May 27/15 – Apple announces new Derek Zoolander watch edition

2015-05-27 10am EDT  |  #AAPL #Apple #Carl Icahn

Lately I have been worried Apple jumped the shark with the launch of the much anticipated Apple Watch. I firmly believe Steve Jobs would have never allowed such a half finished product out the door. And most importantly, he would have never in a million years coached Apple store staff to give f#%ng fashion advice to sell the product. From Fortune:

Those employees are being asked to comment on the device's appearance based on a customer's outfit, saying things like "you seem to have a fun style. I think the Pink Sport band would make your style perfectly," or "the white strap looks great on you."

This fashion advice strategy hasn’t been working that well, so yesterday Apple announced they hired Derek Zoolander as the new face of the Apple Watch. This was a controversial hire as Apple reportedly entered into a $30 million dollar a year exclusive agreement for the use of Zoolander’s “Blue Steel” look. Apart from new “Blue Steel” straps we can expect Apple to leverage this fashion icon’s popularity with new “Blue Steel” iPhones, iPads and most importantly, a special Zoolander Apple TV edition which includes a hundred and seventeen hours of Zoolander commercials and home movies from Derek’s youth growing up on the outskirts of a coal mine.


Controversy with the Zoolander endorsement

Some market pundits are bemoaning Apple’s Zoolander tie up as they claim the watch is gaining all sorts of traction in the social media community. They argue it is getting a lot of “buzz” and doesn’t need the endorsement from a big star like Derek Zoolander. They cite the recent example of China’s richest man’s son’s dog who posted a picture to his 16,000 followers of the coolest new trend in the billionaire dog community:

These analysts claim Apple need not panic with a celebrity endorsement. They argue the fashion advice from Apple store employees is gaining a lot of positive feedback from appreciative patrons. In fact, these same analysts are suggesting Apple should leverage their “cool” factor and start selling jeans, t-shirts and crop tops. They claim the public would really “eat it up.”


Sold to you

I am pretty sure that if Tim Cook keeps up this crap, Steve Jobs is going to rise from the dead to take back control of the company. Whereas Apple used to be a company who sold products that “just worked,” they have devolved into a company relying on their “cool factor” to sell half baked products and who seem to be doing more original work in their financial engineering than in their product development.

From the Nikkei Asian Review:

TOKYO — In what will be its first fundraising activity in Japan, Apple is considering issuing about 200 billion yen ($1.62 billion) in bonds as early as June.

The U.S. technology company aims to procure funds at low cost by taking advantage of rock-bottom interest rates in Japan. It will likely use the proceeds to boost shareholder rewards and possibly expand Japanese operations.

Early this month, Apple started gauging potential demand for the yen-denominated bonds among regional banks, life insurers and other institutional investors. The bonds will target Japanese investors but will likely be sold to overseas investors as well.

I don’t begrudge Apple taking advantage of rock bottom interest rates. I think more corporates should follow their lead and be issuing debt at these ridiculous levels. But Apple seems to be stumbling badly on the product front, and meanwhile the stock market has become so enamoured with the Apple’s stock, they have blinders on.

Have a look at this list of top hedge fund holdings:

Apple is a top holding from all of our fast money friends. And it’s not just the hedge fund mopes who are falling all over themselves with Apple infatuation. Look at this screen shot from a recent CNBC piece:

What do you think about the chances Apple will be a top performer when everyone is already long?


Icahn continues to bully Cook into buying his shares

Last week my favourite jackassactivist investor Carl Icahn got on CNBC to tout his $240 Apple price target and to bully Tim Cook into buying more stock back.

Do you think Steve Jobs would have put up with this crap from Icahn? He would have told him to go pound sand. He would have never let himself be bullied into floating tons of debt to buy back stock.

And I guess that is my problem with all this Apple financial engineering. Between all the tax avoidance and stock buy backs, the debt is not being used to build anything. It is simply a balance sheet entry.

This is the sort of messed up world we live in. Over the past couple of years, Apple has been one of the biggest corporate bond issuers. Yet they are selling massive amounts of debt simply to leverage up their balance sheet and avoid taxes.


Rant over

I was going to write more about Apple, but it is just making me mad. Between Icahn’s rabid stock promotion and aggressive demands to Apple management, along with the public’s blind devotion to all Apple products no matter how ridiculous, not to mention Apple’s recent reliance on increasing amounts of financial engineering, and the final coup d’etat – the hedge fund groupthink that has them all stuffed to the gills with the name, I can only conclude that Apple is an accident waiting to happen. I know I sound like a crazy old man yelling at kids to get off his lawn, but I don’t care. Rant over…

Thanks for reading,

Kevin Muir

the MacroTourist