YOUR FRIENDS' ACTIVITY

    • Amazon (AMZN) reports today after the market close and, as usual, there's a distinct lack of conviction on how to play it — if at all. Officially, analysts are looking for the online kingpins to report EPS of .09 on $16.2 billion in revenue. For the quarter ending June 30, Amazon is expected to earn 22 cents on sales of $16 billion.

      Unofficially, estimates mean next to nothing with the world's largest online retailer. If they did, the stock would have been left for dead long ago. The company's trailing operation margin has a 1-handle, the forward P/E is over 70, and Jeff Bezos and Co. openly disregard quarterly results in favor of investments for the long term.

      Related: Amazon Is a No-Brainer to Own Long-Term, Says Munster

      Lesser companies have been vaporized by Wall Street for the kind of almost-random results Amazon reports quarter after quarter. The difference for Amazon is that Bezos is just so good at what he does. The Kindle was years ahead of its time, a transition away from books into media and general merchandise has been seamless and customers are rabid fans. Amazon just keeps finding places it wants to go and merrily steamrolling anyone in its way.

      As a result, Wall Street is willing to forgive the company for almost anything. In the critical fourth quarter, it missed earnings estimates by a full 25% only to see the stock ramp straight in the face of prematurely giddy bears. Next to Best Buy (BBY), the only group more victimized by Amazon's Teflon operation has been the short-selling community.

      Can the gang from Seattle do it again tonight? CNBC contributor and KKM Financial founder Jeff Kilburg thinks not. "It's just too rich," opines Kilburg in the attached video. "January 25 they put in that all-time high of $284. Are we going back up there? Why are we going back up there?"

      Read More »

    • Less than a week after Twitter established itself as the fastest (not necessarily most accurate) source for breaking news, a crudely worded headline from a hacked AP account caused an instant plunge in the U.S. markets that wiped out $200 billion in value.

      The awkwardly-worded tweet ("Breaking: Two Explosions in the White House and Barack Obama is injured") briefly stunned Wall Street and Main Street alike. But investors barely had enough time to pull the trigger to buy or sell during this 4-minute plunge and subsequent rebound in the stock market.

      So what in the name of rigged markets happened? Jeff Kilburg, founder & CEO of KKM Financial and a CNBC contributor, says the action had all the earmarks of a familiar culprit. "This goes back to the high frequency trading world we live in," he states in the attached video.

      Kilburg's scenario is that the algorithms used by high frequency traders, or HFTs, scan Twitter for keywords, particularly from sources as generally credible as AP with its 2 million followers. Those programs see words like "bomb," "White House," and "Barack Obama injured" and start trading first and asking questions later, if at all.

      Read More »

    • iPhone Still Has 5-7 More Years of Relevance: Munson

      By Kevin Chupka | Breakout – Wed, Apr 24, 2013 9:54 AM EDT

      As of December 2012, 54% of U.S. mobile users owned a smartphone. That works out to 125.9 million American smartphone owners, according to comScore. This staggering statistic is why Lee Munson, chief investment officer at Portfolio LLC, says the gadget, once owned by the tech savvy among us, is now a universal commodity.

      But there's a catch. Munson believes smartphones have saturated the consumer marketplace, therefore old giants like Blackberry (BBRY), Nokia (NOK), Samsung (SSNLF) are struggling to grow. Apple (AAPL) on the other hand, has a hold on the upper end consumer, allowing continued dominance in the space. In the most recent quarter, Apple sold 37.4 million iphones compared to 35.1 million during the same quarter last year.

      “I do think there’s a little special part for iPhones,” Munson argues, “mainly because it’s a brand, it appeals to wealthier people. It’s like a Ferrari – would you call a Ferrari a commodity just because it’s a car?”

      Still, it’s not just the iPhone’s customer that sets it apart according to Munson. It’s Apples proven ability to succeed at creating not just a good piece of hardware, but one that fits perfectly into a broader ecosystem. In this case iTunes and iOS.

      “People that have an iPhone are there for a particular experience and everybody else is a sloppy second,” says Munson.

      Read More »

    • The long awaited, much hyped Apple earnings report came out last night and offered a little something for everyone, particularly investors who've been arguing that the company has much bigger problems than a slumping stock price.

      The Good

      Apple (AAPL) reported earnings of $10.09 per share on revenues of $43.6 billion. Wall Street analysts had been looking for $10.07 on $42.3 billion in revenues. It was a slight beat of estimates that had fallen nearly 14% in the last month.

      The Bad

      * For the current fiscal period Apple lowered its revenue forecast to between $33.5 and $35.5 billion, well below the Street's estimate of $38.2b. In the same quarter in 2012, Apple booked $35b in sales and earned $9.32 per share.

      * Gross margins also missed expectations at 37.5%, compared to expectations of 38.5%. In the same quarter last year, Apple's gross margin was 47.4%. The company says it expects margins in the current quarter to be between 36 and 37% compared to 43% in the quarter ending June 29 of 2012.

      * Splitting the middle on revenue and gross margin guidance, Apple would gross profit of $12.6 billion vs. $15 billion last year. Unless the company finds a score of ways to cut expenses -- and they don't seem to have any plans to do so -- net income would come in somewhere near $7.5b or a drop of 15 - 16%, year over year. Assuming the number of share outstanding remains constant (a generous assumption), Apple would earn in the vicinity of $8 per share in the current quarter, compared to $9.30 last year.

      The average analyst estimate for this quarter is $9.08. Expect that number to fall in earnest -- if not this morning, very soon. Apple is now running well below results that would get the company anywhere near the average estimate of $43.66.

      * The company has spent $2.1b on R&D over the last 6 months, putting it on pace to spend around $4.2B for the year. To be generous, we'll say Apple's expected R&D expenditures are about 2.5% of revenues. To compare, the percentage of revenues used for R&D at Microsoft (MSFT), and Samsung are about 11% and 6% respectively.

      Despite the questions raised by this underinvestment in new products, Apple stubbornly refuses to discuss timing on new product roll-outs. "Our teams are hard at work on some amazing new hardware and services we can't wait introduce this fall and throughout 2014," CEO Tim Cook said vaguely on last night's conference call.

      Pressed further, Cook said "I don't want to be more specific, but I'm just saying we've got some really great stuff coming in the fall and all across 2014."

      Cook's vague comments caused Apple shares to drop 5% by the end of the call, taking back all of its after hours gains. "It was very disappointing, I think it's time for Tim Cook to pass the baton," says Jeff Kilburg, founder & CEO of KKM Financial and a CNBC contributor, in the attached video. "I think the buyback was encouraging; at least they gave us something to bite on."

      Read More »

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