Showing posts from March, 2012

Can Netflix Swim Past the Sharks?

Netflix, the well run, innovative company which dispatched Blockbuster to the nether world, who, with great foresight embraced streaming video, has seen its success attract a lot of big fish to its market, and I think we're about to see a feeding frenzy.
"What?! Blasphemy!" you shout, "Netflix was first mover in internet video, giving them the advantage and the ubiquitous brand recognition so sought after by companies around the world. They're profitable, their stock has been a treat for long term shareholders, they're solid, they're going nowhere baby, they're here to stay."
Look, I love Netflix, I got their DVD's, I switched to streaming, watched whole seasons of 30 Rock and The Office on it, but since they hit themselves over the head with their Quixster PR debacle they started bleeding customers, and the sharks smelled blood in the water.
That's not to say it's the catalyst that brought the monsters, Amazon (Nasdaq: AMZN), Google (N…

The Most Interesting Company in the World- Counters its Biggest Threat

The dictionary defines it as "search," its coffers are stuffed with 44 billion in cash, its Android operating system runs the majority of the planet's smart phones, its X labs make Star Trek seem the stone-age; it is- "The Most Interesting Company in the World."-- "I don't always surf, but when I do, I prefer Chrome."
Adding to its Biblical technological profile, Google has entered the ring to take on King Goliath (Facebook) in social media. Sometimes to up your Biblical profile, you have to enter the arena as David.
Google + was an absolute necessity, but not necessarily with the primary objective of competing directly with Facebook, but rather, to defend its search engine moat.
Today, G+ is superior in functionality to Facebook. Its graphical interface is more elegant, and its use of "circles" was a novel step, far simpler and more intuitive than Facebook's "groups." The ability to video conference with multiple parties a…

Apple's Big Fat Dividend + Buyback Raises Stock Price- what is a dividend?

As I have said before, Apple is going up because of strong fundamentals, the company currently sits at 100 Billion in cash, and a P/E ratio of 17, and has been knocking the ball out of the park with their new, innovative products. Now they have formally announced a dividend and a stock buyback, and the stock price Jumped. 
I am going to take some questions from the audience to demystify what some of this stuff means, and how it affects the stock price.
Q: Look, I'm confused by all this, but I've always wanted to know, what the heck is book value?
A: Whatever Amazon is charging.
Q: Dude, why am I reading this?
A: Book value is what the company would be worth if you sold all its assets plus existing cash, and after all liabilities were paid, the left over money then returned to shareholders would be the book value. However, should that take place, the company would cease to exist, and shareholders would end up with only a lump sum payout.
Q: So why do stocks, like Apple, trade a…

Goldman Sachs- The Vampire Squid Lives Fast and Dies Young

Long thought to be a giant blood sucking machine, the mask has come off the vampire squid.
Greg Smith, resigned with a scathing editorial after 12 years at Goldman Sachs, revealing clients were referred to as "muppets" and treated with disdain, all the while Goldman fattened their pockets by pawning off assets to Kermit the Frog which their analysts believed had poor outlooks.
If you hold stock in Goldman or another Wall Street "paragon," the question is how does this affect your investment?
If this was an isolated case, Goldman could easily spin it as a disgruntled employee, but Smith's NY Times editorial is merely a strong echo of public suspicions, further fueling sentiments brought to the nation's consciousness by the Occupy Wall Street movement. When the echoes are loud enough, with knowledgeable voices like Greg Smith's having far greater volume than a bum's on the street, a tipping point is eventually passed, and reversing the process be…

Is Yahoo Circling The Drain- Light Years Behind Google

In the late 90's Yahoo was the coolest search engine on the planet. Wait, let me rephrase that, the coolest man made index of web pages on the planet.
See, Yahoo gained popularity originally in part because all of the other search engine companies' algorithms for determining top results were easily spammable; remember Infoseek, Altavista, Lycos, Excite, etc? No? I don't either. But Yahoo had humans who decided what would go in their directory, so you could pretty much be assured that you were actually going to find a real web page, instead of being redirected to porn (certainly you weren't looking or that.) So while finding the few web pages available, we decided to start using Yahoo, for news, finance, email; it became a habit for me.
Then along came Google, refining their algorithms on a continual basis. Sure, they got hit with spam, but their engineers learned and quickly changed things up on the spambots. Meanwhile the web was experiencing exponential growth in w…

Why Doug Kass is Wrong About Apple

Doug Kass recently came on Fast Money touting his successful Apple short, ($546 to $528) and explaining the logic behind it. Although Kass is a famous short-seller, he also called the market lows back in 2009 and went long, so he understands value, he's someone I respect, and in investing I do my best to see the world through a broader lens, and evaluate the the validity of others' opinions, and, if they have merit, I can alter my plan of attack.
Kass made the following points:

1) Quoting: “I would say this preoccupation with Apple is becoming a borderline mania. if you just consider the time every evening that Fast Money devotes to Apple, the shoe shine boy owns Apple. I go to cocktail parties and every noninvestment professional owns only one stock. and that's Apple.”

2) The recent huge upside surprise in earnings will likely never be repeated again

3) The company must overcome the following obstacles:
-  potential for supply chain disruptions
-  worsening macro-econom…