsoft was battling Apple to sell smartphones and tablets. Now having recognized the fact that Apple is tops, Microsoft is looking to build apps for the iPads and harness the hundreds of millions of users.

A smart move by Nadella and based on the share price, the stock market is pleased with the new direction.

Of course, Apple also benefits, as the company will receive 30% of the fees paid for … Read More

What the “Microsoft Indicator” Says Now

By for Profit Confidential

Microsoft the Best Market Indicator at This TimeEarnings estimates for Microsoft Corporation (MSFT) are going up and the stock, which recently accelerated, finally looks like it has broken out of a 13-year consolidation.

Microsoft has been an income play for quite a while. Currently yielding three percent, the company’s forward price-to-earnings ratio is around 12.5 and is not dissimilar from many other blue chips.

Then there’s Intel Corporation (INTC). This company has been struggling for capital gains, but it’s yielding 3.6% and isn’t expensively priced.

What these technology companies illustrate so well is the business cycle, both in terms of operational growth and also as equity securities. Getting the cycle correct (the right place/stock at the right time) is the toughest thing for any investor or businessperson.

Regarding stocks, both Microsoft and Intel’s long-term charts clearly show how extremely overpriced their share prices were during the bull market of the 90s. Intel’s long-term stock chart is featured below:

INTC Intel Corp. Nasdaq GS Chart

Chart courtesy of www.StockCharts.com

The benefit of the very long term is that it provides a normalized but still decent rate of return with these kinds of stocks. No enterprise or investor can escape the business cycle, whether it is industry-specific, a local reality, or the general economy.

Railroad stocks have been super hot over the last several years, but for long periods of time, they were not. The solid dividend-payers that they are, you’d be hard-pressed to find Union Pacific Corporation (UNP) competing with Apple Inc. (AAPL) or Google Inc. (GOOG) for headlines.

I feel that stocks have broken out of their previous consolidation phase in favor of a new long-term cycle. But while last year’s stunning … Read More

This New Tech-Related Sector Is Hot

By for Profit Confidential

Profit from Social Media Without Investing in Social Media StocksAs I have recently discussed in this column, I am positive on the technology sector, yet there is also some obvious froth in these stocks, namely in the social media space.

My freshman son in high school is currently producing a sports blog that I admit is pretty good. In less than a week since going live, his blog has more than 40 unique visitors and well over 200 page hits. He is asking how he can make money from blogging. I say it’s all about the eyeballs and traffic to your site and how active the users are.

If you simply look at the social media space, you’d realize the massive money being thrown around in driving the valuation of companies in this space. Facebook, Inc. (NASDAQ/FB) comes to mind, which I recently named as one of my top plays in the Internet sector. When you have more than a billion subscribers, the upside is enormous if the company can monetize its traffic.

In the case of my son, he has a long way to go, but for companies like Facebook or Twitter, Inc. (NYSE/TWTR), they have the eyeballs, so now it’s all about converting them to money. (Read “Two More Internet Stocks to Watch.”)

If you doubt the euphoria in the social media sector, think about Facebook deciding to put down a whopping $19.0 billion to acquire mobile messaging company WhatsApp. The four-year-old company is growing exponentially, with more than 450 million users taking advantage of its cross-platform mobile messaging service each month. The deal makes sense for Facebook, as it adds an additional mobile service … Read More

Where to Find the Best Buying Opportunity in This Stock Market Going Forward

By for Profit Confidential

Buying Opportunity for Stock Investors Going ForwardAt the beginning of the year, I thought the technology sector would deliver some of the top potential for gains this year.

Nearly two months into the year, the technology sector has, so far, made the biggest strides in what has been a relatively cautious start to the year.

So far this February, the technology sector is leading the broader stock market with the NASDAQ closing higher for eight straight sessions as of the end of Tuesday. With the steady advance, the NASDAQ hit a new 13-year high, up 4.12% in February and 2.28% in 2014. The NASDAQ is the only major stock market index in the black this year.

And it looks like the NASDAQ could test its all-time nominal high of above 5,100 sometime in 2015 if everything pans out. We could even see a test later this year if the technology sector can maintain its positive sentiment and continue to edge higher, based on my technical analysis.

It has been nearly 14 years since that infamous period back then when the technology sector imploded.

The valuation and froth this time isn’t as bad, but we have been seeing some euphoric trading in the Internet services space and social media stocks. (Read my take on Facebook in the social media space in “My Top Stock Pick in the Internet Space.”)

A look at the long-term chart of the NASDAQ reveals that the relative steadiness of the current move towards 4,000 is not unlike what happened more than 13 years ago. Note that the index is now near its previous nominal high as indicated by the top … Read More

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U.S.-Listed Israeli Companies the Next Big Buying Opportunity?

By for Profit Confidential

Three U.S.-Listed Israeli Growth Stocks Worth a LookIsrael has grown to become a key producer of technology and medical devices companies outside of the United States and Canada. We are talking about a very small country of less than eight million people, but which has become known as the “Silicon Valley of the Middle East.”

In fact, after China and Canada, Israel-based companies are the third-most-listed on U.S. stock exchanges as far as international listings, and they may be offering a buying opportunity.

Contrary to companies emerging out of China, Israeli companies have, so far, been quite clean as far as reporting reliability and confidence in the financial results, something that has escaped Chinese stocks that make them untrustworthy to investors. (Read “Chinese Stocks Promise Higher Potential Gains?”)

While there are major big-cap companies out of Israel, such as biotech Teva Pharmaceutical Industries Limited (NUSE//TEVA), there is also an excellent speculative buying opportunity in some of the small-cap stocks emerging from the country.

I have listed three speculative Israeli stock plays that are worth a closer look as a buying opportunity.

In the small-cap technology space, another buying opportunity is Israel-based Magic Software Enterprises Ltd. (NASDAQ/MGIC), which has been providing information technology services for more than 30 years. The company has built ventures with key software partners, including International Business Machines Corporation (NYSE/IBM), Microsoft Corporation (NASDAQ/MSFT), and Oracle Corporation (NYSE/ORCL).

In 2013, the company was ranked 37th on the Deloitte Israel Technology Fast 50 list.

Magic Software is profitable, with higher sequential earnings in six straight years, from 2006 to 2012, prior to a small decline in 2013. The valuation is reasonable at 14.66 … Read More

Microsoft’s Deal with Apple a Lucrative Move?

By for Profit Confidential

Microsoft Impressing Investors with New FocusThe business climate appears to be changing at Microsoft Corporation (NASDAQ/MSFT), as the company attempts to evolve from its roots as a maker of operating systems for personal computers (PCs) to a more dynamic business focused on the surging mobile sector.

It has been a long time coming for this former Wall Street star. Out with former Microsoft CEO Steve Ballmer and his lack of vision and execution in acknowledging the significance of the mobile sector. The new leader at the helm, Satya Nadella, appears to be steering Microsoft out of troubled waters and into the new realm of mobile.

The stock is at a new 52-week high and looking higher on the charts—finally rewarding shareholders and institutional investors after years of miscalculations.

Instead of focusing on the “Windows” operating system and PCs, Microsoft has shifted its focus to smartphones, tablets, entertainment gaming consoles, and now, it’s creating applications that could be used on the Apple Inc. (NADSAQ/AAPL) “iPad.”

Microsoft announced it would be offering as a downloadable app from the Apple App Store its widely used “Office” suite, which includes the popular “Word,” “Excel,” and “PowerPoint” applications. This strategy is a sharp contrast to the past years, when Microsoft was battling Apple to sell smartphones and tablets. Now having recognized the fact that Apple is tops, Microsoft is looking to build apps for the iPads and harness the hundreds of millions of users.

A smart move by Nadella and based on the share price, the stock market is pleased with the new direction.

Of course, Apple also benefits, as the company will receive 30% of the fees paid for … Read More

What the “Microsoft Indicator” Says Now

By for Profit Confidential

Microsoft the Best Market Indicator at This TimeEarnings estimates for Microsoft Corporation (MSFT) are going up and the stock, which recently accelerated, finally looks like it has broken out of a 13-year consolidation.

Microsoft has been an income play for quite a while. Currently yielding three percent, the company’s forward price-to-earnings ratio is around 12.5 and is not dissimilar from many other blue chips.

Then there’s Intel Corporation (INTC). This company has been struggling for capital gains, but it’s yielding 3.6% and isn’t expensively priced.

What these technology companies illustrate so well is the business cycle, both in terms of operational growth and also as equity securities. Getting the cycle correct (the right place/stock at the right time) is the toughest thing for any investor or businessperson.

Regarding stocks, both Microsoft and Intel’s long-term charts clearly show how extremely overpriced their share prices were during the bull market of the 90s. Intel’s long-term stock chart is featured below:

INTC Intel Corp. Nasdaq GS Chart

Chart courtesy of www.StockCharts.com

The benefit of the very long term is that it provides a normalized but still decent rate of return with these kinds of stocks. No enterprise or investor can escape the business cycle, whether it is industry-specific, a local reality, or the general economy.

Railroad stocks have been super hot over the last several years, but for long periods of time, they were not. The solid dividend-payers that they are, you’d be hard-pressed to find Union Pacific Corporation (UNP) competing with Apple Inc. (AAPL) or Google Inc. (GOOG) for headlines.

I feel that stocks have broken out of their previous consolidation phase in favor of a new long-term cycle. But while last year’s stunning … Read More

This New Tech-Related Sector Is Hot

By for Profit Confidential

Profit from Social Media Without Investing in Social Media StocksAs I have recently discussed in this column, I am positive on the technology sector, yet there is also some obvious froth in these stocks, namely in the social media space.

My freshman son in high school is currently producing a sports blog that I admit is pretty good. In less than a week since going live, his blog has more than 40 unique visitors and well over 200 page hits. He is asking how he can make money from blogging. I say it’s all about the eyeballs and traffic to your site and how active the users are.

If you simply look at the social media space, you’d realize the massive money being thrown around in driving the valuation of companies in this space. Facebook, Inc. (NASDAQ/FB) comes to mind, which I recently named as one of my top plays in the Internet sector. When you have more than a billion subscribers, the upside is enormous if the company can monetize its traffic.

In the case of my son, he has a long way to go, but for companies like Facebook or Twitter, Inc. (NYSE/TWTR), they have the eyeballs, so now it’s all about converting them to money. (Read “Two More Internet Stocks to Watch.”)

If you doubt the euphoria in the social media sector, think about Facebook deciding to put down a whopping $19.0 billion to acquire mobile messaging company WhatsApp. The four-year-old company is growing exponentially, with more than 450 million users taking advantage of its cross-platform mobile messaging service each month. The deal makes sense for Facebook, as it adds an additional mobile service … Read More

Where to Find the Best Buying Opportunity in This Stock Market Going Forward

By for Profit Confidential

Buying Opportunity for Stock Investors Going ForwardAt the beginning of the year, I thought the technology sector would deliver some of the top potential for gains this year.

Nearly two months into the year, the technology sector has, so far, made the biggest strides in what has been a relatively cautious start to the year.

So far this February, the technology sector is leading the broader stock market with the NASDAQ closing higher for eight straight sessions as of the end of Tuesday. With the steady advance, the NASDAQ hit a new 13-year high, up 4.12% in February and 2.28% in 2014. The NASDAQ is the only major stock market index in the black this year.

And it looks like the NASDAQ could test its all-time nominal high of above 5,100 sometime in 2015 if everything pans out. We could even see a test later this year if the technology sector can maintain its positive sentiment and continue to edge higher, based on my technical analysis.

It has been nearly 14 years since that infamous period back then when the technology sector imploded.

The valuation and froth this time isn’t as bad, but we have been seeing some euphoric trading in the Internet services space and social media stocks. (Read my take on Facebook in the social media space in “My Top Stock Pick in the Internet Space.”)

A look at the long-term chart of the NASDAQ reveals that the relative steadiness of the current move towards 4,000 is not unlike what happened more than 13 years ago. Note that the index is now near its previous nominal high as indicated by the top … Read More

Why 2014 Is Looking More and More Like 2007

By for Profit Confidential

Perfect Storm in the Making for Key Stock IndicesIf there is an investment theme I would follow in 2014, it would be this:

Preserve your capital, be worried about the economy, and don’t for a second believe that key stock indices are going to provide returns like they did in 2013. This year may just be the year when the floor is taken out from beneath stock prices.

Why am I so bearish on 2014? It’s because I believe a perfect storm is in the making for key stock indices.

The main driver of key stock indices, corporate earnings, is under pressure. Of the 344 companies on the S&P 500 that have reported their corporate earnings for the fourth quarter of 2013, 3.3% of them surprised the market with better-than-expected earnings—43% below the four-year average “surprise” rate of 5.8%. (Source: FactSet, February 7, 2014.) Corporate earnings are far from exceptional.

In respect to the future, so far, for their first-quarter corporate earnings forecasts, 57 of the S&P 500 companies have issued negative corporate earnings guidance compared to 14 companies that have issued a positive outlook. (Source: Ibid.) Buying stock when companies in key stock indices are worried about their corporate earnings has never been a wise move.

Then we have the issue of the slow pullback on money printing by the Fed. The Federal Reserve is now printing $65.0 billion a month in new money as opposed to the $85.0 billion a month it printed in 2013. Not a big deal? It has been for the emerging markets, as the U.S. dollar strengthens and emerging market currencies collapse, putting further pressure on U.S. companies that sell abroad.

The … Read More

Top Market Sectors for 2014

By for Profit Confidential

Transports in 2013 Financials in 2014We won’t really get into the heart of the fourth-quarter 2013 earnings season until late January into early February. Smaller companies typically take longer to report, as they don’t have the large accounting departments that blue chips have.

I’ve noticed that quite a number of Wall Street research analysts have been boosting their 2014 full-year earnings expectations. They’re playing the same old game of cat and mouse with corporations and research analysts. Corporations always want to “outperform” if they can, so they deliberately keep their outlooks pretty conservative.

Companies getting a boost to their full-year earnings outlooks include: Wal-Mart Stores, Inc. (WMT), Microsoft Corporation (MSFT), Colgate-Palmolive Company (CL), Oracle Corporation (ORCL), E. I. du Pont de Nemours and Company (DD), Exxon Mobil Corporation (XOM), and Verizon Communications Inc. (VZ). Even Intel Corporation (INTC) is having its earnings outlook nudged higher by the Street for several upcoming quarters, including all of 2014.

According to FactSet, eight out of 10 S&P 500 market sectors are expected to report an increase in fourth-quarter earnings; these sectors are led by a strong expected gain in financials, followed by the telecom and industrial sectors. Energy is expected to produce a decline, comparatively.

While revenue growth from financials should be lackluster to negative on a comparative basis, a strong expected gain in earnings will be market-boosting news. Countless financials have been doing very well on the stock market since last November.

Over several of the last quarters, companies reported they were able to increase their selling prices without materially affecting demand. Sales growth has been a combination of increased volumes and rising prices.

Extreme monetary expansion … Read More

Why the Small Home Supplies Stocks Offer Good Potential

By for Profit Confidential

Stocks Offer Good PotentialThe housing market looks like it may be ready to fall. While the homebuilders may face some hurdles, the area of housing that I feel is a buying opportunity is the home supplies and services stocks. The Home Depot, Inc. (NYSE/HD) is the “Best of Breed” in the housing market, with Lowes Companies, Inc. (NYSE/LOW) trailing in second.

While I like the Home Depot in the housing market, the reality is that the company is too big for my liking, with its market cap at a whopping $112 billion. Even Lowe’s, with a market-cap of $53.0 billion, is too large for my liking and the current valuations are fair.

A small-cap stock that I would look at as an alternative in the housing market supplies sector is Dallas-based Builders FirstSource, Inc. (NASDAQ/BLDR), with a much smaller market cap of $728 million. But unlike the Home Depot and Lowe’s, Builders FirstSource primarily deals with the residential new homes construction housing market as a manufacturer and seller of structural and related building products. The company’s products include roof and floor trusses, wall panels, stairs, aluminum and vinyl windows, custom millwork, and pre-hung doors.

The company runs 53 distribution centers along with 47 manufacturing facilities in nine states that are situated mainly in the southern and eastern United States housing market.

Builders FirstSource has outperformed the S&P 500 over the past year with a 29.91% advance, versus 23.52% by the S&P 500.

The company recorded sequential annual revenue growth from 2004 to 2006, but then struggled on the charts with three straight down years. Builders FirstSource appears to be on the right path … Read More

Small Game Developer Set to Generate Short-Term Gains

By for Profit Confidential

Small Game Developer Set to Generate Short-Term GainsThere’s some buzz surrounding the video gaming market again with the pending releases of the “PlayStation 4” by Sony Corporation (NYSE/SNE) and the “Xbox One” by Microsoft Corporation (NASDAQ/MSFT).

As I recently discussed, the release of new gaming and entertainment consoles generate excitement and drive up the demand for games. (Read “Why the Gaming Sector Should Be on Your Radar.”) In this column, I wrote about Electronic Arts Inc. (NASDAQ/EA) and Activision Blizzard, Inc. (NASDAQ/ATVI), but a much smaller gaming software maker that I expect could deliver some impressive numbers, based on my stock analysis, is Take-Two Interactive Software, Inc. (NASDAQ/TTWO).

If you are a fan of the infamous “Grand Theft Auto” series, you also probably know that the creator is Take-Two Interactive. The recent launch of its latest version, “Grand Theft Auto V,” is breaking all records for the series, as the company said it has already sold 29 million copies in the first six weeks of sales. That’s impressive and will generate well over $1.5 billion in revenues, which is more than the company’s trailing 12 months of sales, according to my stock analysis.

In addition to Grand Theft Auto, Take-Two Interactive publishes games under two labels: Rockstar Games and 2K. The 2K label publishes under three more labels: 2K Games, 2K Sports, and 2K Play.

My stock analysis suggests that the stock should be doing better with the projected sales. Take-Two Interactive is still up 61% over the past 52 weeks, easily beating the 25.5% return of the S&P 500. But in comparison, over the same period, Electronic Arts is up 95%!

On a … Read More

Why the Gaming Sector Should Be on Your Radar

By for Profit Confidential

Gaming Sector Should Be on Your RadarWith the upcoming release of new video consoles from Sony Corporation (NYSE/SNE) and Microsoft Corporation (NASDAQ/MSFT), the video game sector appears to be set to experience a revival, as my stock analysis indicates.

According to NPG Group, the U.S. sales of video game-related hardware, software, and accessories surged by 27% year-over-year to $1.08 billion in September. (Source: The NPD Group, Inc. web site, last accessed October 22, 2013.) The sale of software, specifically, surged 52% to $754 million, accounting for 70% of total sales. Yet with the debut of two new consoles in November (Sony’s “PlayStation4” and Microsoft’s “Xbox One”), my stock analysis indicates that sales in the hardware sector will pick up, giving a boost to the share prices of Microsoft and Sony.

In the hardware area, Microsoft has done well with its Xbox console in spite of its lag in sales compared to Sony’s PlayStation console, based on my stock analysis. Yet the move by Microsoft into the gaming and entertainment console market is a big selling point for the company, as my stock analysis points out. (Read “Why Microsoft May Finally Be Set to Turn Its Fortune Around.”)

I know my son is anxiously anticipating the release of the PS4 and, in particular, the “NBA Live 14” game that is made by one of the top games developers Electronic Arts Inc. (NASDAQ/EA). Electronic Arts (EA) develops games for the Xbox, PlayStation, and ”Nintendo Wii” consoles. The company also develops games for mobile phones and tablets.

EA games are broad in scope and include action, military, sports, racing, simulation, strategy, family, kids, music, and puzzle-based games. … Read More

How to Profit from the Mobile Market Without Investing in Phone Makers

By for Profit Confidential

 buying opportunityThinking of investing in the mobile market? You could try to play the mobile market through cell phone manufacturers and decide which company—Apple Inc. (NASDAQ/AAPL), Samsung Electronics Co. Ltd., Microsoft Corporation (NASDAQ/MSFT), or the slew of other players in this sector—is the best buying opportunity.

At this time, Apple is tops in the United States, but Samsung is the global leader, and may perhaps be a better buying opportunity because of this. On the other hand, Microsoft is the up-and-comer that could make some ground if its acquisition of the cellular assets of Nokia Corporation (NYSE/NOK) is approved—which could make this stock a good buying opportunity. (Read “Why I Like Microsoft’s Proposed Acquisition of Nokia’s Cell Phone Business.”)

However, my thinking is to look at some of the third-party suppliers of products and solutions to the mobile market as an alternative buying opportunity to play the growth of the mobile market.

In this regard, a stock that I have followed for a while is small-cap Synaptics Incorporated (NASDAQ/SYNA). This is the company that supplies some of the touchscreen interface technology used on the Apple “iPhone” and Samsung “Galaxy” devices, along with the touchscreen technology used for “Windows 8.”

In fact, Synaptics has supplied its interface solutions to over one billion devices, according to the company’s web site. These devices include mobile phones, notebook computers, personal computer (PC) peripherals, and portable entertainment devices.

Synaptics is also working on a revolutionary technology that combines its touchscreen solution with the eye-tracking and gaze applications of Tobii Technology. The combination of the two technologies is currently being tested on a prototype laptop. … Read More

Update: Apple’s Attempt to Enter Emerging Markets a Blunder?

By for Profit Confidential

Update: Apple’s Attempt to Enter Emerging Markets a BlunderWhen the next-generation Apple Inc. (NASDAQ/AAPL) “iPhone 5S” and “iPhone 5C” were launched in mid-September, the company reported record sales over its first weekend of selling.

But there was a problem: the majority of the sales were for the iPhone 5S, while sales of the iPhone 5C lagged. The problem was the cost of the plastic-cased 5C; at around $100.00 with a two-year contract, the “cheaper” version simply cost too much, especially for the emerging markets like China, where Apple had high hopes for the iPhone 5C.

Obviously, the initial demand for the iPhone 5C over the first few weeks appears to be disappointing. Best Buy Co., Inc. (NYSE/BBY) announced it was cutting the price of the 5C to $50.00 on a two-year contract between October 3 and October 7.

But while the discount was only for four days, you kind of wonder if there will be a more permanent price cut ordered by Apple should sales lag.

The iPhone 5S is selling very well, but for Apple to really break out of its shell, the company will need to cut the cost of the iPhone 5C in order to get a foothold in the emerging markets.

Without a major price cut, it will not be easy for Apple to break into a mobile market that focuses on attractively priced smartphones—a market that includes established rivals, such as Nokia Corporation (NYSE/NOK), whose mobile assets are to be acquired by Microsoft Corporation (NASDAQ/MSFT), Samsung Electronics Company Ltd., LG Corporation, and major upstarts, such as Huawei Technologies Co. Ltd. and ZTE Corporation, based out of China.

For Apple, the massive mobile market … Read More

Apple Investor Update: New “Cheap” iPhone Not Enough to Break into Emerging Markets

By for Profit Confidential

Apple Investor UpdateThere was so much anticipation and hype for new, cheaper “iPhones” to be introduced by Apple Inc. (NASDAQ/AAPL) on September 10—but something went astray. It was akin to waiting with bated breath for a big moment to happen and then nothing materializes.

Prior to the announcement, cheap iPhones were going to take over in the emerging markets and China, where consumers just don’t have the means to pay that much for a smartphone.

But since the announcement launching the next generation iPhone, the share price of Apple has retrenched over 10%.

Here’s the problem: Everything seems great for the new “iPhone 5S,” which is much more powerful and twice as fast with the 64-bit “A7” chip. The 5S may be a better iPhone, yes, but the lack of selling has to do with the “iPhone 5C.”

With the so-called “budget-friendly” 5C priced at $99.00 with a contract, the price tag is still way too steep for lower-income users in the emerging markets, which is where Apple needs to excel. Who cares about America?—Apple is already the boss of smartphones here.

However, the $100.00 lower cost of the plastic-bodied iPhone 5C could still cannibalize the iPhone 5S sales in the United States and other industrialized countries.

For the company, the failure to offer a cheaper iPhone 5C, say for under $50.00, was not smart. Apple is clearly going after margins, as has always been the case. In this instance, though, this is clearly not the right strategy.

Apple should have come out with a super-cheap smartphone to compete with Samsung Electronics Co. Ltd., Nokia Corporation (NYSE/NOK), HTC Corporation, and others in … Read More

And the Loser in the Smartphone Battle Is…

By for Profit Confidential

emerging marketsAt a time when the smartphone war is picking up, former Wall Street star BlackBerry Limited (NASDAQ/BBRY) is running for the exit as fast as it can. The company is expected to be sold in some form by November, as it tries to unload its issues on another company.

The stakes are high and extremely competitive. BlackBerry finally realized this. Hewlett-Packard Company (NYSE/HPQ) realized this early and vaulted from the tablet market; albeit, it’s still developing a higher-end tablet geared toward companies. Since its decision, Hewlett-Packard (HP) has doubled in price and fared much better than I previously thought it would.

Microsoft Corporation (NASDAQ/MSFT) is proposing to acquire the cell phone business of another former Wall Street darling, Nokia Corporation (NYSE/NOK), to take a run at market leaders Apple Inc. (NASDAQ/AAPL) and Samsung Electronics Co. Ltd. (Read “Why I Like Microsoft’s Proposed Acquisition of Nokia’s Cell Phone Business.”)

So, we now have a three-party battle for smartphone and tablet supremacy.

Apple dominates the U.S. market and continues to make the most attractive products that consumers will line up overnight to get their hands on. The next-generation “iPhone” will be launched tomorrow to great anticipation. (I’m actually looking forward to it, and may upgrade my old “iPhone 4.”)

Of course, Apple is also expected to launch a cheaper plastic “iPhone 5” version that will cater to those who can’t afford the hefty price tag not only in America, but in the emerging markets as well. If Apple, can get its smartphones sold in China (it’s already had talks), it could be a massive game-changer for the company and could … Read More

Why I Like Microsoft’s Proposed Acquisition of Nokia’s Cell Phone Business

By for Profit Confidential

Microsoft’s Proposed Acquisition of Nokia’s Cell Phone BusinessMicrosoft Corporation (NASDAQ/MSFT) is finally doing something that I have been calling for over the past several years. With CEO Steve Ballmer set to leave the company (read “Why Microsoft May Finally be Set to Turn its Fortune Around”), the former Wall Street favorite is making plans to aggressively expand its presence in the growing mobility market. How? Through its proposed acquisition of the cell phone business Nokia Corporation (NYSE/NOK), a deal valued at up to $7.2 billion, in an effort to expand in a sector dominated by Apple Inc. (NASDAQ/AAPL) and Samsung Electronics Co. Ltd.

The deal that sees Microsoft buying the mobile unit, including the “Lumia” line running on a “Windows” platform, makes perfect sense for a company that is falling behind in the mobile race.

For Nokia, the deal also makes sense, as the company probably realized it was going to be a tough upward battle against Apple, Samsung, and a host of other Chinese smartphone makers. Essentially, Nokia made a conscious decision to exit before it was lights out.

As far as Microsoft, the purchase of Nokia’s mobile business also makes a lot of sense, as Microsoft struggles to advance its presence in the mobile space while facing declining demand for its Windows platform on personal computers (PCs) and laptops.

There was really no other choice for Microsoft, and given the company has $76.0 billion in cash, the price (or gamble) is worth it. But again, there’s absolutely no guarantee the strategy will pan out.

The Lumia smartphones had good reviews, but failed to crack the lock on the smartphone market placed by … Read More

The Great Crash of 2014

A stock market crash bigger than what happened in 2008 and early 2009 is headed our way.

In fact, we are predicting this crash will be even more devastating than the 1929 crash…

…the ramifications of which will hit the economy and Americans deeper than anything we’ve ever seen.

Our 27-year-old research firm feels so strongly about this, we’ve just produced a video to warn investors called, “The Great Crash of 2014.”

In case you are not familiar with our research work on the stock market:

In late 2001, in the aftermath of 9/11, we told our clients to buy small-cap stocks. They rose about 100% after we made that call.

We were one of the first major advisors to turn bullish on gold.

Throughout 2002, we urged our readers to buy gold stocks; many of which doubled and even tripled in price.

In November of 2007, we started begging our customers to get out of the stock market. Shortly afterwards, it was widely recognized that October 2007 was the top for stocks.

We correctly predicted the crash in the stock market of 2008 and early 2009.

And in March of 2009, we started telling our readers to jump into small caps. The Russell 2000 gained about 175% from when we made that call in 2009 to today.

Many investors will find our next prediction hard to believe until they see all the proof we have to back it up.

Even if you don’t own stocks, what’s about to happen will affect you!

I urge you to be among the first to get our next major prediction.
See it here now in this just-released alarming video.

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