This morning Apple Inc. established more world domination in the apps market, announcing it had generated over $10 billion in revenue in the Apps Store in 2013.

Apple cited hits like Ellen DeGeneres’ Heads Up, ProtoGeo’s Moves, Simon Filip’s Afterlight and Kevin Ng’s Impossible Road. It also credited some big hits such as Candy Crush Saga, Puzzles & Dragons, Minecraft, QuizUp and Clumsy Ninja, as well as naming some "developers to watch" including Duolingo (United States), Simogo (Sweden), Frogmind (UK), Plain Vanilla Corp (Iceland), Atypical Games (Romania), Lemonista (China), BASE (Japan) and Savage Interactive (Australia).

Given the importance of the developer community to the emerging mobile ecosystem, as we stressed in our Open Source Gone Wild story from this morning, this is a significant sign of Apple's health in the mobile app market. However, investors were non-plussed, as Apple sank about $5 on the news, recently trading around $539. 

This entry was posted on Tuesday, January 07, 2014 at 20:50 pm and is filed under Mobile, Digital Media, Investing.
Keywords: Apple, App Store, Developers, Smartphones, Tablets

It's in! In a tradition I have executed since 2007, I present the Rayno Report model portfolio. 

We had a so-so year in 2013, achieving an 11% return (including dividends) but trailing the indices badly, but that's okay. I kept intact the track record of never having lost money. The portfolio has a 15% annualized return since 2007, so it is still outperforming in the long run.

How are the picks selected? I have six "master lists," from which I glean ideas. These include several different stock-screening tools as well as the financial media (for example, I've often found good ideas in the page of Barron's, usually in the section with the interviews with top fund managers).

This entry was posted on Friday, January 03, 2014 at 15:09 pm and is filed under .
Keywords: Portfolio, Stocks, Apple, IACI, Gold, PEG

Watch how a stock reacts to the news, not the news itself: this is an old trader's saying. Apple shares are displaying some resilient strength this morning following an earnings report that was interpreted both positively and negatively last night. 

This may be a sign that people got too negative on the stock as Apple shares plunged from $700 to $400. It's now bounced back to near $540, with shares are up $7 to $537 ahead of trading this morning. 

This trend now has the potential to feed on itself, as overly negative analysts are forced to revise their forecasts upwards, as is starting to happen this morning. Several analyst firms including Goldman Sachs and Cowen & Co. have alluded to this in their research notes. 

Apple reported profits that beat analyst estimates by about .30 cents per share, though some anlaysts and investors griped that it's projecting flattish profits for its upcoming holiday quarter. In the pre-market hours, however, Apple's stock is strong following a sprinkling of analyst upgrades.

The Cupertino, Calif.-based purveyor of all things "i" reported posted quarterly revenue of $37.5 billion and quarterly net profit of $7.5 billion, or $8.26 per share. These results compare to revenue of $36 billion and net profit of $8.2 billion, or $8.67 per diluted share, in the year-ago quarter. Gross margin was 37 percent compared to 40 percent in the year-ago quarter. International sales accounted for 60 percent of the quarter’s revenue. 

This entry was posted on Tuesday, October 29, 2013 at 13:15 pm and is filed under Mobile, Investing.
Keywords: Apple, iPhone, iPad, Tim Cook

I've be doing a lot of work on Apple, including providing some analysis to other sites such as CMSwire.com, where you can check out my latest anaylsis of Wall Street's reaction to Apple's new product announcements here.

But there's lots of things going on with Apple, and of course there is the nonstop chattering of pundits about what they will do next. And with Carl Icahn getting a lot more involved -- he tweeted today that he has sent another letter to Apple CEO Tim Cook  -- one could see the "vaunted" catalyst that might moving Apple stock higher again.

It seems as if the company is at a key point in it's history. Will it move forward or start to stagnate as it hits a new product slump? Investors are certainly looking for new spark.

Everybody seems to want new products and change. Of course, this is obvious, but the better question is, what's realistic? Here is just a sampling of stuff that's floating around:

Apple TV: Everybody seems to be crying for it, but we're not even sure what it is. They are reportedly working on a mondo, high-end TV that everybody would want. But does Apple really want to be in the high-end TV business? It's a famously commoditized area. I would file this under speculation and not something you will see soon.

More, better tablets: This was a big component of Apple's product release this week. But was it enough? It's no secret that Apple has been under assault in the tablet market -- it's been losing market share in the fastest growing market it's in.

Personally I think Apple needs another product -- something between the iPhone and the iPad mini 2, in the "phablet" market, to compete with the onslaught of various-sized phones from Samsung. Analysts point out that iPad margins and regaining market share in the tablet market are two of the most critical goals for Apple right now.

Tim Cook: They're all asking -- is he the right leader? Cook continues to manage well operationally, and Apple is throwing off a ton of cash, but all of the product announcements have been incremental in nature while everybody screams for something more. Maybe he has a trick up his sleeve, maybe he doesn't. At any rate, he's been at the helm for about two years, and I give him one more year before he comes up with something big or the Apple mob (investors and customers) becomes more vocal.

All that cash: What will Apple do with all that cash? Activist investors such as Carl Ican are screaming for Apple to release more of its cash stockpile, well over $100 billion in cash and long-term investments, while the company throws off nearly $50 billion in annual cash flow. There are many options such as increasing the dividend and share buybacks. I would expect more of both by the end of the year.

The stock price: Apple shares were famously week during 2012 and the earlier part of 2013, moving against the grain of a bullish stock market, but now they have stabilized and are starting a modest uptrend. Can this be sustained? I see two factors: Profit margins and activist moves. Apple's share price has been hit the most by declining margins brought about by competition in the lower-end tablet market. The other factor is what it does with all its cash and how responds to activists cries of people like Car Icahn. If you see movement in either of these ares, watch Apple stock strengthen.

(Disclosure: Author is long Apple stock in a long-term retirement account, which could possibly become very long term.)

This entry was posted on Wednesday, October 23, 2013 at 17:23 pm and is filed under Mobile, Digital Media.
Keywords: Apple, Tim Coook, iPad, iPhone, Tablets, Samsung, Android

Wired has an interesting story on Hartmut Esslinger, the founder of Frog Design, Apple's (AAPL) design consultancy. Much of the material comes from Esslinger's new book, Keep It Simple.

So yes, I am referring to content that is referring to other content. But that's okay because it's the ideas that matter. And maybe you don't have time to read the book, or the article. 

Let me boil it down for you:

This entry was posted on Tuesday, October 08, 2013 at 16:15 pm and is filed under .
Keywords: Design, Apple, Steve Jobs, Hartmut Esslinger, Frog Design

The widespread meme is that Apple (AAPL) is done, Apple is fading, or Tim Cook is functionally challanged, or a combination of the three. The reality is that, after Apple announced that it sold more than 9 million iPhone 5c and 5s phones in three days, kids are obsessed with Apple's new iOS 7, and the new iPhones are selling like mad. 

Apple this morning reported that it sold a higher-than-expected 9 million iPhone 5s and iPhone 5c models in the first three days following their Friday launch, leading to more optimism in the company's sales forecasts.

I have some anecdotal evidence to offer. Last week, my unscientific survey of kids at a local high school indicated that they were completely obsessed with iOS 7. Another indicator is that the Raynovich household has added two more iOS-powered devices in the last 3 months, with clamor for more among the children (sorry, they're not getting them).

This entry was posted on Monday, September 23, 2013 at 17:39 pm and is filed under Mobile, Investing.
Keywords: Apple, Tim Cook, iOS 7, iPhone, iPhone 5s, iPhone 5c

Did you hear Apple's iOS 7 is out? This is how I heard: I picked up a kid at school today. There across from the school I was told this scoop by a high schooler ( I can't divulge my source, but this is true): A Freshman had ditched school so that they could go home and download iOS 7. The student got back to school but was late for class and got into trouble. It was the story of the day! Kids thought it was hilarious.

It is.

Kids these days, ditching school for software downloads. My first thought was: well, in my day, when kids ditched school they were usually downloading much worse.

At the same time, I happened to see a friend post funny story online.  Apparently their kid's school's network melted down from so many kids downloading i OS 7. School network closed.

Wait... what?

Apparently, the iOS7 phenomenon was quite huge today. Yeah, the bloggers are going wild, you can read a few stories like this:

My reaction to a lot of this: Really? Apple doubles cellular app download limit!!!! OMG!!!!!!!

But these blogger pundits don't even know.  They aren't in High School. It's really about the kids. You get your best news talking to them. This is what I found out, just by talking to high schoolers:

  • One of the cool new features in high demand was the ability to "upswipe" instead of "downswipe" to access an iPhone's settings. This makes it easier, for example, to switch WiFi networks, by eliminating that painful taks of finding the Settings menu. Okay, got it. This, you have to ditch school for, apparently.
  • iOS 7 has improsed multitasking. This means that if you are a high school kid and spend 98% of your waking time on social apps, you can effectively run several of them at once. Whoa, dude.
  • iOS 7 takes up 3GB. This is tragic, for example, if you have a iPhone 4 with only 16GB, showing everybody how pathetically underpowered your ancient, three-year-old iPhone is, forcing you to immediately complain to Daddy that you need and UPGRADE SOON.

That's what I learned today. And I just feel a bit older, and more tired. And I can't afford any more iPhones and iPads.

Kids these days.

This entry was posted on Thursday, September 19, 2013 at 03:29 am and is filed under Mobile, Digital Media, Investing.
Keywords: Apple, iOS 7, Updgrads, iPhone, High School, Teens

LAS VEGAS -- ITEXPO -- Life as an entrepreneur or a startup worker can be tough and challenging, sometimes seemingly up against all odds. So what keeps people going? Passion and creativity. That's the message of Apple (AAPL) Co-founder Steve Wozniak, who spoke here today in front of a crowd of his own kind, tech geeks.

Wozniak, the lesser-known founder of Apple who always lived a bit in the shadow of Apple Co-founder Steve Jobs, believes that great tech ideas should be driven by passion and creativity, not always business first

In a talk and Q&A here at ITEXPO, Wozniak expounded on his counter-culture and anti-establishment sensitivities, part of the driving vibe inside of Apple. Wozniak said that people need to follow their own wants and needs and creative forces and ignore the noise, because that's how Apple was founded.

This entry was posted on Thursday, August 29, 2013 at 19:18 pm and is filed under .
Keywords: Apple, Steve Wozniak, Larry Ellison, Innovation, Startups

As you know, The Rayno Report is religious about finding low-PEG stocks. Like a little child before Christmas, I get excited about finding them under the tree. Some of our low-PEG Hall of Fame stocks are Apple (Nasdaq: AAPL), Celgene (Nasaq: CELG) and Gilead Sciences (Nasdaq: GILD), low-PEGers that we found on these pages before they steadily took off like rocket ships.

What's a low-PEG stock? It's a stock that is priced by the market below its growth rate. Common wisdom is that "growth" stocks, with fast rates of profit and revenue growth, receive premium market valuation -- they have earned the right to be expensive. But what's interesting is that the market doesn't always assign a premium valuation to growth stocks. Sometimes they can be found on sale, for whatever reason: the market is skeptical of the name, the market thinks that growth will slow, there may be issues with the company, or our favorite reason -- the market is being irrational and wrong.

The reason I like the low-PEG stock strategy is that it lowers the risks you take for the potential for great rewards. Odds are, the crowd is wrong that a high-growth company should be valued below market rates. Take a look at Apple: the crowd has been proven wrong again and again.

These are the specific situations we seek: the market irrationally pricing in a cheap valuation on a quality growth name. So how is valuation "measured" and rationality assessed? Fortunately we have metrics like the price/earnings ratio and the PEG ratio. I like to define cheap or expensive in the terms of the price/earnings (P/E) ratio, which is generated by dividing the share price by the earnings per share (EPS). The PEG ratio is generated when you take the P/E ratio and divide that in turn by the earnings growth rate. Let's take an example: Let's say fictional Community Growth Corp. has a share price of $20, earnings of $2 per share, and a growth rate of 15% annual. The P/E ratio would be 10 ($20/$2) and the PEG would be .66 (10/15).

A low-PEG stock by my definition is any stock trading below a PEG of 1, meaning that it's P/E ratio is lower than its earnings growth rate. You might think by my description that low-PEG stocks are rare and hard to find. Oddly, in this market, they aren't! In fact Apple Inc. (Nasdaq: AAPL) by definition has been a low-PEG stock throughout its meteoric rise.

In fact, it seems like every time we run a stock screen of your basic Low-PEG ideas, Apple pops up.  But everybody knows Apple right? Its PEG is currently an absurd .48 -- low for what is considered basically to be the best company in the world. Why is this? I think the market discounts Apple because 1) it is so huge and 2) it's worried that at any minute one of its core franchises will come under sudden pressure 3) Highly publicized manufacturing issues with labor and quality control problems in China. Apple stock just dropped $100, trading closer to $600 than its all-time high of $700. If you think any of these issues is overdone buy the thing.

What about some new stuff?

I spent some hours on the weekend looking up some screens and scouring the charts for some interesting names. Two I like that meet my valuation criteria are Syntel Inc. (Nasdaq: SYNT) and Cirrus Logic Inc. (Nasdaq: CRUS).

Syntel is an IT outsourcer based in Troy, MI. Specialities include data warehousing and Web solutions, with a focus on the financial and healthcare sectors. Syntel has very solid numbers including annual net income of about $180 million on revenue of $708 million for an operating margin of 33%. It's got zero debt and $422 million in cash -- nearly $10 per share! With Syntel's shares recently trading hands at $61, it had a forward P/E of about 15 and a PEG of .87. Pretty good numbers for a company with mounds of cash, no debt, and large margins. I love situations like this.

Stock #2 is a little more well-known -- it's Cirrus Logic Inc. Now, Cirrus Logic is a manufacturer for Apple, so if you own Apple you need to be aware of the correlation. But like Apple and Syntel, Cirrus has great numbers. What's good about it is that with a $2.4 billion valuation, there is still a lot of room for growth. Cirrus earns about $90 million per years on $433 million in revenue, for a profit margin of about 19%. It's got a return on equity (ROE) of 20. The forward P/E is 12 and the PEG is .80. All of these are good numbers, in our book. In the last year or so the company has doubled its revenues and quadrupled its profits. I don't see any reason why it can't do that again, yielding a doubling in stock price.

Those are our stocks for the week. Let's see what the screens come up with next week -- I'll have more.

This entry was posted on Sunday, October 21, 2012 at 13:40 pm and is filed under Technology.
Keywords: Low-PEG Stocks, Apple, Syntel, Cirrus Logic, Chips, Mobile, IT

Well, the 3Par bidding war saga looks to be coming to an end as HP's final $33 offer has been accepted and Dell has pulled out of the race.

It makes you wonder about the "efficient market" theory, doesn't it? I mean, here is a stock that was trading around $10 and basically flatlined for about a year, only to suddenly increase by more than 300% in a period of three weeks. The market certainly wasn't efficient at pricing 3Par shares.

Here are the latest stats on 3Par at the current near-$33 level:

Market Cap: $2B

Forward P/E: 122

Revenue (TTM) $203M

Price/Sales (TTM): 9.84

Enterprise value/EBITDA: 294

Hmmm. Not sure I'd call that a bargain.

Onto the rest of the news:

 

This entry was posted on Thursday, September 02, 2010 at 11:02 am and is filed under Media, Mobile, Technology.
Keywords: 3Par, HP, Dell, Earl, Bernanke, Apple