My in-laws have been using Apple (NASDAQ: AAPL) computers forever. I have been using Microsoft (NASDAQ: MSFT) Windows-based machines, because most of our software and that of our engineering consultants was not supported on Macs. This extended to our home/studio. Well, a few years ago my daughter (remember, the iPhone enthusiast?) got an Apple notebook, then my wife did, then six months ago my 11 year old got one. iMacs are taking over the house.

Apple has made a lot of strides in the past 18 months to make all this switching much more easy. From using Intel processors, to adopting Windows options, to improving the operating system and already having the historically superior machine in terms of stability, anti-virus environment, better graphics and sound integration and more innovation on all levels.

So what does the Microsoft-based Windows PC offer me? As far as I can figure out, there are two advantages. The first is price: Apple charges extra for the cool factor, as it does with everything it produces. Although you have to give Apple credit for innovation and its R&D efforts, that has a cost. Microsoft is not known for innovation. The second thing a Windows PC offers is the greater number of programs available. The second attribute is bound to change as more and more people buy Macs and software companies and developers look to grow with that end of the market.

Continue reading Leaving the Microsoft world for Apple

Leaving the Microsoft world for Apple originally appeared on BloggingStocks on Fri, 16 Nov 2007 17:25:00 EST. Please see our terms for use of feeds.

Today the market did an about face going from up to down, to way down, with the Dow Jones Industrial Average ($INDU) losing 146 points or 1.1%. It's not the end of the world but cheaper than yesterday when I posted Who says the stock market is too cheap? In any event, making predictions is a fools game, and when asked to make one, J. P. Morgan (1837-1913) responding to a question about what the market will do, was quoted as saying..."It will fluctuate."

The chatter on Wall Street is about housing, sub-prime loans, default rates and rumors about Apple Inc. (NASDAQ: AAPL) reducing expectations (if not actual production) of iPhone sales. Never mind the rumors, never mind the chatter, just be selective and stick to fundamentals. In particular this may not be a time to venture into highly leveraged companies, or speculative stocks. Stick to basics, and the most basic to me is still energy. Two other sectors that should hold up are health-care / pharmaceutical companies and insurance companies.

If there is anything that was cheap and seems to be getting cheaper it is the unloved insurance companies. They have strong cash-flow, low valuations, pay dividends and very important in unpredictable markets -- they have recurring (predictable) revenue from millions of existing policies. I intend to revisit these in the coming days. Words to the wise for now -- reduce your leverage and think long term.

Those of you who are new to BloggingStocks can check out my other stories and read Chasing Value or Serious Money to find more potential opportunities and verify my track record as well. Disclosure: I do not own any crystal balls and have no current plans of acquiring one.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm.

Cheap market and getting cheaper? originally appeared on BloggingStocks on Tue, 31 Jul 2007 17:20:00 EST. Please see our terms for use of feeds.

In an earlier article this morning, Eric Buscemi wrote Time to build a position in Dell? My Answer is, ABSOLUTELY NOT! I will be short and sweet in my methodical reply to this question.

1. Dell Inc. (NASDAQ:DELL) built its business in a world that does not exist today. When Michael Dell started he had a good idea, a good mind, a good work ethic and low overhead. Most importantly, he had a market place filled with hundreds of other manufacturers and computer assemblers that were inefficient and ineffective in competing with his enterprise. As Dell grew, he drove competitors out of the business, taking market share all the way. Today, few competitors are left, most of them large and well capitalized companies with strong management. Hewlett-Packard Co. (NYSE:HPQ), Toshiba, Lenovo, Sony Corp. (NYSE:SNE), Gateway Inc. (NYSE:GTW) and Apple Inc. (NASDAQ:AAPL) will not be driven out of business very easily, leaving all companies to jockey for percentages of the market. This is a daily battle and while Dell may be equal to the task, growth will occur only with great effort.

Continue reading Forget about Dell -- it's not worth it!

Forget about Dell -- it's not worth it! originally appeared on BloggingStocks on Fri, 02 Mar 2007 14:04:00 EST. Please see our terms for use of feeds.

The Boeing Company (NYSE: BA) is one of those stocks that I owned and sold too soon - BIG mistake as it doubled in value without me on board. The past two weeks I started a new series called "Chasing value" which will have a new stock featured each Friday afternoon, time permitting. In reviewing the potential candidates for this week's post, I was considering Boeing but ruled it out because I could not find clarity in its financial data. Perhaps one of my readers will help me with this and shed some light on the matter for everyone's benefit.

Boeing is doing well, that much is uncontested, and it is expanding and refining its operations too. There is no doubt in my mind that the company is in good shape, but from an investment standpoint I have questions.

Since the current stock price at yesterday's close was $87.26, the P/E is 32.02. That means investors are anticipating unabated growth. For a large company with a capitalization of $70 billion that would be some serious movement. Boeing doesn't make aircraft carriers, which are notoriously slow to maneuver, but it isn't nimble by any stretch of the imagination either.

Continue reading Boeing: Airplanes and numbers are just all over the map!

Boeing: Airplanes and numbers are just all over the map! originally appeared on BloggingStocks on Thu, 01 Mar 2007 13:58:00 EST. Please see our terms for use of feeds.

Just your friendly neighborhood contrarian here to remind you not to get too euphoric over Apple Inc. (NASDAQ:AAPL) stock or any other stock for that matter. My fellow blogger, Georges Yared posted a very worthwhile and well-written story last week titled 5 compelling reasons to buy Apple -- right now.

Georges makes such a good case for loading up on Apple stock that I decided to check it out for myself. After all, there was plenty of money to be made buying it last year and I certainly missed out. Apple winners, momentum investors and stock traders will probably not appreciate my petty commentary. However, since Georges only showed one side of the coin I thought I would look at the other. The following is a contrarian view, perhaps even a cynical one at that. I simply want to point out some additional facts to consider.

1. Apple has a price-to-book value of 6.73 meaning that there is a whole lot of 'good will' in it's share price. This is not out of line with other companies with good prospects, but a value it is not.
2. The price-to-earnings of 30.06 will come down as earnings roll in but you are going to have to assume the earnings will continue to flow unabated, as Georges does. I read somewhere, a rule of thumb, that the P/E ratio of a stock should not exceed twice that of it's growth rate. Since Georges has pegged it at 20% annual growth maybe it is not out of line. Follow the facts, or rules of thumb - so a 15% growth rate might justify the P/E?
3. The price-to-sales of 5.12 does not indicate any value here either and historically this is a stronger indicator of long term value than the P/E.
4. One thing I like to see for my money, is that the return on equity (ROE), assets (ROA), and invested capital (ROIC) are higher than the P/E - in Apple's case they are not.
5. There is a tremendous amount of hype in Apple's share price and there is no greater master than Steve Jobs at squeezing every last drop of it out of every product campaign. We must give Jobs and Apple it's due, and the products usually live up to the hype. That said, I stay away from things that are overly hyped up.
6. Everyone in the technology and consumer universe is giving Apple credit for its iPhone in advance of its release. It will have competition, I prefer to wait and see. The 'Apple III' was a failure, the 'Lisa' another even bigger failure, Apples uncooperative business strategy was a huge failure --- alas, I am showing my age.
7. Georges makes the case that Apple will earn $4.00 per share this year based on it's strong fourth quarter earnings. This may be very likely, but it also smells of straight line extrapolation where one simply connects two points on a chart and extends the line in the same path. More often than not this results in disappointment.

So I think one could definitely call me a cynic here; paraphrasing, "one who knows the price of everything but the value of nothing". The one thing that seems very strange in Georges' story is that after all the bright lights he shines on Apple stock he states that Apple will reach $125, "this calendar year" without any information about how he arrived at that conclusion. He thinks there will be 20% growth, perhaps, but 20% growth does not equate to a 47% increase ($85 to $125) in stock value in less than a year. That leaves me puzzled.

I would not worry about the stock options scandal; worst case they pay a big fine and are greatly embarrassed. As long as Jobs is at the helm --- not to worry. Another factor at play here gets back to the day traders and momentum investors riding the ebb and flow of the stock. That is why the stock dropped after a simply smashing quarterly report. It was not long term investors taking profits, it was speculators. Apple might be a great investment for some, but not for me, and not now.

Check out my other posts for BloggingStocks here.

Sheldon Liber is the CEO of a small private investment company and the vice president for design and research at an architecture & planning firm.

Seven reasons NOT to buy Apple, Inc. originally appeared on BloggingStocks on Mon, 19 Feb 2007 12:22:00 EST. Please see our terms for use of feeds.