Apple patent win: a sign of long term demise?

Apple shares leapt to new high after scoring a patent trial win against Samsung, their closest rival. But, is it really good news? An editorial by China post questions what it means for Apple innovation prowess because it may make it complacent, depending on past glory and only playing catching up to new competitors.

“The fact that a patent lawsuit victory becomes major good news for Apple shows how much the company has changed from a market creator into a defensive market leader jealously guarding its tuff.

Apple’s real strength under late leader Steve Jobs was to create not only new products but brand new markets. The Apple II was the first personal computer with commercial value; the portable music player iPod and the online music market iTunes Store virtually launched the digital music market; the iPhone jump-started the smartphone industry; the iPad created the tablet device market; even the seemingly traditional MacBook Air heralded the Utlrabook subcategory of high-priced, ultrathin, lightweight laptops with powerful but expensive SDD hard disks and no DVD ROM.

Apple’s last major breakthrough, the iPad, is already two years old. In these two years the company has launched other seemingly promising new services and gimmicks such as the social-network feature, Ping, for iTunes, the cloud-based information sharing service iCloud, the video-calling service Facetime, and the voice-recognition personnel assistant Siri. None of them succeed in really catching on or distinguishing themselves from their competitors. The iPhone 4 and iPhone 4S are hugely successful financially but they are just upgrades in the iPhone line with less market-shaking innovations.

The introduction of the iPhone 5, Apple’s first major new product launch after the death of the revered Jobs, will be a major case in point to interpret the outlook of the company. If the new smartphone model offers only more juice, better hardware and exterior updates, then the company may find their competitors closing in faster.

If Apple is launching a smaller 7-inch iPad as rumoured, it will mark the first major step the company has made to catch up with competitors, and its obvious shift from forward-looking innovator to careful market strategist. In other words, Apple will become more like its competitors and less like Apple.

The Friday verdict may be a major legal victory for Apple, but if the company cannot exhibit its trademark groundbreaking innovation, the verdict could mark the watershed where competitors began to catch up with Apple in terms of innovation. Some makers from the Android camp are already churning out devices with sleek features such as smartphone with image projection hardware, and Internet TV with voice and hand-gesture control.

The technology giant should watch out and not be slowed down by its own popular products. It should remember that its real strength is in creating a new way of life for the future generation, not just making big-sellers.”

Why Gold price is destined for a fall?

Peter Tasker of Arcus Research has written an article on the gold bubble. Here’s an extract:”
The current bull market saw the gold price rise from $280 per oz. to $ 1900 in 10 years. This is a rate of ascent comparable to some of the great historical bubbles such as Japanese stocks in the 1980s, NASDAQ in the 1990s and Chinese stocks more recently.

In inflation-adjusted terms, gold remains with spitting distance of the all-time high it reached in 1981. After that it embarked on a 20 year bear market which delivered a loss of 80% in real terms and a far greater opportunity cost as other financial assets soared in price. Even now the total market value of all the gold in existence – which, remember, generates a return of precisely zero – exceeds the combined capitalization of the German, Chinese and Japanese stock markets, with all the productive capacity they represent.

According to the website pricedingold.com, gold is at a 120 year high (at least) relative to US house prices. Likewise, it is at a 74 year high relative to US wages, at multi-generation highs relative to wheat, coffee and cocoa and at the same price relative to the cost of a Yale education as in 1900.

Gold did not rise to these giddy heights by accident. A bull market of this scale requires widespread distrust of other financial assets, of the banking system, of capitalism itself. This was the case in the late 1970s, when Soviet expansionism and the bitter aftermath of the Vietnam war bred a growing pessimism about the future. When gold peaked in 1981, both equities and bonds were cheap by historical standards, having endured long grinding bear markets.

This time round bonds are expensive –if Sidney Homer’s History of Interest Rates is any guide, long-term interest rates are as low as they have been since Babylonian times. Meanwhile we are twelve years into a global bear market in equities, but the US equity market, the world’s largest, is not cheap on such long-term measures as the Shiller PER and neither are the most popular emerging markets.”

From:http://www.petertasker.asia/articles/have-a-golden-breakfast/

Who do you trust more? Temasek Holdings or Seth Klarman?

Seth Klarman, one of the world’s best value investor runs Baupost Fund which has an anuual compounded return of about 20% since 1982. Temasek Holdings said that they have a return of 17% since 1974.

Baupost Group uses no leverage and is closed to new investors. In fact,it holds a sizeable amount of cash and has returned funds back to investors due to lack of opportunities. Temasek Holdings is beginning to use leverage and its staff strength is larger than Baupost Fund. Christopher Balding has questioned Temasek Holdings returns whether it is more due to investment prowess or transfer of assets from state to Temasek Holdings.

Seth Klarman has warned of market rally induced by cheap money from central bankers.With the market reaching new heights, it is time to be cautious again.

Cerebos Pacific delisting: A cash cow being taken away

Cerebos Pacific (a stock which i own) is going to be delisted by its parent, Suntory at $6.60 per share. Although there is a EGM for the delisting proposal, with Suntory holding about 83% of the shares, the delisting offer is 99% certain unless minority shareholders like me turn up in force to reject the delisting offer.

Cerebos Pacific pays 25cents/share as dividend for quite a number of years and its earnings per share is on a gradual upward trend with Brands business contributing the most to this upward trend due to its domination of the essence of chicken market, especially in Thailand. The delisting price of 10X EV/Ebitda compared to the 17X EV/Ebitda offered by Heineken for APB is lower than my expectation for such a fine business with lots of cash flow and not much capex.

SGX is losing another great company and it will be difficult to find another company as good as Cerebos Pacific to invest in SGX.