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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 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 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 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's problems will continue and the stock will fall from here...
    Dec 30 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 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 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 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 walkman and vaoi....motorola apple 2gs... my commodore 64......nintendo gameboy....casio watch.... ti-85...gateway 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 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 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 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.. 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 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 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 or 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 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 03:44 PM | 7 Likes Like |Link to Comment
  • Debunking Altucher's Bull: 'I Could See, But Now Am Blind' [View article]
    Collateral Attacks appear to be all you have. I'm anonymous? What person seeking anonymity uses his real first name? And not exactly a common real first name. If you took the time to read my response and had clicked on the link to 'The Big picture' article you'd have the last name too. But is this what this is about? Names? Identities? You have made three comments and not once discussed the merits of my article. Not a single point I made. Literally no substance out of you. How many times are you going to write "on the economy, you give opinions but no facts... I only gave facts" ???

    People are going to start thinking you are delusional and in denial if you keep saying that. My response is filled with plenty of facts and also much rigorous analysis of those facts. You overlooked the FACT that the 8 money center banks now hold assets worth over 70% of gdp vs 16% when the LDC problem started. When you are assessing systemic risk that is important.(so to is the difference between financial markets then and now as far as derivatives go) You disregard the FACT that effective taxes paid are the lowest they have ever been relative to the corporate tax rate. You completely misinterpret the reasons behind the cash being at all time highs number, and seem to have no desire to understand what that means. Same for buybacks. Go look at whose bought back the most stock over the last five years, and tell me how their shares prices have faired. Is there anything to conclude from msft, hpq, csco, bby, wmt, and xom buybacks?

    As for being right, and those guys being wrong. You are truly delusional.

    Before the Crash you were saying everything is cheap and recommending for people to buy the whole market. Forget your fears and just buy is exactly what you were saying.;

    then a few months later even as it became more obvious things were getting messy you were out saying housing and subprime were baked in.......and "you can't go wrong in stocks"

    or how about your five stocks poised to double article...all five have been obliterated....literally as close to buying five stocks that went almost bankrupt as you can get.

    So, what were you right about?

    Actually what happened is the economy crashed and so did the market. You then just doubled down and got more bullish. But we all know that is not how this game works. Nobody with a portfolio would still be standing had they followed your advice in 2008 so everything you had to say a year later wouldn't have mattered. I also can't understand how you would celebrate genworth, dendreon, and goldman. You could have cited other names as evidence of good investing, but you chose those. Three stocks that would collapse because of major fundamental issues. You think anyone who made money long enron is still walking around citing that as evidence of his ability to spot a good investment? That is not to say Goldman is Enron or that you have not written some great stuff on apple and google, but come on get serious already. You were recommending three broken business models that managed to get swept along with the risk on wave driven by govt assistence, and then immediately collapsed once the fundamentals of their models were focused on again. As that goes you win some and lose some. But my point is you tend to not back anything up and just seek to be the guy who is the most bullish. Then when challenged you offer very little in return. Anyone dealing with markets makes their fair share of mistakes, but some of us learn. You seem to have just decided you will be the most bullish person no matter what. And i think i know why. When you are bullish like you are, people don't really ask too many questions. So it easy.

    Btw- I can live with you not responding to the merits of the article or anything else. But I am dying to know why our biggest risk to a bull market is war between Iraq and Israel or India and Pakistan?
    Please ever since i saw you mention that on tv i have been dying for a more detailed explanation. Here I am like a fool focusing on Iran war risk as it is being brought to its economic knees when Iraq/Israel india/pakistan are the real stories. Just that info is all I ask.

    Oh, and let's be clear about your blog and you not promoting. Not that i have a problem with promoting, but just to be clear.

    The opening of your most recent post....
    "Every Thursday from 3:30-4:30 I answer questions on twitter. Then I summarize and expand in a post. Then I’ll expand further in a book coming soon: “FAQ ME”

    FAQ ME....seems you are trying to pull off a Shit My Dad Says type of self help book through twitter promotion....not a bad business idea...but also doesn't allow you to say you are not selling anything as you have 7 books for sale and are using your site to promote one on one consulting and speaking engagement bookings. James you are an ULTIMATE PROMOTER, learn to accept that. You make money of selling you. Nothing wrong with that except when you pretend that is not part of your model.
    Jan 7 10:35 AM | 7 Likes Like |Link to Comment