Apple’s Latest Products
Last Tuesday, Apple Inc. (NASDAQ: AAPL) held an event in which in unveiled its latest product refreshes as well as a couple of brand new product categories.
The company debuted new versions of the iPhone, known as the iPhone 6 and iPhone 6 Plus. Both have bigger screens than previous versions of the phone as well as several other upgraded features including a faster processor, better camera, and improved resolution.
Apple also introduced a payment system known as Apple Pay, which integrates with the new phones, and will allow iPhone users to pay for in store purchases using one of many supported credit card providers. You can upload your current credit cards to the app and make in store payments quickly and easily. To pay, just hold your phone up to the contactless reader with your finger on the Touch ID. The phone will vibrate and beep to let you know the payment was transmitted. When you add your cards to passbook, your card number isn’t displayed. Rather Apple assigns a number to that card that is encrypted and securely stored, never stored on Apple servers. Your actual credit or debit card numbers are never shared by Apple with merchants.
The highlight of the event was the announcement of Apple’s first wearable device, the Apple Watch. The Apple Watch and Apple Pay are the company’s first new product categories since introducing the iPad in 2010. Apple Watch is expected to hit the market in 2015.
For those of you who don’t plan on upgrading your devices, the company announced an OS update to iOS 8, which was released on Wednesday, so you can get the latest software for your iPad and iPhones which will include some new health and fitness related apps. The watch will put all of your notifications, messages, simple apps, and Siri on your wrist. The Apple Watch will also feature Apple Pay.
Apple reported a record 4 million first-day-pre-orders, more than twice the number of preorders for the iPhone 5. Analysts expect Apple to sell 37.4 million phones in the current quarter and 60 million in the fourth quarter.
Alibaba’s IPO
If you’ve turned on the national news over the past two weeks, you’ve likely heard the name Alibaba. The company went public on Friday on the New York Stock Exchange. Shares opened at $94.50, well above the IPO Price of $68. Alibaba Group Holding Ltd. (NYSE: BABA) set a new record for the world’s largest ever IPO. So with all this hype around the company, who is Alibaba, and what do they do?
In short, they are China’s biggest online commerce company. While the company has their hands in a little bit of everything, the company operates mainly through three websites:
Taobao, China’s biggest shopping site; Tmall, an online seller of branded goods which focuses on the country’s middle class, and lastly, the company’s namesake site, Alibaba.com which hosts a network of exporters who it connects with millions of merchants and businesses. The company also has stake in Alipay.com, the Chinese equivalent of Paypal; Sina Weibo, which is China’s Twitter; and Youku Tudou, China’s equivalent of YouTube.
To clarify, the company isn’t like Amazon who has millions of square feet in warehouse space. It is simply a middle man connecting buyers and sellers. The company makes money through selling ads and search placement. Last year, the company hosted $248 billion of online shopping transactions, more than eBay and Amazon combined.
Unlike many IPOs of late, Alibaba is actually profitable. In fact, the company has nearly tripled its profits to $2 billion in the most recent quarter. Alibaba is expected to grow earnings more than 50% this year. However, Chinese listings on U.S. exchanges have underperformed the overall U.S. market by an average of about 9% annually in the three years following their IPO. There is also a growing concerns about counterfeit goods on Alibaba. Another concern is the company’s aggressive acquisition streak in a wide range of industries, including a soccer team, a film division, brick and mortar chain store, and an appliance manufacturer. This is in addition to the financial transparency concerns in that exist any time you invest in a Chinese company.
Alibaba is Chinese, but incorporated in the Cayman Islands. China has prohibitions on foreign ownership, which means U.S. investors won’t actually own the company’s Chinese assets. Instead, investors will own a Cayman Islands company called Alibaba Group Holding Limited. The structure is risky and may even be illegal under Chinese law, The New York Times reports. The company originally considered listing its stock in Hong Kong but it didn’t comply with Hong Kong rules intended to treat all shareholders equally. Like U.S. tech giants Facebook, Google, and LinkedIn, Alibaba has a partnership structure that gives Ma and a few insiders outsize power to nominate a majority of company directors.
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