Showing posts from May, 2012

Patent Trolls- The Mafia of the Business World!

I recently read a column stating that the Google vs. Oracle Java/Android trial has cost in excess of 50 million dollars. Now, I understand the value of intellectual property being protected, the IP and patent laws originally were created to help protect and aid the process of innovation, to prevent some massive company, at least in theory, from coming along and stealing the hard work and ideas of a smaller innovator.
Unfortunately patent lawsuits are becoming more and more commonplace.  Larry Ellison and Oracle merely did a game theory calculation about the cost vs. the potential payoff, and as that had a positive expected value decided to drag Google into court, and forced the company to spend a substantial amount of resources in defending itself.
$50,000,000?  Would that might be better spent hiring engineers to create new products?  To be given to charity, to establish after school centers for impoverished youths? How about if that money is instead geared towards giving workers a r…

POP-- Goes The Student Loan Bubble!

I was listening to a podcast yesterday about the state of the job market, and the commentators started lamenting the fact that so many new college graduates are unable to find employment.  Meanwhile, tuition costs continue to accelerate upwards, and student loan payments are ballooning.  They cited a figure that young people owe upwards of a trillion dollars to lenders, for student loans that are super easy to get. Meanwhile there is a shortfall in semi-skilled workers-electricians, plumbers, and welders.
When my parents were growing up, a college degree was key the key to securing gainful, high paying employment.  You could "bank" on it.
"Why I see here you have a college degree, I'm sure we can find a place for you."
This is no longer the case. I have many friends who majored in liberal arts who have had great difficulty getting jobs since graduating.  Meanwhile their over-priced education has left them mired in debt, and even those with mediocre to decent p…

Envisioning a Cell Phone Only World: Who Will Adapt?

The Battle to Turn Mobile Into Cash: Envisioning a Cell Phone Only World: Part II
In my last column, I played Devil’s Advocate and tried to imagine a world where the primary way to access the Internet was via your mobile phone. As a Google investor, I wanted to look at the downside of a smart-phone only world, and invited you, the reader, to submit your thoughts on the subject of the future of Internet access, and again, I invite you again to express your thoughts as I imagine how each of these big Internet companies will adapt to a world, where I make the giant presupposition that 95% of internet access comes from smartphones, which would have huge ramifications on the stocks. So the question becomes, what happens to, and how do the following companies adapt to this new world.

Video: The Adaptation to a Mobile Centric World 1
1) Google- My favorite company which gives me so much- Gmail, blogger for free, video distribution (YouTube), Android for my phone. If there is any new Google p…

The Battle to Turn Mobile Into Cash

I have been a major advocate of Google, having fallen in love with their line of products, and been very bullish on the stock which I have been long since $490 a share. Now, my friends and readers, I need your help- I want to start a discussion, whether the heart of my portfolio, and the other web successes of the last two decades will be around five years from now, and in what form.
Am I moving away from my bullish stance? Not yet, but any good investor must play devil’s advocate at times and try to anticipate competitive challenges. I do ask that you feel free to contribute your thoughts, and nullify or add to my crazy theories in the comment section below. The winner for most insightful comment gets an all-expense paid trip, and I swear I’ll follow through on this promise, to the Olympics! *
What I’m Worried About These two thugs, Moe + Bill (pronounced “mo-bill”), are threatening to slaughter my beloved Google’s cash cow, nicknamed “Search,” which accounts for 90% + of Google’s pr…

The IPO @ Facebook was a Crime

Okay, let me give you a bit brief rundown of what took place during the Facebook IPO and not only why it matters to common investors, but also why it might affect Facebook’s business.
Here’s what took place- during the company’s road show, a Facebook exec verbally told under-writers and institutional investors that Facebook’s second quarter and full year earnings would be weaker than expected.  Basically, Facebook pre-announced their second quarter earnings, only instead of this being common knowledge, it was a whisper into the ears of the big Wall Street players.

Video: The Facebook IPO was borderline criminal

The reason for the internal downgrade was because more and more Facebook users are logging into the site via mobile phone, which Facebook has yet been able to monetize. Naturally, this diminished the appetite of the sophisticated smart money for Facebook shares.  Meanwhile, Facebook not only raised the number of shares being offered, but also the offering price to $38.00, as …

Investors' Facebook Quandry- To Buy or Run for the Hills

Let's "face" it, you use Facebook, your friends use Facebook, the whole world uses Facebook and a lot of us are thinking about buying the newly issued stock of this company we are so familiar with. I have had at least 5 friends ask me privately for my opinion, so I'm going to: reply-all.
What’s Facebook’s #1 goal? Grow their already huge base of users, currently at around 900 million. Why? Very simply put, Facebook’s only true competitive advantage, its “moat” if you will, is its ubiquity of use.
The fact that you, and all your bonehead friends use it, is the primary reason people don’t move over to Google Plus, which frankly has a prettier platform and more capabilities. I often equate Facebook to being the sun of the Social Media Galaxy and the more planets (people) it has in its orbit, the greater its gravitational pull becomes, and the more planets it attracts. Zuckerberg clearly understands this, and thus is doing all he can to add to his gravitational mass befo…

IBuy Droids- IRobot Rocks

A few weeks ago, I wrote a column predicting that robots would be the new .com wave of investing, and we would see big run-ups in share prices as they become ubiquitous in our everyday lives, making us more efficient, and giving us more free time.
The self-driving car running on Google software for example, is already being tested on roads in Nevada (where the worst that will happen is you’ll run into a cactus) and who knows how long til it’s ready for Primetime, but the fact is that robots and humans will soon be co-existing on this planet to a much greater degree than they do today.
That being said, let’s take a look at a company that many of you have some sort of experience with, IRobot. They’re the ones that make the Roomba, the robotic vacuum cleaners that clean your house with a push of a button. The Roomba line is actually ten years old, but still has a low market penetration in the United States, where only an estimated 8% of vacuums sold are of the robotic variety, which comp…

The Market Will Crash- the Sky is Falling

The sky is falling, along with Apple (Nasdaq: AAPL). With JP Morgan's (NYSE: JPM) two, no wait make that three billion dollar loss (and counting) there will rightfully be increased fear raging through the markets, as to whether the unnecessary risks they took may lead to bigger losses, and what other banks have similar exposure.
Meanwhile over in Europe recalcitrant and fiscally irresponsible nations are dragging down the Euro. The run on the banks in Greece has already begun, as citizens anticipate them leaving the monetary union, and don’t want to be stuck with the Greek Drachma. How long will Germany and the Netherlands, Europe’s paymasters, continue to shell out their hard earned money to keep Greece in the Euro, a culture rife with fraud,where paying taxes is considered a "chumpy" activity, whose people don’t wish to work, but want all the benefits and hand outs of living in a modern society?

Video: Stock market faces too many headwinds Meanwhile, in America, states ar…

Yahoo Drowning- better Swim to "For Sale" Sign

Supposing I you are on some low lying islands in the Pacific, and I told you, "You know Global Warming is going to have your whole island under water within two years."
"Yeah, yeah, I know," you respond. "We all know about global warming.
"No, you didn't listen to me. The speed at which of a Huge nearby glaciers is speeding algorithmically, which will singularly affect your cash cow, mango growing islands unless you can miraculously construct a giant dam, I suggest you make plans to vacate the island."
"Yeah yeah, we all know about global warming."
Okay, you don't have to listen, but as Google becomes more of a portal (ice melting more quickly), the same thing is likely to happen to Yahoo.

Video: Yahoo is selling the company.

Yahoo the 1990s "It" search engine, has recently come upon hard times. Activist shareholders are holding the company accountable for exaggerating CEO Scott Thompson's credentials. He who was supposed t…

JP Morgan's Gambling Problem- Time to Pay-up

Charlie Munger, of Berkshire Hathaway recently gave an interview on CNBC, and when asked about Michael Lewis, an author who chronicled the financial meltdown of 2008, who said more needed to be done help heal the ills of Wall Street, and that the Volker rule was insufficient, Munger replied, "The majority of what was wrong has not been fixed. The Volker rule is not enough. If I was making the rules, I would make Lewis look like a "piker. " (An overly cautious person.)
Munger then went on to say that his weapon of choice would likely be a Tobin Tax, named after a Yale economist, who wanted taxes which discouraged short term thinking and investing. He stated, "If taxes on short term trades were 99%, nobody would ever do it."
This was before JPMorgan Chase, and CEO Jamie Dimon, announced that they had lost two billion dollars on a trade. 
The trade in question- selling insurance derivatives against America's biggest corporations going out of bu…

Big Banks Prized Deal With The Devil

In case you're not aware, JP Morgan announced they had lost two Bills (billion) last week, sending the stock, and that of other banks spiraling downwards. JP Morgan, and their CEO Jamie Dimon, were the fiercest critics of the Volcker Rule, designed to prevent commercial banks which citizens entrust with their hard earned money, to use these deposits for trading and hedges, and with the staggering sums bet, asking us for another bailout. 
------------------------------------------------------------------ Piles of money surround you, fast cars, hot women in miniskirts display their long legs, mansions, all the things Madison Avenue convinces you are necessary to be happy.  "All this can be yours," says your silver haired host in the dashing red cape with the small horns sticking out of his skull.  "What's the catch? My soul?" He tilts his head back and let's loose a mighty roar of a laugh.  "We think here in much larger terms my friend, I don't want yo…

Redbox and Coinstar- Dinosaurs That Will Be Washed away By Streaming

"Ain't giving up my vinyl records, for the new dangfangled CD's. Besides, CD Players cost too much, I like my records just fine."
"The idea that my grandfather will ever have a DVD player is a joke. He's still using Betamax."
"I'll always shoot on film, the image quality is superior, and will always be so."

Throughout human history, new technology has been met with resistance from those with entrenched profit interests (companies,) those with ego driven viewpoints on a subject matter (bloggers, individual investors) and those who simply don't like change. (95% of humanity)

Video: RedBox will be washed away by the stream!

In my recent column, "Microsoft Declares the DVD Dead," I noted that Softy is not including a DVD decoder in their default setting of Windows 8, and this is another symptom bubbling-up in the demise of the DVD. I suggested that this does not bode well for Coinstar's long-term fu…

Google Plus Live Hangouts Might Obliterate Facebook

Grandma: "Billy, what time is your championship game on TV?"
Billy: "It starts at 1:00 Grandma, are you gonna watch?"
Grandma: "Of course I am Billy!"

Question: Is Billy a professional athlete?
No, Billy is a 12 year old Little Leaguer whose team made the city finals, and Grandma is all the way in Virginia, and she'll be watching the game live and chatting about it in real time along with other members of the family. How is this possible? Via Google Plus Live Hangouts!
Hangouts, which were previously limited to 10 people,  have opened the door to be broadcast to millions of people at once.  In all fairness, investors, and especially Mark Zuckerberg, should have seen this coming.  Google thinks big, and the ability to have a hang out with 10 people, coupled with the fact that Google has already hosted On Air Live Hangouts with the likes of David Beckham, Desmond Tutu, President Obama, and the Muppets, should have hinted at what was coming.
My reaction: …