Saturday, October 29, 2011

Humorless TSA To Fire Note-Drafting Screener

A TSA screener who left a friendly note for a female passenger traveling with a checked sex toy will apparently be terminated.

"Get your freak on girl!" is apparently a firing offense.

Apparently, subjecting passengers to screening isn't an offense, but trying to humanize the experience with humor is.

Go figure.

Thursday, October 27, 2011

MTGE Announces First Quarter Results (3Q2011)

MTGE, which announced a stub-quarter dividend of $0.20 for 3Q2011, has now revealed that it earned $0.25 in net income during its inaugural partial-quarter, and taxable income of $0.17. The other big-ticket news is that NAV at the close of the quarter was $19.96, which is up from the net MTGE would have received from its $20 IPO, after issuance-related fees were deducted.

MTGE used 4.7x average leverage during the stub period, but closed the period with 7.8x leverage (compared to 7.7x leverage at AGNC on the same date). Net interest spread in the stub quarter was 2.13%, but at quarter-close it was 2.41%. Increasing leverage and increasing spreads should mean dramatic increases in income. That is, up from 10.01% to 18.80%. MTGE hasn't got the fat investment sizes with which AGNC can manage transaction costs, but (with leverage) has $1.7B to work with.

Crazy risks?
"With book calue preservation in mind, and given the volatility and liquidity conditions in the credit markets, we have been cautious on non-agency investments. We expect to patiently develop this portfolio as compelling opportunities arise."
- Jeff Winkler, S.V.P. & Co-Chief Investment Officer
This is exactly what I was hoping for in MTGE: a portfolio that mirrors AGNC's successful formula, but keeps its eyes peeled for material mispricing in assets more susceptible to fear-based avoidance (as opposed to fundamentals-based avoidance) than the agency-backed instruments whose principal and interest, being guaranteed by the federal government, tend to assuage terror regardless the fundamentals of the asset bundle. The non-agency opportunities are thus a nice place to get capital appreciation: a mispriced asset will, in time, end up valued at its worth. (As Buffett has said, markets may be a popularity contest in the short run but in the long run they are a weighing machine.) Carefully scrutinizing opportunity rather than rushing in is exactly how I'd like to see non-agency assets approached.

The price for this opportunity in MTGE is a 0.25% increase in management fee over the fee paid by AGNC. It's described here. ACAS, which had hoped to issue a lot more shares of MTGE than actually changed hands on IPO day, may want to raise some more money in order to support big deals in really mispriced non-agency bundles – but for my money, ACAS just wants to be ready to capitalize on opportunity and hasn't got a deal it's dying to do or it'd have done it.

AGNC Pummeled Today

TheStreet just today published that American Capital Agency Corp (AGNC) fell on high volume, but it doesn't seem to suggest why.

AGNC, which has a history of issuing shares above NAV to increase the equity behind its outstanding shares, announced on 10/26 that it would issue another 37m shares ("approximately" $1B gross proceeds), which comes to "approximately" just north of $27 per share. There's an over-allotment option for an additional 5.55m shares. Presumably, the proceeds received by AGNC net of fees and commissions will be "approximately" $27. The magic number to look at in evaluating this transaction isn't the trading price of the shares, but the net assets per share prior to the transaction. At the end of the third quarter of 2011, that NAV stood at $26.90 per share. Without knowing what "approximately" means, we can't know whether this is NAV-neutral, or actually raises NAV.

The fact that AGNC has maintained NAV despite worries about the twist suggests that its managers at ACAS are doing an appropriate job of managing rate-related risk. Or in the alternative: it suggests that worry about the twist failed to take into consideration the difference between the short-term rates available to financial institutions borrowing against federally-secured financial instruments, and the rates that were available to individual borrowers when they last refinanced their real-estate-backed mortgages. The spread AGNC needs to accomplish its work isn't the spread between 1-week and 10-year Treasuries, but the spread between the rate AGNC can get in the short term and the rate individual borrowers can get on their home loans.

Given the growth of this movement, it's clear the view isn't in favor of rapid decrease of home loans toward 0%. While the spread survives, so too does AGNC's business model.

With NAV seemingly free from dilution risk in the current issuance, and share prices remaining above NAV, AGNC doesn't seem to be moving in response to factors specific to the long-term prospects for the stock. The "issuance at ~$27.03" news is good for a short-term push toward $27.03, but AGNC has historically traded at a premium to NAV and – barring failure to perform in the manner so long justifying the premium – that premium is likely to return.

ACAS Moves Up

ACAS has rocketed over $8 today as the market has moved broadly up on summer economic growth numbers and slightly-lower jobless claims. ACAS' portfolio companies should be expected to move in value with their publicly-traded comparables, but there's something else afoot. Zacks just added ACAS to a list of #1 Rank ("Strong Buy") stocks. The five added to this ranking yesterday include Duke Energy (DUK), Bebe Stores (BEBE), AMAG Pharmaceuticals (AMAG), and software developer Fortinet (FTNT).

Are people buying on the market, or on something as ephemeral as a ranking change?

re OWS

Recently, this note was sent out-of-band:
An awesome article by Matt Taibbi, well worth the time to read. When anyone asks what the hell the Occupy Wall Street people are about, this tells it "like it is".

My reply was:
I agree that the ire against brokenness in the system is genuine, and not merely the sour grapes of jealous also-rans. My concern is that the movement, while capable of articulating its displeasure, has not seemed able to propose a remedy. I therefore fear that the movement will end up like the Tea Party, co-opted by persons capable of harnessing their energy for some orthogonal purpose. The Tea Party began as a leaderless movement of people dissatisfied with government, too -- and now look at it.
This isn't to say that nothing done under the name of the Tea Party is good, but it is no longer about restoring representation, bringing government to heel, and introducing a fiscal conservatism long denied Americans by either party. It's taken on a distinct right-wing social cast and appears aligned with extremists within the Republican Party – a party which has just destroyed its "small government" and "fiscal conservatism" branding by presiding over some of the most significant budgetary imbalances in our lifetimes while growing both the size of government and its scope of intrusion into everyday life. The injection of social conservatism strikes me as being at distinct odds with the seemingly libertarian cast the Tea Party movement had at its inception.

While the relation between Republicans in Congress and the Tea Party candidates elected into their midst on the Republican ticket may not be entirely warm and cozy, there's no question that Tea Party candidates are neither Democrats nor Independents. Elected "Tea Party" candidates seem to view their mandate as bringing a no-compromise position on issues that anger their voter base – thereby imperiling business-a-usual vote-swapping operations in Congress – but they don't seem to be proposing the sort of radical change that would be reflective of serious effort to control the problems that seem so connected to the concerns that gave rise to the Tea Party in the first place. Perhaps it is the fate of OWS to pose as a mirror to the Tea Party, sharing an anger at the establishment but supporting a more Democratic-leaning brand of uncompromising, government-skeptical extremism.

Might not be a bad thing, all in all, but it would not set the ship aright either.

The question is: what will?

My proposals all involve changes of a scale that make them politically unlikely, so I've kept their details largely to myself.

Wednesday, October 26, 2011

On "Occupy Wall Street"

To discuss "Occupy Wall Street" without going into the details of whether private property owners must accept squatters who seek to proclaim a political message without regard to the maintenance needs of the property, or whether protesters are unduly paranoid in their interpretation of effort to vacate areas to enable maintenance and public health operations (interesting; here and here), it seems attractive to discuss it in comparison to its opponents.

About OWS Itself
"Occupy Wall Street" proponents assert that the movement represents the views of the 99% of the population whose incomes aren't in the top 1% of incomes. These proponents include some advocates who are rather more articulate than those sent to interview them. Being articulate in exposing flaws in some opponent is excellent marketing, and is wonderful for argument ad hominem, but what does it do in connection with the movement's thesis?

Does OWS have a thesis?

The site contains a sympathetic video that nevertheless suggests that movement participants may have no idea what they will do next, or even what result they hope to achieve through their action. (If true, how will they know it worked? Or will any subsequent development be seized as proof the movement accomplished valuable objectives? Will this end up like Crichton described junk science environmentalism, with no need for data, just a press strategy?) Many of the individual quotes accompanying photos of OWS participants reflect a theme of disappointment with existing government and a desire for an undefined "change". Some suggest hopelessness, and others a call to action to combat the apathy that enabled government to get to its current unsatisfactory state. The apparent unifying feature is disappointment with the status quo; what seems lacking is a specific proposed fix.

The lack of any articulated "condition of victory" is rather a problem in evaluating an intervention's effectiveness. While claiming to represent the 99% who aren't busy raping the land and destroying the economy for personal gain (an apparent meme of OWS), OWS doesn't seem to have expressed any solution to whatever evil it is OWS asserts the government should address. And getting the government to address some evil seems to be OWS' hope: that someone will eventually, inspired by the throngs napping on the local parks and streets, devise a solution to the ills that upset them. Claiming to represent 99% of the nation that generates the most patented inventions on the planet, these folks seem to be singularly bereft of concrete solutions.

Representativeness is a tricky thing. Revolutionaries in the late 1700s famously chafed at taxation without representation, and denied that the democratic government in London was capable of representing colonists obliged to live within that government's law. An anonymous poll conducted at was given to CUNY sociologist Héctor R. Cordero-Guzmán, who declared that "the 99% movement comes from and looks like the 99%" -- a nice tautology if ever there was one. Are the bottom 99% of US incomes 70% politically independent, as revealed by the OWS poll? According to Rasmussen Reports, two thirds of the U.S. population consider themselves members of either the Republican or Democratic parties. (Despite that multibillionnaires such as Steve Jobs and Warren Buffett were Obama supporters in the last presidential election, it's probably not safe to assume that the entire top 1% of incomes has a party affiliation. Even subtracting the top 1% from the party-affiliated population, one seems to find that adding 1% to the 32.4% of the politically-unaffiliated population – down from 33.5% in August – brings it nowhere near the OWS threshold of 70%.) Where is OWS drawing a sample that is 70% independent? What part of the bottom 99% of incomes does it represent?

First, let's look at the other side of the question.

Who is the 1%?
While we occasionally get enforcement for criminal wrongdoing among the financial executives (or those that receive improper tips, or even obstruct investigations into tipping schemes), and it's easy to lay blame on financial-industry executives whose reckless schemes cost so many investors their lives' savings and resulted in a publicly-financed bailout intended to thwart a broader economic collapse, the fact is that most of the top 1% of earners in the United States aren't even members of the financial industry. Among the larger groups of top-1% earners, for example, are physicians (1.85%). Attorneys follow (1.22%). The largest group fall into a category called "executives, managers, and supervisors (non-finance)", which occupies a 6.35% slice of the top 1% of U.S. incomes. Financial professionals only explain 2.77% of the top 1%. Some of the "financial professionals" are surely actuaries that help price life insurance policies, and other highly-compensated specialists whose unexciting but skilled work offers little prospect for social injustice.

What is really going on here? If the OWS video is evidence, the participants aren't in on the secret yet and we must look elsewhere for insight.

According to Univ. Michigan's blogging professor of economics and finance Mark J. Perry, the top 5% of incomes are responsible for 57% of U.S. taxes despite earning 33% of U.S. income. The slant is a bit higher as you reach the thinner air of the 1% earners – which, at present, means an income just north of $340K/y – who earn 19% of all declared income in the U.S. but pay 37% of all U.S. taxes. This isn't to say these high-earning individuals have a rough time of it – they arguably are getting more benefit from public infrastructure and the rule of law than folks whose earnings (or disability checks) barely cover their subsistence. Paying more may be perfectly just.

But they're not paying more because they are causing social inequity; they are paying more because the Internal Revenue Code of 1984 as amended requires persons who declare earned incomes of that scale to pay the highest taxes levied in the nation. Whether a person is a crime boss who declares no income at all, or a fatcat exec whose largess is rendered from the carcasses of innocent victims, means nothing at all under the Internal Revenue Code. You pay taxes based on declared income, period. Well, maybe not period – there's a semicolon and lots of subparagraphs of deductions and income categories (gambling winnings, earnings from the trade of collectibles, long-term capital gains, income subject to Alternative Minimum Tax – all kinds of things complicate the calculation of tax liability, and offer room for high-income enterprises to restructure operations so as to realize income in a lower-taxed category).

Tax liability isn't a social punishment, it's the price of success. Whether obtained through means vile (e.g., deliberately destroying competitors with better products by leveraging market power to prevent fair competition, deceiving the public about impending product launches to prevent the growth of competitors' sales due to fear of their destruction, using monopoly power to contractually bar competitors from being able to obtain retail shelf space or software pre-installation ... I'm looking at your company, Bill) or virtuous (e.g., delivering products and services that participants in an informed market were happy to buy, at prices based on what the market would bear in the absence of antitrust violation, like most of the rest of the country but in particular like Steve's firm), income tax doesn't ask whether you are nice or good but what you earned and in what categories. Because of the various tax credits and deductions available to U.S. filers, only 53% of the population actually pays federal income tax in the United States. The other 47% aren't especially virtuous, they're just sufficiently under-employed that Congress has, for their sake or that of their dependents (or perhaps for the sake of a vote), called off the IRS.

Who is the 53%?
Those who actually pay income taxes in the United States – not those with undeclared crime jobs, or undeclared off-the-books cash work; and not those whose income tax obligation is swamped by personal deductions, dependent deductions, earned income tax credits, home buyer's tax credits, and every other deduction and credit afforded filers under the Internal Revenue Code – are diverse. Interstate truck drivers and local road crews. Doctors and nurses. Employers and employees. Supervisors and supervised. Immigrants and local-born. Self-employed and salary[wo]men. Americans.

(Some of the foreign-born Americans' stories are interesting, like above and here.)

There's a Facebook page dedicated to the 53% who actually pay taxes, filling with comments by those who don't agree with what the Occupy Wall Street crowd appears to advocate. The tumblr link contains self-portraits of self-identified taxpayers (including some whose jobs just evaporated) who believe in personal responsibility rather than government handouts, displaying on one sheet of paper what it means to be part of the 53% who have been paying for everything government claims to provide. To the extent these statements have a theme, it seems to be that however dire their situation, they expect to bear the consequences of their actions and to succeed by the dint of hard work rather than handouts – and they have no expectation that government should be in the business of saving them from their debts or their choices or even their hardships. They expect to keep working even inglorious jobs and to continue paying the taxes that make possible.

Substance Behind the Rhetoric?
Since the Occupy Wall Street group does not represent the 53% – the object of at least this fraction of it is to distinguish themselves from OWS – and OWS appears to disclaim the 1% at the top, it seems we need some math to discern whether OWS represents 46% of the population, or some other fraction. Without some unusual math, it seems unlikely that OWS represents 99% of the population, when the 53% are plainly against seeking the sort of government action apparently hoped for by OWS. (As it happens, the Pew Research Center conducted a poll with a 4% margin of error that suggests that OWS support/opposition recently stood at 40%/35% among Americans.)

Without even a proposed fix, the OWS movement seems a demonstration of a throng that feels more powerful huddled together than back home where toilets are available, and who prefer to complain loudly than to toil for the improvement of the lot of man. The greatest likelihood assigned by the Jaded Consumer is that a political force with superior strategic prowess will co-opt "Occupy Wall Street" for some purpose previously unknown to OWS, and sell participants (at least those on camera, and at least long enough that the cameras catch it) on the snake oil being peddled by the parasite that worked out how to feed from a host too dim-witted to defend itself.

(Dim-witted in this case isn't intended as a disparagement of individual participants, but of the collective, which is investing substantial time and energy in an enterprise with no identified objective. Whoops. I'd give this post more serious treatment, but ... I have to work.)

Irony Award
"If this doesn't stop soon I will be out of business." quoted in BusinessWeek by Charles Mead and Esmé E. Deprez, who wrote on the effect of crowd-control efforts on the ability of local vendors to conduct their otherwise profitable businesses that employ Americans. Whoops again. (On the other hand, a newsstand with a working toilet was doing great business among the protestors. You win some, you lose some.)


Tuesday, October 25, 2011

iOS 5, iCloud, and the iPad-Only Customer

When I first learned about iPad's feature set, my primary disappointment was that it could not be pitched to users as a stand-alone computer replacement. In other words, its addressable market was limited to users who'd already bought another computer with which it was possible to sync content and download software updates. It appeared iPad might be doomed to be tethered to some other "real" computer.

With Apple's announcement of iOS 5, Apple enables data sync without a main computer – wirelessly to iCloud – even to the extent of updating the system software. iPad is now a serious contender for a front-line machine for users whose demands are within the realm of iPad. Given what iPad's app developers are doing – and what Apple is doing with iPad development – the scope of those demands will quickly reach quite a few users.

Growing the size of Apple's addressable market for the iPad by freeing it from cable-based sync is a huge boost for the long-term prospects of iPad.

Sunday, October 23, 2011

Apple: Trouble Keeping Specialist Recruits?

Apple hired Kevin Timmons from Microsoft (where he was General Manager of Datacenter Cervices) in April, and may already have replaced him with Scott Noteboom of Yahoo (where he was Head of Global Data Center Infrastructure) following Timmons' departure for CyrusOne earlier this month.

Previously, Apple acquired chip design talent in its purchase of the chip designer PA Semi, but lost its top manager in less than a year. Promptly on the heels of that departure, Apple bought chip design firm Intrinsity – and all its engineering talent.

Is Apple having trouble keeping recruits, or is it getting what it needs in the form of high-intensity consulting on projects that run fine following the departure of the top folks it brings onboard? Are these personnel losses cut by Apple as cultural mismatches, or are they leaving because the Apple job turns out not to be what they expected?

Inquiring minds want to know.

With respect to the new Noteboom recruitment, the expertise of an industry insider with a decade-long positive track record while growing Yahoo's data center by an order of magnitude is likely to provide Apple a valuable resource. Given Microsoft's need to eat its own dogfood and Yahoo's flexibility in tool selection, I'd expect a Yahoo exec to be a better match than a MSFT careerist whose solution to every problem would have to be to buy a bunch of Microsoft solutions or risk running outside his sphere of competence. The indecipherable title accorded Noteboom – "distinguished gentleman" – may say more about Apple's secrecy than about a lack of authority assigned to Noteboom.

Watching Apple enter the data business will be interesting. I'd expected Apple to use Google for this, but Google and Apple have ended up competitors to such an extent that I foresee Apple opting to use non-Google solutions for everything it can. My question is simple: with Apple declining to push ads on users as Google does to fund its operations, how will Apple manage to make its data operations self-funding? If they are not, its data-based endeavors risk becoming a weight around the neck of high-margin hardware and software products. Those datcenters aren't cheap.

Tuesday, October 18, 2011

ACAS: Another Exit

American Capital Ltd. (NASDAQ:ACAS), an internally diversified business development company currently taxed as a corporation rather than as a BDC, exited an investment recently when its portfolio company Sixnet Holdings LLC was sold to Spectris Plc. for $72m. Sixnet, in whose recapitalization ACAS invested in 2005, followed by additional investments in 2007 and 2009 to facilitate Sixnet acquisitions, supplies machine-to-machine cellular data products. Equity proceeds from the transaction totaled $12m, including $7m paid to ACAS (part of Sixnet was held by ACAS-managed portfolio companies). ACAS' senior debt investment of $37m was repaid in full as part of the transaction.

ACAS calculated its internal rate of return on the Sixnet investment at 15%. ACAS' compounded rate of return, from the date of its IPO through the second quarter of 2011, was 11%.

ACAS currently trades below $7, though its net asset value per share at the end of 2Q2011 was over $13. Getting a double-digit return on $13 for an investment at $7 seems an interesting prospect, though ACAS' NAV naturally varies with the value of the comparables against which its portfolio is valued.

Sunday, October 16, 2011

Dennis Ritchie Preparing the Great Product In the Sky

Dennis Ritchie may not be as great a household name as Jobs and Gates, but he did something neither of them ever achieved: he wrote code that worked. As the developer of the C programming language, he enabled the work of every programmer whose work depended on it -- developers who worked on OpenBSD, Mathematica, Apache, Linux ... and Microsoft Office, Microsoft Windows, Microsoft Internet Information Server (IIS, which has apparently had its unabbreviated name changed to end with the word "Services"), Microsoft Bob ... you name it. Even MacOS X and everything written using the Cocoa API. There are some folks who wrote programs in Cobol or Fortran, to be sure – but if you're like most of the people on the planet you've not only never run such a programs but never owned a machine that did.

Dennis Ritchie's operating system work further illuminated his philosophy: lots of specialist tools, ready to work in concert to perform complex tasks ... none of which needed to be able to do "everything" to get its job done, all of which were consequently lighter on resources than tools that "had to do everything all by themselves." The simplicity of his systems made them strong; but like a game of go, their simplicity was easily lost on untrained observers. Indeed, Dennis Ritchie famously – and widely quoted in doing so – said "Unix is simple. It just takes a genius to understand its simplicity."

Dennis Ritchie, benefactor of mankind, has departed to prepare the Great Product In The Sky (which, being the rockingest product of its kind, Jobs will surely be set to demo).

Blackberry Outage Ends

Research In Motion's (NASDAQ:RIMM) Blackberry devices, which depend on RIMM-supplied back-end support for which RIMM charges subscription fees, suffered an intercontinental email service outage that began October 10 and went unresolved until October 14. Now that the outage is over, some customers who bought RIMM's "ready for business" pitch are re-assessing the single-point-of-failure aspect of depending on RIMM for critical infrastructure.

Although RIMM has suffered (and suffered) in stock price (market cap is at the time of writing about a tenth of the $123B RIMM once commanded) and in market share, it now also suffers a setback in something that might be hard to restore: its brand.

If RIMM's profit continues to suffer pressure, infrastructure investment (and service quality) may be in long-term jeopardy. The discussion of RIMM as a takeover target (more here) is interesting, as it offers promise of capital with which to address service quality – and management change to aid re-direction in a more competitive direction.

Frankly, a successful and independent RIMM has been a good motivator of other manufacturers; I hope they pull the firm out of its dive. RIMM has a large subscriber base; hope springs eternal.

Sunday, October 9, 2011

A5 Leads Phone Performance

According to Anandtech, the A5 chip in the iPad2 – and now the iPhone 4S – performs significantly better than (like, 2x) the best of the recently-launched competitors' devices' CPUs. (*cough*Samsung Galaxy S2*cough*) Leading handset performance is certainly an Apple objective: iPad apps will run better on iPhones, and games will work better, and the services Apple wants to supply users while they're doing everything else they do with Apple's products will be easier with more computing power in each device.

Yet, Apple isn't sitting still.

With Apple's A6 apparently set to launch next year as a quad-core part built on a 28nm process (compared to the 40nm process on offer at NVidia's fabs), it's clear that Apple intends maintaining advantages in hardware even as it differentiates it phones with software. The hardware advantage isn't something Apple is taking lightly: it's got a thousand FTEs building the brains in Apple's next mobile devices. (And AppleTVs, and maybe its next MacBooks; who knows where this could go. Based on Apple's control of its developer tool chain and capacity to support compilation of multiple-architecture binaries, Apple can potentially do things others have no chance to duplicate.)

Outperforming NVidia chips in graphics, Apple's chips seem set to dominate mobile gaming and potentially replace games-specialist competitors. Unlike the XBox, which spent years losing money before it went into positive cash flow, Apple's iOS devices have consistently made money while building the platform from which to attack available markets. Where Apple will push the iOS platform is definitely a point of personal curiosity.

The more power I see in Apple's devices, the more I marvel at how auto manufacturers can keep shipping such crummy mapping tools, with kludgy interfaces and quickly-outdated databases of destinations. Surely the opportunity isn't lost on the manufacturers. Apple's devices can replace the stereo head unit, the GPS, the map, the address database, the climate controls, the bluetooth controller ... everything other than, you know, the car. The improvement in usability – especially for borrowed cars, rentals, and other situations in which users won't have unlimited time to become familiar with some screwball new way to identify a destination to a mapping program – is a huge plus for customers. Heck, with cloud music, car renters could log into the i-device in the dash and pull down the music they love rather than fighting local radio for something worth hearing. While using a map app that updates continuously from sources in Apple's cloud.

Apple's departure from the rack server space may certainly be a function of low sales volumes, but as Apple's tools improve for enterprise uses, the demand for something that will free users from high-overhead competitive server software will create an opportunity for Apple to sell low-power server hardware based on homegrown CPUs: cool-running, cheap to operate, and supporting ARM's hardware-supported security tools, Apple's non-x86 servers might be truly attractive for enterprises.

Did someone say Research in Motion was selling for less than Apple's cash on hand, and was becoming more affordable as its unit share teetered? Especially in the post-Jobs era, taking a serious look at the enterprise space might not be that hard to imagine a few years down the road.

Speaking of the post-Jobs era: there's been a lot written about him and what he did for tech. Much of it is really worth reading. I was at an airport when I heard, and as I looked around I saw white earbuds, iPhones, iPads, and other evidence of his passage all over the place. It was moving: he'd changed the world. We can argue how much, perhaps, but the evidence he was here is everywhere. It should be clear from the posts here in what regard his accomplishments are held here at JadedConsumer, but I don't think I have anything especially brilliant to say on the matter. I think much of what he contributed is a result of his expressed view that you only get one shot at life, so it stands to reason you should not waste your time on things that aren't excellent. We've benefited from his pursuit of excellence, and can hope that his successors really share the same value of quality.

Apple has a quality lead and a solid footing for retaining it. Sales seem strong at Apple's store and at AT&T's; nobody else is talking. Sprint's demand for the phone suggests Apple is something of a carrier kingmaker: Sprint's leading cause of customer loss before the iPhone 4S launch was the carrier's lack of an iPhone. (Now, carriers are competing for iPhone customers.) With China a relatively untapped market and smartphones still a minority of worldwide handsets, the long term trajectory of Apple is toward sales volumes increases in the handset market. Notice Apple doesn't drop its old models, just moves them down the performance ladder for customers unwilling to pay more? Apple is moving toward capacity to do with phones what it's done with music players, and overtake most of the business that's worth taking.

And, you know what? Apple is selling more computers, as well!

It's a good time to be Apple.

Thanks, Steve.