3
Oct

iPhone 6 and iPhone 6 Plus consumers are not likely to maintain an insatiable appetite for these devices

On Thursday, September 25, 2014, Barrons ran an article by Tiernan Ray. This short piece, Apple: ‘Bendgate’ Irrational, Says Cantor; Apple Comments via CNBC, which was included in Ray’s Tech Trader daily feature amounted to a quote from an analyst at Cantor Fitzgerald, Brian White, along with some comments from Ray.

White’s quote speaks to the current controversy about these new smart phones, and points to what he refers to as an “insatiable appetite” for these devices on the part of Chinese consumers. No product has ever, or, in this writer’s opinion, will ever stimulate insatiable consumer appetite. Anyone with a keen interest in the fortunes of these newest smart phones from Apple should maintain a skeptical stance about the usefulness of any comments like White’s.

If readers are skeptical about the veracity of our take on White’s comment, we simply point to the fate of Apple’s stock in market activity on Thursday, September 25, 2014. The stock dropped over 3% precisely around the set of concerns White calls “irrational”. If these concerns are, in fact, “irrational”, then why the deep dive on Apple’s stock price?

In this writer’s opinion, consumer concerns about these new smart phones are not irrational. As we have published earlier in this blog, and some other people (who we consider to be astute) have also written, the price of these devices will fall out of the range of the “average” smart phone consumer by a substantial amount. So, with the very high end of the consumer market not only targeted for these products, but, even more, already rapidly consuming them, the market reaction is entirely understandable.

Folks shopping at Burberry’s expect perfection. Sure they are willing to pay for it, but, in return, they are the most demanding of consumers. So market dissatisfaction with Apple’s mistakes and, perhaps, PERCEIVED trickery (why would an affluent consumer throw away a perfectly functional iPhone, albeit a previous model, for a slick new entry, which, nevertheless is “bendable”), should be entirely acceptable.

Further, an analyst who looks at market reaction and attempts to DENY its legitimacy is an analyst whose words will likely receive a lot of careful scrutiny.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved

26
Dec

What Can We Learn As Adobe Stock Defies Gravity?

On October 3, 2013, Adobe notified the public of a breach of its security system for customer IDs, and even source code for a number of its most popular products. On December 12, 2013, Adobe announced its Q4 2013 earnings and issued guidance. Y/Y revenue dropped 9.7%, while profits dropped over 13%.

But the next day Adobe stock hit a 52 week high of $61.09. The disconnection between actual business performance, and stock prices for an important mature ISV like Adobe points to an unsupportable high premium priced into stock prices for the technology sector, merely to reward growth in cloud subscriptions, and little else.

An important segment of large consumers of technology (enterprise businesses, and their peers in the public and not-for-profit sectors) located in North America, Western Europe, and Australia/New Zealand continue to require on premises computing solutions. My assumption is not the result of mere conjecture. I base my position on a number of conversations I’ve recently had, on behalf of clients, with contacts participating in some substantial purchases for solutions to enterprise document management, content management and collaboration requirements.

With one exception, all of these contacts have directly expressed a need for on premises computing solutions. Our conversations have not included any mention of the Adobe security issue, but I cannot avoid reaching an important conclusion: information technology buyers have slowed down the pace of cloud/SaaS purchasing as the frequency of bad news on cloud/SaaS offers has increased.

This slowdown has bitten not only Adobe, but also Salesforce.com. I can’t help but think Salesforce.com’s recent “Internet of Things” branding campaign is nothing more than camouflage over product marketing’s fallback to tried and true customer service applications for its CRM tracking infrastructure.

I think a large portion of subscribers to services like Adobe Creative Cloud are either retail customers, or personnel connected to large organizations in the market for remote computing resources capable of supporting the BYOD trend. These subscribers will be the first to abandon subscriptions should security issues worsen.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved