aylien_text_api 0.0.1

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Files changed (89) hide show
  1. checksums.yaml +7 -0
  2. data/.gitignore +3 -0
  3. data/Gemfile +3 -0
  4. data/Gemfile.lock +28 -0
  5. data/LICENSE +13 -0
  6. data/README.md +67 -0
  7. data/Rakefile +8 -0
  8. data/aylien_text_api.gemspec +24 -0
  9. data/config/app_config.yml.example +7 -0
  10. data/lib/aylien_text_api.rb +23 -0
  11. data/lib/aylien_text_api/client.rb +246 -0
  12. data/lib/aylien_text_api/configuration.rb +57 -0
  13. data/lib/aylien_text_api/connection.rb +71 -0
  14. data/lib/aylien_text_api/error.rb +110 -0
  15. data/lib/aylien_text_api/version.rb +17 -0
  16. data/spec/fixtures/aylien_text_api/client/classify_with_invalid_client.yml +36 -0
  17. data/spec/fixtures/aylien_text_api/client/classify_with_invalid_params.yml +40 -0
  18. data/spec/fixtures/aylien_text_api/client/classify_with_text.yml +48 -0
  19. data/spec/fixtures/aylien_text_api/client/classify_with_unauthenticated_client.yml +40 -0
  20. data/spec/fixtures/aylien_text_api/client/classify_with_valid_url.yml +98 -0
  21. data/spec/fixtures/aylien_text_api/client/classify_with_value_as_text.yml +48 -0
  22. data/spec/fixtures/aylien_text_api/client/classify_with_value_as_valid_url.yml +98 -0
  23. data/spec/fixtures/aylien_text_api/client/concepts_with_invalid_client.yml +36 -0
  24. data/spec/fixtures/aylien_text_api/client/concepts_with_invalid_params.yml +40 -0
  25. data/spec/fixtures/aylien_text_api/client/concepts_with_text.yml +44 -0
  26. data/spec/fixtures/aylien_text_api/client/concepts_with_unauthenticated_client.yml +40 -0
  27. data/spec/fixtures/aylien_text_api/client/concepts_with_valid_url.yml +63 -0
  28. data/spec/fixtures/aylien_text_api/client/concepts_with_value_as_text.yml +44 -0
  29. data/spec/fixtures/aylien_text_api/client/concepts_with_value_as_valid_url.yml +63 -0
  30. data/spec/fixtures/aylien_text_api/client/entities_with_invalid_client.yml +36 -0
  31. data/spec/fixtures/aylien_text_api/client/entities_with_invalid_params.yml +40 -0
  32. data/spec/fixtures/aylien_text_api/client/entities_with_text.yml +43 -0
  33. data/spec/fixtures/aylien_text_api/client/entities_with_unauthenticated_client.yml +40 -0
  34. data/spec/fixtures/aylien_text_api/client/entities_with_valid_url.yml +302 -0
  35. data/spec/fixtures/aylien_text_api/client/entities_with_value_as_text.yml +43 -0
  36. data/spec/fixtures/aylien_text_api/client/entities_with_value_as_valid_url.yml +302 -0
  37. data/spec/fixtures/aylien_text_api/client/extract_with_invalid_client.yml +36 -0
  38. data/spec/fixtures/aylien_text_api/client/extract_with_invalid_params.yml +40 -0
  39. data/spec/fixtures/aylien_text_api/client/extract_with_unauthenticated_client.yml +40 -0
  40. data/spec/fixtures/aylien_text_api/client/extract_with_valid_url.yml +185 -0
  41. data/spec/fixtures/aylien_text_api/client/extract_with_value_as_text.yml +40 -0
  42. data/spec/fixtures/aylien_text_api/client/extract_with_value_as_valid_url.yml +185 -0
  43. data/spec/fixtures/aylien_text_api/client/hashtags_with_invalid_client.yml +36 -0
  44. data/spec/fixtures/aylien_text_api/client/hashtags_with_invalid_params.yml +40 -0
  45. data/spec/fixtures/aylien_text_api/client/hashtags_with_text.yml +48 -0
  46. data/spec/fixtures/aylien_text_api/client/hashtags_with_unauthenticated_client.yml +40 -0
  47. data/spec/fixtures/aylien_text_api/client/hashtags_with_valid_url.yml +58 -0
  48. data/spec/fixtures/aylien_text_api/client/hashtags_with_value_as_text.yml +48 -0
  49. data/spec/fixtures/aylien_text_api/client/hashtags_with_value_as_valid_url.yml +58 -0
  50. data/spec/fixtures/aylien_text_api/client/language_with_invalid_client.yml +36 -0
  51. data/spec/fixtures/aylien_text_api/client/language_with_invalid_params.yml +40 -0
  52. data/spec/fixtures/aylien_text_api/client/language_with_unauthenticated_client.yml +40 -0
  53. data/spec/fixtures/aylien_text_api/client/language_with_valid_text.yml +41 -0
  54. data/spec/fixtures/aylien_text_api/client/language_with_valid_url.yml +57 -0
  55. data/spec/fixtures/aylien_text_api/client/language_with_value_as_text.yml +41 -0
  56. data/spec/fixtures/aylien_text_api/client/language_with_value_as_valid_url.yml +57 -0
  57. data/spec/fixtures/aylien_text_api/client/related_with_invalid_client.yml +36 -0
  58. data/spec/fixtures/aylien_text_api/client/related_with_invalid_params.yml +40 -0
  59. data/spec/fixtures/aylien_text_api/client/related_with_phrase.yml +60 -0
  60. data/spec/fixtures/aylien_text_api/client/related_with_unauthenticated_client.yml +40 -0
  61. data/spec/fixtures/aylien_text_api/client/related_with_value_as_phrase.yml +60 -0
  62. data/spec/fixtures/aylien_text_api/client/related_with_value_as_valid_url.yml +40 -0
  63. data/spec/fixtures/aylien_text_api/client/sentiment_with_invalid_client.yml +36 -0
  64. data/spec/fixtures/aylien_text_api/client/sentiment_with_invalid_params.yml +40 -0
  65. data/spec/fixtures/aylien_text_api/client/sentiment_with_text.yml +53 -0
  66. data/spec/fixtures/aylien_text_api/client/sentiment_with_unauthenticated_client.yml +40 -0
  67. data/spec/fixtures/aylien_text_api/client/sentiment_with_valid_url.yml +57 -0
  68. data/spec/fixtures/aylien_text_api/client/sentiment_with_value_as_text.yml +53 -0
  69. data/spec/fixtures/aylien_text_api/client/sentiment_with_value_as_valid_url.yml +57 -0
  70. data/spec/fixtures/aylien_text_api/client/summarize_with_invalid_client.yml +36 -0
  71. data/spec/fixtures/aylien_text_api/client/summarize_with_invalid_params.yml +41 -0
  72. data/spec/fixtures/aylien_text_api/client/summarize_with_title_and_text.yml +78 -0
  73. data/spec/fixtures/aylien_text_api/client/summarize_with_unauthenticated_client.yml +40 -0
  74. data/spec/fixtures/aylien_text_api/client/summarize_with_valid_url.yml +65 -0
  75. data/spec/fixtures/aylien_text_api/client/summarize_with_value_as_text_and_title.yml +78 -0
  76. data/spec/fixtures/aylien_text_api/client/summarize_with_value_as_text_and_without_title.yml +41 -0
  77. data/spec/fixtures/aylien_text_api/client/summarize_with_value_as_valid_url.yml +65 -0
  78. data/spec/lib/aylien_text_api/classify.rb +86 -0
  79. data/spec/lib/aylien_text_api/client_spec.rb +23 -0
  80. data/spec/lib/aylien_text_api/concepts.rb +81 -0
  81. data/spec/lib/aylien_text_api/entities.rb +81 -0
  82. data/spec/lib/aylien_text_api/extract.rb +81 -0
  83. data/spec/lib/aylien_text_api/hashtags.rb +87 -0
  84. data/spec/lib/aylien_text_api/language.rb +79 -0
  85. data/spec/lib/aylien_text_api/related.rb +80 -0
  86. data/spec/lib/aylien_text_api/sentiment.rb +91 -0
  87. data/spec/lib/aylien_text_api/summarize.rb +95 -0
  88. data/spec/spec_helper.rb +16 -0
  89. metadata +193 -0
@@ -0,0 +1,43 @@
1
+ ---
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+ http_interactions:
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+ - request:
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+ method: post
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+ uri: https://api.aylien.com/api/v1/entities
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+ body:
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+ encoding: US-ASCII
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+ string: text=Barack+Hussein+Obama+II+is+the+44th+and+current%0A++++++President+of+the+United+States%2C+and+the+first%0A++++++African+American+to+hold+the+office.
9
+ headers:
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+ Accept:
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+ - ! '*/*'
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+ User-Agent:
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+ - Aylien Text API Ruby Gem 0.0.1
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+ Content-Type:
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+ - application/x-www-form-urlencoded
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+ App-Id:
17
+ - <PASSWORD>
18
+ App-Key:
19
+ - <PASSWORD>
20
+ response:
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+ status:
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+ code: 200
23
+ message: OK
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+ headers:
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+ Server:
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+ - openresty/1.5.12.1
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+ Date:
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+ - Tue, 02 Dec 2014 18:16:37 GMT
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+ Content-Type:
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+ - application/json;charset=UTF-8
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+ Content-Length:
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+ - '381'
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+ Connection:
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+ - keep-alive
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+ body:
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+ encoding: US-ASCII
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+ string: ! '{"text":"Barack Hussein Obama II is the 44th and current\n President
38
+ of the United States, and the first\n African American to hold the office.","entities":{"location":["United
39
+ States"],"keyword":["current","President","44th","United","Obama","African","Hussein","American","Barack","office"],"person":["Barack","Hussein
40
+ Obama II"],"product":["Barack Hussein Obama II"]}}'
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+ http_version:
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+ recorded_at: Tue, 02 Dec 2014 18:15:34 GMT
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+ recorded_with: VCR 2.9.3
@@ -0,0 +1,302 @@
1
+ ---
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+ http_interactions:
3
+ - request:
4
+ method: post
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+ uri: https://api.aylien.com/api/v1/entities
6
+ body:
7
+ encoding: US-ASCII
8
+ string: url=http%3A%2F%2Fwww.businessinsider.com%2Fcarl-icahn-open-letter-to-apple-2014-1
9
+ headers:
10
+ Accept:
11
+ - ! '*/*'
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+ User-Agent:
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+ - Aylien Text API Ruby Gem 0.0.1
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+ Content-Type:
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+ - application/x-www-form-urlencoded
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+ App-Id:
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+ - <PASSWORD>
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+ App-Key:
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+ - <PASSWORD>
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+ response:
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+ status:
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+ code: 200
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+ message: OK
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+ headers:
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+ Server:
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+ - openresty/1.5.12.1
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+ Date:
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+ - Tue, 02 Dec 2014 18:16:35 GMT
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+ Content-Type:
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+ - application/json;charset=UTF-8
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+ Content-Length:
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+ - '20361'
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+ Connection:
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+ - keep-alive
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+ body:
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+ encoding: US-ASCII
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+ string: ! '{"text":"Carl Icahn Open Letter To Apple\nHe announced on Twitter
38
+ that he bought another $500 million worth of Apple stock, bringing his total
39
+ to $3.6 billion.\n\nHe also wrote an open letter to Apple shareholders explaining
40
+ why he thinks Apple needs to ramp up its share buybacks. He believes a share
41
+ buyback would easily goose the company''s share price.\n\nOver the course
42
+ of my long career as an investor and as Chairman of Icahn Enterprises, our
43
+ best performing investments result from opportunities that we like to call
44
+ \"no brainers.\" Recent examples of such \u201cno brainers\u201d have been
45
+ our investments in Netflix, Hain Celestial, Chesapeake, Forest Labs and Herbalife,
46
+ just to name a few. In our opinion, a great example of a \u201cno brainer\u201d
47
+ in today\u2019s market is Apple. The S&P 500\u2019s price to earnings multiple
48
+ is 71% higher than Apple\u2019s, and if Apple were simply valued at the same
49
+ multiple, its share price would be $840, which is 52% higher than its current
50
+ price.1 This is a dramatic valuation disconnect that simply makes no sense
51
+ to us, and it seems that the company agrees with us on this point. Tim Cook
52
+ himself has expressed on more than one occasion that Apple is undervalued,
53
+ and as the company states, it already has in place \u201cthe largest share
54
+ repurchase authorization in history.\u201d We believe, however, that this
55
+ share repurchase authorization can and should be even larger, and effectuating
56
+ that for the benefit of all of the company\u2019s shareholders is the sole
57
+ intention of our proposal. The company has recommended voting against our
58
+ proposal for various reasons. It seems to us that the basis of its argument
59
+ against our proposal is that the company believes, because of the \u201cdynamic
60
+ competitive landscape\u201d and because its \u201crapid pace of innovation
61
+ require[s] unprecedented investment, flexibility and access to resources\u201d,
62
+ it does not currently have enough excess liquidity to increase the size of
63
+ its repurchase program. Assuming this indeed is the basis for the company\u2019s
64
+ argument, we find its position overly conservative (almost to the point of
65
+ being irrational), when we consider that the company had $130 billion of net
66
+ cash as of September 28, 2013 and that consensus earnings are expected to
67
+ be almost $40 billion next year. Given this massive net cash position and
68
+ robust earnings generation, Apple is perhaps the most overcapitalized company
69
+ in corporate history, from our perspective. Regardless of what liquidity it
70
+ may require with respect to \u201cunprecedented investment, flexibility and
71
+ access to resources\u201d for innovation moving forward, we believe the unprecedented
72
+ degree to which the company is currently overcapitalized would overcompensate
73
+ for any such investments (including possible investments in strategic M&A,
74
+ to which the company does not refer). Said another way, we believe that the
75
+ combination of the company\u2019s unprecedentedly enormous net cash balance,
76
+ robust annual earnings, and tremendous borrowing capacity provide more than
77
+ enough excess liquidity to afford both the use of cash for any necessary ongoing
78
+ business-related investments in addition to the cash used for the increased
79
+ share repurchases proposed.\n\nIt is our belief that it is the responsibility
80
+ of the Board, on behalf of the company\u2019s shareholders, to take advantage
81
+ of such a large and unmistakable opportunity. Indeed, we believe that by choosing
82
+ not to increase the size of the repurchase program, the directors are actually
83
+ performing a great disservice to the owners, especially smaller shareholders
84
+ who may not be in a position to buy more stock themselves. Meanwhile, we are
85
+ in a position to continue buying shares in the market at today''s price, so
86
+ perhaps we should thank the Board for not being more aggressive, and thus
87
+ allowing us to accumulate an even larger investment position at a price that
88
+ reflects the aforementioned valuation disconnect. In fact, over the past two
89
+ weeks we purchased $1 billion more in Apple shares, $500 million of which
90
+ we purchased today, bringing our total ownership position in Apple to a current
91
+ value of approximately $3.6 billion.\n\nGiven the degree to which Apple appears
92
+ undervalued to us, we almost feel that it\u2019s a waste of time to debate
93
+ the point. As we believe it to be the preeminent and most innovative consumer
94
+ products company in the world, with the greatest brand, hardware, software,
95
+ and services in the world, Apple has had tremendous growth to date, and we
96
+ fail to see why this growth would not continue moving forward. The industry
97
+ (smartphones and tablets) is expected to grow volume at a 15% compounded annual
98
+ growth rate from 2013 through 2017 according to IDC. We believe Apple should
99
+ continue to benefit from this secular growth, as last year, 85% of Apple\u2019s
100
+ revenues came from smartphones, tablets, and related software, services, and
101
+ accessories. The naysayers question whether Apple will be able to participate
102
+ in this growth without sacrificing pricing and gross margins, especially with
103
+ competition from Google, Samsung, Microsoft, Amazon and Chinese manufacturers.
104
+ Our response to them is that the answer is already evident to us from the
105
+ continuing loyalty of Apple\u2019s growing customer base. The highly successful
106
+ evolutionary (not revolutionary) introductions of the iPhone 5s and 5c and
107
+ Ipad Air and Mini, prove to us that Apple could, for the most part, maintain
108
+ pricing and gross margin as we believe consumers are willing to pay a reasonable
109
+ premium for the world\u2019s best smartphones and tablets. The rumored future
110
+ introduction of product line extensions with larger screens for both the iPhone
111
+ and iPad would further support this view.2 In fact, a recent study from NDC
112
+ shows that the iPhone accounted for 42% of smartphone users in the United
113
+ States at the end of 2013, up a staggering 20% from the prior year. Despite
114
+ its great scale and narrow focus, Apple has an operating margin of just 28.5%.
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+ We believe its customers\u2019 willingness to pay a premium price for the
116
+ world\u2019s greatest products should enable Apple to participate in the expected
117
+ volume growth of these categories while at the same time largely maintaining
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+ its average selling prices and gross margins. And, as software and services
119
+ improve and become even more important to consumers in the future, we expect
120
+ customer loyalty to strengthen further.\n\nEven if the story ended with Apple\u2019s
121
+ existing product and software lines, we would still choose to make Apple our
122
+ largest investment. But there is more to the story! Tim Cook keeps saying
123
+ that he expects to introduce \u201cnew products in new categories\u201d and
124
+ yet very few people seem to be listening. We\u2019re not aware of a single
125
+ Wall Street analyst who includes \u201cnew products in new categories\u201d
126
+ or new services in any of their financial projections, even though Apple clearly
127
+ has an impressive track record of such new category product introductions,
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+ even if it does so rarely. Apple released the iPhone in 2007 and the iPad
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+ five years later in 2012, both so extraordinarily successful that today they
130
+ represent the majority of the company\u2019s revenue. Tim Cook\u2019s comments,
131
+ along with advancements in enabling technologies, lead us to believe that
132
+ we may see in the not too distant future what new groundbreaking products
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+ they\u2019ve been working on developing in Cupertino these last several years.3\n\nTo
134
+ get a sense of the scale of the opportunity that stems from new products in
135
+ new categories, let\u2019s take a moment to consider the possibility of an
136
+ Apple television. The major electronics companies are now focused on ultra
137
+ high definition TVs as their next big opportunity. Ultra high definition is
138
+ expected to offer a level of image clarity that is superior to today\u2019s
139
+ high definition televisions for screen sizes 55 inches and above. To date,
140
+ the barrier to mass market adoption of ultra high definition has been the
141
+ price gap between it and regular high definition, but that price gap is closing
142
+ and will soon be de minimis. The closing of this price gap is supported by
143
+ statements made by the Co-CEO of Samsung Electronics, who expects the price
144
+ gap to fall to 10% by the end of this year. While cable companies will likely
145
+ be slow to upgrade their linear TV infrastructure due to cost, video content
146
+ is expected to be accessible through the internet via services like Netflix
147
+ and others. We believe ultra high definition represents a major catalyst for
148
+ the next TV replacement cycle and a promising moment for Apple to introduce
149
+ its first new product in this category. Reed Hastings, CEO of Netflix, has
150
+ referenced ultra high definition as a major catalyst for Netflix going forward.
151
+ While this is true for Netflix, we believe it is also true for Apple, not
152
+ just for its hardware but also for selling ultra high definition movies and
153
+ shows on iTunes through the internet. With 238 million TVs sold globally in
154
+ 2012, it would not surprise us if Apple could sell 25 million new Apple ultra
155
+ high definition televisions at $1,600 per unit, especially when considering
156
+ both its track record of introducing best in class products and its market
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+ share in smartphones and tablets.4 At a gross margin of 37.7%, which would
158
+ be consistent with that of the overall company, such a debut would add $40
159
+ billion of revenues and $15 billion to operating income annually.5\n\nThe
160
+ possibility of a television represents only one opportunity for the company
161
+ that stems from new products in new categories. While we won\u2019t go through
162
+ all of them here, we see several major opportunities in hardware alone. With
163
+ advancements in miniaturization and continued improvements in Siri, it seems
164
+ obvious to us that Apple has a compelling opportunity in the exciting area
165
+ of wearable devices, supported by rumors that Apple is developing a smartwatch
166
+ (as Tim Cook himself said the wrist is \u201can area of great interest for
167
+ Apple\u201d). While many consider Apple a hardware company, to pigeonhole
168
+ it as such is no longer appropriate in our opinion. Apple has built an ecosystem
169
+ of hardware, software, and services that we believe collectively represents
170
+ the most successful consumer product platform in the entire history of consumer-facing
171
+ technologies. And as Apple\u2019s customer base continues to enjoy the use
172
+ of this ecosystem, storing media in the cloud and moving it from one Apple
173
+ device to another as doing so becomes increasingly convenient with innovations
174
+ such as Airplay (as just one simple example of this ecosystem\u2019s current
175
+ functionality), we believe that customer base grows increasingly loyal and
176
+ excited for the next Apple product release, making it an asset in and of itself
177
+ that grows and becomes increasingly valuable. Indeed, we believe any new software
178
+ service that offers new functionality to this customer base becomes a large
179
+ opportunity for Apple to introduce as a revolutionary and disruptive bolt-on
180
+ to the ecosystem. As just one of many possible examples of this phenomenon,
181
+ Apple could introduce a next generation payments solution. In terms of whether
182
+ the marketplace is well addressed by mobile payments solutions, Tim Cook has
183
+ said \u201cI think it is in its infancy\u2026 I think it is just getting started
184
+ and just of out of the starting block.\u201d With the fingerprint sensor,
185
+ iBeacon, 575+ million credit card numbers stored in iTunes, and Apple\u2019s
186
+ homogeneous iOS installed base with 79% of devices using iOS 7, we believe
187
+ a revolutionary payments solution is now a very real opportunity that the
188
+ company could choose to pursue. With respect to all of Apple\u2019s new and
189
+ existing opportunities for growth, they will only prove to be successful with
190
+ strong execution from the company\u2019s management, in whom we hold great
191
+ confidence. Naysayers say Tim Cook is not Steve Jobs, and they\u2019re absolutely
192
+ right. He is Tim Cook and we believe he is doing an excellent job, and Jonathan
193
+ Ive, Senior VP of Design, is Jonathan Ive and we believe he\u2019s doing an
194
+ excellent job, etcetera.\n\nIn this letter, we have above summarized why we
195
+ believe Apple is undervalued in order to express how ridiculous it seems to
196
+ us for Apple to horde so much cash rather than repurchase stock (and thereby
197
+ use that cash to make a larger investment in itself for the benefit of all
198
+ of the company\u2019s shareholders). In its statement in opposition to our
199
+ proposal, the company claims that \u201cthe Board and management team have
200
+ demonstrated a strong commitment to returning capital to shareholders\u201d
201
+ and we believe that is true, but we also believe that commitment is not strong
202
+ enough given the unique degree to which the company is both undervalued and
203
+ overcapitalized. Furthermore, it is important to note that a share repurchase
204
+ is not simply an act of \u201creturning capital to shareholders\u201d since
205
+ it is also the company effectively making an investment in itself. To us,
206
+ as long term investors, this is an important difference: a dividend is a pure
207
+ return of capital while a share repurchase is the company making an investment
208
+ in itself by buying shares in the market at the current price, which we believe
209
+ to be undervalued, from shareholders willing to sell at that price for the
210
+ benefit of shareholders who choose to remain investors for the longer term.
211
+ And we are long term investors. It should be noted that no one on the Board
212
+ seems to be an expert in the world of investment management. However, based
213
+ on our record, we believe few will argue that we are experts in this area,
214
+ and we have no doubts that the Board is doing a great disservice to its shareholders
215
+ by not immediately increasing the size of the share repurchase program in
216
+ order to more effectively take advantage of what we believe to be the company\u2019s
217
+ low market valuation.\n\nWe have expressed above what we believe to be the
218
+ company\u2019s primary reason for not supporting our proposal. Conversely,
219
+ it is our belief that Apple\u2019s current excess liquidity is without historical
220
+ precedent and beyond reasonable comparison to its peers or otherwise, and
221
+ such dramatic overcapitalization affords the company enough excess liquidity
222
+ to repurchase the amount of shares we proposed. Apple\u2019s existing capital
223
+ return program has just $37 billion remaining, and the company has until the
224
+ end of 2015 to complete it. Without any changes to the program, the largest
225
+ pile of corporate cash in the world is likely to grow even larger, and if
226
+ the share price rises, this Board will have missed a great opportunity to
227
+ use more of that hoarded cash to repurchase shares at an attractive value.
228
+ While it is important for the Board to focus on the return of capital on a
229
+ sustained basis, it is also important for the Board to evaluate whether or
230
+ not its share price is undervalued and to take advantage of it with share
231
+ repurchases, especially when the balance sheet exhibits dramatic excess liquidity,
232
+ as we believe Apple\u2019s does today.\n\nThe Board may argue that with so
233
+ much opportunity, it would be prudent to maintain its excess liquidity to
234
+ increase R&D or make acquisitions, especially when considering the financial
235
+ strength of its competitors. We completely agree that the company must innovate
236
+ and should be flexible to make prudent strategic acquisitions, yet even after
237
+ taking such factors into account, we believe that tremendous excess liquidity
238
+ remains. With respect to possible M&A (to which the company does not refer
239
+ in its statement), for the opportunities highlighted above (a TV, a watch,
240
+ a payment service), we find it extremely difficult to identify any possible
241
+ strategic acquisitions of scale that make sense. Furthermore, such action
242
+ would seem to conflict with Apple\u2019s culture historically. A remarkable
243
+ fact is that since the Board reacquired Steve Jobs through the NeXT acquisition
244
+ for $427 million in 1997, the next largest acquisition Apple made was $2.6
245
+ billion for Nortel\u2019s patent portfolio. Amazingly, over these 17 years,
246
+ Apple made just $7.8 billion worth of acquisitions in total during this timeframe.
247
+ Apple clearly has a long history and culture of developing its innovation
248
+ internally, which leads us to believe that the company will not seek out large
249
+ acquisitions to pursue any of the opportunities about which we have speculated.
250
+ In terms of paying for the necessary innovation internally, Apple is expected
251
+ to generate $40 billion of earnings next year, which already takes into account
252
+ an increasing R&D expense. In order to address the argument that Apple should
253
+ reserve excess liquidity to more effectively compete with some of its deep-pocketed
254
+ competitors, there is no doubt that some of them also have significant earnings
255
+ and net cash on their balance sheets (whether or not that is appropriate).
256
+ But Apple has much more. When compared to its next largest competitor, Microsoft,
257
+ for example, Apple has $68 billion more net cash and is expected to generate
258
+ $18 billion more in earnings during 2014.\n\nThe Board may argue that much
259
+ of its cash and earnings are international and therefore subject to a repatriation
260
+ tax if returned to the United States to repurchase shares. While this is true,
261
+ we question why the company would not simply borrow the money in the Unites
262
+ States to the extent it deems its domestic cash of $36 billion and domestic
263
+ earnings are insufficient. Given that the company has $130 billion of net
264
+ cash and $40 billion of expected annual earnings, and the fact that it is
265
+ hard to find a better time in history to borrow money, a $50 billion share
266
+ repurchase over the course of fiscal year 2014 seems more than reasonable
267
+ to us. Today, Apple\u2019s outstanding ten year bonds yield 3.63%, and its
268
+ five year bonds yield 2%. Apple could either continue to carry this debt,
269
+ repay it from its domestic earnings over time, or repatriate cash from abroad
270
+ upon the passage of corporate tax reform.\n\nThe company has stated that it
271
+ is \u201cupdating perspectives on its capital return program for 2014 and
272
+ beyond\u201d and \u201ccollecting input from a very broad base of shareholders.\u201d
273
+ We believe, if our proposal receives majority shareholder support, that the
274
+ Board should respect it and increase the repurchase program as requested.
275
+ We believe this action will greatly enhance value for all long term shareholders
276
+ who believe, as we do, in the great potential of this company. If the Board
277
+ takes this action, we will applaud them for taking advantage of one of the
278
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