I'm skeptical about the prospects of the Apple Watch. While Apple does have a reputation for breaking into new markets, other smart watches have not done well. It would be reckless to simply assume that Apple's Watch will be successful, therefore, I would focus on the future of the iPhone and iPad when analyzing Apple.
The increases in GoPro's YouTube channel views, while impressive sounding, do not have a corresponding increase in revenue. It may help with marketing, but only to a point. I don't expect their YouTube channel to lead to any real improvements in revenue or profits.
I remain concerned about the amount of goodwill on Facebooks balance sheet. The result of many expensive acquisitions including Whatsapp, it now accounts for 42.8% of assets. Investors should carefully consider the risk that Facebook needs to write down some of its goodwill in the next few years.
Total average assets at Citigroup have been in decline for the last several years. The most recent change indicates that the decine is over, and that management has therefore cleared the majority of the legacy toxic assets from the balance sheet.
While the stronger dollar will certainly put pressure on US exports and impact a wide range of companies, it is important not to read too much into it. Other businesses have managed to continue growing in spite of the currency movements. HP's message about its concerns for FY2015 due to the currency movements is concerning because it appears that management is using the exchange rate as cover for the fact that the business is not improving.
It will be important to watch the competition when considering GPRO. Within the technology sector, hardware has a history of attracting the attention of competitors, both nationally and overseas. GPRO will need to find ways to maintain market share and differentiate their product from competitors as they continue to grow.
Facebook has been aggressive with acquisitions such as WhatsApp and Oculus in the last year. While investors continue to debate the wisdom of the acquisitions for Facebook's long-term prospects, but the impact on the balance sheet cannot be overlooked. Goodwill increased by 2,043% since December last year and now constitutes about 45% of total assets compared to 4.7% last year. Should Facebook need to write down the goodwill than there would be a significant impact on the stock price.
It will be important to watch how much of its cash Apple eventually returns to shareholders. The cash provides the company a means to survive in the event that it misses the next major revolution in technology. Investors need to consider that the history of technology companies strongly suggests that Apple will not be the number one technology company forever.
It is notable that Windows 10 represents a change in strategy for Microsoft and not simply a new edition of Windows. Windows 10 will be offered for free to Windows 7 and 8 users for a year after the release. The idea is that users will be much more likely to upgrade if there is not cost to do so and Microsoft hopes to earn money through the services offered to users on its platform. The main risk is that Microsoft's services are still considered to be inferior to Google's, or even Apple's, services, so bringing users back to the Windows platform will be difficult.
Investors with a short time horizon should be very concerned about the weakness in the traditionally higher growth BRIC nations. Regardless of IBM's success restructuring its business, the general economic weakness in the BRIC countries will be a drag on revenue growth. It is difficult to anticipate the length and magnitude of the economic slowdown in the BRIC nations, but, given that all are in need of structural reforms, it could be a number of years before their economies are again growing rapidly.
It may help a little, but I think that Netflix missed most of the publicity associated with the film. The news cycle has moved onto the details around North Korea hacking Sony and no longer on the free speech issues that pushed Sony to release the film. However, it does show that Netflix has the stomach to offer controversial content and that could be a benefit in the future.
Earnings were also weak this quarter at JPM and BofA. The causes are primarily due to macro-economic changes that have impacted all of the large banks and are not unique to Citi.
North American mortgages make up about 60% of the assets at Citi Holdings. This is down slightly from Q4 last year when N.A. mortgages were 62% of assets at Citi Holdings.
Citi's total assets has remained fairly constant for the last five years around $1.8 trillion. This can be taken to indicated a significant improvement in the health of Citi's balance sheet.
It is worth noting that public shareholders have relatively little control over BABA. The reason BABA chose to list in the US was to keep control of the company in the hands of its founders. Shareholders should keep in mind that their interests may not always be the same as the management's interests and there is nothing they can do about that.