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Wednesday, October 19, 2011

A bite of Apple has seldom looked so tasty

SIMON AVERY — INVESTMENT REPORTER

From Thursday's Globe and Mail

Published Wednesday, Oct. 19, 2011 6:14PM EDT

Last updated Wednesday, Oct. 19, 2011 7:34PM EDT

The investors who are selling Apple Inc. (398.62-23.62-5.59%)shares following the company’s first quarterly earnings miss in more than six years may want to think again.

The shares lost 5.6 per cent on Wednesday, a day after the announcement. But while Apple certainly faces tough competition from the emerging Android mobile platform, its valuation has rarely been so tempting.

The shares trade at just 14.5 trailing 12-month earnings. Since 1997, when the late Steve Jobs retook the helm of the company he co-founded, the shares have traded at this level, or slightly less, on only three occasions: during a short period following his return, during the bursting of the dot-com bubble at the end of 2000 and during the financial crisis of 2008. The median price-to-earnings multiple over this period was 34.3.

Apple shares now trade at about 11 times estimated 2012 earnings. Discounting the approximately $80-billion (U.S.) in cash and cash equivalents that Apple hoards, the PE multiple drops to about nine.

The average forward-looking PE among S&P 500 companies is about 11. Is Apple just average? Hardly. The company just posted a 54-per-cent jump in profit ($6.6-billion U.S.) on revenue that rose 39 per cent ($28.3-billion) for the three months ended Sept. 24.

The impressive results fell slightly short of the Street’s forecasts due to lower-than-expected sales of iPhones, iPads, and iPods. But management’s updated outlook for the current quarter exceeded analysts’ estimates, calling for record share profit of about $9.30 on record sales of about $37-billion.

The underlying numbers also tell a bullish tale, with return on common equity hitting 41.7 per cent last quarter, twice the median of 20.3 recorded over the last decade. Cash flow per share has sky rocketed to $11.24, compared with an average since 1990 of $1.25.

Some analysts warn that the shares are likely to be volatile in the short term, as investors react to the earnings miss, wait for data supporting the next leg of growth and adjust to the company’s new era without its visionary leader.

But they point to numerous trends that should support a higher share price, including red-hot growth in emerging markets. Sales of iPhones in the Asia Pacific region, for example, more than doubled year-over-year. The company says 15 per cent of revenue last quarter came from China.

“China and other emerging markets such as Brazil, India, and Indonesia could drive a multiyear product cycle for Apple, particularly with new lower-priced iPhone products such as the iPhone 4 and 3GS,” Michael Walkley, an analyst with Canaccord Genuity Corp., wrote in a report this week.

In addition, sales of Mac computers hit a record 4.9 million units last quarter, topping most analysts’ expectations. Demand also appears strong for the latest iPhone, with four million iPhones 4S units selling in the first three days following its release.

Tuesday, August 23, 2011

Corruption in India? Really?

In India, Fighting and Fasting Over Corruption: Choudhury

By Chandrahas Choudhury Aug 23, 2011 2:46 PM PT 0

For the past few months, Anna Hazare, the septuagenarian Indian social activist, has led his country's most prominent anti-corruption movement. Last weekend, it reached a crescendo when Hazare began an indefinite fast.

Hazare was protesting the Indian government's decision to introduce a watered-down version of a bill in Parliament that would give an independent body, called the Lokpol, the power to investigate political corruption at the highest levels of government. The Lokpal Bill would assign this power to a three-member group made up of current or former senior judges.

For several months, Hazare has led a committee of activists and intellectuals trying to stop the government from weakening the bill. Team Anna, as it is popularly called, has proposed its own version of the bill that would give the Lokpal radical powers, extending to both the office of the prime minister and the judiciary. (A summary of the opposing positions can be found here.)

Hazare's version has stimulated robust debate. Some commentators think it is a much-needed antidote to corruption; others think it gives the Lokpal draconian powers.

Representatives from Team Anna and the government met in June with the intention of thrashing out their differences and preparing a single version of the bill to present to Parliament in August. But they could not reach a compromise. Earlier, in March, Hazare had called off a planned hunger strike to protest corruption. He said he'd take up the plan again if the government tabled its version of the bill, and so he has.

On Aug. 16, the day after India's 64th anniversary of independence, Hazare addressed demonstrators in two locations in New Delhi: Tihar Jail, where he was detained by the government for three days, and the grounds of Ramlila Maidan, the scene of many memorable political demonstrations over the decades.

The capital's citizens and visitors from far and wide -- many of whom had never attended a political protest before -- flocked to Ramlila Maidan to voice their agitation. They seemed moved by various factors: political disenchantment, a need for empowerment, nationalistic fervor, hero worship or just plain curiosity. With the month of Ramzan (the Muslim fasting season known elsewhere as Ramadan) coming to an end and the Hindu festival of Janmashtami soon arriving, the demonstrators were at times united in both protest and prayer.

In both New Delhi locations, Hazare said that if his team's version of the bill did not pass by Aug. 30, he would lead protestors directly to the homes of Members of Parliament (MPs).

On Aug. 23, the Indian Express reported Hazare as saying:

Now, 25 to 30 people are sitting on dharnas in front of MPs' residences. If the government does not pass the Bill by August 30, we have to intensify the protest. Protesters in thousands should gherao [surround] the residences of MPs then.

In an essay in the publication Tehelka, Shoma Chaudhury scathingly criticized the government's pusillanimity and disconnection from the Indian public. Chaudhury acknowledged that there were many flaws in Hazare's movement, but she argued that the government sparked the crisis:

In a curious way then, what the Hazare campaign has really shown up about this government is a condition almost unprecedented in Indian public life: a complete and debilitating loss of politics in its political leadership.
Politics in urban India has come to mean a dirty word. But in truth, the loss of politics is among the worst calamities that can befall a society. The art of politics is the ability to understand human nature; come up with big ideas; read a situation astutely; anticipate events; manage situations; steer through minefields; build bridges; take widely diverse people and views along; be game for both soothing words and firm action; play both statesman and strategist. Display leadership.
... At a time, then, when the country needed agile leaders with great heart and intuition, India seems to be landed with a reign of the tin men: no heart, just uni-dimensional cold-blooded intellect, clumsy actions, unnecessary polarities and a growing sense of crisis.

Monday, August 8, 2011

US economic problems & India

You are here: Home » Business » We are better prepared, says Govt

We are better prepared, says Govt
New Delhi, Aug 8, (DHNS and PTI):
Admitting that US economic problems could have some impact on Indian economy, Finance Minister Pranab Mukherjee, on Monday, said that India’s fundamentals are strong and the government is ready to address any concern that may arise.

“We would focus on encouraging greater domestic consumption and give impetus to the drivers of domestic growth,” Mukherjee told reporters while reacting to economic situation in US. Mukherjee’s confidence was reflected in a sharp bounceback of Indian shares on Monday, as the stock markets plunged by over 500 points before witnessing some recovery. The Finance Minister also said that the government will put some of the long stalled reforms measures in fast track to help stimulate local consumption. “India is better position than other nations to meet the challenge posed by the developments in the US and the euro zone”, he said adding that India could see faster and greater FII inflows unlike after 2008 meltdown, in view of the higher returns that global investors could get here. The recent developments in the US and the euro zone have injected certain uncertainty in global markets. Though there could be “some impact” on capital and trade flows “but as India’s growth story is strong we could see FIIs viewing India as an attractive investment destination even if there is any temporary outflow”, he said. The finance minister said softening of global commodity prices, especially oil, will help check inflationary pressures. Meanwhile, Chief Economic Advisor Kaushik basu termed the slump in the stock market as a “panic reaction”, affirming that the country’s growth story remains intact, with now policy intervention required. “Right now, we don’t need any special measures. Should the need arise, the government and the central bank are in a position to step in. But barring the immediate reaction to what is happening now, the India story remains robust,” Basu said. Though the downgrade of the US sovereign rating is a matter of concern, Basu said there was no need for alarm and people should not overreact to the development, adding that the American economy has been facing difficulties for the past many months and hence, the stock market has already factored in the troubles in the US. If there is a slowdown in the US economy, “which is possible”, he said Indian exports could suffer, as the US is one of the country’s largest trading partners, but the the impact would be short run. He further said there are signs of the tectonic plates of the global economy shifting toward the eastern part of the world. “In the next months and in the medium to long run, there will be global capital in search of safe haven. India can become the safe haven that a lot of global capital will be seeking,” Basu added. Basu said the S&P downgrade could lead to an increase in borrowing costs in the US and could impact its economic growth going forward. The crisis in the global economy following downgrading of US sovereign rating has a silver lining for the Indian economy, grappling with high inflation. As prices of global commodities, mainly crude oil, have started coming down, the pressure on inflation would ease, Basu added.India imports 75 per cent of its crude oil requirements and the volatility in its prices have been fuelling inflation, which was 9.44 per cent in June. Weakening of crude oil prices will help moderating the price rise. On Monday, The Deputy Chairman of the Planning Commission Montek Singh Ahluwalia mentioned that the Indian economy is mostly driven by domestic factors and markets here will stabilise in the short-run, despite the recent meltdown due to US downgrade. “The high growth of Indian economy is largely driven by internal factors. I feel the market will stabilise in the short-run. I don’t expect to see a big negative impact but we have to watch the situation,” Ahluwalia said. “The impact on India depends on what happens in the world. If there is financial instability, there will be some impact,” he added. Ahluwalia said that if there is financial instability globally, it will affect the Indian economy to some extent.

Indian Market in Vietnam

Vietnam tourism cannons attention to Indian market

August 7, 2011 about News, Travel

LookAtVietnam - Vietnam, for the first time, has added India into the group of potential visitor-generating markets which the local tourism industry should carry out promotion activities and build products to woo visitors, an official said.
Hoang Thi Diep, deputy director general of Vietnam National Administration of Tourism (VNAT), said that VNAT would conduct the first-ever market survey in India at the end of 2011 for market expansion.
“This is a large and potential market which should be approached by now,” she said.
At present, Indian visitors are arriving in large numbers in neighboring countries like Thailand or Singapore. However, the number of Indian tourists to Vietnam was still scanty, mainly under MICE (Meeting, Incentives, Conventions, and Exhibitions) tourism instead of pure travel, and the number of tourist companies to explore this market was trivial.
Indian tourist source is quite good but hard to exploit as such travelers know little about Vietnam. Moreover, high tour fee and lack of direct flights make it inconvenient for them to visit Vietnam as tourists have to transit in Singapore or Bangkok of Thailand, said the director of a HCMC-based travel firm.
“Therefore, direct flights are needed so as to develop the market, especially to lure travelers,” he said.
Doan Thi Thanh Tra, head of the Marketing Department of Saigontourist Travel Services, said that the Indian tourist market was harder to exploit than other markets. The company explored the market and received some Indian tourists, mainly business visitors but the amount grew sluggishly.
“There are a great number of problems related to tour prices, flight routes, and food as well. It is very hard to find Indian restaurants in Vietnam and most of Indian tourists cannot eat Vietnamese food as other ones,” she added.
Diep of VNAT said “the tourism industry took many issues into consideration before adding India into its potential market groups.”
“There was so much work to be settled such as the lack of Indian restaurants. But first of all, the industry has to do some surveys on tourists’ need to prepare services and marketing,” she explained.
In addition to India, the industry’s major markets also include Northeast Asia, Southeast Asia, Europe, and North America.
Source: SGT

Chuck Kuhn's India in Photos

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