Steve Jobs Is Building AppleWorld – And Google’s Running Scared

Original Article from Seeking Alpha Editor’s Pick

Jason Schwarz submits:

Steve Jobs is walking the same path as Walt Disney. As soon as California’s Disneyland was completed, Walt knew he had made a terrible mistake by not securing the surrounding real estate. He had built this wonderful destination but his oversight allowed hotel chains and restaurants to come in and make more money off his customers than he did. So Walt immediately went to Orlando, FL and built Disneyworld the right way.

The moral of the story is that Steve Jobs is not someone you want to depend on for your livelihood. His goal is to build a closed digital neighborhood where Apple (AAPL) controls who makes money and who doesn’t. I’ll bet that in one of those Apple board meetings that Google (GOOG) CEO Steve Schmidt used to attend, he realized that Jobs was on the verge of building AppleWorld and he’s been scared ever since.

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6 Elements to Steve Jobs’ Bold Prediction for 2010

Original Article from Seeking Alpha Long Investment

Jason Schwarz submits:

When Apple’s (AAPL) Steve Jobs speaks, investors need to do a better job of listening. His recent statement to the media got lost among the noise of Google (GOOG) phone hype, 3D televisions, and the flood of 2010 predictions coming from market commentators.

Although his statement was as plain as vanilla, it was probably the most profound forecast of the year and deserves some analysis. When announcing that the App Store had surpassed 3 billion downloads, Jobs finished with his crystal ball prediction, “We see no signs of the competition catching up anytime soon.”

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Steve Jobs’ Return: What Does It Mean for Apple and RIM Stock?

Mark McQueen (Wellington Financial) submits:

If Apple (AAPL) CEO Steve Jobs is coming back to work shortly, what does that mean for the stock? Inquiring minds will want to know, before the market opens.

Can only be good, right?!?!

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Steve Jobs ready to return

SAN FRANCISCO – APPLE Inc CEO Steve Jobs is on track to return to the company from his medical leave of absence as planned, the Wall Street Journal reported, citing a person who had seen Mr Jobs in recent weeks.

The report that Mr Jobs will return by the end of the month comes ahead of Apple’s Worldwide Developer Conference in San Francisco on Monday, an event at which Mr Jobs unveiled Apple’s 3G iPhone a year ago but had not been expected to attend this time.
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2 Suggestions for Apple’s Board of Directors

Chad Brand submits:

As an Apple (AAPL) shareholder, the recent handling of disclosures regarding the health of CEO Steve Jobs has me upset like most other investors. For some reason, Apple’s board of directors believes that a CEO facing a potentially fatal cancer is not a “material” piece of news.

They didn’t tell us right away when Jobs was diagnosed with pancreatic cancer several years ago, despite a five year survival rate of less than 50%, and they have refused to update us on his health. Now we have to rely on tech-related blog sources to update us and when finally forced to give more details, the Apple board said he was fine, only to announce his six month leave of absence days later.

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Wall Street Breakfast: Must-Know News

• BoA gets another handout. Bank of America (BAC) is close to finalizing a deal in which the government will provide billions of dollars in aid to help the bank close its Merrill Lynch acquisition. BoA approached the Treasury in mid-December, sources say, warning that Merrill’s larger-than-expected Q4 losses posed a problem in the acquisition process. Concerned the deal’s failure would further hurt shaky financial markets, the Treasury agreed to help create a plan including additional funds from TARP. (BoA has already received $25B in federal rescue funds.) Details are still being finalized, and an announcement is expected on Tuesday when BoA reports quarterly earnings.
• Apple’s Jobs loss. Apple (AAPL) shares plunged over 7% in after hours trading yesterday on the surprise announcement that CEO Steve Jobs will take a medical leave until June. Only nine days ago, Jobs reluctantly released a public letter saying he had a non-life-threatening hormone imbalance and would continue in his role as CEO as he recovered. In a new, cryptic letter, Jobs called his health problems ‘more complex than I originally thought.’ COO Tim Cook, respected in the company for his expertise, will take over day-to-day operations. This is his second time at the helm of the company, having taken over when Jobs underwent cancer treatment in 2004. Many investors and analysts are worried Jobs’ absence will hurt the company at a time when it’s struggling to find the next big thing, though others believe Apple is sufficiently innovative and well-placed in the market to continue without its famed leader. The company will likely face several lawsuits from investors angered over Jobs’ failure to fully disclose his health problems.
• Fund custodians under fire for Madoff losses. HSBC (HBC) and UBS (UBS) are potentially facing liabilities of up to $3.2B as the financial custodians of funds in Luxembourg and Ireland with Madoff-related losses. As custodians, the two banks were charged with overseeing the funds and managing cash inflows and payments to investors. A lawyer representing 10 French retail investors and two institutions that face Madoff-related losses at Luxembourg funds said "UBS didn’t do its job of knowing at all times where the assets were, and the same with HSBC," a failure of duty lawyers will have to prove to recoup investor money. The legal firm representing both HSBC and UBS said the funds were created by investors specifically looking to place money with Madoff, and as such the custodian had only ‘a very, very, very small role to play.’
• Lilly reaches drug settlement. Eli Lilly (LLY) agreed to a $1.42B settlement over criminal and civil charges that it illegally marketed Zyprexa, its blockbuster antipsychotic drug, for unauthorized patient use. Lilly was accused of pressing doctors for years to prescribe Zyprexa for children and the elderly, two groups for whom the drug is not federally approved and poses extra risks. Anticipating a settlement last fall, the company set aside $1.4B for that purpose. Lilly will also plead guilty to one misdemeanor violation of the Food, Drug, and Cosmetic Act.
• Black report from Beige Book. Overall economic activity has continued to weaken across nearly all of the Federal Reserve districts, according to the Fed’s Beige Book. Retail sales were generally negative, manufacturing decreased, construction weakened, lending remained tight and the labor market continued to soften. As if the report weren’t already sufficiently depressing, the Fed noted that a ’substantial number of job reductions in the financial sector have yet to show up in payroll statistics.’ (Read the full report)
• Bartz searches for right MSFT approach. With Bartz as its new CEO, Yahoo (YHOO) is several steps closer to a search deal with Microsoft (MSFT), though sources from both companies said a deal is unlikely to be imminent. In a company-wide meeting, Bartz said she plans to spend considerable time researching whether to sell Yahoo’s search business, but added that her ‘gut’ feeling was to hold on to the business. Although Bartz’s appointment is seen as a fresh start for the company, Microsoft is busy dealing with other problems, including cost cutting, that could get in the way of a sale or partnership.
• Mortgage apps surge. Mortgage applications jumped 15.8% last week, MBA reported, as record-low interest rates spurred a 25.6% increase in refinances from the previous week. Refinances now account for 85.3% of all applications, up from 79.8%. The Average 30-year mortgage rate dropped to 4.89% from 5.07%.
• Despite mortgage mods, foreclosures soar. Foreclosure filings jumped 81% in 2008 to 3.2M, RealtyTrac says, with one in every 54 U.S. households getting at least one foreclosure notice. "Clearly the foreclosure prevention programs implemented to date have not had any real success in slowing down this foreclosure tsunami," RealtyTrac’s CEO James Saccacio said. Activity did slow by 4% in Q4, but jumped 17% in December from November – another signal mortgage moderations helped to temporarily slow, but not stop, foreclosures. On Wednesday, Foreclosures.com reported a 63.5% jump in foreclosures.
• Retail sales fall. Retail sales fell 2.7% from November to $343.2B, according to the Census Bureau, and were 9.8% lower than a year ago. Consensus was for -1.2% M/M. Excluding auto sales, December was -3.1% M/M vs. estimates of -1.3%. "We finally saw confirmation of our original expectations that holiday retail spending would prove acutely weak, though even we underestimated the degree of weakness," one economist says of the larger than expected drop in retail sales. "Bad ugly and worse," says another.
• Import/export prices. Import prices declined 4.2% in December from a month earlier, the fifth straight down month, vs. consensus of -5.3%. Export prices also fell for the fifth consecutive month, declining 2.3%. Import prices -9.3% on the year (fueled by a 47% drop in petroleum); exports -3.2%.

Earnings: Thursday Before Open

• ASML Holding (ASML): Q4 net loss of €88M ($115.9M), slightly better than consensus of -€104M but a far cry from profit of €193M in the year earlier period. Sales of €494M (-48%). 2009 outlook is grim, as "the severity of the global economic downturn has caused semiconductor manufacturers to delay their investment plans." (PR)
• JPMorgan (JPM): FQ4 EPS of $0.07 beats by $0.07. Revenue of $17.2B (-0.9%) vs. $18.8B. (PR)

Earnings: Wednesday After Close

• Xilinx (XLNX): FQ3 EPS of $0.32 in-line. Revenue of $458M (-3.5%) vs. $444M. (PR)

Today’s Markets

• Asia markets closed heavily down following Wall Street losses. Nikkei -4.9% to 8,023. Hang Seng -3.4% to 13,243. Shanghai -0.45% to 1,920. BSE -3.45% to 9,047.
• In Europe at midday, London -0.1%. Paris -0.4%. Frankfurt -0.05%.
• U.S. futures: Dow +0.1%. S&P -0.3%. Nasdaq -1.4%. Crude +0.8% to $37.59. Gold +0.5% to $813.10.

Thursday’s Economic Calendar

• 7:45 ECB Announcement
  8:30 Producer Price Index
  8:30 Empire State Mfg Survey
  8:30 Jobless Claims
  9:00 RBC CASH Index
  10:00 Senate confirmation hearings for SEC nominee Schapiro
  10:00 Philadelphia Fed Survey
  10:30 EIA Natural Gas Report
  12:30 PM Fed’s Yellen speaks on economic outlook
  1:40 PM Fed’s Lockhart speaks on economic outlook
  1:55 PM Fed’s Evans speaks on economic outlook
  4:30 PM Money Supply
• Notable earnings before Thursday’s open: APH, ASML, JPM, MI
• Notable earnings after Thursday’s close: DNA, INTC

Seeking Alpha editor Eli Hoffmann contributed to this post.

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Wall Street Breakfast: Must-Know News

• New prez, new banking plan. President Obama’s economic team is rushing to complete a bank-rescue plan that can be twinned with the $825B stimulus package working its way through Congress. Details are still sketchy, but the plan will likely include $50B+ to stem foreclosures, new capital injections for banks and efforts to deal with toxic assets, possibly through the combination of a ‘bad bank’ and government guarantees. In his inaugural speech, Obama called for ‘bold and swift’ action to resolve the crisis that cost the U.S. nearly 2.6M jobs last year. Shares of U.S. banks fell around 20% as some investors feared the government might ultimately need to nationalize the hardest hit financial institutions.
• Geithner grill. Tim Geithner, Obama’s pick for Treasury, will be grilled in Congress today on issues ranging from his past tax troubles to his solutions for fixing ailing financial markets. Still, despite Geithner’s late payment of almost $50,000 in federal taxes and penalties, even critics concede his experience and ability. In prepared remarks, Geithner calls for ‘reform’ of TARP to help small businesses and families that are losing their homes and jobs, and says "the ultimate costs of this crisis will be greater if we do not act with sufficient strength now. In a crisis of this magnitude, the most prudent course is the most forceful course." The Finance Committee will vote on his nomination tomorrow.
• Fiat deal needs federal aid. Fiat announced plans yesterday to take a 35% equity stake in Chrysler in exchange for access to Fiat technology. The deal is not yet final, however, because it’s contingent on Chrysler getting an extra $3B from the government. A Chrysler spokeswoman said the $3B in loans is necessary for the company’s viability. Assuming the government coughs up the extra money, the deal still presents several challenges. The linkup between the two companies is likely to be loose, without the full synergies of a merger, and Fiat’s side of the deal may be cash-free but certainly isn’t risk-free. A continued Chrysler slump could cost Fiat money, time and energy it can’t afford to waste.
• BHP closes mine, cuts jobs. Mining giant BHP Billiton (BHP) will cut 6,000 jobs and close a major nickel mine in Australia with a write-off of $1.6B. BHP had set itself apart from other miners recently by maintaining its production levels but a continued slide in commodity prices has forced the company’s hand on job cuts and mine closures. CFO Alex Vanselow warned more mines could be closed and open mines could reduce output.
• IBM sees sunny ‘09. IBM (IBM) posted better-than-expected Q4 earnings (more details below) and, unlike many of its high-tech rivals, forecasts a rosy 2009. Acknowledging the ‘extremely difficult economic environment,’ IBM expects continued benefits from growing profitability on its software and services businesses. IBM said customers are continuing to sign up for outsourcing and other services contracts despite the global slowdown. According to CEO Samuel J. Palmisano, the company is ‘ahead of pace on our roadmap for $10 to $11 per share’ in 2010.
• Sony’s Stringer battles ‘old guard.’ Tensions are rising at Sony (SNE) over a sweeping restructuring plan announced in December, with details of the plan expected to be announced today or tomorrow. Chairman and CEO Sir Howard Stringer is at odds with an ‘old guard’ of managers in the company’s electronics division. Sources say Stringer wants to cut 16,000 jobs and undergo massive restructuring but has met with resistance. Much of the dispute centers on where the job cuts will fall and in which areas Sony should cut its production costs and rely more on sales of software built into its gadgets.
• SEC wants its Apple a day. Sources say the SEC has opened a review of Apple (AAPL) over its (non)disclosures of CEO Steve Jobs’ health. A review doesn’t necessarily mean the commission sees evidence of wrongdoing, and to bring a case the SEC would probably have to show the company tried to benefit by withholding information about an unambiguous diagnosis. An Apple spokesman declined to comment.
• Citi’s penny payments. Citigroup (C) cut its common stock dividend to $0.01 from $0.16 as required by the government bailout it received in November. The dividend cut will save the company around $817.5M per quarter.
• French bank aid. The French government will provide another €10.5B ($13.6B) in aid to the country’s biggest lenders. In exchange, top execs will have to forgo bonuses.

Earnings: Wednesday Before Open

• Air Products and Chemicals (APD): FQ1 EPS of $0.97 in-line. Revenue of $2.195B (-8.8%) vs. $2.192B. (PR)
• Coach (COH): FQ2 EPS of $0.67 in-line. Revenue of $960.3M (-1.8%) vs. $959M. (PR)
• United Technologies (UTX): Q4 EPS of $1.23 beats by $0.01. Revenue of $14.5B vs. $14.8B. (PR)

Earnings: Tuesday After Close

• Bank of New York Mellon (BK): Q4 EPS of $0.65 misses by $0.04. Assets under custody fall 13% to $20.2T, down 10% from Q3. Securities losses of $1.24B vs. $191M last year and $162M last quarter. Unrealized loss on securities portfolio of $4.1B vs. $2.8B last quarter. (PR)
• Cree (CREE): FQ2 EPS of $0.20 beats by $0.11. Revenue of $147.6M vs. $141.4M. Sees FQ3 EPS of $0.10-0.13 vs. $0.09 and revenue of $128-135M vs. $139M. (PR)
• CSX (CSX): Q4 EPS of $0.90 misses by $0.01. Revenue of $2.7B in-line. (PR)
• Fulton Financial (FULT): Q4 EPS of -$0.58 misses by $0.04. Revenue of $102.3M vs. $150.3M. (PR)
• IBM (IBM): Q4 EPS of $3.28 beats by $0.25. Revenue of $27B vs. $28.15B. Sees 2009 EPS of at least $9.20 vs. $8.75. (PR)
• Packaging Corp. of America (PKG): Q4 EPS of $0.30 beats by $0.05. Revenue of $546M (-5.9%) vs. $568M. (PR)

Today’s Markets

• Asia markets closed broadly down. Nikkei -2.0% to 7,902. Hang Seng -2.9% to 12,584. Shanghai -0.5% to 1,985. BSE -3.5% to 8,779.
• In Europe at midday, London -1.6%. Paris -1.7%. Frankfurt -0.3%.
• U.S. futures: Dow +1.1%. S&P +1.0%. Nasdaq +0.4%. Crude +1.4% to $41.40. Gold +0.4% to $858.70.

Wednesday’s Economic Calendar

• 7:45 ICSC Retail Store Sales
  8:55 Redbook
  10:00 Senate hearings for Treasury nominee Geithner
  10:30 EIA Petroleum Status
  1:00 PM NAHB Housing Market Index
• Notable earnings before Wednesday’s open: ABT, AMR, APD, ATI, BPOP, COH, HCBK, NTRS, UAUA, USB, UTX
• Notable earnings after Wednesday’s close: AAPL, BNI, DOX, EBAY, FFIV, KMP, NE, PLCM, RJF, SANM, SLM, STX

Seeking Alpha editor Eli Hoffmann contributed to this post.

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Wall Street Breakfast: Must-Know News

• Abysmal auto sales. U.S. auto sales plummeted 36% in December, depressing industry volume in 2008 to a 16-year low. Vehicle sales for the year totaled just 13.2M, and the pain is expected to continue into 2009. Breaking U.S. December sales down for individual automakers: Ford (F) -32.4% to 138K units vs. -33% consensus, with market share of 14.6% up 0.77% from a year ago. Honda (HMC) -34.7% vs. -36% consensus, with 2008 sales of 1.28M (-8.2%). Toyota (TM) -37% to 142K units vs. -40% consensus, with 2008 sales down 16%. General Motors (GM) -31% to 222K units vs. -41% consensus, with total deliveries up 67K (+43%) from November. GM delivered 2.98M units for the year (-23%) for a market share of 22%. Nissan (NSANY) -30.7% to 62K units, and 838K for the year (-10.9%).
• Toyota cuts production. Following dismal 2008 auto sales and rapidly growing inventory, Toyota (TM) will suspend operations at all of its Japanese factories for an additional 11 days between February and March. Toyota had already planned a three-day suspension at most of its Japanese factories for January. The rare output reduction is expected to have a ripple effect through its subcontracting firms, including auto suppliers.
• Fed enters MBS market. The Federal Reserve began buying mortgage-backed securities issued by Fannie Mae (FNM), Freddie Mac (FRE) and Ginnie Mae yesterday, the latest in its unconventional efforts to kickstart the economy. The aim of the program is to provide an incentive for buyers to return to the housing market and to reduce monthly payments on existing loans. The $500B program has already had an effect, as mortgage rates dropped significantly in anticipation of the purchases after they were announced at the end of November. As of the end of December, the rate on 30-year fixed-rate mortgages was 5.03%; some analysts expect the Fed to try and push the rate down to around 4.50%.
• Apple a day fails to keep doctor at bay. Addressing persistent rumors about his health, Apple (AAPL) CEO Steve Jobs released a public letter yesterday, explaining that he’s in treatment for a non-life-threatening hormone imbalance and will continue as Apple CEO while he recovers. Shares rose 4.2% on the news, though not all investors were pleased with the lack of disclosure until now. (Read Jobs’ letter)
• GE offers FDIC-backed debt. General Electric’s (GE) finance division launched a $10B sale of FDIC-backed debt yesterday, the largest sale under the government guarantee program since it was created in November. GE Capital’s offering includes $2B in two-year notes, $5.5B of 3.5-year debt and $2.5B of 18-month securities. The sale will push total issuance under the government program to $115B.
• Clearinghouses move forward. Nasdaq OMX Group (NDAQ) has opened a derivatives clearinghouse and has started clearing over-the-counter contracts tied to interest rates. The clearinghouse will be competing with rival platforms operated by Chicago’s futures giant CME Group (CME) and European clearing company LCH.Clearnet. Separately, derivative exchange operators CME Group and InterContinentalExchange (ICE) are preparing to launch their respective CDS clearinghouses later this month once they receive final approvals from U.S. regulators.
• Logitech cuts jobs, forecast. Logitech (LOGI) withdrew its FY 2009 financial targets (which had already been reduced in October) and announced it will cut 15% of its non-manufacturing jobs in the face of the deepening global recession. The company will also take an unspecified one-time charge in its FQ4 ending March 31. "The situation is really bad," said Chairman Guerrino De Luca. "We’re on really shaky grounds with the consumer. The situation is really unprecedented."
• Madoff off to jail? U.S. prosecutors are trying to have Madoff jailed for violating the conditions of his bail. Currently under house arrest, Madoff mailed over $1M worth of jewelry and other items to family and friends despite a court-ordered freeze on his assets.
• Germans eye more-generous stimulus. German lawmakers agreed on the broad outlines of a second stimulus plan worth €50B ($69B) over two years. The country’s initial stimulus, worth €12B over two years, has widely been seen as inadequate to pull Europe’s biggest economy out of an increasingly severe recession. Lawmakers are hoping to have full agreement on the package details by Jan. 12.
• Construction spending wobbles down. Construction spending in November fell 0.6% from the month before, better than the expected 1.3% drop, and was down 3.3% from the previous year. Residential private construction fell a heavy 4.2%; non-residential +1.4%.

Earnings: Monday After Close

• Mosaic (MOS): FQ2 EPS of $1.53 beats by $0.10. Revenue of $3.01B (+36.9%) in-line. Shares -1.7% after hours. (PR)

Today’s Markets

• Asia markets closed mostly higher. Nikkei +0.4% to 9,081. Hang Seng -0.35% to 15,510. Shanghai +3.0% to 1,937. BSE +0.6% to 10,336.
• In Europe at midday, London +1.1%. Paris +1.2%. Frankfurt +1.5%.
• U.S. futures: Dow +0.7%. S&P +0.7%. Nasdaq +1.0%. Crude +2.7% to $50.14. Gold -2.0% to $840.50.

Tuesday’s Economic Calendar

• 7:45 ICSC Retail Store Sales
  8:55 Redbook
  10:00 Factory Orders
  10:00 ISM Non-Manufacturing Survey
  10:00 Pending Home Sales
  2:00 PM FOMC Minutes
  5:00 PM ABC Consumer Confidence Index

Seeking Alpha editor Eli Hoffmann contributed to this post.

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Eric Schmidt Talks Google, Apple, Energy and Obama with Jim Cramer

Michael Arrington submits:

Google CEO Eric Schmidt was on Jim Cramer’s Mad Money Wednesday evening to talk about a wide range of issues, from Obama to Steve Jobs.

On Google killing its print ads business: “That particular product didn’t work particularly well and we’re trying other solutions. Print is a hard one because they have declining ad revenue and higher print costs. And so we’re trying other solutions. Ultimately most people will get their information online.”

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