ValuePlays

How stupid do those folks who slept outside for days for a phone feel? They could have waited a year, got a better phone from apple (AAPL) for 1/3 the price….

By the way, Jobs did not actually say it but we all know “actions speak louder than words”…..

Apple finally admitted its sales strategy was a failure today having only sold 6 million phones in year 1 and only 2.4 million to date.

Here is a photo we should have seen from day one:

Jobs botched this one big time. Has this been the price from day one, he would have crushed the market and not given time for competitors (Verizon (VZ) Research in Motion (RIMM) and Sprint (S)) to get their own versions of it working. It took a market share slide to finally convince him that just because something is from Apple, people are not dumb enough to pay whatever he wants to charge. Well some are, but most aren’t.

I expected my post last night to garner the typical Appleholic rage from supporters, I guess they are too busy licking their wounds today????

The real irony here? Even though the stock has sold off and probably will continue to do so for a while on the news, long term, this is the best thing. The phone would have NEVER been a big seller even at $399.

Disclosure (“none” means no position):Sold Apple July $280 Calls in January

↑ Grab this Headline Animator

Visit the ValuePlays Bookstore for Great Investing Books

Do you know what 1.7 out of 10 equals. The number of iPhones Apple (AAPL) has sold in 2008 (Q1) vs the goal they have set. Now news comes of drastic prices cuts. Where is that crazy English guy who does the Sunday morning infomercials? He could move a few…

Because of this, it now seams Apple has realized the obvious and will accept iPhone’s being sold perhaps even below $200 and in an effort to help carries subsidize the price cuts, will be foregoing some of the monthly revenue they receive from subscribers.

Just over a year ago, before the iPhone hit the shelves I said “a $599 phone will not gain mass acceptance no matter what is does, lower the price to $299 and you’ll have something”

Not long after the launch, Apple dropped the price of the phone to $399 and was forced to issue $100 rebates to irate folks of questionable mental functionality who waited in line for days to BUY A PHONE.

Recent news has seen Apple fall farther behind Research in Motion’s (RIMM) Blackberry in the corporate market.

If that was not bad enough, Apple lost share to both RIMM and Palm in the total market for smart phones last month. Losing share to RIMM is one things, but Palm?

Apple fans will excuse this as Job’s and co. “emptying the shelves” of the old version to get ready for the new one. Right, because Job’s MO since day one has always been about willingly falling behind the competition. A better excuse is the 3G phone is just behind schedule and someone planned poorly. Remember, we have been hearing about this coming out “any day” since January.

Why did they fall behind? A pinched consumer will not pay $400 for a phone. I can get a Blackberry Pearl for $99 and a Palm for the same. Apple fails to realize (or only now has) that they are selling a phone, not a technological revolution. When you add recent and upcoming competitive products from Verizon (VZ) and Sprint (S), you further crown a market Apple is by far the most expensive in for a strapped consumer.

Apple fan will scream “tech talk” about why the Apple offering is so superior, pretty and “cool” at the top of their lungs. Guys………..IT’S A PHONE….PERIOD. You want to get $599 for it? Stop selling iPods, them folks will have to buy it in order to listen to their music. Not really too realistic though.

Steve Jobs will hit the stage Monday and reveal the “3G” that according the Apple fans will even be able to light my grill and flip the steaks. He will also for the first time accept massive price cuts on a superior product (to the old version). If this is not an admission Job’s and Crew misjudged the market, nothing is.

Apple fans will also claim this is some sort of “master plan” from Jobs. I seem to remember when I did not want to pay $399 for a ipod, I found one for $149 with less than half the memory and one for $99 for one with almost none. At no time did I have the ability to buy a superior version for far less money. Remember, an iPhone for under $200 will be a 50% price cut.

Will Apple hit their goal now? Probably. But, it is not because of a 3G version though. It is because they will most likely finally price the phone at a price point most sane people will actually pay FOR A PHONE.

Now that is done, Apple devotees are free to yell from the roofs at me, curse, swear, threaten, and take partial sentences mix them up to try to twist what I say all in an effort to ….well…..I do not know why they are like that.

Of, course what they could just as easily say is, “when we called you a $%#&$ last year for suggesting the phone was overpriced, we were wrong and you were right”. Doubtful though….

Disclosure (“none” means no position):Sold Apple July $280 calls in January

↑ Grab this Headline Animator

Visit the ValuePlays Bookstore for Great Investing Books

Do you know what 1.7 out of 10 equals. The number of iPhones Apple (AAPL) has sold in 2008 (Q1) vs the goal they have set. Now news comes of drastic prices cuts. Where is that crazy English guy who does the Sunday morning infomercials? He could move a few…

Because of this, it now seams Apple has realized the obvious and will accept iPhone’s being sold perhaps even below $200 and in an effort to help carries subsidize the price cuts, will be foregoing some of the monthly revenue they receive from subscribers.

Just over a year ago, before the iPhone hit the shelves I said “a $599 phone will not gain mass acceptance no matter what is does, lower the price to $299 and you’ll have something”

Not long after the launch, Apple dropped the price of the phone to $399 and was forced to issue $100 rebates to irate folks of questionable mental functionality who waited in line for days to BUY A PHONE.

Recent news has seen Apple fall farther behind Research in Motion’s (RIMM) Blackberry in the corporate market.

If that was not bad enough, Apple lost share to both RIMM and Palm in the total market for smart phones last month. Losing share to RIMM is one things, but Palm?

Apple fans will excuse this as Job’s and co. “emptying the shelves” of the old version to get ready for the new one. Right, because Job’s MO since day one has always been about willingly falling behind the competition. A better excuse is the 3G phone is just behind schedule and someone planned poorly. Remember, we have been hearing about this coming out “any day” since January.

Why did they fall behind? A pinched consumer will not pay $400 for a phone. I can get a Blackberry Pearl for $99 and a Palm for the same. Apple fails to realize (or only now has) that they are selling a phone, not a technological revolution. When you add recent and upcoming competitive products from Verizon (VZ) and Sprint (S), you further crown a market Apple is by far the most expensive in for a strapped consumer.

Apple fan will scream “tech talk” about why the Apple offering is so superior, pretty and “cool” at the top of their lungs. Guys………..IT’S A PHONE….PERIOD. You want to get $599 for it? Stop selling iPods, them folks will have to buy it in order to listen to their music. Not really too realistic though.

Steve Jobs will hit the stage Monday and reveal the “3G” that according the Apple fans will even be able to light my grill and flip the steaks. He will also for the first time accept massive price cuts on a superior product (to the old version). If this is not an admission Job’s and Crew misjudged the market, nothing is.

Apple fans will also claim this is some sort of “master plan” from Jobs. I seem to remember when I did not want to pay $399 for a ipod, I found one for $149 with less than half the memory and one for $99 for one with almost none. At no time did I have the ability to buy a superior version for far less money. Remember, an iPhone for under $200 will be a 50% price cut.

Will Apple hit their goal now? Probably. But, it is not because of a 3G version though. It is because they will most likely finally price the phone at a price point most sane people will actually pay FOR A PHONE.

Now that is done, Apple devotees are free to yell from the roofs at me, curse, swear, threaten, and take partial sentences mix them up to try to twist what I say all in an effort to ….well…..I do not know why they are like that.

Of, course what they could just as easily say is, “when we called you a $%#&$ last year for suggesting the phone was overpriced, we were wrong and you were right”. Doubtful though….

Disclosure (“none” means no position):Sold Apple July $280 calls in January

↑ Grab this Headline Animator

Visit the ValuePlays Bookstore for Great Investing Books

After all the recent real estate news, I have decided it is time to go into the sector.

Here is the thing. I lack the ability to properly value a builder (so do they it appears from recent results) and most of us investors do not have the access to some of the more esoteric products out there that can provide superior returns. When that happens, it is time to look at someone who does.

I am going with Ken Heebner at Capital Growth Management (CGM) and his CGM Realty Fund (CGMRX)

From the prospectus

Definition
A company is considered to be in the real estate industry if construction, ownership, management, financing or sales of residential, commercial or industrial real estate account for at least 50% of its gross revenues or net profits. Companies in the real estate industry include the following:
• REITs that own properties or make or invest in construction, development or long-term mortgage loans;
• housing and building materials companies;
• real estate brokers or developers; and
• companies with significant real estate holdings, including hotel chains and mining, lumber and paper companies.

Management Style.
Rather than following a particular style, the Fund’s investment manager employs a flexible approach and seeks to take advantage of opportunities as they arise. In making
an investment decision, the Fund’s investment manager will generally employ the following method:
• it uses a top-down approach, meaning that it first analyzes the overall economic factors that may affect sectors of the real estate industry and potential investments;
• it then conducts a thorough analysis of certain realty industries and companies that the investment manager believes have stable or improving prospects, evaluating the fundamentals of each on a case-by-case basis and focusing on companies that it determines are attractively valued based on price to earnings ratios and growth rates;
• the investment manager will sell a security if it determines that its investment expectations are not being met, better opportunities are available, or its price objective has been attained.

Portfolio Turnover.
The Fund’s objective is to provide a combination of income and long-term of capital and the Fund does not purchase securities with the intention of engaging in short term
trading. The Fund will, however, sell any particular security and reinvest proceeds when it is deemed prudent by the Fund’s investment manager, regardless of the length of the holding period.

Additional Information
The Fund may invest up to 20% of its total assets in debt or fixed-income securities of a quality below investment grade (i.e., securities rated lower than Baa by Moody’s Investors Service, Inc. (‘‘Moody’s’’) or lower than BBB by Standard & Poor’s Ratings Services (‘‘S&P’’), or their equivalent as determined by the investment manager)

These may include securities commonly referred to as ‘‘junk bonds’’. Investing in junk
bonds is an aggressive approach to income investing. The Fund may also invest up to 20% of its assets in repurchase agreements, by which the Fund buys securities with the understanding that the seller will buy them back with interest at a later date.

Heebner has a 38% annual return the last 5 years during both up and down real estate markets. The funds expense ration is .9% and has a $2500 minimum or $1,000 for IRA’s.

Disclosure (“none” means no position):Long CGMRX

↑ Grab this Headline Animator

Visit the ValuePlays Bookstore for Great Investing Books

MONDAY’S PICKS
None

FRIDAY’S RESULTS
Jeff Macke is bullish on Microsoft (MSFT) $28.30 CLOSE $27.49 LOSS

Guy Adami recommends getting long Intel (INTC) $23.87 after Nat Semi revenues topped expectations.CLOSE $22.90 LOSS

Pete Najarian likes Excel Maritime (EXM) $52.77 on increasing shipping rates. CLOSE $49.09 LOSS

Karen Finerman thinks J. Crew (JCG) $36.89 is a buy. CLOSE $35.02 LOSS

2008 Records:
Brian Schaeffer= 0-1
Carter Worth= 1-1
Jon Najarian= 4-3
Jeff Macke= 44-37-1
Tim Seymore= 17-14
Guy Adami= 48-37
Pete Najarian= 43-39
Karen Finerman= 42-33-1
Joe Terrenova= 1-3

2007 Results (Since 6/21):
Guy Adami= 58-46 = 56%
Jeff Macke= 60-40 = 60%
Pete Najarian= 49-41 = 54%

↑ Grab this Headline Animator

Visit the ValuePlays Bookstore for Great Investing Books

In this section Mr. Liveris and I discuss US energy policy (or lack thereof) and

Todd:
US energy policy. I had several questions planned here but you have been all over TV the last week and a half answering them for me..

Andrew:
(Laughing) And I am not done yet, I am determined to shake this all loose because we are just shooting ourselves in the foot very effectively as a nation.

Todd:
There was an “American Energy Production Act” Senate Republicans just introduced recently, have you seen it?

Andrew:
The drilling one right?

Todd:
Yes, they said it would produce an estimated 24 billion barrels of oil a day and 47 trillion cubic feet of nat. gas.

Andrew:
Certainly the bill recognizes the problem. It is a Republican bill and certainly I appreciate Senator Domenici’s work on it. However, the country need a bill both Democrats and Republican can support

I was in Washington yesterday and I had meeting after meeting. I actually think I might get deported here eventually [laughter] . You know I’m just screaming from the rooftops to get real with our energy policy.

Todd:
Let’s say you left Washington and they said “this guy is right, let’s do everything he said we should”. Even if they did that and they started at the earliest next spring, after the election, what kind of lag based on your experience is it 2 years, 5 years before anything they do now actually takes hold and excess production comes online.

Andrew:
Well we went through this in 2005 with the Lease Sale 181 in the inter-continental shelf of the US. The US gulf we were told that time and I think this is still very true that there are some known fields of oil and gas that can easily be tapped into current infrastructure especially on the US gulf they could be on the street in 12-18 months. Not as big as the numbers you just quoted, because on the outer edge that would be Anwar and that could be as far away at 4-5 years because of the pipeline.

We take a window and if you said “let’s go now” I think the earliest is 18 months and the latest is five years. But something else happens which is very important. The world as speculators look at supply very differently. We have a real supply issue because demand is surging and everyone thinks that there is not enough supply. Supply is bottle-necked in two places. One is availability of actual oil and gas of course in our Country we’re not accessing it and it will take 18 months to five years to accomplish that. Overseas its ships and freight and there are not enough ships on the water to get all this oil to everyone to get all this gas to everyone. So that’s one bottleneck.

The second bottleneck is refining capacity which as you know this country won’t permit refineries. I think the only one under construction today is Valero’s (VLO) in Texas. No one wants a refinery in their back yard. So you have this ridiculous situation of Reliance building the world’s largest refinery in India and all the products are for exporting to the United States.

So those two bottlenecks will take several years, if you take those two bottlenecks out by passing laws, I think there will be an instantaneous reaction to price.

Part Three: Dow Ag

Disclosure (“none” means no position):Long Dow, None

↑ Grab this Headline Animator

Visit the ValuePlays Bookstore for Great Investing Books

In an SEC filing Bruce Berkowitz of Fairholme funds continued selling TAL International (TAL) selling 24,000 shares at $26.68 bringing his total holdings down to 2.463 million shares.

It was the second SEC sale filing in a week in the company.

Disclosure (“none” means no position):None

↑ Grab this Headline Animator

Visit the ValuePlays Bookstore for Great Investing Books

The week’s top insider transaction by dollar amounts.

Community Bankers Acquisition Corp (BTC)- $4,675,000
Information Services Group Inc (III)- $3,075,000
eLoyalty Corp (ELOY)- $2,297,000
Pharmacyclics Inc (PCYC)- $2,082,000
TCF Financial Corp (TCB)- $2,009,000
Perini Corp (PCR)- $1,887,000
Marchex Inc (MCHX)- $1,815,000
Powerwave Technologies Inc (PWAV)- $1,604,000
Enterprise Products Partners L P (EPD)- $1,557,000
Align Technology Inc (ALGN)- $1,467,000
Huntsman Corp New (HUN)- $1,270,000
Dick’s Sporting Goods Inc (DKS)- $1,254,000
ev3 Inc (EVVV)- $1,066,000
Insight Enterprises Inc (NSIT)- $1,021,000

↑ Grab this Headline Animator

Visit the ValuePlays Bookstore for Great Investing Books

The week’s top insider transaction by dollar amounts.

Community Bankers Acquisition Corp (BTC)- $4,675,000
Information Services Group Inc (III)- $3,075,000
eLoyalty Corp (ELOY)- $2,297,000
Pharmacyclics Inc (PCYC)- $2,082,000
TCF Financial Corp (TCB)- $2,009,000
Perini Corp (PCR)- $1,887,000
Marchex Inc (MCHX)- $1,815,000
Powerwave Technologies Inc (PWAV)- $1,604,000
Enterprise Products Partners L P (EPD)- $1,557,000
Align Technology Inc (ALGN)- $1,467,000
Huntsman Corp New (HUN)- $1,270,000
Dick’s Sporting Goods Inc (DKS)- $1,254,000
ev3 Inc (EVVV)- $1,066,000
Insight Enterprises Inc (NSIT)- $1,021,000

↑ Grab this Headline Animator

Visit the ValuePlays Bookstore for Great Investing Books

Adam, Lehman, Barnes & Noble, Blackberry beats iPhone

– Adam Warner is a tremendous judge of writing

– They are toast

– Can’t argue

– Is anyone really surprised?

↑ Grab this Headline Animator

Visit the ValuePlays Bookstore for Great Investing Books