Apple came on strong today and deservedly so.
I’ve been writing about Apple all week and it’s my single largest remaining holding as it is for many of our members and I find new reasons to like it every day. Today’s fun facts are the IPhone battery replacements will be $85.85, renting an IPhone while you wait for a repair is $29.95 and, if you synch it up with your desktop, Apple claims you will not know the difference. Also, sometime later this month, Apple will roll out Applecare for the IPhone.
Let’s see, that’s a new battery once every 3 years ($30/yr) and perhaps $10 per year in rental and a $50/yr Applecare contract all to assure you your $70/month phone service is never interrupted. Sounds like a no-brainer sale of $90 x 10M per year and bingo – we found another $900M in IPhone revenues! You gotta love these guys!
Oh did I mention that DT has announced they will be rolling out the IPhone in Germany on November 1st and in Asia in early ’08? Did you know people are already bypassing AT&T service just to have the multifunciton device sans phone? Goldman Sachs now estimates that 700,000 IPhones were sold in 4 days yet Apple has moved up the shipping date for mail order IPhones to July 6th after telling people it would be 2-4 weeks – just how many of these things did they make? 700,000 phones is more that the previous record holder, the Motorola Razr, sold in its first month. The Razr shipped its 100,000,000th phone this year so someone at Apple must have had big plans.
That reminds me of an interesting article I read back in May when Apple placed the World’s largest ever NAND order with Samsung, which, at the time, we thought it was for the whole line but what if it was just for the IPhone? 500M 2Gb chips, now that we’ve opened the phones up, are enough for 125M 8Gb Iphones. Of course they may have bought those chips for their $149 Nanos but I’m starting to get the feeling that they are going to blow the doors off the estimated 4M IPhones that were projected to be shipped in the first 6 months.
In other action, M&A keeps marching on with KFT making a $7.2Bn offer for Danone biscuits, TRY says they may buy WEN and BX is bidding $26Bn for HLT, a 40% premium. Are US equities stil so undervalued or have private equity players simply gone insane?
We had another energy rally as oil held up well above $71, closing the day at $71.43, up $4 in 5 sessions. We added to our oil puts but it’s looking pretty hopeless if things don’t calm down soon although there is certainly no way I would go long on the sector at these insane prices. I maintain that either oil or the economy breaks down soon, things are just not good enough that you can have both at once. Case in point: Home sales fell 3.5% in May to a 6-year low and GM sales fell 21.3% despite the fact that they have been giving away 0% financing! Ford lost 8.1% of last year’s sales (which were lousy) and Chrysler was the star of the group, dropping just 1.4%.
Yes, I’m still concerned about the dollar and Jim Kingsland wrote a nice article about why you should be too so I’m not going to beat it to death. I just want to remind people that we are making these fun plays like AAPL and GOOG with the full knowledge that the market could still come down like a house of cards. So far, there seems to be no limit to investors willingness to ignore, well —– everything! As OptionSage pointed out in his weekend post, who are we to fight the crowds?
| Description | Basis | Open | Sale Price | Close | Gain/Loss | % |
| 10 JUL 120.00 AAPL PUT (QAASD) | $ 3,310 | 6/22 | $ 3,590 | 7/2 | $ 280 | 9% |
| 10 JUL 125.00 AAPL CALL (APVGE) | $ 2,010 | 5/17 | $ 90 | 7/2 | $ (1,920) | -96% |
| 20 OCT 115.00 AAPL PUT (QAAVC) | $ 16,410 | 4/28 | $ 14,590 | 7/2 | $ (1,820) | -11% |
| 40 JUL 120.00 AAPL CALL (QAAGD) | $ 23,010 | 7/2 | $ 18,990 | 7/3 | $ (4,020) | -18% |
| 20 JUL 45.00 CROX CALL (CQJGI) | $ 2,510 | 6/29 | $ 2,990 | 7/2 | $ 480 | 19% |
| 60 JUL 35.00 DIS CALL (DISGG) | $ 1,390 | 6/6 | $ 2,390 | 7/2 | $ 1,000 | 72% |
| 20 JUL 75.00 DNA CALL (DWNGO) | $ 5,010 | 6/20 | $ 5,090 | 7/2 | $ 80 | 2% |
| 30 JUL 129.00 FXI CALL (FAHGY) | $ 14,260 | 6/15 | $ 14,990 | 7/2 | $ 730 | 5% |
| 10 JUL 210.00 RIMM CALL (RFYGB) | $ 7,260 | 6/29 | $ 5,090 | 7/2 | $ (2,170) | -30% |
| 200 JUL 22.50 STX CALL (STXGX) | $ 9,410 | 6/7 | $ 1,990 | 7/2 | $ (7,420) | -79% |
As you can see above, we finally had to give up on several protects but our positive Apple calls more than made up for the damage done by covering over the weekend as we were very lucky that Apple got off to a slow start yesterday.
Have a very happy holiday,
– Phil
