Love him or hate him, one thing is clear: when it comes to Apple, Carl Icahn — or whomever wrote this for him — knows their shit when it comes to Apple.

Half of the stuff you read about Apple on the internet from banker-types makes it clear that they’re not really paying attention. Again, agree or disagree with Icahn’s stance on Apple, you cannot deny that this is well-researched. 

You pay $150 billion for that, and it’s a lot of risk. You might never make any money. The Clippers make money, and they’re going to make more money. As a multiple of earnings, you’re paying less than you are for almost every tech stock. You have very limited downside because there will never be more than two teams in Los Angeles.
Steve Ballmer, comparing investing his money in the Los Angeles Clippers versus tech stocks.

Sarah Treanor:

For while other countries have struck oil and then binged on the revenues, by contrast Norway is continuing to invest its oil and gas money in a giant sovereign wealth fund.

The fund, worth about $800bn (£483bn), owns 1% of the entire world’s stocks, and is big enough to make every citizen a millionaire in the country’s currency, the kroner. In effect, it is a giant savings account.

1% of all the stocks in the world. Crazy (smart).

We’ll see how this plays out in the long run, but it strikes me as smart for any “boom” town to diversify as much as possible when they can — before they can’t, and they’re screwed.

I think the multiples of technology stocks should be quite a bit lower than the multiples of stocks like Coke and Gillette, because we are subject to complete changes in the rules. I know very well that in the next ten years, if Microsoft is still a leader, we will have had to weather at least three crises.

Bill Gates, in a joint-interview with Warren Buffett, in the summer of 1998 — before the Bubble burst, of course.

The whole interview is pure gold.

[via @ElliotTurn]

Brian Womack:

Google, which became the world’s largest online advertiser through its dominant search engine, had a higher market capitalization during intraday trading today before falling back at the close in New York to a value of $395.4 billion compared to Exxon’s $395.7 billion, according to data compiled by Bloomberg. Apple had a market value of $463.5 billion. Software company Microsoft Corp. is No. 4 with $303.5 billion.

Technology companies are establishing themselves as key players worldwide as they disrupt industries from retail to finance. Google, which went public in 2004 — 84 years after Exxon — has benefited from consumers moving to online services and content, a trend that’s being accelerated by the growing popularity of smartphones and tablets.

I suspect we’ll see quite a few more tech companies ahead of Exxon in the coming years. Progress.

Dennis K. Berman:

For the last 20 years, IBM has been an avid, methodical buyer of its own stock. In 1993, it had 2.3 billion shares outstanding. Today it has 1.1 billion, shrinking at more than 1% per quarter over the past few years. At that pace, there will be no more publicly traded IBM shares left by 2034.

Sort of crazy. But that’s good news, right? Doesn’t that mean that IBM’s management feels its stock has a lot of value? Not necessarily:

Look deeper at IBM and dozens of mature U.S. companies, and you can sketch a different, more ominous, story: That CEOs are in fact stuck, reluctant to build new plants, launch products or pursue an acquisition.

By rote and by fear, they are pitching their billions into buybacks, nearly $1 trillion from the 100 largest companies in the S&P since 2008. In the 12 months ending in September, the total dollar amount of all corporate buybacks increased by 15% from a year earlier, according to S&P Dow Jones Indices.

$1 trillion since 2008 even though the numbers all seem to point to returns being clearly better when making long-term investments in the business (see: Amazon). But that seems risky for any CEO. As Berman concludes:

And so here it is in 2014, five years since the worst of the financial crisis. Are they playing to win? Or still playing not to lose?

And guess what: it’s actually worse than that. With the earnings miss today, IBM officially missed its revenue target for every quarter in 2013. They’re playing to lose.

Noah Buhayar on the news that Berkshire Hathaway likely failed to increase net worth more rapidly than the Standard & Poor’s 500 Index during the past five years:

Missing the mark in the last five years would highlight how difficult the billionaire’s task has gotten with his company’s expansion. Takeovers and stock picks have built Berkshire into a business with dozens of operating units and equity investments valued at more than $100 billion. That means future gains have to be bigger in absolute terms to increase book value by the percentage amounts of years past.

It seems that Warren Buffett is running into the same “problem" that Apple faces. Because they’ve both built such massively successful businesses, they’re nearing the limits of possible growth. They are both true “victims” of their own successes.

Despite the huge swings in our stock price since our 2002 IPO ($8 to $3 to $39 to $8 to $300 to $55 to $330), we’ve continued to grow our membership every year fairly steadily. We do our best to ignore the volatility in our stock. The progress we’ve made over the last 10 years is stunning. We want to make the next 10 years even more remarkable.

Reed Hastings, after Netflix beat quarterly estimates once again, sending the stock soaring to new all-time highs.

You could certainly argue that Netflix is an even more volatile stock than Apple — because it clearly is. And Hastings is smart to try to calm the furor in a time of exuberance. You’re never neither as good nor as bad as they say you are — but you can only really say that when they’re saying you’re good.

Quentin Hardy:

Google closed up 14 percent on Friday, at $1,011.41, after a better-than-expected earnings release late Thursday. The jump brought its gain since its initial offering to roughly 1,100 percent. During the same period, the shares of Amazon.com rose 830 percent. Samsung, which makes smartphones as well as the chips that go into many other manufacturers’ devices, rose 760 percent. And Apple leapt a staggering 3,300 percent. By comparison, the overall Nasdaq composite rose 120 percent, while Microsoft — 10 years ago the most feared giant in technology — gained just 28 percent.

While I largely think the stock market has a bit too many forces at play to serve as a good barometer, at a high level, this data seems pretty telling.

John Gruber:

Leave aside for now the fact that Tim Cook has been CEO for only two years and that Vogelstein himself acknowledges that under Jobs, the revolutionary products came “every three to five years”. The stuff about the stock price is just nonsense — Apple’s stock price routinely fell after products announcements by Steve Jobs. For all the lip service paid to “innovation”, Wall Street tends to be conservative, rewarding the conventional and punishing the unconventional.

You can actually check these things. Stock prices and the dates of Steve Jobs’s product announcements are matters of fact…

It’s a deep burn.

Tim Fernholz:

People can’t really respond to stimuli much faster than in one second. The benchmark comes from cognitive scientists who find that it takes 650 milliseconds for a chess grandmaster to realize that a king has been put in check after a move. Below that time period, you can find “ultrafast extreme events,” or UEEs, in which trading algorithms cause prices to change by 0.08% or more before returning to human-time market prices. This appears to be the case when many simple algorithms, operating on limited information, pile into a single trade.

If a crash happens, but no one can actually see it, did it really happen? Apparently yes.

Nomura analyst Rick Sherlund in a note to clients following Microsoft’s Q4 earnings:

"This (the results) was much more disruptive than investors have expected, with Microsoft missing its guidance in every division and guiding lower," wrote Sherlund. "Everything an activist investor could ask for."

And another view from the same note (in a piece in which author Nick Wingfield makes a strange, loose connection to the Detroit situation):

In a research note on Friday, Rick Sherlund, an analyst with Nomura Equity Research and a veteran Microsoft watcher, noted how Wall Street had warmed to Microsoft’s message lately. “Not so fast,” Mr. Sherlund wrote. “It was discouraging to read down the table and see that every division was below expectations.”

Just to follow up on something, the correct answer to this tweet from April was “next”. And per the guidance, it could still get worse…

As I write this, our recent stock performance has been positive, but we constantly remind ourselves of an important point – as I frequently quote famed investor Benjamin Graham in our employee all-hands meetings – “In the short run, the market is a voting machine but in the long run, it is a weighing machine.” We don’t celebrate a 10% increase in the stock price like we celebrate excellent customer experience. We aren’t 10% smarter when that happens and conversely aren’t 10% dumber when the stock goes the other way. We want to be weighed, and we’re always working to build a heavier company.
Jeff Bezos, in his letter to shareholders.