Morgan Stanley analyst Scott Devitt says Amazon’s poor results in the fourth quarter can be attributed directly to Apple’s excellent results.

He wrote in a note, “Apple’s strength in iPhone and iPad sales are negatively affecting Amazon.com by accelerating the company’s transition from physical to digital media sales (which has effects on sales, margins and ROIC) as well as impacting Electronics & General Merchandise (“EGM”) growth.”

In the long term, Devitt believes Amazon comes out stronger. In the short term, he’s expecting pain.

Here are two big reasons according to Devitt, our emphasis added:

“In CQ4:11, Apple reported $33.6B of sales from two products – iPhone and iPad, which was more than 3x the size of Amazon.com’s entire EGM category. Importantly, Amazon.com is not a licensed retailer of iPhone and iPad, which has left a noticeable gap in Amazon.com’s consumer electronics portfolio. The true impact manifests itself in the sales growth deceleration of Amazon.com’s North America (“NA”) EGM sales line, which decelerated in CQ4:11 to +27% y/y growth (excluding Kindle Fire) from +44% y/y in CQ3:11. While most investors focused on Amazon.com’s Media sales deceleration, the EGM deceleration is more significant since it is the segment that investors expect the most share gains from over time.“

In a less direct way, Apple and other digital media startups are causing problems for Amazon:

“The second derivative impact of Amazon.com’s Apple issue is that mobile device proliferation is accelerating the shift of books, music, video and video games to digital distribution. Amazon.com is currently the market share leader in books but otherwise faces an uphill battle.

We estimate that ~40% of Amazon’s media sales or ~16% of total sales comes from non-book media sales, and we believe this revenue stream is increasingly at risk to companies such as Apple, Netflix, Pandora, Spotify, etc.

We believe Amazon.com is particularly focused on two of the four media categories – books and video. The books category has already been a huge success and given the media war that Amazon.com is now fighting to sustain its media business through the digital transition, we think Amazon.com will spend as much as it needs to in video to win top-spot within the second media category. With that said, we are incrementally negative on Netflix as we believe Amazon.com has competitive strengths that could aid in its war for video market share, namely its video streaming delivery infrastructure and its large, engaged customer base.

Furthermore, Amazon.com has the necessary capital to ‘pay to play’ in this area (Netflix spends $1.5B-$2B per year on content). As it relates to music and video games, we believe Amazon.com is currently in a more difficult position and may choose to buy vs. build in these areas over time.

Net / net, Apple is a problem for Amazon.com and the first / second derivative impacts will drive Amazon.com to continue spending aggressively for an extended period in the areas of discounted hardware devices, acquiring content, etc to sustain its competitive position within the media category.”

So, why is he positive on Amazon?

We expect that Amazon.com will make it through this transitional period a stronger company, and we believe more than ever in its long-term prospects. Amazon.com remains our highest conviction, favorite long-duration business model. The potential to be an increasingly destructive force in the retail industry for physical goods has never been higher. We also expect Amazon.com to come out on the other side of the digitization cycle with a leadership position but expect it to be an expensive battle along the way, particularly in the areas of hardware and the transitions of the music, video and video game segments.

Source: SAI

Apple is set to broadcast live Tim Cook’s presentation at the Goldman Sachs Technology and Internet Conference at the Palace Hotel in San Francisco. The presentation will begin at approximately 12:30pm PT/3:30pm ET on Tuesday, February 14, 2012.

Although Tim Cook has spoken at the conference many times before, this would be the first time for him to do so as CEO. Apple co-founder Steve Jobs always shunned such events. He never played to Wall Street or anyone.

This is also first for Goldman Sacs as only account holders with $10 million or more are invited to such events. However, Apple has been able to bring this exclusive event for the few to the masses. Now everyone can see and hear what the privileged few do.

Here is the link http://www.apple.com/quicktime/conference/

Thank you Apple.

Apple is firing on all cylinders. Today, its stock hit a high of 496.75 just shy of $500. At that share price, Apple is bigger than both Microsoft and Google combined. Here is some excellent analysis from AppleInsider:

Apple’s stock soared to new heights on Thursday, pushing the company’s market capitalization to $456 billion, a number that is greater than the values of rivals Google and Microsoft combined.

As of Thursday morning, Microsoft’s market cap was around $256.7 billion, while Google was valued at around $198.9 billion. With Apple’s stock up more than 3 percent in morning trading, the company surpassed the combined totals of both Google and Microsoft.

The milestone comes soon after Apple reported its best quarter ever, earning $13.06 billion on sales of 37 million iPhones, 15 million iPads and 5.2 million Macs. Total revenue for Apple’s holiday quarter was $46.33 billion.

But Google’s shares fell more than 9 percent last month after the company missed expectations on Wall Street for both earnings and revenue. And while Microsoft met Wall Street expectations, revenue from its Windows operating system fell 6 percent to $4.74 billion.

Apple’s market capitalization passed Microsoft alone in May of 2010 when the iPhone maker’s value hit around $222 billion. And last August was the first time that Apple passed Exxon to become the world’s largest company by market cap, then with a value of $346.74 billion.

As of Thursday morning, Apple was well ahead of Exxon Mobil, which had a market cap of around $402 billion. That put Apple at a value of more than $50 billion more than the oil giant.

With AAPL stock north of $490, some Wall Street analysts on Thursday began increasing their price targets for the iPhone maker. Charlie Wolf with Needham & Company upped his estimate from $540 to $620, while David Evanson with Canaccord Genuity raised his target on AAPL shares even higher, to $655.

The FBI has release a 190 page on the Apple founder, The Great Steve Jobs. Here is the report from CBS:

The FBI, noted for its dossiers on Martin Luther King, Elvis Presley, Michael Jackson, released its file on late Apple (AAPL) co-founder Steve Jobs Thursday. The document is pretty benign, revealing only that he experimented with drugs during the early 1970s, and that the famously difficult Jobs wasn’t always nice to everyone.

In 1991, Jobs was being considered for a post on President George H.W. Bush’s Export Council, an appointment that would not have required Senate confirmation. The FBI was asked to do a background check, the file said. A large number of people who worked with Jobs at the time or knew him in some other capacity were asked to comment on his character and suitability for a political position.

“Several individuals commented concerning past drug use on the part of Mr. Jobs,” the file said. Jobs was said to have” experimented with marijuana, hashish and LSD” during 1970-1974 period, but was not believed to have used any illegal drugs in the five years prior to 1991.

“Several individuals questioned Mr. Jobs’ honesty,” the file said, “stating that Mr. Jobs will twist the truth and distort reality in order to achieve his goals.”

One of the people interviewed in March 1991 who described himself as “bitter and somewhat alienated” after working for the Apple co-founder, said Jobs is “basically honest and trustworthy”, but his “moral character is suspect.” He added that Jobs also alienated many other Apple employees, but that he could succeed in “any political position.”

Jobs died last October after a long battle with pancreatic cancer.

Halliburton (HAL), the oilfield services company, once a bastion for the Blackberry (RIMM), is dumping RIM’s platform and switching Apple’s (AAPL) iOS.

“Over the next year, we will begin expanding the use of our mobile technology by transitioning from the BlackBerry (RIMM) platform that we currently use to smartphone technology via the iPhone,” the firm told employees in an internal newsletter.

Halliburton is taking the same path for it 70,000 employees as Clorox (CLX) did last year, when it ditched the BlackBerry for the iPhone.

The company once relied heavily on RIM’s platform, but after evaluating RIM, Windows Phone, Android, and iOS, Halliburton has settled on switching to Apple’s platform.

RIM’s platform was once synonymous with business communications, but that status has slowly eroded since the iPhone’s introduction. While corporate IT spent the first few years after the iPhone’s introduction scoffing at the device, quarterly reports from analysis firms like Good Technology show that iOS has penetrated enterprise markets in a way that even the stodgiest of companies can no longer afford to ignore.

As such, Halliburton is looking to iOS devices to provide employees with secure access to many of its internal applications from outside the company’s network, exclusively through their iPhones. The demand for such flexibility was driven in part Halliburton’s customers, who desire mobile data-access apps for their own iPhone platforms, according to people familiar with the matter.

Halliburton, said it is actively working with Apple on the transition to iOS.

Logitech was all too eager, when Google came calling about Google TV. Logitech thought by partnering with Google, they would grow big and become a world leader.

Nothing could have been further from the truth. Logitech, failed to do its due diligence or was misled to believe, that Google TV was a real product. Not a project to garner headlines for Google, in its war with Apple.

Days before the launch of Google TV at the Consumer Electronics Show in Las Vegas, Google informed its TV partners Logitech, Sony, Toshiba, LG and Sharp, that it will not be there. The partners were humiliated.

Logitech had to stop production of Google TV and had to eat the costs. Since the misadventure, the market capitalization of Logitech, the leading mouse maker has dropped from $6 billion to $1 billion and change. Essentially, the mouse maker has become a mouse in the world of business.

When Logitech reported earnings on Jan 26, 2012, its dropped 12.47%. The Google misadventure was still costing it a later. See image below.

Logitech, risked its core business with a side project Google was experimenting with and has become the butt of jokes in the television industry.

My advice is don’t let that happen to your company.

Logitech was all too eager, when Google came calling about Google TV. Logitech thought by partnering with Google, they would grow big and become a world leader.

Nothing could have been further from the truth. Logitech, failed to do its due diligence or was misled to believe, that Google TV was a real product. Not a project to garner headlines for Google, in its war with Apple.

Days before the launch of Google TV at the Consumer Electronics Show in Las Vegas, Google informed its TV partners Logitech, Sony, Toshiba, LG and Sharp, that it will not be there. The partners were humiliated.

Logitech had to stop production of Google TV and had to eat the costs. Since the misadventure, the market capitalization of Logitech, the leading mouse maker has dropped from $6 billion to $1 billion and change. Essentially, the mouse maker has become a mouse in the world of business.

When Logitech reported earnings on Jan 26, 2012, its dropped 12.47%. The Google misadventure was still costing it a year later. See image below.

Logitech, risked its core business with a side project Google was experimenting with and has become the butt of jokes in the television industry.

Don’t let this happen to your company.

Data includes desk-based PCs, mobile PCs, including mini-notebooks but not media tablets such as the iPad.

You have probably been hearing that the PC era is over. Now there is evidence that it really is over. The latest Gartner and IDC “PC” shipments reports show that PC growth declined by 5.9% in Q4 2011 and Apple growth increased 20.7% over the same period.

Total 4Q11: 15,854,964
Total 4Q10: 17,342,605
4Q11-4Q10 Growth: -8.5

The result is a decline of 8.5%, which is far worst that the originally reported decline of 5.9% for PC growth. That 2.6% delta is not insignificant, it’s over 40% worse than what was reported.

Apple’s earnings were so huge here is a little perspective on how big it was.

Who would have thought 10 years ago that Apple would make more money than Microsoft. This quarter Apple’s revenues came in at $46.33 billion, more than Microsoft’s $20.9 billion. Apple also earned a profit of $13.06, again, more that double Microsoft’s $6.62 billion.

Apple’s profits for the last quarter exceed Google’s entire revenue for the last quarter. Apple’s profit for the entire year now beats Google’s revenue for the entire year.

The Apple iTunes Store alone generated 50 percent more revenue than all of Yahoo did last quarter. The amount Apple paid to third-party developers via the App Store last quarter ($700 million) is more than double Yahoo’s overall profits.

Apple’s profit last quarter was $3 billion more than all of Hollywood’s gross box office receipts for all of last year.

Apple’s stock popped nearly 10 percent from where it closed to $460 a share, after hours. That pushes Apple well beyond the $400 billion market cap — and once again past Exxon as the most valuable public company in the world.

Apple, just released its Q1 2012 earning, and it was a spectacular blowout.

Apple now has $97 billion in cash, short term, and long term securities, which is more than the US government has, not counting debt.

Here is the breakdown of Apple’s Q1 numbers:

Revenue: $46.33 billion versus expectation of $38.76 billion

EPS: $13.87 versus expectation of $10.07

iPhones: 37 million versus expectation 30 million

iPads: 15.4 million versus expectation 13 million

Macs: 5.2 million versus expectation 5 million

iPod: 15.4 million versus expectation 13.9 million

Gross Margin: 44.7% versus expectation 41.8%

March quarter revenue: $32.5 billion versus expectation $31.9 billion

March quarter EPS: $8.50 versus expectation $8.00