Jack and The Giant Bean Stalk - 11.12.09

This morning ADP Jobless Claims numbers were a bit better then expected. Jobless claims came in at 502,000 down from the revised 514,000 last week. Economists poled by Bloomberg expected 510,000 claims. What does this really tell the market? Nothing. Let's examine this from a corporate/private sector perspective.

We have seen poor corporate earnings through the second and third quarters of 2009. More then 70% of S&P 500 companies beat estimates, but with cost cutting rather then revenue growth. Take Applied Materials as an example. The company announced it will cut another 1500 jobs or 10-12% of its labor force. This equates to $450M savings in the long run. Coupled with 2009 expense axes of $460M Applied Materials can barely turn a profit. Third quarter net income was 10 cents/per share ($137.9M) on $1.53B of revenue. That equates to a meager profit margin of 9.01% compared to 2008 full year Profit margin of 11.8% . My point: there is no revenue growth or job creation. The only growth is coming from accountants sliding decimal places.

Furthermore, recent M&A activity in the tech sector has guaranteed more job cuts as firms look for cost synergies. H-P announced yesterday it will pony up $2.7B to buy 3com, a maker of switching and routing gear. Oracle bought Sun Micro systems. Dell took Perot Systems off the market. Xerox swallowed ACS. Typically in an acquisition the Acquiror ravages the acquiree and keeps only the most profitable/valuable businesses. Hence, most acquisitions lead to layoffs. Not to mention if the acquisitions go bad (3/4 do), more layoffs will follow.

Undoubtedly, the unemployment/Jobless claim numbers may tell Washington and "Policy Makers" what they wants to hear, but the numbers do not indicate long-term economic growth.



Trade with caution...

Patrick M. Ambrus
Analyze Capital LLC
ambrus.anlzgroup@gmail.com

Smartphone's Fight in 2009 - OS & UI

Google & HTC - Android Era

A good smartphone system will allows power hardwares inside a device get fully used. Android creates possibility for a faster developing of the use of a phone because of the open source system. In fact, we can see consumers' interest are shifting from powerful hardware to easy-to-use OS (operation system) and pretty UI (user interface). HTC is growing pretty fast not only because of the Android system, but also HTC's beautiful UI (user interface) that made for the system. With help from HTC, Android system issued by Google has become more and more popular.

Apple - iPhone Kingdom

Same as HTC, one of the main reasons of iPhone's success is that it has a easy-to-use OS and neat UI. Moreover, Apple's online App Store is definitely the most important reason for iPhone's success. There millions and millions of applications and games on iTunes, that make iPhone a very useful handheld device. Although iPhone does not have the most hardcore hardware set, but these applications make iPhone has a lot more functions than other smartphone. Microsoft, Blackberry, Sony Ericsson are all creating and improving their own online application stores now because of the treat from Apple.

Blackberry - Hold on

Blackberry is doing pretty well in competing with iPhone, since plenty of businessman are still trusting Blackberry as the best cellphone for professional uses. Blackberry is also trying to expand its market by following what Apple did, for example, Blackberry Storm. However, the competing in smartphone market now is tough. Blackberry really should focusing on how to keep their loyal customers, the professional image of Blackberry is definitely a vital point they have to notice.

Nokia - Fight back

Since iPhone and Google phones are gradually taking over the market, and Palm, Samsung, Panasonic, LG are all doing pretty well in the smartphone competition. Nokia as the leader of cellphones for couple decades, has to fight back for it's head position. The problem Nokia is facing right now is really their cellphone systems. Although Microsoft Windows 6.5 is releasing, more Nokia phones are still using their traditional S40 or S60 symbian operation system. This limited the use of Nokias' powerful hardwares. There are news of corporate between Nokia and Linux, and Nokia knows where the problem is. Therefore, if Nokia can have an evolution on its OS, it should be able to keep its market share.

Motorola - Reborn?

Motorola is still getting lost in the smartphone competition, and in fact, it is not doing well even in selling normal cellphones. Motorola has been trying to use some outstanding design to attract costumers, but their design and technology is really not catching up with their competitors. If Motorola cannot have a good call in the smartphone competition, they might even get out the market gradually.

NVIDIA - New Star

Due to the growing interest of GUI (graphical user interface), stronger chip which can be dealing with more graphical computing are needed inside smartphone. As the head of computer GPU (graphical processing unit), NVIDIA is entering the handheld market as well. Corporate with NVIDIA will become as important as embedding a good operation system.