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Do RetroSpective Thoughts on Apple Inc Hint of the ProSpective Future after the “Crash” Today?

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PART I.

Understanding Apple Requires an Analysis of Fundamentals and Psychology

vitalyBy Vitaliy Katsenelson CFA

So many articles have been written recently about Apple — defending it or explaining why this glorious fruit will turn into a shriveling pumpkin by midnight (with Samsung’s help) — that I really haven’t felt the need to contribute to the unending debate.

But, when Apple’s stock crashed to $450 back in January 2013, we bought a little for our clients. After receiving an outraged e-mail from one of them calling the purchase “irresponsible” and proclaiming that everyone (including his neighbor) knows that Apple is going down to $300, I decided it was time to join the discourse. Clients rarely (almost never) contact us about stocks we own in their accounts. More important, this is far from the most “radioactive” stock we own or have owned.

So, here is a column on Apple, I wrote back then.  I have no intention of defending or prosecuting the company, but I would like to share some thoughts about it that many pundits have either overlooked or ignored.

***

Logo of Apple Inc. to be used on a custom landing page/brand page about Apple products on the website of Shopping.com.

***

The Psychlogy

What makes Apple stock difficult to own is psychology. The company’s success since 2000 is a black swan. We tend to think of Nassim Nicholas Taleb’s black swans as significant random negative events, but Apple is a positive one. When co-founder Steve Jobs came back to the company in the late ’90s, Apple was about to take its last breath. Jobs pulled off a miracle. He revived the company’s computer product line, making Macs exciting again, and then came out with three revolutionary “i” products in a row: the iPod, iPhone and iPad. You could argue that the success of each “i” product in itself was a black swan, exceeding all rational expectations and revolutionizing, transforming and in some cases creating new categories of merchandise that had never existed before.

Revenue and Market Capitalization

Apple’s revenue and market capitalization deservedly surpassed those of almighty Microsoft Corp. — the hairy monster with stinky breath that performed CPR on dying Apple in the late ’90s by injecting liquidity into the company by buying its preferred stock. We have a hard time processing this highly improbable success and an even harder time imagining that there is another black swan about to take flight from the Apple labs, especially with no Steve Jobs around to sit on the egg.

Black swans come out of nowhere, unannounced, but their impact may be long-lasting. The wildly successful “i” gadgets dug a formidable moat around Apple. They created the most valuable and still most inspirational brand in the world, funded an enormous research and development effort, enabled huge buying power (Apple locks up supply and pays much lower prices than many of its competitors for parts), filled out a mature product ecosystem and stuffed Apple’s debt-free balance sheet with $137 billion — half the market capitalization of Microsoft. The moat is wide, deep and unlikely to be breached any time soon.

***

Ex-Cathedra black swan

***

High Price

One reason the psychology of owning Apple stock is so difficult: it’s high price. (Note: I am talking not about its valuation but purely about its price.) Apple has had only one stock split since the late ’90s, when it was trading in double digits, and it now changes hands at about $450 (down from $700 just a few months ago). Stock splits create zero economic value in the long run — absolutely none. Apple could split its stock ten to one and you’d have ten $45 shares, and nothing about the company or its business would change. But, I’d argue that a 3 percent “slide” of $1.35 would grab fewer headlines than a $13.50 “drop” — there is a media magnification factor that is hard to ignore.

Hardware versus Software

Is Apple a hardware or a software company? This is a very important question because Apple’s net margins of 25 percent are dangerously higher than those of Microsoft, a software monopoly that, with the minor exception of the Xbox and its new venture into tablets, sells only software, which has a 100 percent incremental margin.

Apple is either a smart hardware company or a software maker dressed in hardware company clothes. Take a look at the PC businesses of traditional “dumb” hardware companies like Dell and Hewlett-Packard Co. (I am not insulting these companies, I am just highlighting their lack of PC-directed R&D.) They buy hard drives from Western Digital Corp., graphic cards from Nvidia Corp., processors from Intel Corp. and an operating system from Microsoft, then they have contract manufacturers put together these parts in Asia and ship PCs all over the world. Dell and HP engineers design the PCs but contribute minimal R&D to their boxes; most of the R&D is done by the suppliers. Dell and HP are really asset-lite marketing and logistics companies — this explains their razor-thin margins. (Side note: Because of a lack of fixed costs, Dell and HP can remain profitable despite the ongoing decline in PC sales.)

Same Surface

On the surface, Apple’s personal computer business is not that much different from Dell’s or HP’s: It uses the same highly commoditized hardware and it also outsources manufacturing, but Apple spends much more on the R&D of its own operating system and creates distinctive, innovative products. Apple gets to keep a slice of revenue that would otherwise go to Microsoft for the operating system. Also, Apple is able to charge a premium (usually a few hundred dollars per PC) for the aesthetic appeal and perceived ease of use of its products.

However, when it comes to the “i” devices, Apple is a much smarter hardware company; its value added goes further than just basic design and software. Though there is a lot of commoditized hardware that goes into an iPhone or iPad, Apple’s skill at fitting an ever-growing number of components into ever-shrinking devices constantly increases. Add world-class touch and feel, superior battery life and durability, and you have a package that turns what would otherwise be commodity items into highly differentiated, and undeniably sexy, products. Apple has even gone a step further and is designing its own microprocessors.

But — and this is a very important “but” — as phones and tablets mature, processor speed, battery life and weight will tend to become uniform across all devices. It is arguable that the competition has already caught up with Apple in the hardware race. As the hardware premium goes away, there will be only two premiums left: Apple’s brand and its ecosystem. (I will go into detail about the “i” ecosystem and what it means for Apple’s margins and profitability in my second essay posted below).

Note that I did not mention the software premium. Unlike Microsoft, which charges for the Windows operating system installed on PCs, Google gives away Android to anyone who dares to make a phone or a tablet. Unless Apple can maintain the operating system lead against Android, that premium will go away.

Assessment

Recently, I spent a few days playing with Nexus 7, Google’s Android-powered 7-inch tablet, which retails for $200 ($130 cheaper than Apple’s iPad mini). Nexus 7 is a good product, but I kept remembering that humans and monkeys share 98 percent of their DNA, and the Android operating system is missing the 2 percent that makes Apple iOS so special.

*** 

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PART II.

How Much Would You Pay for the Apple Ecosystem?

Apple’s ecosystem is an important and durable competitive advantage; it creates a tangible switching cost (or, an inconvenience) after Apple has locked you into the i-ecosystem. It takes time to build an ecosystem that consists of speakers and accessories that will connect only via Apple systems: Apple TV, which easily recreates an iPhone or iPad screen on a TV set; the music collection on iTunes (competition from Spotify and Google Play lessens this advantage); a multitude of great apps (in all honesty, gaming apps have a half-life of only a few weeks, but productivity apps and my $60 TomTom GPS have a much longer half-life); and, last, the underrated Photo Stream, a feature in iOS 6 that allows you to share photos with your close friends and relatives with incredible ease. My family and friends share pictures from our daily lives (kids growing up, ski trips, get-togethers), but that, of course, only works when we’re all on Apple products. (This is why Facebook bought Instagram for $1 billion. Photo Stream is a real competitive threat to Facebook, especially if you want to share pictures with a limited group of close friends.)

The i-ecosystem makes switching from the iPhone to a competitor’s device an unpleasant undertaking, something you won’t do unless you are really significantly dissatisfied with your i-device (or you are simply very bored). How much extra are you willing to pay for your Apple goodies? Brand is more than just prestige; it is the amalgamation of intangible things like perceptions and tangible things like getting incredible phone and e-mail customer service (I’ve been blown away by how great it is!) or having your problems resolved by a genius at the Apple store.

Of course, as the phone and tablet categories mature, Apple’s hardware premium will deflate and its margins will decline. The only question is, by how much?

Let me try to answer

From 2003 to 2012, Apple’s net margins rose from 1.1 percent to 25 percent. In 2003 they were too low; today they are too high. Let’s look at why the margins went up. Gross margins increased from 27.5 percent to 44 percent: Apple is making 16.5 cents more for every dollar of product sold today than it did in 2001. Looking back at Nokia Corp. in its heyday, in 2003 the Finnish cell phone maker was able to command a 41.5 percent margin, which has gradually drifted down to 28 percent.

Today, Nokia is Microsoft’s bitch, completely dependent on the success of the Windows operating system, which is far from certain. Nokia is a sorry shell of what used to be a great company, while Apple, despite its universal hatred by growth managers, is still, well, Apple. Its gross margins will decline, but they won’t approach those of 2003 or Nokia’s current level.

For Apple to conquer emerging markets and keep what it has already won there, it will need to lower prices. The company is not doing horribly in China — its sales are running at $25 billion a year and were up 67 percent in the past quarter.

However, a significant number of the iPhones sold in China (Apple doesn’t disclose the figure) are not $650 iPhone 5’s but the cheaper 4 and 4s models. (Also, on a recent conference call, Verizon Communications mentioned that half of the iPhones it has sold were the 4 and 4s models.) Apple’s price premium over its Android brethren is not as high as everyone thinks.

What is truly astonishing is that Apple’s spending on R&D and selling, general and administrative (SG&A) expenses has fallen from 7.6 percent and 19.5 percent, respectively, in 2003 to a meager 2.2 percent and 6.4 percent today. R&D and SG&A expenses actually increased almost eightfold, but they didn’t grow nearly as fast as sales. Apple spends $3.4 billion on R&D today, compared with $471 million in 2001. This is operational leverage at its best. As long as Apple can grow sales, and R&D and SG&A increase at the same rate as sales or slower, Apple should keep its 18.5 percentage points gain in net margins through operational leverage.

***

***

Growth of sales is an assumption in itself. Apple’s annual sales are approaching $180 billion, and it is only a question of when they will run into the wall of large numbers. At this point, 20 percent-a-year growth means Apple has to sell as many i-thingies as it sold last year plus an additional $36 billion worth. Of course, this argument could have been made $100 billion ago, and the company did report 18 percent revenue growth for the past quarter, but Apple is in the last few innings of this high-growth game; otherwise its sales will exceed the GDP of some large European countries.

If you treat Apple as a pure hardware company, you’ll miss a very important element of its business model: recurrence of revenues through planned obsolescence. Apple releases a new device and a new operating system version every year. Its operating system only supports the past three or four generations of devices and limits functionality on some older devices. If you own an iPhone 3G, iOS 6 will not run on it, and thus a lot of apps will not work on it, so you will most likely be buying a new iPhone soon. In addition — and not unlike in the PC world — newer software usually requires more powerful hardware; the new software just doesn’t run fast enough on old phones. My son got a hand-me-down iPhone 3G but gave it to his cousin a few days later — it could barely run the new software.

As I wrote above, Apple’s success over the past decade is a black swan, an improbable but significant event, thanks in large part to the genius of Steve Jobs. Today investors are worried because Jobs is not there to create another revolutionary product, and they are right to be concerned. Jobs was more important to Apple’s success than Warren Buffett is to Berkshire Hathaway’s today. (Berkshire doesn’t need to innovate; it is a collection of dozens of autonomous companies run by competent managers.) Apple will be dead without continued innovation.

Jobs was the ultimate benevolent dictator, and he was the definition of a micro-manager. In his book Steve Jobs, Walter Isaacson describes how Jobs picked shades of white for Apple Store bathroom tiles and worked on the design of the iPhone box. He had to sign off on every product Apple made, down to and including the iPhone charger. His employees feared, loved and worshiped him, and they followed him into the fire. Jobs could change the direction of the company on a dime — that was what it took to deliver black i-swans. Jobs is gone, so the probability of another product achieving the success of the iPhone or iPad has declined exponentially.

***

Steve Jobs RIP

***

What is really amazing about Apple is how underwhelming its valuation is today — it doesn’t require new black swans.

In an analysis we tried very hard to kill the company. We tanked its gross margins to a Nokia-like 28 percent and still got $30 of earnings per share (the Street’s estimate for 2013 is $45), which puts its valuation, excluding $145 a share in cash, at 10 times earnings. We killed its sales growth to 2 percent a year for ten years, discounted its cash flows and still got a $500 stock.

There is a lot of value in Apple’s enormous ability to generate cash. The company is sitting on an ever-growing pile of it — $137 billion, about one third of its market cap. Over the past 12 months, despite spending $10 billion on capital expenditures, Apple still generated $46 billion of free cash flows. If it continues to generate free cash flows at a similar rate (I am assuming no growth), by the end of 2015 it will have stockpiled $300 of cash per share. At today’s price [2013] it will be commanding a price-earnings ratio (if you exclude cash) of 4.

Of course, the market is not giving Apple credit for its cash, but I think the market is wrong. Unlike Microsoft, which does something dumber than dumb with its cash every other year, Apple has a pristine capital allocation track record. It has not made any foolish acquisitions — or, indeed, any acquisitions of size. Other than buying an Eastern European country and renaming it i-Country, Apple will not be able to acquire a technologically related company of size, nor will it want or need to. The cash it accumulates will end up in shareholders’ hands, either through dividends or share buybacks.

What is Apple worth?

After the financial acrobatics I’ve done trying to murder the valuation of Apple, it is easier to say that it is worth more than $450 than to pinpoint a price target. When I use a significantly decelerating sales growth rate and normalize margins (reducing them, but not as low as Nokia’s current margins), I get a price of about $600 to $800 a share.

Growth managers don’t want Apple to pay a large dividend, as though that would somehow transform this growing teenager into a mature adult. But I have news for them: Apple already is a mature adult. Second, when your return on capital is pushing infinity (as Apple’s is), you don’t need to retain much cash to grow. Two thirds of Apple’s cash is offshore, but that doesn’t make it worthless; it just makes it worth less — only $65 billion, maybe, not $97 billion, once the company pays its tax bill to Uncle Sam.

***

ImageProxy

***

Assessment

In the short term none of the things I am writing about here will matter. Remember, “Everyone knows Apple is going to $300,” as a client recently e-mailed me, as everyone knew it was going to a $1,000 a few months ago when Apple’s stock was trading at $700. The company’s stock will trade on emotion, fundamentals will not matter, and growth managers will likely rotate out of Apple, because once the stock declined from $700 to $450, the label on it changed from “growth” to “value.”

But ultimately, fundamentals will prevail. Like the laws of physics, they can only be suspended for so long. And so, do these retrospective thoughts on Apple hint of future prospects?

More: Should You Buy Apple Stock Ahead of Its September Event

ABOUT

Vitaliy N. Katsenelson CFA is Chief Investment Officer at Investment Management Associates in Denver, Colo. He is the author of Active Value Investing (Wiley 2007) and The Little Book of Sideways Markets (Wiley, 2010).  His books were translated into eight languages.  Forbes Magazine called him “The new Benjamin Graham”.  

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Buying Warren Buffett, Richard Branson and Steve Jobs at a Discount

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On capital allocators with impressive records

vitaly

By Vitaliy Katsenelson CFA

What would you get if you crossed Warren Buffett, Richard Branson and Steve Jobs? Answer: Masayoshi Son, the Korean-Japanese, University of California, Berkeley–educated founder of one of Japan’s most successful companies, SoftBank Corp.

***

interview

[A capital allocator]

***

Masayoshi Son

Just like Buffett, Son is a tremendous capital allocator with a very impressive record: Over the past nine and a half years, SoftBank’s investments have had a 45 percent annualized rate of return. A big chunk of this success can be attributed to one stock: Chinese e-commerce giant Alibaba, a $100 million investment SoftBank made in 2001 that is worth about $80 billion today. Though you may put Alibaba in the (positive) black swan column, Son’s success as an investor goes well beyond it — the list of his investments that have brought multibagger returns is very long. Today, at the tender age of 57, he is the richest man in Japan, and SoftBank, which he started in 1981 and owns 19 percent of, has a market capitalization of $72 billion.

Son, like Apple co-founder Jobs, is blessed with clairvoyance. He saw the Internet as an amazing, transformative force well before that fact became common knowledge. In 1995 he invested in a then-tiny company, Yahoo!, earning six times his investment. But he didn’t stop there; he created a joint venture with Yahoo! by forming Yahoo! Japan, putting about $70 million in a company that today is worth around $8 billion. (Yahoo! Japan is a publicly traded company listed in Japan).

What is shocking is that Son saw that the iPhone would revolutionize the telecom industry before Apple announced it or even invented it. See for yourself in this excerpt from an interview with Charlie Rose, where Son describes his conversation with Jobs in 2005 — two years before the iPhone was introduced:

“I brought my little drawing of [an] iPod with mobile capabilities. I gave [Jobs] my drawing, and Steve says, “Masa, you don’t give me your drawing. I have my own.” I said, “Well, I don’t need to give you my dirty paper, but once you have your product, give me for Japan.” He said, “Well, Masa, you are crazy. We have not talked to anybody, but you came to see me as the first guy. I give to you.”

Richard Branson

Similar to Virgin Group founder Branson, who had the testicular fortitude to create Virgin Atlantic Airways in the U.K. to compete against the state-owned behemoth British Airways, Son started two telecom businesses in Japan — one fixed-line and one wireless — with which he challenged the state-owned NTT monopoly. In 2001, disgusted with Japan’s horrible broadband speeds, he convinced the government to deregulate the telecom industry. When no other companies emerged to compete with NTT (I don’t blame them, really), Son took it upon himself to start a fixed-line competitor, Yahoo! BB (Broadband). Thanks to him, now Japan enjoys one of the highest broadband speeds in the world and Yahoo! BB is a leading fixed-line telecom.

It took Son four years to bring his broadband business to profitability. This is how the Wall Street Journal described that period in 2012:

“The problems at the broadband unit contributed to losses for the entire company for four consecutive years. Mr. Son set up an office in a meeting room 13 floors below his executive suite to be closer to the problem unit. He slept in the office at times and routinely summoned executives and partners for meetings late at night. . . . He worked out of the meeting room for 18 months, until the broadband unit had cut enough costs and moved enough customers to more lucrative plans.”

A normal person might have taken a break and enjoyed the fruits of his labor at that point, but not Son. Just as his broadband business went in the black, Son executed on his vision for the Internet and bought Vodafone K.K., a struggling, poorly run wireless telecom in Japan. SoftBank paid about $15 billion, borrowing $10 billion.

Fast-forward eight years, and SoftBank Mobile is an incredible success. It is one of the largest mobile companies in Japan, even faster growing than NTT Docomo (a subsidiary of almighty NTT). Today it spits out about $5 billion in operating profits annually — not bad for a $5 billion equity investment.

Like Branson, Son is a serial entrepreneur who has started multiple, often unrelated businesses and has succeeded a lot more than he has failed. SoftBank has built a robot named Pepper that can read human emotions; and after the earthquake that crippled Japanese power generation, Son started a renewable-energy business.

Son has a very ambitious goal for SoftBank: He wants it to become one of the largest companies in the world. Unlike the average Wall Street CEO, whose time horizon has shrunk to quarters, Son thinks in centuries. I kid you not — he has a 300-year vision for SoftBank. Practically speaking, 300 years is a bit challenging even for long-term investors, but at the core of his vision Son is building a company that he wants to last forever (or 300 years, whichever comes first).

He views SoftBank as an Internet company and is committed to investing in Internet companies in China and India. He thinks that as these countries develop, their GDPs will eclipse those of the U.S. and Europe.

Jobs, Branson, Buffett — it is very rare for somebody to embody strengths of all three of these giants. None of them has the qualities of the other two. Buffett is not a visionary, nor does he want to run the companies in his portfolio. Branson is not a visionary — in his book Losing My Virginity he admits he did not see analog music (CDs) being destroyed by digital music (iTunes) and demolishing his music store business. Jobs probably came the closest, as both a visionary and a business builder, but he was not known for his investing acumen.

You’d think SoftBank would be richly priced to reflect Son’s premium. Wrong! Today its stock is trading at about a 40 percent discount to the fair value of its known assets (SoftBank has about 1,300 investments, many of them not consolidated on its financials).This discount is not rational, but maybe the market thinks Alibaba is overvalued, or it expects the Japanese yen to continue its decline (I would not disagree), and thus wholly owned Japanese telecom businesses are going to be worth less in U.S. dollars. Or maybe SoftBank’s Sprint investment is not going to work out. Oh, I forgot to mention that one — let’s address it next.

SoftBank’s Japanese telecom businesses generate about $6 billion of very stable operating income, but there is little room for growth in Japan. Unable to find anything telecom to buy in Asia, in 2013 the company took advantage of the strong yen and bought 80 percent of Sprint for $21 billion, or $7.65 a share. Sprint is the No. 3 mobile company in the U.S., a market dominated by AT&T and Verizon, which together account for about 75 percent of wireless revenue and more than 100 percent of wireless profits (T-Mobile and Sprint are losing money). If I knew no more than that, I’d say Sprint’s chances of success in the U.S. are slim — after all, it is competing against two very profitable giants.

But I would have said the same thing about SoftBank’s adventure into fixed-line and then wireless in Japan, and I would have been dead wrong. Admittedly, Sprint’s turnaround will not be easy and will be far from linear, and its $30 billion debt load will not help. SoftBank is looking to apply the tremendous experience it gained through a lot of hard work in turning an ailing Vodafone K.K. into one of the best wireless companies in the world.

However, this time around SoftBank is even better equipped to fight its competition: It has lots of experience with 2.5 GHz spectrum in Japan, where its network is several times faster than Verizon’s and AT&T’s networks in the U.S. SoftBank brought 200 engineers from Japan to help Sprint design its new network; the two companies combined have tremendous buying power in equipment, second only to China Mobile. In fact, suppliers Alcatel-Lucent, Nokia and Samsung just agreed to provide Sprint with $1.8 billion in vendor financing. But most important, SoftBank has already had success with a telecom turnaround. It is following the same road map with Sprint that it used in Japan with Vodafone K.K.: improve the network, cut costs, provide better customer service and top all that with cutthroat price reductions.

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investmentcenter5

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Sprint News

Over the past several months, the news flow from Sprint has not been great: It cut guidance, and its stock declined to $4 a share. This may explain why SoftBank’s stock is down; however, even if Sprint meets its maker, the impact on SoftBank should be just $5 a share. Sprint’s $30 billion debt is nonrecourse to SoftBank. Even at current market values, SoftBank’s equity stake in Sprint is worth only $12 billion, while its 32 percent stake in Alibaba is worth $80 billion, and its Japanese telecom businesses are worth about $50 billion (at five times earnings before depreciation and amortization). SoftBank’s stake in Yahoo! Japan is worth north of $8 billion.

Softbank

As part of our investment analysis, we tried to hypothetically kill SoftBank — smother it with a pillow — but we simply could not. We assumed that the yen will depreciate against the dollar to 180 from 120 today, slashing the value of Japanese businesses by a third. Alibaba stock is trading at around $100, about 30 times 2015 earnings forecasts; we took the earnings multiple down to 20 times, pricing the stock at $60. We even assumed SoftBank will have to pay capital gains taxes on selling Alibaba. We halved the price of Sprint’s stock. However, even in this fairly grim scenario we could not get SoftBank’s stock to decline much below its current price of $30. In the worst case we are paying fair value for SoftBank’s assets and get Son’s magic for free. This places no value on his 1,300 other investments, either. Sprint may, by the way, actually work out to be a tremendous success for SoftBank.

There are many ways to look at SoftBank. You can think of it as buying a stock at a roughly 50 percent discount to the market value of its assets or as a way to buy Alibaba at less than half its current price. Alibaba is a great play on China — not the China that builds ghost towns and bridges to nowhere but the Chinese consumer, and not just the Chinese consumer but the Chinese consumer who is spending more and more money shopping online. Alibaba is synonymous with Chinese online shopping, whose growth may accelerate with higher smartphone penetration and, just as important, the ongoing rollout of a fast wireless LTE network.

I’d be remiss if I did not discuss an important asterisk in the ownership of Alibaba. Its shares listed on the NYSE and owned by SoftBank don’t have an economic interest in Alibaba, although, through a stake in a Cayman Islands entity, they have contractual rights to profits from Alibaba China. The latter is owned and controlled by Jack Ma, Alibaba’s founder and CEO. This structure is not a by-product of Ma’s evil intent to steal Alibaba from gullible investors but rather is forced by Chinese law that prohibits foreign ownership in certain industries. There is a risk that the Chinese government might find this structure illegal, but at Alibaba’s size — $240 billion — the company is simply too big to be messed with. China’s economy would pay a huge price if its second-largest public company just disappeared due to a legal technicality. This would also turn into an international public relations nightmare for China, not only with the U.S. but with Japan as well. It would make Ma richer at the expense of U.S. shareholders but also at the expense of SoftBank and Japan’s richest man, Son.

(Those who have a problem with Ma maintaining complete operational control of Alibaba should recall that the phenomenon of founder as benevolent dictator is nothing new — just look at Google. In fact, I’d argue that this control has allowed Ma to sustain his long-term time horizon and this is what has helped Alibaba drive eBay out of China; but that’s a discussion for another time).

Assessment

You can also look at SoftBank as a vehicle through which to invest in emerging markets — not just China but India as well. It is almost like hiring the combination of Buffett, Branson and Jobs to go to work for you investing in markets whose economies in a few decades will surpass that of the U.S., while also investing in a segment of the economy — the Internet — that is growing at a much faster rate than the overall economy. And yes, of course, you have Masayoshi Son, the super-Buffett-Branson-Jobs fusion, making these investments for you. With SoftBank at this valuation, you can forget about your emerging-markets mutual fund.

More: Ode to Steve Jobs

ABOUT

Vitaliy N. Katsenelson, CFA, is Chief Investment Officer at Investment Management Associates in Denver, Colo.

Conclusion

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Arnold Spielberg and the Birth of Personal Computing

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It’s BASIC*

[By staff reporters]

From Thomas Edison to former President Ronald Reagan and novelist Kurt Vonnegut, GE has employed a number of luminaries over the course of its 123-year history.

But, one famous last name that’s been missing from this list is Spielberg.

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Insurance Company Tower

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Enter Arnold Spielberg

In the late 1950s, Arnold Spielberg, the father of Hollywood director Steven Spielberg, helped revolutionize computing when he designed the GE-225 mainframe computer. The machine allowed a team of Dartmouth University students and researchers to develop the BASIC programing language, an easy-to-use coding tool that quickly spread and ushered in the era of personal computers.

(Young Bill Gates, Paul Allen, Steve Wozniak and Steve Jobs all used the language when they started building their digital empires.)

LINK: http://www.gereports.com/post/117791167040/its-basic-arnold-spielberg-and-the-birth-of

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More on BASIC*

BASIC (an acronym for Beginner’s All-purpose Symbolic Instruction Code) is a family of general-purpose, high-level programming languages whose design philosophy emphasizes ease of use.

In 1964, John G. Kemeny and Thomas E. Kurtz designed the original BASIC language at Dartmouth College in New Hampshire. They wanted to enable students in fields other than science and mathematics to use computers. At the time, nearly all use of computers required writing custom software, which was something only scientists and mathematicians tended to learn.

Versions of BASIC became widespread on microcomputers in the mid-1970s and 1980s. Microcomputers usually shipped with BASIC, often in the machine’s firmware. Having an easy-to-learn language on these early personal computers allowed small business owners, professionals, hobbyists, and consultants to develop custom software on computers they could afford.

BASIC remains popular in many dialects and in new languages influenced by BASIC, such as Microsoft’s Visual Basic. In 2006, 59% of developers for the .NET Framework used Visual Basic .NET as their only programming language.

Conclusion

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Acknowledging Ada Lovelace Day [“Mother” of HIT?]

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Today is Ada Lovelace Day 2014

[By Dr. David Edward Marcinko MBA CMP™]

demAda Lovelace Day was created to celebrate one of the first female computer programmers. As the daughter of the poet Lord Byron, Augusta Ada Byron, was brought up by her mother, Annabella, after he passed.

Her mother feared that she would inherit her father’s poetic temperament, and gave Ada a strict upbringing of logic, science and mathematics. Ada became fascinated with mechanisms and designed steam flying machines, poring over the scientific magazines of the time and embracing the British Industrial revolution.

The Analytical Engine

In 1833, Ada Lovelace was introduced to Charles Babbage whom she helped to develop a device called The Analytical Engine; an early predecessor of the modern computer. Lovelace and Babbage worked together closely for many years in order to refine the Engine. Ada found relative fame in 1842 when she expanded on an article by an Italian mathematician, in which she elaborated on the use of machines through the manipulation of symbols. Although Babbage had sketched out programs before, Lovelace’s were the most elaborate and complete, and the first to be published; so she is often referred to as “the first computer programmer”.

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ADA LOVELACE

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Death

Ada Lovelace died of cancer at the age of 36 a few short years after the publication of “Sketch of the Analytical Engine, with Notes from the Translator”. The Analytical Engine remained a vision for many but until Ada’s notes inspired Alan Turing to work on the first modern computers in the 1940’s.

Assessment

Her passion and vision for technology have made her a powerful symbol for women in the modern world of technology. But, was she the “mother” of Health Information Technology? You decide.

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Conclusion

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Ode to Steve Jobs

Timeline of a Life Well Spent

[By Staff Reporters]

Apple has lost both a product visionary and outspoken leader. And, healthcare has lost an eHR and HIT advocate.

This timeline is an ode to the ideas and words of perhaps the greatest technological revolutionary of the past century.

 

Assessment

More on AppleUniversity: http://www.infographicsarchive.com/tech-and-gadgets/apple-university-apple-with-without-steve-jobs/

Brought to you by columnfivemedia.com

Conclusion

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Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com

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