Sell short shares of RIM (RIMM) or Nokia (NOK).

This is cruel, as over the years I’ve been a happy owner of Blackberries and many Nokia phones.

But the writing is on the wall and these two companies are already well into their respective death spirals.

Here’s Nokia’share price for the past 4 years:

85% drop in 4 years? That’s quite a ride down. You could have financed all your iphones shorting this stock pretty much anytime of the year.

RIM’s isn’t a whole lot better. The only real difference between the two is that RIM’s hasn’t been as much of a straight line down:

Technology can be so brutal to those supplying it. Go back just 5 years ago: RIM and NOK are both world-class companies, fast-growing, with incredible products and fanatical, loyal customers. They did nothing wrong, but are paying the worst price for just having been a step too slow in catching the next technological wave that came along.

But back to today’s reality: these stocks are going to continue downward.

(by the way, don’t trade stocks to try to make money to pay for an iphone. seriously.)

There….my Henry Blodget moment.

My analysis is very simple:

Apple will end it’s fiscal year in September 2011, with figures roughly like this:

• Revenues: $100 billion
• EBIT: $40 billion
• iPhones sold: 100 million
• iPads sold: 50 million
• Total cash on balance sheet: $100 billion
• Market cap less cash @$400/share: $275 billion

My prediction, which I don’t find particularly bold, is that Apple continues to grow all of these metrics by 100% per year, for the next two years. Let’s break that down implication by implication:

1- This would mean for iPhones: 200 million sold in 2012, and 400 million sold in 2013.

I don’t find that particularly hard to believe – by then the world market for phones will be 2 billion units/year, which would mean Apple would have just 20% market share. And the logistic challenge to build and ship 400 million phones is very feasible – it’s how many phones Nokia was already shipping before starting their death spiral.

2- For iPads we’re talking about: 100 million sold in 2012, and 200 million sold in 2013.

Unrealistic? I don’t think so. It’s a new category and all indications are that it will dwarf the size of the laptop market. The current size of the computer market worldwide is about 150 million desktops and 200 million laptops sold per year. Is it crazy to think there will be just as many “tablets” sold as laptops in 2 years? When I see families with 3 year olds having their own iPads, something unthinkable with laptops, it certainly seems realistic. And in this market, Apple has the advantage of a near monopoly: for the next few years at least, “tablet” = “iPad”.

3- Extras: Besides the iphone/ipad product lines, there are many extras that could support this growth:

• Apple TV – another large global consumer electronics category waiting to be thoroughly transformed.
• App stores – continued growth of the iOS and Mac app stores will become very meaningful revenue streams with the compounded effect of both more devices and more apps spirals upwards
• China – Apple seems to have cracked the one gigantic market all other American tech firms fail to penetrate. By some unknown magic, Apple there sells products, achieves brand love, and gets its patent protection.

Just executing along these lines will create a company in only two years with financials that are surreal:

• Revenues: $400 billion
• EBIT: $160 billion
• 2011 Cash + Cash generated through 2013: $340 billion

Who knows how Apple will choose to use its cash. In any event, if at September 2013 the shares are trading at $2000 (assuming no splits), then the market cap would be….$1.8 Trillion.

Many factors could cause Apple to miss, but what’s astonishing is that this isn’t a forecast for 5 or 10 years, but just 24 months. These numbers seem so surreal that it’s likely one of the main reasons Apple shares aren’t trading higher already today.

There is a very good chance that the world’s largest company by market cap will grow that market cap by 5x in just 24 months. Unprecedented.

Payments startup Square isn’t a year old but already has a valuation of $1.6 billion in its latest funding round.

Is this sensible?

Square is processing $4 million/day of payments and growing fast- it’s doubling every quarter. If it continues at this rate, by end end of the year in just six months it will be processing $16 million/day.

When Paypal was acquired by eBay in 2002 for $1.5 billion, it was also fast growing and processing…$16 million/day.

Paypal of course continued its massive growth and almost 10 years later is considered responsible for the bulk of eBay’s $37 billion valuation.

Square’s valuation seen in this light doesn’t seem so outrageous.

The rumors appear to be true: Ryanair will be setting up a hub in Barcelona’s main airport (BCN).

I’m impressed by the number, and appeal (to me, at least), of launch destinations.

Barcelona’s main airport is just a 25 minute cab or bus ride away from the city centre. Ryanair has its faults, but with this move one of its biggest ones – being located in faraway airports – has just disappeared.

Here are the new destinations, and their start date:

From Barcelona to:
Brussels (Charleroi) 02 Sep 10
Cagliari 02 Sep 10
Dublin 01 Sep 10
Düsseldorf (Weeze) 03 Sep 10
Edinburgh 06 Sep 10
Gran Canaria 03 Sep 10
Ibiza 01 Sep 10
Lanzarote 02 Sep 10
Leeds Bradford 03 Nov 10
Malaga 02 Sep 10
Milan (Bergamo) 01 Sep 10
Oslo (Rygge) 02 Sep 10
Palma Mallorca 01 Sep 10
Paris Beauvais 01 Sep 10
Porto 02 Nov 10
Rome (Ciampino) 02 Sep 10
Santander 02 Sep 10
Santiago Comp. 01 Sep 10
Seville 02 Sep 10
Tenerife South 05 Sep 10
Valencia 01 Sep 10
Venice-Treviso 02 Sep 10

My friend and former colleague Tom Dibaja is soft-launching his new project, an arab dating website called LoveHabibi.com. I’m no expert in the arab or muslim internet communities, but I do know they are both very large in numbers, very young in demographic, and with members all over the world. Why not a dating and friendship site for these communities? Sounds like a promising venture.

I was raised in the US, and it’s interesting to look at those cities through the lens of foreclosure markets. You can see that time has not treated the real estate values of the different cities the same way, as some aren’t doing that badly and others are a catastrophe. The interesting thing is that I don’t know anyone could have predicted how these cities’ fortunes would evolve. Makes you wonder about where you currently live!
check it out:
depressed foreclosure real estate in detroit, mi
more depressed foreclosure real estate in st. louis, mo
but perky foreclosure homes in bethesda, md

Robert Shiller in the New York Times today makes a case for Why Home Prices May Keep Falling.

His argument centers on the idea that people decide to buy/sell/rent based on life factors which are years in the making and not very easily reversed. These can include major changes in life-stage (getting married, retirement), family considerations (job of spouse, continuity of kids’ schooling), or psychology (caution or fear from long past experiences).

The common message of Japan and the US in the 90’s are cited:

After the bursting of the Japanese housing bubble in 1991, land prices in Japan’s major cities fell every single year for 15 consecutive years.

Even if there is a quick end to the recession, the housing market’s poor performance may linger. After the last home price boom, which ended about the time of the 1990-91 recession, home prices did not start moving upward, even incrementally, until 1997.

It’s a simple message, but important to bear in mind. How would your decisions change in the next year if you could be reasonably certain that housing prices would not rise *at all* for the next 10 years?

You think the California budget cuts are harsh?

From Ambrose Evans-Pritchard yesterday:

Latvia has become the first EU country to face a sovereign debt crisis after failing to sell a single bill at a treasury auction worth $100m (£61m), prompting fears of a fresh storm in Eastern Europe as capital flight tests currency pegs.

If the US is finding it harder and more expensive to finance it’s debt (just have a look at treasury yield curves this year), then what hope does a tiny, massively overleveraged country like Latvia have?

The finance ministry expects GDP to contract 18pc this year. House prices have fallen 50pc , the world’s most spectacular crash. A third of the country’s teachers are being fired and public salaries will be slashed by up to 35pc to meet bail-out terms imposed by the IMF and the European Commission. The policy risks a deflation spiral that defeats its own purpose.

Wow…stunning what is happening to these small countries. Will it stop with the Latvia’s, Iceland’s, and Ireland’s, or are larger countries also at risk?