Why Android Users Are Clueless and What that Means for Apple and Google

NEW YORK (TheStreet) -- Apple(AAPL_) took a few shots at Google(GOOG_) last week during their WWDC keynote.'


Even Siri poked fun at Google's names for their different versions of their operating systems (Ice Cream Sandwich, Cupcake and FroYo): "Who came up with these names, Ben & Jerry's?"


But the really stunning stat to come out at the conference was from Scott Forstall, who is the head of Apple's mobile software. He pointed out that more than 80% of Apple's iOS users were running the latest version of iOS. However, only 7% of Google Android users are running the latest version of their software.

Read the full post in TheStreet

Sphere: Related Content

Motorola Hits Rough Patch

NEW YORK (TheStreet) -- Late Friday, after the market closed, Motorola Mobility(MMI_)sent out an innocuous-sounding press release with a "Business Update" in the title.


The release ended up tanking Google's(GOOG_)stock by more than 4% on Monday and the sell-off continued on Tuesday, even after the market bounced out of the gates.


Read the full post on TheStreet

Sphere: Related Content

It's Official: Eric Schmidt Is Pathological

Eric Schmidt has some explaining to do over his attempt to portray a great relationship with Steve Jobs, given what Jobs just said in his book.

Read the Full Post here in Forbes

Sphere: Related Content

Do Apple Apps or Android Daily Activations Matter Most?

There is no bigger a debate in mobile tech today than whether the growth of Apple's apps or Google's Android activations are more important as a predictor for which platform will "win" in the long-run. Here's my take.

Read the full post here on Forbes.

Sphere: Related Content

The 8 Most Important Things Not Being Covered About Apple’s Quarter

Most in the press are missing the most important aspects of Apple's quarter announced last night. Here they are.

Read the full post in Forbes.

Sphere: Related Content

Why Apple Should Never Pay a Dividend – Ever

Stop the whining already! If you want to complain about how Apple spends its money, why don't you make $70 billion and have it sitting in your bank account first.

Read the full post here at Forbes.

Sphere: Related Content

Chatting With NXPI CEO Rick Clemmer

By Eric Jackson
RealMoney Contributor
5/5/2011 1:00 PM EDT
Click here for more stories by Eric Jackson

I had a chance to chat yesterday with NXP Semiconductor (NXPI - commentary - Trade Now) CEO Rick Clemmer from his Eindhoven, Netherlands office after his company's reported its quarterly earnings on Wednesday. The quarter beat analysts' estimates but the stock price sagged along with the rest of the market.

NXP Semiconductor is a spinoff from Philips(PHG - commentary - Trade Now). It held an IPO last August after some big-name U.S. private equity firms bought it from Philips back in 2006. Clemmer was working with Kohlberg Kravis Roberts (KKR - commentary - Trade Now) - one of NXPI's investors - at the time, and he soon was installed as CEO. He previously worked at Agere when it was spun off from Lucent and at Texas Instruments (TXN - commentary - Trade Now).

The semiconductor company is most famous for its exposure to near-field communications (NFC). NFC is starting to explode this year with mobile handset makers as it allows users to securely make mobile payments with a tap of their phones. It will also allow for an amazing number of new applications that will allow users to get location-specific information (and advertising) on their phones down the road from wherever they are. Although that gets the lion's share of attention from investors, NFC is actually a tiny part of NXPI's overall portfolio of products.

Here are some highlights from our conversation:

• Debt. The company had $3.7 billion in debt at the end of the quarter but management is waiting on government approval to sell their Sound Systems unit. When this happens, they will immediately have another $880 million in cash, which they plan to use to pay down their debts. The focus is on continuing to shrink the amount they owe, but Clemmer says it will be much smaller a year from now.
• Mergers-and-acquisition (M&A) speculation involving NXPI. Clemmer said that he's never surprised when rumors pop up in the space. He sees that as normal. NXPI is focused on continuing to grow itself organically and not be distracted by rumors. He sees his job as continuing to ensure that the company's portfolio keeps growing above market rates. I asked him why we're seeing more semiconductor deals occur. He believes it is because the industry's growth is slowing and that is forcing consolidation. Many semiconductor companies will only see single-digits growth this year. Those are the ones that need to look for faster growing companies to acquire.
• Will there be more secondary offerings? Some of the private equity investors recently sold their shares to the public as the stock has tripled since the IPO last August. Clemmer claims the owners didn't want to sel,l but others were clamoring for a larger public float of NXPI shares to trade.
• How much does NXPI make from NFC? About $2-$3 per handset. This can be more or less but that's a rough estimate.
• Will NFC grow at the rates he's previously suggested? He's sticking with their prior estimates of 70 million NFC handsets shipped this year and 150 million next year. He wants NXPI to have Intel-like (INTC - commentary - Trade Now) market share (i.e., 70%-80%) in NFC.
• Which carriers are leading and lagging in NFC? Clemmer wouldn't call out the laggards. He said every time he talks to Google (GOOG - commentary - Trade Now), they want to double their orders.
• Do you worry about Qualcomm's (QCOM - commentary - Trade Now) progress in NFC?Clemmer said they have to cooperate and compete with Qualcomm. He also mentioned they compete with the privately-held Inside Secure, but that he felt that unlike Inside Secure, NXPI was able to present customers with a single-vendor solution that was appealing.
• Will there be any more sales of products in the NXPI portfolio? Never say never, but Clemmer is happy with the portfolio at the moment.

Clemmer didn't have any speculation about when Apple (AAPL - commentary - Trade Now) would enter the NFC market. That's a question a lot of NXPI investors have. Some are hoping that iPhone 5 will have it. Others have speculated NFC support won't happen until iPhone 6. Clemmer just said that Apple was definitely studying the space closely and wanted to do something special when they decide to incorporate NFC into its products.

Knowing Apple though, I find it hard to believe the company is happy to let Google keep doubling orders for its Android phones while it has NFC all to itself.

[At publication, Jackson was long NXPI and AAPL.]

Sphere: Related Content

What I Would Ask Jim Balsillie of RIM This Morning

Here are some questions for Jim Balsillie, after last night's cut earnings for Research in Motion.

Read my post on Forbes here.

Sphere: Related Content

Baidu Keeps Rolling

By Eric Jackson
RealMoney Contributor
4/28/2011 12:15 PM EDT
Click here for more stories by Eric Jackson

Last night's report from Baidu (BIDU - commentary - Trade Now) didn't disappoint the bulls. The company beat earnings expectations by $0.03 a share and beat top-line revenue estimates.

More important, Baidu raised its guidance for the second quarter above $500 million, on the high end of the range. This was beyond any prior high-end estimates for the second quarter. Quite simply, Baidu is continuing to perform with continued staggering growth.

The company's trailing 12 months of revenue prior to last night was $1 billion. Last night's quarter annualized is up to over $1.3 billion in revenue. Next quarter's guidance puts it up to $2 billion annualized. Its last quarter-on-quarter earnings growth compared with the prior year is 171%. That compares to the "mature" growth of Apple (AAPL - commentary - Trade Now) at 95% and Google (GOOG - commentary -Trade Now) of 20%.

But Baidu is still relatively small compared with Google. We're talking $1 billion or so in revenue a year vs. $30 billion. Can Baidu continue to justify a high multiple in the coming years? It now has almost one-third the market capitalization of Google.

To hear Robin Li, the founder and CEO of Baidu, talking about it on last night's call, Baidu still has a lot of growth areas ahead of it, including:

• Further penetration within China, where only 30% of its population is connected to the Internet today.
• Further increase in wealth and ad rates within China as the standard of living increases.
• Growth in mobile use. Last night, Baidu management confirmed that 80% of the Android handsets shipping in China have Baidu as the default search engine. Ironically, Google's open platform has allowed handset manufacturers to insist that Baidu be the default search engine, as it is preferred in China.
• Social. Robin Li made the point last night that Baidu has been competing against social platforms in China for many years, via Tencent's QQ service. Therefore, it has responded by trying to integrate social search into its search for a while. No one confuses Baidu with a social platform yet, although it has had its own version of Yahoo! (YHOO - commentary - Trade Now) Answers for years, and it has become very popular. Baidu can do a lot more to monetize search. And although the company didn't mention it all last night, there is the possibility of partnering with Facebook to bring the universal social service to China in the future.
• Local. Today, this remains very under-monetized, according to Li's comments last night. In an increasingly mobile connected world, this search ability will become more important. A couple of days ago, the CEO of Sina (SINA - commentary - Trade Now), Charles Chao, said that over half of the users of his popular Weibo service connect via a mobile device.
• Video. Baidu has 150 users for its Qiyi video service in less than a year. Youku (YOKU) has 230 million users. Baidu is rumored to be looking to spin-off Qiyi in 2012.
  
• Robin Li discussed last night how apps are becoming more popular. Today, there are tens of thousands of apps, and the Chinese are showing a lot of interest in downloading them and experimenting with them. In a few years, however, he said, there will be hundreds of thousands and then millions of apps. At some point, users get overwhelmed with the choices. When that happens, they need to fall back to their familiar choices. Search, and Baidu, will be a key necessity for them. (Other big Chinese Internet companies such as Tencent, Taobao and Sina should also benefit from this trend.)

This morning, there are some increased price targets out from analysts. The stock is up.

Baidu is a solid Chinese company. It might not grow 143% in the next 12 months as it has in the last 12 months, but it will do very well.

At the time of publication, Jackson had long positions in BIDU, SINA, YHOO and AAPL.and short YOKU

Sphere: Related Content

Proof Apple's Post-PC Strategy Is Working

Apple is using its lead in with the iPad to convert Android and BlackBerry users to the iOS platform. New data suggest this shift is happening faster than anyone predicted.

Read my full Forbes post here.

Sphere: Related Content

Apple Doesn't Have an iPad Strategy, It has a Post-PC Strategy

While competitors focus on battling Apple in the tablet market, they fail to see Apple's strategy is to own a generation of post-PC users.

Read my full post on Forbes.

Sphere: Related Content

Google's Turning Point

By Eric Jackson
RealMoney Contributor
10/18/2010 5:30 PM EDT
Click here for more stories by Eric Jackson

Google (GOOG - commentary - Trade Now) earnings last Thursday were a turning point for the company. Even after Friday's big 10% bump up in price, the stock is still down 3% for the year. Negativity has surrounded the company for most of the year -- some of it deserved, in my view, because of missteps (like Google's awkward and ill-advised withdrawal from China in the spring), and some of it not.

The concern for investors for much of the year -- aside from the whole China kerfuffle -- has been whether Google is just a one-trick pony.

Sure, it's been a hell of a pony, but investors have been wondering if Google could leverage its dominance in text ads for search into other areas. The company has thrown a lot of pasta against the wall over the years -- everything from Google Wave to Orkut to its $1.6 billion acquisition of YouTube a few years back - but not a lot has stuck in terms of meaningful profits... at least, not yet.

So, what was so eye-catching about Thursday's earnings call was that Google decided to give some specific data on its key new areas of growth.

The key stats revealed by the company were that:

The mobile business is contributing more than $1 billion annually in revenue (calculated by taking the last quarter's revenues and annualizing them)

Display advertising (as a result of the Double-Click acquisition a couple of years ago and the YouTube display ads) is contributing more than $2.5 billion annually in revenue (calculated using the same methodology as mobile)

More than 2 billion YouTube videos are viewed each week

What also seemed to surprise analysts on the upside was a drop in Google's TAC (traffic acquisition costs) in the quarter. Google is no longer paying News Corp's (NWS - commentary - Trade Now) MySpace for traffic under a very lucrative (for MySpace) agreement, struck a number of years ago when MySpace was still the big dog of the social-networking space.

So, the market is starting to sit up and take notice of Google again in the last two days. And why not? These metrics are important indicators of the company's future success.

The area that intrigues me most -- as a long holder of GOOG -- is mobile. This $1 billion in revenue is all from mobile ads. Google is still in a land-grab mode with Android. It continues to give away the operating system for free to carriers in order to drive adoption. And that is certainly working, as Android has grown from nothing to major mobile player in the last year. Many expect it to surpass Apple (AAPL - commentary- Trade Now) in terms of mobile market share soon, as it is now part of so many devices.

...

[*** This post is an excerpt of the full article, available by clicking here to go to RealMoney.com. Note: subscription required. ***]

Sphere: Related Content

Research In Motion's Moment of Truth

By Eric Jackson
RealMoney Contributor
9/16/2010 2:15 PM EDT
Click here for more stories by Eric Jackson

Research In Motion (RIMM - commentary - Trade Now) will report its latest quarterly earnings this afternoon after the close. Here's a preview.

I have been short Research In Motion since mid-June, just prior to the last earnings call. Back then, my thesis was that the company was going to have a Nokia (NOK - commentary - Trade Now)-type swoon. New models were no longer going to excite. People would increasingly be drawn to the Apple (AAPL - commentary - Trade Now) iPhone 4 and new Google (GOOG -commentary - Trade Now) Android devices. I also believed that people would increasingly become trained on typing emails on flat screens and find that they were "good enough" compared with the tactile RIMM keyboard. Finally, the enterprise -- RIMM's stronghold -- looked vulnerable to me. Most people don't want to carry multiple devices, and I believed they would increasingly push to make their touch-screen phone their work phone.

This thesis is still valid today in my view (although it has become much more popular since June).

We got validation of the thesis from RIMM's June 24 earnings call, which did not paint a rosy view of the next earnings call (which is coming today). The stock sold off from $59 to the low $40s on the outlook, despite co-CEO Jim Balsillie's tough talk and optimism that his new devices would be a "quantum leap" for the company and really excite consumers.

The stock began to perk up ahead of the August announcement of the company's newest touch-screen BlackBerry, which kept the keyboard as a slide-out: the Torch. The new phone failed to inspire the critics and - a week later - when it went on sale, there were no lines outside AT&T stores or stories on your local late-night news about its debut.

Now, we hear news that JPMorgan (JPM - commentary - Trade Now) is letting its bankers use their iPhones instead of requiring them to carry a corporate-issued BlackBerry. Comscore says that BlackBerry's smartphone market share in the U.S. slipped from April to July by 2% (although it still had 39% share, making it No. 1). Nielsen released a report saying that 57% of current BlackBerry owners want to make their next smartphone something other than the brand they are using now (vs. 29% for Android users and only 11% for iPhone users).

....

[*** This post is an excerpt of the full article, available by clicking here to go to RealMoney.com. Note: subscription required. ***]

Sphere: Related Content

A Hard Sell for RIM

By Eric Jackson
RealMoney Contributor
8/5/2010 2:30 PM EDT
Click here for more stories by Eric Jackson

On Tuesday, Research in Motion (RIMM -commentary - Trade Now) launched its newest BlackBerry in New York with AT&T (T -commentary - Trade Now). The device is called the Torch, and it combines the standard RIM keyboard with a larger touchscreen that slides open.

We were expecting a new version of BlackBerry, running an upgraded operating system, as well as a possible new slider-type device. With the Torch, we ended up getting both of these in one. The verdict appears to be that the product is a solid improvement for RIM, compared with the company's current operating system, and that the new device has better functionality (considering the touchscreen).

Yet, there appear to be nagging doubts in most investors' and observers' minds on whether the new device will be enough to stem the tide of Blackberry defectors to Apple (AAPL - commentary - Trade Now) andGoogle (GOOG - commentary - Trade Now). From the moment the new Torch device was announced on Tuesday, when the stock got up to $58.53, RIM's stock price has dropped more than 9%.

Some of the $3 billion or so in lost market capitalization in two days can be attributed to the uncertainty around how the United Arab Emirates and Saudi Arabia will resolve their security issues regarding RIM. But, to be frank, I view that as a non-issue in the long-term. I fully expect RIM to find a resolution that is good both for them and for those countries -- the company would really be shooting itself in the foot if it did not.

More to the point, I believe the stock's decline is an early vote on how excited investors are by the Torch -- and that isn't good news for RIM.

Now, the stock market definitely is not all-seeing or all-knowing. Let's not forget that the market -- and crack Wall Street analysts -- completely underestimated how big the iPhone and iPad were going to be. (Remember the analyst who said - shortly after the product announcement - that Apple would be lucky to sell 1 million iPads this year? They're now selling a million a month. In my view, it's also ironic that the media snickered at the name iPad and that, at this point, it's universally accepted -- so much so that no one has said a word about RIM considering the name BlackPad for its new tablet device, which is supposed to come out later this year.)

....

[*** This post is an excerpt of the full article, available by clicking here to go to RealMoney.com. Note: subscription required. ***]

Sphere: Related Content

Research In Motion's Outlook Grim

By Eric Jackson, Senior Contributor07/28/10 - 06:00 AM EDT

Stock quotes in this article: RIMM , AAPL , GOOG , AMZN , NFLX , MOT

Since the initial shock of Research In Motion's(RIMM) disappointing quarterly earnings numbers last month, a number of investors have tried to call a bottom and point out how cheap are the company's shares. They shouldn't.

Although the stock could see a slight short-term rally from here, expect the shares to come under renewed pressure in the fall.

On June 24, RIMM shares took a dive after it announced its earnings. They sold-off from $58 pre-earnings to just below $48 on July 6. Since then, and timed with the general market rebound, the stock price has recovered to $55.

Amidst the sell-off, there were many RIMM bulls who made the rounds on television talking about how "irrational" the market's negativity on the stock was. Here are some of the arguments they made at the time in defense of the stock and why these arguments don't hold water.

Lofty Sales Projections

RIMM sold 11 million devices in its most recent quarter and surpassed the 100 million mark for BlackBerries shipped. The RIMM bulls find it hard to fathom that a company selling so many devices will not continue selling the same number on an ongoing basis.

I have one retort to that point: Remember the RAZR byMotorola(MOT)? RAZR, of course, was a runaway success of a phone for most of the last decade.

The iconic phone, which was introduced by former CEO Ed Zander in 2004, enjoyed a great four-year run and sold 110 million units over that time. But no one uses a RAZR today.

I'm not saying BlackBerries will disappear in two years, but it is clearly on the decline, as RAZR was in late 2007. With all the speculation about whether Apple will have difficulty surpassing the $250 billion market capitalization size, no one has yet asked: will BlackBerries hit a wall after they ship their 110 millionth device like RAZR did?

A Lock on Enterprise

BlackBerry bulls often talk about the security of these devices and how they are beloved by enterprise IT managers. They point out that enterprises have written apps for the BlackBerry, making the devices sticky.

........

[** This post is an excerpt of the full article, which is available on TheStreet.com by clicking here. Free Site.**]

Sphere: Related Content

RIM's Bleak Future

By Eric Jackson, Senior Contributor

06/30/10 - 06:00 AM EDT

Stock quotes in this article: AAPL , GOOG, RIMM, NOK, MOT

What happened to Research in Motion(RIMM)?

It has been the king smartphones seemingly forever. Yet, it's stumbled badly. Last Thursday, it announced its new subscribers were less than analysts expected and the stock dropped 10% the following day.

Now there seem to be thousands of RIMM haters among hedge fund managers and investors. Why? Didn't it add almost 5 million net subscribers last quarter? How can it be dying with that kind of growth?

In the stock market, the focus is always on where companies are going - not where they've been. In the smartphone market, this is probably doubly true.

Motorola's(MOT) RAZR used to be the world's No. 1 selling phone for many years, and as late as 2007.

After former CEO Ed Zander quit the company, one of his successor's (Greg Brown) first marketing campaignswas a promotion of the newest incremental version of the RAZR. Management then said that the new version would help the RAZR on the top by being faster and sleeker. However, the new RAZR was a dud and we haven't talked about it since. That story is a warning sign for RIMM.

The mobile phone and now smartphone business is brutally competitive. There's no loyalty. What's hot today is ancient history tomorrow.

At a conference last month, Apple(AAPL) CEO Steve Jobs talked about how he liked the consumer market much more than the business market. His reasoning was that, in the consumer market, if you make a good device, people will buy it. If you don't, they won't.

In business, it's often not the end users who are making the purchase decisions, so inferior products can remain market leaders for years and years with no accountability.

The co-CEOs of RIMM (which has always been a terrible organizational structure which hasn't been previously questioned because of RIMM's prior success) should take a look at that Jobs interview. RIMM is about to be RAZR'ed in the consumer market by Apple's iPhone 4 and the new phones using Google's(GOOG) Android software which are popping up all over.

........

[** This post is an excerpt of the full article, which is available on TheStreet.com by clicking here. Free Site.**]

Sphere: Related Content

Google Is Too Cheap

By Eric Jackson
RealMoney Contributor
5/18/2010 7:32 AM EDT
Click here for more stories by Eric Jackson

I've recently been critical about Google (GOOG - commentary - Trade Now). The company has made a number of missteps this year and hasn't really demonstrated much urgency in fixing things. However, the negative sentiment on Google is too high and the price is too low. Although I've had my complaints about the company and its lackadaisical culture, it's drifted too low for too long. I like Google as a good turnaround bet from here and intend to find the right entry in the next month or so.

There's no question that Google has had a difficult year. Its stock price is down 18% versus a 3% rise in the Nasdaq over the same period. It is not used to under-performing the benchmark.

A few weeks ago, Google announced it would be leaving China in a dispute over the information requested by the Chinese government. Since then, Baidu (BIDU - commentary - Trade Now) -- the top search player in China -- has seen its stock price surge 23%, and it has recently split the stock. Google's share price, meanwhile, has continued to slump.

Google's new mobile operating system, Android, has had difficulty attracting investors' attention since the start of the year, while everyone has been focused on Apple's (AAPL - commentary -Trade Now) successful iPad launch.

Since it became clear that the iPad would be a hit -- and would give iMac, iPhone and iPod users a new reason to rush out to the Apple Store to buy yet another gadget they can no longer live without -- most large mutual funds have been playing catch-up, buying up Apple shares. Google, amidst the iPad buzz, has been an afterthought.

Google is also losing talent. Its top salesman, Omid Khordestani, has retired. Android Senior Product Manager Erick Tseng just left Google to join Facebook's Mobile team. That suggests he saw bigger opportunity at Facebook Mobile.

....

[This post is an excerpt of the full article, available by clicking here to go to RealMoney.com. Note: subscription required.]

Sphere: Related Content