Top 10 Pick: Buy Berkshire Hathaway [View article]
WB is not a trader, most of his positions are in place for the next decade... IBM is a mistake, and it's going to get slapped, but he's got some hidden gems that will offset, e.g., BAC warrants.
The company is saving $250Mil in interest expense this year because of 2 recent refi's... debt is manageable, it was much higher relative to revenue before the crisis.
Your comment is typical of someone in the business... seriously, talk to IT people? They are the ones being disrupted, who stand to lose... you think they'll give me the straight scoop?
The public cloud is a low-margin utility... you think Azure and Google Compute and AWS are high-margin? CRM uses the public cloud, they are not the public cloud.
The key with IBM is all it takes is a tiny incremental shift and their operating model doesn't hold up, can't raise margins, can't cut costs enough, and can't drive revenue higher, even by buying lots of other co's.
Depends on what you mean by low-margin; Software co's are high margin, retailers like HD are low-margin, HD sells at 1.2x sales... don't forget a growth premium too... AMZN is more like HD b/c of durability and quality of the model, worth 1x plus a growth premium; it's growing at 20% per year (30% in North America).
Agree, but here's the problem: you can't justify a $220Bil market cap ($105Bil rev) on services... they need fat margins from hardware (already commoditized) and software (headed the same direction). Unfortunately for management, the model needs restructuring and there just aren't any options available to them that will protect the stock.
Brian, don't accept what all the bears are saying about debt without thinking it through... net household assets are $67 trillion, we've increased public debt to $17 trillion, that's awful, but it's hardly catastrophic... debt service is 1.5% of GDP, it was 3% in 1989. Bull markets are tough to recognize early on, you have to see through a lot of nonsense.
Lealane,as AWS is getting into enterprise, this is the pushback I've heard from consultants, that some of the bigger retailers don't want to deal with AWS because it's an AMZN company...it's understandable.
And when you bought at $40, what was the PE? It looked expensive ten years ago, five years ago, one year ago... it's not hard to figure out what this model will look like when they slow earnings... if you're not comfortable thinking like that, avoid the stock. But to investors that short the stock, whew, it could get really ugly for you.
Competition for elite talent is intense. It'll be easier for AWS to attract top talent if they have AWS options to offer. There's also the "anybody but Amazon" mentality among IaaS users, many of whom compete with AMZN so it's understandable. AWS would have an even bigger share if not for this dynamic.
You state the bear case, very good. If investing were as simple as buying based on current PE (as opposed to prospective), it sure would be easy. Amazon is making ever-increasing gross profit dollars, that's what you should key on, not what they drop to the bottom line in the short-term.
Top 10 Pick: Buy Berkshire Hathaway [View article]
Top 10 Pick: Buy MGM Resorts [View article]
IBM: A Disaster In The Making [View article]
The public cloud is a low-margin utility... you think Azure and Google Compute and AWS are high-margin? CRM uses the public cloud, they are not the public cloud.
The key with IBM is all it takes is a tiny incremental shift and their operating model doesn't hold up, can't raise margins, can't cut costs enough, and can't drive revenue higher, even by buying lots of other co's.
Arne Alsin's #1 Pick: Amazon.com [View article]
4 Scary Charts Warning Of The Next Financial Crisis [View article]
Arne Alsin's #1 Pick: Amazon.com [View article]
The Good News, The Bad News And What's Very Ugly [View article]
IBM: A Disaster In The Making [View article]
IBM: A Disaster In The Making [View article]
Arne Alsin's #1 Pick: Amazon.com [View article]
Arne Alsin's #1 Pick: Amazon.com [View article]
Arne Alsin's #1 Pick: Amazon.com [View article]
Arne Alsin's #1 Pick: Amazon.com [View article]
Arne Alsin's #1 Pick: Amazon.com [View article]
Arne Alsin's #1 Pick: Amazon.com [View article]