My Take On The Merrill Lynch Downgrade of Apple Computer

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I am not sure if it was the Merrill Lynch downgrade from buy to neutral or the iPod nano screen problems that led to the sharp decline in Apple Computer (AAPL) but the reaction was sharp with the shares dropping close to 5% on well above average volume. I’m no technician but the chart definitely looks broken, at least for the very short term.
I read through the new Merrill report. It is very well done. It is also not really a negative piece…..

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Changing To A Buy On Time Warner

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Over the past few weeks based on my own reading and the action in the stock, I have become more attracted to Time Warner (TWX) shares. As of today, I am dropping my cautious view and adopting a constructive three-to-six-month view of TWX shares….

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ABC Season Off To Good Start For Disney

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Goldman Sachs had a note out on Monday indicating that the fall season at the Walt Disney (DIS) owned ABC Network is off to a good start. Ratings for key returning shows including Desperate Housewives, Lost, and Grey’s Anatomy were all up over last year’s season opening shows with Lost actually setting an all-time high rating….

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New Blog Coming Soon

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Northlake Capital Management, LLC will be debuting its new blog, Media Talk any day now. The blog will provide commentary on media stocks that are not broadly held in client accounts….

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Updating Individual Stock Positions

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In the extended entry, please find an update on individual stock positions currently broadly held across client accounts. Click the “Continue Reading” link immediately below to see the updates on Apple Computer, Central European Media Enterprises, Lions Gate Entertainment, Motorola, Sears Holding, SBS Broadcasting, and Walt Disney….

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Apple Introduces the iPod Nano

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Today I contributed the following commentary on Apple Computer to StreetInsight.com, the professional service of theStreet.com. Since Northlake clients are long Apple in their portfolios, I thought the note might be of interest. I have also included the text of two other comments on Apple that were contributed by other money managers who contribute to the various websites owned by theStreet.com:
Based on reports from various Apple Stores around the country it appears the iPod nano is major hit. Numerous stores had lines at the cash register and traffic was extraordinary. At the Apple Store where I bought my nano, the sales people reported that much of the initial traffic was from people who already own iPods. I think that the nano will drive a major “upgrade” cycle for current iPod owners in addition to bringing even more buyers (according to AAPL only 6% of the people in the United States own an iPod). The nano, with 500 or 1000 song capacity is a nice compliment to a currently owned 20 or 40GB model. It is also a nice upgrade over a shuffle. I think the nano will be the hot product this Christmas and current estimates for total iPod unit shipments over the next two quarters are low….

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Sticking With Sears Holdings Despite Mixed Earnings Report

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Sears Holdings (SHLD) 2Q06 earnings for the quarter ending July 30, 2005 disappointed investors leading to a decline of 5.2% in the shares on Thursday. To get a sense of what the Street was expecting please take a look at my preview note posted yesterday.
The main disappointment in the quarter was on the top line where the company reported $13.1 billion against a consensus of $13.7 billion. The culprit in the quarter was the old Sears stores which had a same stores sales decline of over 7% despite an easy comparison. The old Kmart stores actually performed OK with same store sales declining just 0.3%….

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Anatomy of SBS Broadcasting Buyout — Why I Hope For A Higher Offer

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I received the circular on the buyout of SBS Broadcasting (SBTV) earlier this week and based on my reading I am continuing to hold the shares owned by clients hoping for another bidder to emerge. As a reminder, SBTV has agreed to a buyout offer from private equity investors led by European group Permira and supported by KKR. The buyout is structured as an asset sale and will pay SBTV shareholders

Sears Holdings Earnings Preview

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Northlake clients remain long Sears Holding (SHLD) ahead of second quarter earnings due to be reported before the open tomorrow. The company is not expected to host a conference call but will release a 10Q and probably a note from Eddie Lampert along with the earnings. Current client positions in SHLD are on the small side as half of the original positions were sold in July when the stock was at $160. With the weak performance since then the holding is now below average and I decided to wait on the earnings report to decide if I want to rebuild to a full position.
Consensus estimates call for EPS of $1.36 on revenue of $13.7 billion. Investors will probably focus on same store sales trends, gross margins and operating margins….

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Taking Partial Profits in Apple Computer

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There is a lot of anticipation and excitement surrounding this week’s official announcement of the iTunes phone combining the efforts of two companies owned by Northlake clients, Apple Computer (AAPL) and Motorola (MOT). I think the iTunes phone launch is a positive for both companies and might be significant for the mobile phone industry as well. It appears the phone will launch at Cingular in the United States and at T-Mobile and O2 in Europe. Each of these operators is moving outside the walled garden approach which I think makes it more likely that cell phones move to the next level and become the dominant all-in-one device carried by individuals….

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