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Canaccord Genuity on Apple, Dean Foods, and United Rentals


Apple is discussed during the presidential debate, Dean Foods posts double-digit gains, and United Rental soared on news that its third-quarter profit rose 12%.

The following are excerpts from Canaccord Genuity analysts' commentaries.

Apple (NASDAQ:AAPL): Boy, great question and important question, because you're absolutely right – maybe.
From Tuesday's presidential debate, the candidates were asked the question: The outsourcing of American jobs overseas has taken a toll on our economy. What plans do you have to put back and keep jobs here in the United States? A follow-up to that was the question: iPad, the Macs, the iPhones, they are all manufactured in China. One of the major reasons is labor is so much cheaper here. How do you convince a great American company to bring that manufacturing back here? Mitt Romney responded by saying, "The answer is very straightforward. We can compete with anyone in the world as long as the playing field is level. China's been cheating over the years. One by holding down the value of their currency. Number two, by stealing our intellectual property; our designs, our patents, our technology. There's even an Apple store in China that's a counterfeit Apple store, selling counterfeit goods. They hack into our computers. We will have to have people play on a fair basis, that's number one."

While the counterfeit Apple store to which Romney was referring was not an authorized reseller of Apple products, it nonetheless sells authentic Apple products. Yes, there are stores around China that sell Apple products smuggled into the country. With respect to counterfeit Apple products, as the Wall Street Journal put it, "There are certainly counterfeit Apple products floating around China, but for the most part Chinese consumers are savvy enough to know whether they're buying a real iPhone or a fake one. Those who buy the fake ones often can't afford the real deal, and are simply trying to broadcast that they belong to the class that own legitimate Apple products." Romney has cranked up his anti-China rhetoric of late, but, that happens almost every American election year.

Last January, the New York Times published an article titled: "How the US Lost Out on iPhone Work," where US President Obama once asked Steve Jobs, "What would it take to make iPhones in the United States? Why can't that work come home?" Jobs' reply was apparently, "Those jobs aren't coming back." According to the New York Times, Apple's executives believed, "The vast scale of overseas factories as well as the flexibility, diligence, and industrial skills of foreign workers have so outpaced their American counterparts that 'Made in the USA' is no longer a viable option for most Apple products." Sound like a lame excuse? In 2010, the average manufacturing wage was roughly $2.00 in China and $34.75 in the US. If the cost of US labor would only add $50, $75, or $100 to the cost of each iPhone would consumers pay? Sure. Is a generation of American workers, sitting row upon row assembling iPhones, the country's future? No.
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No positions in stocks mentioned.
Canaccord Financial and its affiliated companies may have a Corporate Finance or other relationship with the companies mentioned and may trade in any of the Designated  Investments mentioned herein either for their own account or the accounts of their customers, in good faith and in the normal course of market making. The authors have not received, and will not receive, compensation that is directly based upon or linked to one or more specific Corporate Finance activities, or to coverage herein.
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