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Showing posts from April, 2012

Robots Will Destroy Analyst Expectations Before the Human Race

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Analysts sit like civilian generals in their ivory towers waiting for reports from the battlefields to pour in.  When all data is received, they come to a collective consensus, the distribution of which, taken as gospel by most investors, often causing seismic activity stock charts.
However, most of these Wall Street number crunchers don't see the permutations of the game as it is being played. It is the soldiers in the trenches that see the fight as it evolves.
While Enron was robbing citizens of California, and falsifying their figures to meet Wall Street expectations, "experts" on the street screamed "Buy! Buy! Buy!" based on their so called "exhaustive research," publishing glowing reports filled with spreadsheets and projections, sending many lemmings over the cliff and to their doom.
The company was a house of cards. When you ignored the hype, and took an objective look at what they actually produced (nothing), and why would I wish to invest in …

Avoid the Herd! Buy- The Streets are Getting Bloody!

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Google's shares made a recent peak in after hours at just under $660 a share after announcing earnings that beat expectations.
However, they also announced a stock split of common shares that investors got in a huff about because they some "experts" told them that their voting power was being diluted, which is simply farcical, both practically and in theory.
The Google share split explained Practically because investors have the same ratio of voting power as before as everyone's shares are being split, as well as theoretically, because Google is run as a dictatorship, which the founders stated from the outset would be the case. So even if every single other Google shareholder came bearing arms at the annual meeting, it would be fruitless.
The idea of Google diluting your voting power is the equivalent of North Korea stating that their citizens only get half a vote in the upcoming election.
Meanwhile, I'm reading message boards, articles in the NY Times, comments …

Whiny Analysts Hate Google Stock Split

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Google recently announced a two for one stock split with a twist.
This is usual reaction to stock splits:
Retail investor: "Oh my God, I have twice as many shares! I'm rich!"
Pro investor: "Twice as many at half the price. You are aware of math, right?"

The truth lies somewhere in between, because while in a perfectly rational world a split should make zero difference, brace yourself for this epiphany, human beings are not rational creatures.
Just blow your mind? If you're still with me, what actually takes place is a lot of novice investors say "My God, I couldn't afford to buy any shares at $200 but at $100, I guess I could buy a few." So high-rolling it, they go out and purchase twenty shares, adding a fractional amount of liquidity to the market, as well broadening the investor base who want the company to do well, and based on my theory of rationality (Nobel Prize 2012) they actually believe that in purchasing the company's products t…

Microsoft Bings Facebook to Ward off Being Googled

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The idea of Microsoft sending Bing over to Facebook in exchange for an additional stake in the company was recently floated by a Microsoft analyst, and to me it's a no-brainer.
Microsoft introduced Bing three years ago in an attempt to stave off total search domination by Google and the resulting war chest they would amass from this cash cow, which would finance an attack on Microsoft's core (Windows and Office.)
To say Microsoft's efforts have been in vain is an understatement. Bing loses 2.5 bills ( high-finance slang for a billion) a year, while Google consistently gains search market share each quarter due to a superior product, and generally better press.
Google has amassed the war chest, and struck at Microsoft's heart, bleeding both retail and commercial customers from them with their Chrome OS/ browser, and Google Docs.
In giving away their Android operating system for free, and leveraging the technical expertise of mobile handset makers, Google has developed l…

The Challenge of Digesting Motorola for Google

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With Google's acquisition of Motorola set to close, and their earnings having surpassed Wall Street expectations,  (as I predicted in this column) I thought it would be useful to analyze what the purchase will mean for the world's internet leader. But first, a potential hiccup in-
China
While the American, and European governments have signed off on the Google/Motorola deal, the Chinese still haven't. How someone can call the acquisition monopolistic with the rabid competition in the smart phone market is beyond me, but the Chinese government doesn't play nice. 
Google, sticking to its ethos "don't be evil" made a partial withdrawal from China a couple of years ago, refusing to kowtow to the country's enlightened regime and its demand for total web censorship. 
So now China has "questions" about the deal, which is no doubt a way of exacting a measure acquiescence from Big G on the censorship issue. Hey, whatever it takes to stay in power, right?

Why Google Earnings Might Surprise on the Upside

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After two straight earnings reports that defied the gravity of Wall Street's expectations, sending the stock up like a hot air balloon, last quarter Google under performed despite their core revenue driver, search advertising, seeing an increased number of clicks.


Search
The increase was offset by a lower average cost per click, which lead some analysts to believe more search was being done via mobile phones for which Google cannot charge as much, as clicks lead to fewer sales.
Some analysts believe that if the trend towards mobile search versus desktop continues, Google's long term profitability will be eroded.
I disagree with this assessment, as more and more targeted ads will be delivered in the future, based not only on the GPS tracked location of the phone and Google Plus user data, but assuming that security can win the war against the hackers, which is still up in the air, (but generally the direction the human race moves in) buying something on your mobile phone in the …

Who's Buying Netflix? Google vs. Amazon (Final Four + Championship Game)

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We started with 8 teams in the Netflix buyout tourney, and are down down to the Final Four.
1) Google vs. 4) Comcast
2) Amazon  vs. 6) Time Warner

Fast forward- Google blows out Comcast, who was a pretender, and Amazon edges Time Warner, though not by much, simply because the idea of HBOGO content, plus the streaming Netflix content is beyond appealing to me as a consumer, something I would be salivating to pay for.

So now we have the hoopla, the Superbowl of buyouts, we pit the leading E-Commerce company, Amazon, versus the undisputed King of the Internet, and if you don't know which company I mean, just Google it.
Amazon vs. Google-- The Finals

This promises to be a well played, competitive game, which highlights Amazon point guard Jeff Bezos versus Google's rapid fire Kobe Bryant like small forward Larry Page, who only recently learned to pass up contested shots. (note- I'm not saying Kobe has, just Larry)
Google has so much talent, traffic, and bankroll, they were able …

Who's Buying Netflix? - Apple vs. Time Warner

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In the continuing battle to see who will buy Netflix, we enter into bottom half of our eight team tournament, with Google and Amazon already scoring victories, it's time to see which of the following companies will join them in the "Final Four."
In today's match-ups, 5 seed Viacom takes on 4 seed Comcast, and 3 seed Apple takes on 6 seed Time Warner.
Apple vs. Time Warner The cult of Jobs is running on full steam, with their 100 billion in cash making an acquisition like Netflix akin to a Tyrannosaurus Rex popping a Chicken McNugget into its mighty jaws. To boot, the mythical Apple TV is due soon, which will likely be a giant, razor thin flat screen, controlled by a Siri remote with maybe one button, that is assuming they want to complicate things. However, as I will describe below when I speak about Viacom, Apple does not appear to want to pay for content, letting others create it while they continue to specialize in making the god damned best hardware on the face of the…

Netflix Buyout? Round 1- Walmart vs. Google, Amazon vs. Verizon

With March Madness having come to a close I'm still in the mood for one game elimination tourneys.
As I wrote in my last column, Netflix is facing some serious competition in streaming video, its success having attracted a lot of big fish to its waters. With Netflix's streaming business operating on low margins, and the increased price of content due to bids from the other giants, it's sure to put a dent in the company's bottom line.
Nevertheless, it would make a tasty acquisition for many of the sharks, and that's the one thing that I'm worried, being shorted the stock and all.
So, let's put all the potential big fish into a tourney format, and see which is most likely to take a bite out of Netflix. Let's take a look at the teams that made the tournament, and get the first round under way.

1) Google
8) Walmart


4) Comcast
5) Viacom


3) Apple
6) Time Warner


2) Amazon
7) Verizon

We're going to see how the top two seeds fare against their competition, and pick…