A VC - Latest Comments in Selling Apple and Google Today

Re: Selling Apple and Google Today

Sebastian Wain — Sat, 17 Jan 2009 19:57:58 -0000

Don't know about AAPL, but on GOOG I have some medium/long term doubts on purchasing their stocks. Nice to discuss:

In the Bearish side:
- Internet is obviously a self organizing system, and it's self organizing very fast and better lastly. Search Engines are great, Google infrastructure is amazing BUT people will search less and take more time with information received by feeds. So, what happen if less eye balls go to the Google ecosystem? Now even torrents can be downloaded from a feed (yes, I think on things like Boxee too)

- More about self organizing systems: What about a better, more efficient Keyword Exchange Market? including OpenX et al? Can adwords win in the end?

- GOOG is being really closed on the web side (remember they don't distribute API keys for the search engine anymore), and the web is towards openness at new levels (and with few business models).

- GOOG doesn't understand what MSFT does well: "building tools" (and converting developers in partners). How much time does it take to develop a simple application using Visual Studio? Is Google building TOOLS to develop solutions around their services? or you need to "just" know XML/JS/HTML/CSS? Remember Visual Basic!

- Things like Google Spreadsheets or Google Documents are toys, comparing it to Excel or Word. I think a Silverlight implementation of office tools will be a lot better than HTML/AJAX (hacks) implementations. HTML is currently pretty limited for a long term truce.

In the Bullish side:
- Lot of opportunities on voice, audio, video recognition and retrieval. And Google has a strong reseach division (not like MSFT...)

- Lot of oportunities on cross language search and communication. Now that China has surpassed US, little communication is happening between these two worlds. In some areas there are more valuable information in chinese or russian than in english.

Nice topic!

Re: Selling Apple and Google Today

fredwilson — Sat, 17 Jan 2009 11:48:11 -0000

I¹m not jumping back in.

I got out because of distrust of the company and that isn¹t solved by time
or events

Re: Selling Apple and Google Today

Henry Yates — Fri, 16 Jan 2009 10:31:04 -0000

Me too. Human nature I guess. Harder when it is not your "main" job.

Re: Selling Apple and Google Today

fredwilson — Fri, 16 Jan 2009 09:16:13 -0000

Its the last part, transacting that's always hard for me

Re: Selling Apple and Google Today

Henry Yates — Fri, 16 Jan 2009 08:50:26 -0000

Great call re Apple. Pays to follow your instincts and actually transact on your gut feeling.

Re: Selling Apple and Google Today

AnujMathur — Thu, 15 Jan 2009 11:10:48 -0000

This post led me to discuss the issue with some medical professionals, who echoed your sentiment, and suggested a diagnosis similar to what we're seeing in the press today. That said, at least a part of the story behind Jobs has been priced in (although we cannot be certain to what extent) - what are you looking for before jumping back in?

Re: Selling Apple and Google Today

fredwilson — Thu, 15 Jan 2009 01:03:11 -0000

I have to thank my friends who helped me make that decision

Re: Selling Apple and Google Today

toddsavage — Wed, 14 Jan 2009 23:16:32 -0000

You couldn't have been more right on Apple. Looks like they have been totally dishonest with the public. Good for you for selling when you did.

Re: Selling Apple and Google Today

Peter — Wed, 14 Jan 2009 18:48:45 -0000

Looks like you timed it right on AAPL...

Re: Selling Apple and Google Today

fredwilson — Mon, 12 Jan 2009 08:13:14 -0000

I am almost there Druce. I¹ve just got amazon and ntdoy, not sure why I
still have ntdoy

Might sell it today

Re: Selling Apple and Google Today

Druce — Sun, 11 Jan 2009 21:25:11 -0000

don't misunderestimate yourself LOL.

you have an edge based on deep understanding of the industry that tells
you when stuff is undervalued ... but short-term mean reversion trades
might not take maximum advantage.

GOOG - pretty great company in a pretty great industry
AMZN - great company in some not-that-great industries
AAPL - great company but hard to value - Jobs succession, iPhone
accounting and whether growth is sustainable or hit-driven

then again that other post I just wrote makes me think none of that
matters and I should sell everything LOL.

Re: Selling Apple and Google Today

fredwilson — Sun, 11 Jan 2009 08:33:13 -0000

This is a great way to think about it

I am hoping that google¹s management shows it¹s maturity and does the right
thing this year

Re: Selling Apple and Google Today

fredwilson — Sun, 11 Jan 2009 08:31:12 -0000

Great comment Druce

I¹m a total amateur in the stock market and have said so on many occasions.

That¹s why the vast (like 99%) of the money that we have at risk in the
markets is managed by pros.

The stuff I do myself and blog about (and run through covestor) is largely
about being able to put my money where my mouth is

I felt that the market had overdone it on google, amazon, and apple in late
oct and early nov and so I put some money down to prove it

Now I feel a bit differently and that¹s why I sold the stock and posted
about it

Re: Selling Apple and Google Today

fredwilson — Sun, 11 Jan 2009 08:27:13 -0000

I¹m convinced. I am going to do that when I start getting into google again

Re: Selling Apple and Google Today

fredwilson — Sun, 11 Jan 2009 08:25:08 -0000

Holding AMZN for now. I don¹t love the market dynamics right now. I think
it¹s going to test the Nov lows at some point this winter/spring.

Re: Selling Apple and Google Today

fredwilson — Sun, 11 Jan 2009 08:24:05 -0000

That¹s a good observation and question. The decision to sell appl is based
on losing trust and I think that¹s a binary thing. When its¹ gone, I should
be too. The decision to sell google all at once is kind of odd and I
probably should have done it over time.

Re: Selling Apple and Google Today

Nate — Thu, 08 Jan 2009 04:42:15 -0000

I love Apple, but I agree that the long term doesn't look good because no Steve Jobs successor can be Steve Jobs.

Re: Selling Apple and Google Today

jonathanmarcus — Thu, 08 Jan 2009 03:19:27 -0000

I penned the following about Amazon 8 months ago:

Microsoft and the Media are focused on the wrong target. At $31, Yahoo is being valued at $45 BN. Assuming a 40% acquisition premium, Amazon also costs $45 BN.

Amazon Web Services (AWS) launched in 2002, and has revolutionized the entire Internet infrastructure model. AWS disrupts storage, hardware, hosting and content delivery markets, and is increasingly the most strategic service for thousands of Internet services. The AWS team is outstanding. Rackspace, Joyent and Media Temple provide small-time competition, and Google only released App Engine in 2008, giving Amazon the undisputed leadership position in utility computing.

Amazon has spent the past several years developing emerging leaders in digital downloads. MP3 is more open and flexible than iTunes, the Unbox + TiVo integration represents an important implementation in the Set-Top / TV services market, and the Kindle appears to be exceeding Amazon’s internal projections. Digital technology continues to impel fundamental change in media distribution, and Amazon is well positioned.

In retail, Amazon has the most comprehensive user-generated review database and Prime ($79 = free 2-day / $4 next-day shipping), the cost-effective answer to many Internet shipping problems; the alternative is a Big Box experience and $4 gas. Ultra-competitive prices and the most diversified inventory (1st + 3rd-party) make Amazon the online Wal-Mart. Why use a comparison shopping engine when Amazon offers everything at great prices, in one location, with convenient service?

http://jonathanmarcus.tumbl...

Re: Selling Apple and Google Today

firebones — Thu, 08 Jan 2009 01:27:25 -0000

On the three: my opinion is that AMZN and AAPL have quality management teams and quality strategies; GOOG's team is not yet proven --they've had a major wind at their back throughout their lifetime and this is the first real test they've had in rough waters. For AAPL, 2009 will see them 1) withdraw into their shell through the downturn (no major new retail-dependent game-changing launches of note, but lots of development for the future, and some launches held back for better economic conditions) and 2) weather the storm of a Jobs death or transition. Both of these conditions are temporary for AAPL--they're fundamentally strong as a money engine. When all the bad news is out by later this year, the depth of their management plus their strategy will make them a buy, but we may have to see the 60s first. AMZN is just solid. I'd avoid GOOG until they show they have some evidence that they have a strategy to keep the growth going while going through a prolonged downturn.

My AAPL buy signal is the day after "news" that Jobs is gone, provided that the stock is painting 60s the day after the news comes out. That's not priced in yet, and I don't think it changes anything substantial about the company.

Re: Selling Apple and Google Today

josh guttman — Thu, 08 Jan 2009 00:33:57 -0000

Heard Howard's rationale and wasn't compelled to sell. He's more of a trader than me, and I suspect most people reading this blog. I think q4 iPhone sales will be strong and now DRM-free iTunes and new laptops? I feel good about Apple. The big question - what is the Jobs discount factor? 5%? 10%? 20%?

Re: Selling Apple and Google Today

Alex Iskold — Wed, 07 Jan 2009 23:58:09 -0000

Fred,

I have do disagree with you on $AAPL.

Okay, yes, Steve is sick. So what? He built an incredible execution machine that is doing amazing things. True, its not cool for Apple PR not to be straight. But this is typical Jobs. He is neurotic, egocentric and very private guy. He just doesn't want people to know.

But just like its not cool for him to hide things, its not cool to sell stock because CEO is sick. It does not feel like a value investment, feels like a gamble instead. Apple's execution for the last decade is unprecedented in the industry, IMO and its not just Jobs that did it. He is important, but I am sure that Apple folks know what they are doing.

Of course I am being critical (hypocritical?) without much base - I do not own the stock, but wanted to give you my 2cents on this.

Don't give up on $AAPL, they need the support of people like you now more than ever. I mean this whole heatedly, because Apple's take over laptop/desktop market is in progress.

Good pick on AMZN though!

Re: Selling Apple and Google Today

Druce — Wed, 07 Jan 2009 23:30:37 -0000

Your GOOG trade, wonder if it went through at your limit... now it may be a good trade and it may be a bad trade, I can't really tell without asking a whole lot of questions. How did you originally select GOOG as something with good risk-reward profile? What was your rationale for buying it and what changed? How did you pick your entry point? How do you control your risk on the individual trade, and on the whole portfolio? You talk about why this exit point, but it seems specific to this situation, so what are the general criteria for exiting? most important, what is your overall edge against the market? (asking rhetorically, but maybe worth exploring in future posts)

There's a guy with a pretty good post about how poker taught him everything about business, and sometimes I think maybe I could write an even better book about the analogies between poker and investing (and a few important differences). A poker amateur runs into a poker pro (maybe Harrington said this) and invariably there's some hand that gutted him that he's been agonizing about for weeks or maybe years. "One time I had ace, ten. I flopped two pair and made a big bet. Then the other guy came over the top and I called. Then" yada yada yada until he gets gutted. "Did I play it right?" And the poker pro asks, where were you seated and where was your opponent? How many callers pre-flop? What were the stack sizes? And so forth, and the amateur, says hey, I don't know, just tell me what you would have done already!

That's why I'm not a huge fan of stock chat - without knowing an incredible amount of stuff about where the participant is coming from, what his strategy is, risk tolerance etc., what expertise they have, what work they did, it's really hard to determine if anyone knows what they're talking about. And you will lose your shirt if you listen to people, or think you're one step ahead of them, and you trade against the market that is two steps ahead of you.

Now one of the interesting analogies with poker - a big part of the game is to get in situations where you stand to lose a limited amount if you're wrong, and a much larger or unlimited amount if you're right. When you're adding on the way down, and cutting the position quickly on the way up, that's potentially putting you in the position of cutting your winners and letting your losses run, and having optionality work against you. Also, when your edge is deep industry knowledge that will win out in the long run, when you try to time the market you risk that positive earnings surprise and a big pop, and then wondering if you chase it or risk missing out.

On the other hand, when you put yourself in a position where you can add to a position on the way up, but put in a stop so you can only lose a little or even not lose at all on the way down, that's a good place to be. So that's the way I am inclined to play GOOG for now.

Re: Selling Apple and Google Today

TMC2K — Wed, 07 Jan 2009 19:31:53 -0000

when $goog comes down again, then you should consider selling puts. I'm not sure that would be a good strategy for short-term timing. But it would have worked well for you over the past few months based on your objectives.

Re: Selling Apple and Google Today

TMC2K — Wed, 07 Jan 2009 19:21:15 -0000

Very solid move. I think the market action today reflects thinking like yours in general.

I also firmly agree with your position on $aapl and $goog for exactly the reasons you mention.
Also $aapl has introduced big notebooks at a time when the market is demanding netbooks. They may have made their first product strategy error in years with this. Netbook popularity may not ultimately be good for $aapl

I also think you've nailed in on $AMZN They are one company positioned very well for the developing internet.

Re: Selling Apple and Google Today

fredwilson — Wed, 07 Jan 2009 18:34:22 -0000

I keep hearing that. I think I'll give it a try.