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Akram's Razor

 
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  • What Do You Get When You Buy Netflix? [View article]
    Was a very different environment when you worked there.

    "expert at negotiating content terms compatible with all you can eat pricing"

    Giving mgmt way too much credit. The Starz deal was one of the greatest deals in media history because there was no OVD industry. It was an under the radar deal at a time when dvd sales where more robust and cable was still growing like it was. Now it is the problem. Not only will the starz content which netflix holds cost 10x as much to retain or replace, but the terms are likely to get worse.

    The netflix u worked for put blockbuster out of business because it took advantage of lower overhead and better inventory mgmt courtesy of the internet as well as unfettered access to USPS (a consistent loss making business)nationwide mail infrastructure.

    Digital streaming is really cable with a different interface thats all. Its not a revolution They can and often do come in over the same pipes. Really it just boils down to the interface. But as far as content access the model is identical. licensing and release windows, and it isn't changing. As for the unfettered access, I assure you the carriers will seek to earn their fair share for the infrastructure they have in place. They are not the USPS. The arbitrage netflix has been playing is going to turn against it. Nothing to be ashamed of. Reed hastings put on a great trade and now is time to close it.

    What you and many bulls don't get is that some of us shorting recently where long this stock for years. We are shorting an industry model issue netflix has no way around and a stock price that doesn't account for that. We are not shorting a cool service and innovative company with a good mgmt team that people like to work with and for. Still amazes me how many people cant separate stock from business.


    I recommend you do what your former ceo and company founder is doing and sell your very overpriced shares before that quarter comes when he decides to break to the market the heartbreaking news which i am sure he already knows about where he sees his longer term eps growth at and margins.

    Netflix actually did the dirty work for amazon and google. They wouldn't bother with a market with 7mln users streaming. Now its on their radar. Something they have been patiently waiting for. They have the cash and scale to pay whatever they need for content. though i dont necessarily see the industry going that way. I think the entrenched players in cable and satellite will remain and that nflx and the likes will be ultimately forced to more of cable channel model. Ovd is not the great disruption it currently appears to be. In two years that will become pretty clear to all and netflix shares will be back to 65$.
    Feb 4, 2011. 09:25 AM | 21 Likes Like |Link to Comment
  • Whole Foods Is A Short [View article]
    You are a class act Gary J....keep it up!!
    Feb 14, 2013. 07:50 AM | 18 Likes Like |Link to Comment
  • Why QE3 Can't Work: Understanding The Liquidity Trap [View article]
    As they are states of mind, fear and uncertainty will always exist.
    Economies are meant to contract and expand; its perfectly normal and healthy. Trying to eradicate contractions is like trying to eradicate the common cold; it is impossible but you can treat the symptons to the point that some people might feel like they have nothing. Not exactly healthy though as the meds might kill you.
    The deflationary pressures in the US are in wages and housing. The latter was the result of a typical overinvestment bubble while the former is due to structural shifts in the global labor force. The wage issues are going to get worse before they get better, and the fed can do nothing about that.
    Keynes theories have never been properly applied so i don't exactly know what it is you believe in. What we have had is stimulus to counteract contractions that is never properly withdrawn in good times. It is the definition of an imbalanced system.
    Sep 16, 2012. 09:34 AM | 10 Likes Like |Link to Comment
  • Go With The Crowd And Short Netflix [View article]
    Some advice: Try to make a case when you are going to write something like this. Just telling me to short because well it seems to be broken and redbox offers $1 rentals doesn't really cut it. The company has told you they won't be profitable next year. So, if you are going to short here you better be of the view that they will disappoint on that guidance, and show signs that their international expansion was a bad idea at this point. Tell me why they will disappoint internationally, give me some thoughts on how the core dvd business will fair...will it erode faster than expected now that the post office is limiting next day delivery?....will they renew the starz deal for 1 yr? will they be forced to reexamine their pricing one more time? and at what price is netflix worth it for a suitor like msft that has global media ambitions and an xbox platform to integrate into?

    We are long past the point where a note like this cuts it on netflix. I suggest you challenge yourself and give us something more. I know it is a tempting stock to write about, but if you can't add to the debate here maybe you a better of spending your time finding a stock where you can.

    That being said you are probably right....netflix's problems will continue and the stock will fall from here...
    Dec 30, 2011. 08:50 AM | 10 Likes Like |Link to Comment
  • Microsoft: The Big Short [View article]
    I knew this would stir controversy and 8million timing quotes.....all that matters to me is that their are now cracks in the armor that Linux failed to make. Apple is no longer a small threat to pc sales, and google model is dangerous solely on economic appeal to oems. That means msft to get ahead of this better start offering price concessions or face an even worse outcome. I like my chances here. But I am usually early....
    Oct 20, 2010. 12:57 PM | 10 Likes Like |Link to Comment
  • Why You Should Be Selling Sina Now [View article]
    Everyone is entitles to their opinion, but this article completely misses the mark. Not only is Sina not a sell it is probably the cheapest web property of its kind available on public equity markets. Weibo is effectively the twitter of china, and much like twitter it has been very focused on user experience over revenue. The stock really struggled last year as market sentiment on mobile exposed properties went in the gutter, and the mvas revenue declines in the legacy biz started. Facebook turned that around this past quarter as did Baidu. What was viewed as weakness became a strength as the market realized that impression volumes on mobile are insane, and more than enough to offset pricing declines. Now china is a turbo charged mobile environment where engagement is much higher than the west. That bodes well for weibo. Renren engagement is collapsing and the company is trying to pivot to gaming, meanwhile weibo engagement has been rising and last quarter actually acclerating on q/q basis for first time in over a year. Considering the wechat cloud earlier on in the year that's pretty notable. But really all this is irrelevant as you wrote a detailed post about selling sina and nowhere in the whole thing does the name Alibaba come up. That to me tells me you don't know this company very well. Their deal with the eccomerce giant is a huge story. Beyond the significant financial investment, you have guaranteed revenue being channeled by Alibaba to the tune of $120 million a year. Anyway, you might also want to look at cash on balance sheet and where everything else is trading before you say sell this name....
    Sep 4, 2013. 06:11 PM | 9 Likes Like |Link to Comment
  • Whole Foods Is A Short [View article]
    What's a typical short guy?

    I'm long plenty of stocks....just not this one.
    Feb 14, 2013. 08:07 AM | 8 Likes Like |Link to Comment
  • Enough About Apple [View article]
    You serious? Every top consumer electronics brand in history was once selling a non-commodtized product for the bulk of its revenue just before it became commoditized. That's the whole point. If all you have to say about your iphone is that it is faster and lighter then the previous model differentiation and the desire for something new or different become very serious risks as well as the whole commodization issue eating into margins as everyone narrows the value proposition gap.

    Fyi- I love my apple products....but i also once loved my nokia 6160 brick....dell notebook....sony walkman and vaoi....motorola razor.....my apple 2gs... my commodore 64......nintendo gameboy....casio watch.... ti-85...gateway plasma...panasonic tv....yes over the years i have loved many gadgets....the operative word is loved because at some point you want something new just to try something new....that's the problem with this space
    Nov 27, 2012. 08:13 AM | 8 Likes Like |Link to Comment
  • If Vringo Was The Inventor Of Google Search, They'd Have Invented Google Search [View article]
    Promote-Give publicity to (a product, organization, or venture) so as to increase sales or public awareness.

    What does writing an article about a little known stock you own with the title 'Google Might Be Going to Zero' and then publishing it on the worlds most widely read technology blog constitute? Your aim was to increase awareness of something you identified as a potential money making opportunity, and in doing so increase your prospects of making money by driving eyeballs to it. You are promoting an investment idea just about as loudly as you can. That is why so many people on techcrunch where infuriated with the post as they felt that was the wrong forum for it. And stop complaining about anonymity if you are seeking to leverage your public profile. Nobody asked you to open your entire personal life to the whole world, to go on tv every chance you get, and write books and articles sharing your personal experiences that are picked up or displayed on major news outlets. You chose this path. Some people don't want to share all their private experiences with the public. Its not that complicated.
    Apr 4, 2012. 09:58 AM | 8 Likes Like |Link to Comment
  • Debunking Altucher's Bull: 'I Could See, But Now Am Blind' [View article]
    Wow I am surprised an online content contributor and tech fanatic like yourself doesn't understand how this works. I submit an article to SA. They publish it. Then tons of little spammer types on the internet pick up the link. They aggregate this free content and sell the ad space to penny stock pushers. Goolge anything you write and see how many financial spam blogs pick it up

    Btw- I am betting you didn't even read my article or else you wouldn't be saying I don't have a single fact or source. That is just a straight up ridiculous statement. The Bank/ LDC data is cited directly to the FDIC report on the LDC crisis. The current data on bank assets of top US financials is cited to the National Information Center and calculated based on current gdp. The corporate tax graph is from the same FRED group of charts you used for PCE and After tax profits. The real pce yr/yr data and household debt service is from the BEA. And the sp500 earnings yield/treasury yields spread is compiled data that is readily available.

    I am now losing respect for you James. I thought you were a talented writer with a knack for financial entertainment, and clearly creating a media personality. Now, you are behaving like a little kid. You were better off not responding at all than posting what you have posted. This isn't cnbc. You can't just blurt out five sentences and expect people to nod or not really question a single thing you say in any direct manner. In the democratized world of online content which you love to preach about, the burden of proof is a lot higher.

    Look at the feedback on here......the criticism is more about your failure to provide substance than it is about your predictions for dow 20000......considering the boldness of that prediction...that is remarkable.
    Jan 6, 2012. 09:47 AM | 8 Likes Like |Link to Comment
  • Debunking Altucher's Bull: 'I Could See, But Now Am Blind' [View article]
    What website James? I don't have one. Have a couple of blogs i played around with but never set up a site or promoted anything.
    But great response. Your previous article spent a lot of time talking about how amazing black friday was which I was quick to point was at the expense of margins. That was a month and a half ago. Been paying attention to retail data coming out?

    As for macro, you can read the last major conversation I engaged on the topic here..http://bit.ly/zHRR0Q think it speaks for itself.

    But thanks for attempting a collateral attack after I took the time to actually provide substance to some complicated issues which you seem to think can be summed up in two sentences or less. housing, consumption, investment, banking, systemic risk, valuation, corporate balance sheets, profitability. Can't see why you are surprised that without cnbc or tech ticker soundbite world that there are plenty of people capable of poking titanic sized holes in your bull arguments.

    That aside...I am still a fan...and love your enthusiams for tech. But maybe next time...go a little further than facebook has 800million users, groupon grew revenues fast, and you love your ipad 2.
    Jan 5, 2012. 04:16 PM | 8 Likes Like |Link to Comment
  • China Will Stumble; I Guarantee It [View article]
    I have no problem with cheaper prices. I used these examples to illustrate what happens to the economics of an industry once the chinese cap-ex binge hits it. Rampant over investment or capital misallocation is an important thing to identify if you are investing in anything. But you clearly don't get that.

    And don't give me this 'their horizon is longer than yours' nonsense. That's just a lazy way of saying I don't really want to take a very close look. If China is facing its first major super cyclical investment crash, your goal should be to avoid the damage it will cause.

    As for the title, it was meant to be catchy because I am getting tired of reading articles that dismiss everything going on by saying nothing other than that China will be fine over the long haul. But to be clear it is the only thing I can guarantee you. Capital investment booms like this have always ended in crashes (read up). The evidence is overwhelming. And the longer the cycle goes without correcting the worse the crash usually ends up being. The point of this article was to show there are clear signs this cycle has gone too long. Too much credit is being extended to capital intensive industries and the returns are just not there anymore. That is why you have so much built up idle capacity and rapid price shocks. Common sense tells you that we are close to a point were investment will have to temporarily cease till demand catches up with supply (or supply is taken out via bk's and consolidations). If you've been making a living off of China's voracious demand for commodities, this is a major concern. Because what people keep calling a 'slowdown' will feel more like you were clubbed over the head with a baseball bat.

    As for your 1929 question:
    If I bought gm, standard oil, and dupont at their 1929 peaks I'd have had to wait 20 years to get to break even. My point was that despite the future success of the US economy that one decision would make or break anyone with any measurable investment horizon.

    But yet you are asking me the question from a workers standpoint which i find interesting as the whole point of the China miracle is cheap labor and the need to employ them. Anyway, I'll give you a spin. A median age person in 1929 would mean i'd spend the next ten years dealing with the depression and a crappy economy. Then in 1941 I'd have to register for the military as every male between 18-65 became eligible to be drafted for WWII. Maybe, considering the average age people got married back then, I'd have a kid at this point who would be draft eligible too. Maybe we survive the war, or maybe we end storming the beaches at Normandy together and don't. Who knows? But by the end of the war I am now 50-52 years old. I probably have no savings and no real career and have spent the prime of my working life riding out an economic correction and fighting in a world war. Nah, I'd have probably moved to switzerland and become a banker.

    If I had to be reincarnated in the US I'd rather have been 2 years old in 1929. This way I dodge the economic crisis as a little kid, am in high school during the war and not draft eligible, in college during the short economic transition after it ends, and start working when the next boom starts. That would be the ideal worker outlook. But fighting the Nazi's and traveling the world, that would have been something more story worthy than a decent salary at IBM.
    Dec 12, 2011. 05:29 PM | 8 Likes Like |Link to Comment
  • Netflix: This Stock's Story Is Over [View article]
    It borrows from the federal financing bank which is under the us treasury. Discounted borrowing rates just like many other Gre's. I'd like to think that after this financial crisis some people can figure out that a subsidy....direct or indirect....is still a subsidy. If it was private, the rates it would charge would be higher and the delivery schedule would be reduced. That is a no brainer. And that would have meant less of an advantage for any online firm exploiting their loss making model.
    Sep 21, 2010. 01:25 PM | 8 Likes Like |Link to Comment
  • Financial Engines: Growth Mission Impossible [View article]
    So, I build a whole line by line model, and I get to read this.....might want to crack out your textbook........
    Sep 26, 2013. 03:44 PM | 7 Likes Like |Link to Comment
  • Short The Lemon [View article]
    Seriously Bill sorry but you have no clue what you are talking about here. And i say that with great admiration for your passion because i wish something like SA existed when i first got interested in markets, but come back to me after fifteen years of trading these type of stocks and we can chat. I have no doubt lulu could rise and this could not work, and judging by all the other trades like this i have done long/\short i'm almost waiting for some stupid 'i missed something' blowup because they tend to humble you and i have not had one in a while.

    Now to respond to your points....

    1) I am not a day trader and think that is a suckers game. Btw- this is speaking from experience as everyone thinks they can trade some 'trend'. Real money is made in markets in concentrated big moves were your hedge is knowing the position inside out and just how you will manage just about every variable you can think of, and plenty you can't. From 30-50 you peppered us with 'short the pops' in deckers calls....now ask yourself how you would have done if you bought the calls....ever heard the expression picking up p\ennies in front of a steam roller?

    2) I wouldn't call the icr news a pre announcement warning as they are at high end of range on rev and above what they guided by a cent on eps....the fact that they are a hair below what street is forecasting is irrelevant to me and if u ask me has bred some complacency in the same way ulta's reaffirmation did when they preannounced on ceo resignations

    3)This is not apple...they really don't underpromise big and overdeliver. They have been beating in the way that a strengthening momentum brand beats, and in the last year that really slowed as operationally they will be within 3% or so of their guidance from last march. That's down from huge beats the previous two years. If I believed that they would low ball 2013 i'd probably do something crazy here as this stock on a short term basis cant handle that. My view is the guidance is fine though the tone is a little more clear about how this is not a 'momentum' year. That will be enough for the stock to see the 50's again over a week or two. A guidance miss will of course not sit well with the market as i think consensus numbers are already baking in a decent downshift this year and will require a nice upside surprise to support the shares or pop them from here
    4) Their brand is unknown and untested abroad and culturally not exactly the type of fit it is in North America...it will take a lot more work and investment than most people realize. And as i p\ointed out in the article....plenty of international 'potential' brands similar to lulu have been repriced at this typ\e of juncture
    5) All i care about is enterprise value.....buybacks and dividends don't get my attention unless i think a company is truly earning an inferior return on their capital....if lulu now thinks their stock at 40\x trailing is more attractive then investing in their brand i'd really panic...same goes for dividends-some of the best trades i have ever made involve shorting stocks as soon as management announces stupid buybacks. fyi-i was a gmcr short before einhorn showed up\...and a bull almost from the day it bottomed.....buybacks have nothing to do with it....the coffee business is a monster and the bears seriously miscalculated despite plenty of shennagins out of gmcr mgmt....i personally remain skeptical that gmcr won't blow up\ again but for now im just watching and waiting
    6) Pay attention to the argument for a change instead of feeding me mumbo jumbo....wfm and cmg are fine...buying back stock....have p\ristine balance sheets....and expa\nding abroad....did that save their stocks from significant corrections during a 20% rally in the sp500? And what about kors? Why is trading where it is trading? They are hot as hell...and if you go anywhere on the planet women know the brand....and want to buy their p\roducts
    Mar 17, 2013. 06:33 PM | 7 Likes Like |Link to Comment
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