Wednesday, April 3, 2013

Another NY analyst gives his USEFUL opinion

I don't get it.  Where do these pundits come from?  Today's news -- San Jose Mercury-News, p.D2 -- "Apple taken off Goldman list".   The first paragraph says "Goldman Sachs dropped Apple off its list of 'most highly recommended' stocks Tuesday as it joined other analysts in reducing expectations for a company that hasn't had a revolutionary new product since the iPad in 2010."

It goes on to say "Goldman analyst Bill Shope said the iPhone 5, introduced last fall, hasn't sold as well as expected.  He said the company now needs some real hits ... in order to boost the stock price."

Peter Swanson, AP journalist reporting the Shope story nationally, noted that Apple's stock price of $427.90 is down from the peak $705.07, reached the day the iPhone 5 went on sale last September.  He neglected to point out that this is a decline of 39.3% in six months, the ssame six months that HP rose 25.3%.  He also failed to note that prior to February 2012, during all the gains from iMacs, iPods, iPhones, and iPads, each a revolutionary new product -- that Apple never topped $400/share.

The hysteria in other words that took Apple to new heights, some 75% above all historic numbers, was a one-year hype by Wall Street, including Goldman Sachs.

The best report of the day was that of Philip Elmer-DeWitt, writing for Apple 2.0 magazine: "Apple first appeared on Goldman's conviction list in December 2010 and during its 28 month stay it managed to outperform the S and P 500 33.8% to 25.9%. But ... Shope's clients might have been better served if he had mentioned last fall that Goldman Sachs was selling Apple, lowering its considerable holdings in the fourth calendar quarter by 1.2 million shares."

Why do I care what Shope writes?  Because in the same "flurry of notes issued Tuesday", Bill Shope downgraded Hewlett-Packard from Neutral to Sell, citing the shareholder discontent with the Board.

And yes, there is dissatisfaction with the Board, but the media (e.g. Wall Street) is playing this all out of proportion.  The guy Shope is a whack job on both counts -- forget him and his backward looking advice, and remember instead that Goldman Sachs profited "the most" in the sub-prime mortgage meltdown, just prior to their own liquidity crisis.  For which Allan Sloan, at Fortune magazine, said "we asked mortgage mavens to pick the worst deal they knew of" and it came up Goldman Sachs.

So there you have it -- sell HP, and forget Apple.  Well, we'll see.

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