AAPL Stuff; The Market, Etc.

The iPhone is looking good in a pair of market snapshots, as AAPL grabbed 25% of the smartphone market. In the past week, IDC and comScore have both issued reports of the fast-growing smartphone market that show AAPL gaining share.

In the U.S., according to a comScore report published Monday, Apple's share grew to 25.3%, up more a point, in the fourth quarter of 2009, while RIMM's fell to 41.6%, down a point.

MSFT and PALM both lost ground while GOOG's Android gained nearly 3 points to reach 5.2%. IDC's report, issued last Thursday, looked at the worldwide market, where NOK has long been dominant. Its research show Apple gaining on Nokia and RIM in both the fourth quarter and the full year. Apple's shipments nearly doubled year over year in Q4 2009 to reach a global smartphone market share of 16%....

Those are incredibly compelling share gains for AAPL. But maybe the most interesting is looking at the total sales figures and seeing how much room AAPL has to still increase share in wireless. I don't discount GOOG's smallish numbers either. While I'm not projecting this currently, I could make a low probability (though increasing probability) case where AAPL and GOOG are 1 & 2 in wireless handset share. And yes I'm talking about total handsets not just smartphones in the coming years as the original iPhone or something similar will be an entry level handset in 2-3 years.

Remember, the iPhone platform has just gotten started. In time the iPhone lineup will probably look a lot more like the current iPod lineup. In the next 18 months I would not be surprised to see AAPL make a smaller, lighter and cheaper iPhone available on any network....

As for the overall market, the incessant selling of great reports is as bad as I've seen since...1997. I bet you all were thinking that was going to be a different year. Anyway, yes, 1997, and during that time we saw former tech stars like JAVA, Ascend Communications, JDSU, NVLS, CSCO, MSFT and a host of others all trade for PEGs below or well below 1. Sun Micro in particular at one time had a PE of 14 and EPS growth of 25% which turned out to be hugely conservative. Needless to say the stock went on a humongous run after a tough few months. As did all those others mentioned above.

While that year and 1998 get a little historic press, we had a series of corrections over a 2-3 year period with one doozy in 1998.

Bottom line, I see many parallels between then and now, though this time the market is actually cheaper on a few fronts. First, it's notably cheaper on the ratio to bond yield levels. It's also cheaper on PE's and PEG's if these huge net cash positions are stripped out. Interestingly, another parallel is the tension associated with foreign jitters and, broadly, the derivatives markets.

In the end, the jitters of 1997-1998 gave way to the earnings bubble of the Y2K, Internet and bandwidth growth segments and many new highs were created, ultimately culminating in the 2000 tech stock bubble. So what happens this time?

Well, back then, the Long-Term Capital Management and Orange County and the Russian currency crisis were fixed and thus the earnings power was able to come through to stunningly higher stock prices.

The same potential exists today. The latest wrinkle isn't about Greece or Spain or the UK or US. It's more about the CDS market. And this is fixable, I think quite easily. Sure all these countries have higher debt levels but they always do coming out of trough economic cycles and coming into growth phases, revenues increase, tax receipts increase and voilà, debt and deficit reduction. Just look at the tax collections from the top 50 in the S&P 500 after this quarters earnings results.

The fix has to address the root. And I believe if we do that the gains in the various global markets (esp., US, Germany, Aussie and UK) will be similar to what we saw post the last 1997 market correction.....

long AAPL