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from Counterparties:

MORNING BID – The quiet days for Apple

Apple’s been the two-ton behemoth of the stock market for so long that it is going to be surprising, in a way, to see that the company isn’t really pulling its weight anymore when it comes to its percentage of S&P 500 earnings. This sort of thing can be a bit silly, but Howard Silverblatt, the index guru over at S&P Dow Jones, points out that Apple right now is about 3.2 percent of the total market value of the S&P while at the same time accounting for an expected 2.8 percent of earnings in the S&P – the first time since 2008 that Apple hasn’t delivered a percentage of S&P earnings equivalent to its market value.

In the past few years, Apple has tended to carry much of the S&P on its back, such as in the fourth quarter of 2011 and first quarter of 2012, when it accounted for 6 percent and 5.2 percent of the index’s earnings – compared with accounting for about 4.4 percent of the market’s value at that time. In the last quarter of 2012 the stock was 6.3 percent of the market’s earnings and was less than 4 percent of its market value.

Of course you wouldn’t expect that to be the case now – the second and third quarters are the relative dead period when it comes to Apple, given people are generally waiting for the next round of Apple innovations at the end of the year, be it a new phone or what-have-you.

This time through won’t be all that different – with the only real issue being just how solid the growth is for the quarter and whether the stock begins one of its patented run-up-to-the-new-phone rallies that we’ve seen in past years that lasts through the end of the calendar year. Notably, Samsung’s Galaxy S5 came out and face-planted, and that’s either the result of just being a lousy product or competition from China, so it’ll be interesting to see whether upstarts out of China are starting to take share from everybody, or if the Samsung problems auger in general for better things for Apple, as tech editor Eddie Chan points out.

from Alison Frankel:

The weird proviso in Apple’s e-books settlement

There’s a very unusual sentence near the beginning of the letter that class action lawyer Steve Berman of Hagens Berman Sobol Shapiro sent Monday to U.S. District Judge Denise Cote of Manhattan. Cote is presiding over the consolidated antitrust litigation in which the Justice Department, 33 U.S. states and territories and a class of book purchasers have accused Apple of conspiring with publishers to fix e-book prices. A year ago, after a bench trial of the Justice Department’s case, Cote found Apple liable for violating federal antitrust law. Since then, the company has been pursuing an appeal of the liability decision at the 2nd U.S. Circuit Court of Appeals while continuing to battle with the states and private plaintiffs in Cote's courtroom.

Berman’s letter on Monday informed the judge that Apple has agreed to a binding settlement with the consumer class and the states. But there’s a catch, he wrote: “Any payment to be made by Apple under the settlement agreement will be contingent on the outcome of that appeal.”

from Alison Frankel:

Lesson from the smartphone wars: Litigation is not a business plan

After almost five years of suing each other in courts in the United States and Europe over patents on mobile devices, Apple and Google abruptly announced Friday night that they've called a ceasefire: They're dropping all of the litigation. They're not even making a deal to cross-license one another's IP, just declaring a truce and walking away.

Apple has not yet settled with Samsung, the device manufacturer that most successfully employs Google's Android operating system, so the two companies haven't entirely resolved their dispute; evidence from the recently concluded patent infringement trial between Apple and Samsung in San Jose, Calif., revealed that Google is paying at least part of Samsung's defense costs. (The Korea Times reported Monday that Apple and Samsung are in global settlement talks.) Until there's a Samsung deal, two law professors, Brian Love of Santa Clara University and Michael Risch of Villanova told Bloomberg, the Google settlement is more important as a symbol than for any actual impact.

from Breakingviews:

Interpreting Apple/Beats using Andreessenomics

By Richard Beales
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Attachment therapy is controversial in the field of mental health. It’s far from indisputable in the technology world, too. Venture capitalist Marc Andreessen justifies some high tech-deal price tags, in part, with the idea that huge companies are able to “attach” the products of smaller ones, making them worth far more than traditional analysis would suggest.

from Breakingviews:

Mini-me tech bubble is mere shadow of 2000 excess

By Robert Cyran
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

The latest mini-me internet bubble is a mere shadow of the excesses that came crashing to an end in 2000. Sure, even though the run-up may have paused, the feverish signs are unmistakable. Dozens of companies are in line to float, hubris is rampant, oddball valuation metrics abound, and revenue-free startups are still worth fortunes. Even nerd culture has somehow become hip. The latest boom is as absurd as the last, but it’s far smaller.

from Edward Hadas:

Apple’s many magic tricks

Apple is in the news for borrowing $12 billion this week, even though it has $151 billion of cash on its balance sheet. The financial legerdemain will keep the technology giant’s tax bill down. It also is suitable for a company whose business model has long looked more like a magic act than a traditional corporate drama.

Of course, Apple has, or had, one of the necessary attributes of any successful enterprise: a strong competitive advantage. The California company’s edge comes from a synergistic mix of design expertise, marketing genius and supply chain mastery.

from Counterparties:

MORNING BID – Volatility, or lack thereof

It was another disappointing night for those looking for heavy volatility out of those reporting earnings - the trio of biotech stocks many were looking at, Gilead, Illumina and Amgen, had varying results, but they didn't show the kind of bounce that some people were expecting.

In after-hours action Illumina was moving around 7 percent, short of the 11 to 12 percent move the options market was looking for, and Gilead was up around 3 to 4 percent, less than the six percent gain that the options market had factored in. Following the disappointment among those betting on volatility post Netflix-earnings -- and the stock still moved a lot, just nowhere near as much as expected -- it raises questions about whether some investors might start to temper expectations when it comes to overall volatility, because putting down money on a big swing has been a bit of a loser so far.

from Breakingviews:

Rob Cox: GE should put itself up for sale

By Rob Cox
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

General Electric should sell itself. If that sounds like an April Fools’ Day joke, think again. It’s a real proposal on the ballot at the industrial group’s annual meeting. Setting aside the absence of any obvious buyer for the $260 billion company, the proposition illustrates the kind of shareholder democracy gone wild that many boards, and even some regulators, would like to squelch. They have half a point.

from Breakingviews:

Activists crash dealmaker party

By Reynolds Holding
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Activists are crashing the dealmaker party. Shareholder lawsuits, cross-border mergers and defender-in-chief Marty Lipton will play supporting roles at the annual New Orleans confab for M&A attorneys and bankers. Aggressive investors shaking dozy boards are this year’s headliners. Their increasing presence at the gathering reinforces a growing power.

from Alison Frankel:

New class action: Real victims of Samsung infringement are consumers

Once again, we are reminded that defendants underestimate the creativity of the class action bar at their own peril.

Last week, the firms Reese Richman and Halunen & Associates filed quite an interesting class action complaint in federal court in San Francisco. The case asserts that Samsung's infringement of various Apple patents in its mobile devices - as established in a jury trial in federal court and in a proceeding at the U.S. International Trade Commission - has injured unwitting Samsung mobile device buyers who believed they were purchasing non-infringing products. According to the complaint, the resale market for Samsung devices has been hard-hit by infringement findings against the company; the suit claims that Samsung owners are actually in danger of violating the Tariff Act of 1930 if they attempt to resell infringing tablets and smartphones.

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