Asset Investing

Long/short equity, momentum, ipos, tech
Asset Investing
Long/short equity, momentum, IPOs, tech
Contributor since: 2012
Company: DJS Internet Solutions LLC.,
The low end Windows RT version will probably be around $500, while the high end Windows 8 Pro version will probably be closer to a $1000.
To the last two posters - Am I reading your comments correctly? Are you already calling Bing a failure?
Thanks, that is what I thought, and it also has a usb port and a mini display port. All of which will let you connect to an external monitor. The point I was trying to make to Northwest Investor (apparently unsuccessfully, but it was 3 in the morning where I am) was that they have ways to increase screen size, there just not going to add every way possible onto a tablet.
Great discussion, I had no idea people were so passionate about Microsoft.
I didn't say in the article that this was an iPad killer because I think this is a completely different market (at least for the Intel version). The tablet market is still in its early stages and there is plenty of room for both of these products as they each fill different needs.
@Northwest Investor - I understand your concern about screen real estate. As I am writing this I have 24 browser windows open, a Filezilla window, Rapid PHP program, two notepad windows and a system folder. The real estate problem could easily be solved with an external monitor port or an HDMI port or even a USB port. But that would increase the size and weight and once you start adding stuff like that, it becomes just another laptop.
I haven't played with the surface yet, but it looks like the keyboard has a touchpad mouse similar to most laptops. That alone would be a 100% improvement over the copy and paste functions of other tablets.
The company also said it has a new way to vent the internal components so that it doesn't heat up like the iPad. I'm still just guessing like everybody else, but they probably have other upgrades to things like the CPU so that it can handle resource intensive applications.
I also don't think they should be scrutinized for announcing it months in advance. I'm sure they did it to get people that might want it, to save their money and not buy other devices and for developers to increase app development and software development for Surface and Windows 8 in general.

I would definitely have a need for this device, just like many other people here. I don't see Microsoft's success and Apple's success as mutually exclusive and 2 and a half years from now I think they will both be double their current stock prices.
Those are valid concerns and GME may have to drastically update its core business of selling used games. I have been a proponent of the video game rental business.
The company is closing 50 more stores than it is opening this year, so there will be fewer 'physical locations' in the future.

Digital sales also include directly downloadable games and portions of games (extra levels, special weapons, etc), for which GME has agreements with Microsoft and Sony.
Whether those two companies produce new consoles in June or later in 2013 is the issue. The last new console release increased GameStop's new hardware sales and software sales by more than 20%.
Another question now is whether increasing the digital business will decrease foot traffic at the physical locations and thereby dampening the effect new consoles have on physical sales.
The Nintendo Wii U should be released before the holiday season and that might give us a window into how effectively GameStop isdealing with the changes in the industry.
Thank you for your comment, I had a couple notes to add to it -
"The remainder of digital sales are mobile/PC-related and are actually high margin and growing"
By 'high margin', the company was saying it's close to 100%.
"the cash position declined preciptously in the latest quarter from ~650M to ~350M"
The company is always flush with cash after the holiday quarter, you can't really compare the fourth quarter with the first quarter -
April 28, 2012 - 329.1
April 30, 2011 - 395.8
May 1, 2010 - 431.9
May 2, 2009 - 230.2
January 28, 2012 - 655.0
January 29, 2011 - 710.8
January 30, 2010 - 905.4
January 31, 2009 - 578.1
Most people attribute the decline to the aging of consoles. Also, you didn't mention GME's efforts to buy and sell used tablets and smartphones. That's part of the $175 million number that the company mentioned as its 'Mobile Business'. That should also bring some foot traffic into the physical stores. You don't think it can hit the projected $575 million in 2013?
1. Both RSH and GME are electronics retailers. The market trades the stocks as retailers, for instance, today retail sales fell 0.2 percent in May and GME sold off.
2. The idea is that the stock price has been depressed based, at least in part, on industry events that will never come to fruition. The estimate the stock price could double by 2014 is based off the predication that it could double operating income from increases in digital sales and its mobile business, its low PPE ratio, software and hardware sales getting a boost from new consoles and other factors related to its business.
The monthly sales report from the International Sleep Products Association was released today and the wholesale dollar value of mattresses and foundations rose 14.5% over April of last year. Unit sales rose 5.4% and the average unit selling price rose 8.7% over April 2011. Needless to say mattress stocks did well today. Sealy Corp. (ZZ), Select Comfort Corp. (SCSS) and Tempur-Pedic International Inc. (TPX) all gained about 5% and Mattress Firm (MFRM) was up $2.90 (8.09%) on the news.
Only 140 total shareholders and only 1.8 million shares outstanding. This company's share price is being controlled by a couple people trading with each other.
Sorry, the Seagate link seams to be redirecting to the wrong link, lets try again -
Seagate -
Okay, that link takes you to a pdf data sheet on the Pulsar which is its leading SSD.
Thank you for your comments. While Seagate and Western Digital are best know for hard drives they also manufacture solid-state drives -
Seagate -
Western Digital -
The fact that STX and WDC are primarily hard drive makers only enhances their pricing power. So they can lower prices on solid-state drives in order to gain a customer who will buy the company's other products. Corsair doesn't have that same luxury.
I don't know how Gamestop (GME) is going to survive, even if the changes mentioned in the article don't happen to the next generation of consoles, gamers are still playing more and more online games. For instance, Zynga is the number 2 game maker out there. GME is going to have to completely reinvent itself.
Facebook says up to 5% are fake or duplicate accounts. That's 40 million accounts. And 900 million active users is a completely meaningless number because there are multiple ways to get counted as an active user without visiting the Facebook website.
After Dell's earnings miss this afternoon, this offering might have a harder time getting to market than I originally thought when I wrote the article.
I have seen numerous reports that Cancer Genetics has cancelled or postponed its IPO. Apparently, those reports may be untrue and the company is still actively talking to investors and looking to price its shares. Sources close to the company say it never intended to go public on the same day as Facebook. I guess we'll see if it can get this deal done.
Great article and you're right, Facebook has had many chances in the past (before Zynga went public) to buy the company and passed on the opportunity. So there is no reason to think they'd be interested in them now.
I agree with you it was a good job from the underwriting perspective. According to Facebooks S1, there are multiple lockup expiration dates. Those dates can always change based on material news, earnings releases, etc.
91 days after, 171,797,666 shares are available for sale
151 to 180 days after, 137 million Pre-2011 RSUs (Restricted Stock Units) and 110 million shares and options are available for sale
181 days after, 1,338,453,216 shares and another 18 million RSUs are available for sale
211 days after, 141,776,569 shares are available for sale
366 days after, 93,815,940 shares are available for sale
I agree, maybe the author is trying to brand the name Sir Perfluis. They should have credited the name on the article.
SDT and SDR are both a little more focused on oil production than natural gas, although one of its best wells is producing 1.5 million cubic feet of gas per day. Both stocks always have a pullback after their dividend dates. The companies production in the Mississippian was started in 2010 and is now up to 26,000 Boe per day with 14 rigs and its plans to have 45 rigs by 2013. These are probably less risky than HGT. MTR has a relatively low dividend and has been selling off recently. The stock is closing in on its 52 week low and you could probably pick it up at better prices in the future.
I have received that communication and I have submitted a correction to the editorial department for approval.
That's a great distinction to point out and for at least the first two quarters FB will not only be a speculative stock, but very volatile. First there was significant retail interest in the IPO and retail investors tend to buy and sell the stock frequently. Then of course tech and internet funds will have to hold the stock. And don't forget there are three lockup periods at 90, 180 and 360 days. After these lockups the amount of shares on the market could double. All that is only going to add to the volatility. If you didn't get in on the IPO, its going to be awhile before you can "invest" in Facebook.
There is a more recent S1 than the one mentioned in your article - There are a lot of items I'd like to take a "closer look at" in Facebook's S1. For one, it mentions that FB is involved in numerous lawsuits. I'd like to know whether that's 10 lawsuits or 10 million lawsuits and what is the average amount of the class actions?
Facebook calculates users who 'Like' a page in its monthly and daily user statistics. Since you don't have to go to Facebook's website to 'Like' something, I'd like to know how many users actually visit the Facebook website and view FB ads on a daily and monthly basis. And how does that affect the revenue per active user?
It would be nice if it could "inject some life" into the market. Until now it seems to have just sucked money away from other issues. Recently, 38 stocks have withdrawn their IPOs, the highest number for this quarter in years. We'll see if there's money left in the market for new issues after the Facebook hype dies down.
Good article. I agree it is out hand, but Einhorn is just the popular name of late. I think the overall market has been trading virtually sideways for so long investors are grasping at anything to find the next trade.
Good article. One thing that wasn't mentioned is the major shift occurring in the video game market away from console based games into online gaming. While in the past Xbox hasn't been the best performing unit of Microsoft, it seems to me that the company is better positioned than other console makers to handle this shift.
I've taken a lot of flak for preferring Google over FB, but I am a small advertiser and I definitely see more misdirects of ads with FB (i.e. ads being delivered to people you are not targeting) than I do with Google. As a small advertiser it impacts my campaign more significantly than it would if I were spending millions of dollars per month on it. However, I would be interested in reading other people's experiences with the two companies.
Just yesterday I was ready an article about someone suing the film makers of "The Social Network" because he wasn't mentioned in the film. It looks to me like there were a lot of people involved in Facebook's creation and Zuckerberg would have us believe it was just him and his computer. -
I have seen the decline in usage also. A few months ago, I posted to my FB page looking for managers for a fantasy basketball league, it was up for 2 days and didn't get any responses (and I have 2400 friends). Then I posted on Google Plus and it filled the league with 10 people in under a minute.
Thank you for your comment. I think I understand why you had a problem with that sentence. When I look at the value of an IPO at the time of its pricing, I put growth on the back burner. Mainly because we don't really know how the company will use the capital it raises.
Facebook, according to its S1 is already sitting on $10.3 billion (in cash and investments) and if the stock prices at $40 it would net another $7.3 billion. So a market cap of $90 billion would only be 5.11 X's cash. It's what Facebook does with this cash that will help determine growth.
If Zuckerberg and his young board (the top 5 execs are under 43) can effectively invest this capital, then I'm wrong and Facebook's value will actually go up after the IPO. For comparison's sake, GOOG is sitting on $23 billion in cash with a market cap of $159 billion and AAPL only has $10 billion in cash (has investments of $81 billion) on $521 billion in market cap.
In the past Facebook has relied on user growth for earnings growth and according to its S1 its intends to put the proceeds into investment grade securities or hold as cash. So when user growth stops, if Facebook does not take steps to increase revenue and earnings from its existing users and technology or invest in new markets, then that is when earnings growth will stop and the stock will go back down to reasonable levels.
So yes, 5 times cash is fairly valued to me, it will probably go much higher on at least the first day. Afterwards, it could either trade like Groupon and immediately come back down or it could pop up like LinkedIn and trade at an enormous P/E.
After dropping its IPO's price range to $10 - $12 per share, Community Choice Financial (CCFI) has decided to postponed its IPO. This is usually a sign the company was unable to get commitments for most or all of the shares in the offering.
Great article. The problem with Facebook's online advertising is it can't deliver ads that are as targeted as Google can deliver. It has even tried asking users if the ad is relevant or to "like" ads and nothing has seemed to work. With the online ad market still in decline and no bottom in sight, that has to hurt Facebook's growth prospects.
I thought you made a great point about internet users. The number of people with access to the internet has soared over the past few years. But I remember almost two years ago people "estimated" Facebook was closing in on 900 million users. So its user growth has slowed, if not stopped completely. So where's the growth?
Rib-X Pharmaceuticals (RIBX) has postponed its IPO indefinitely.
Rib-X (RIBX) has cut its price range in half and now expects to price its shares between $6 and $7 per share. The company has upped the size of the offering to 10 million shares as well.
Thanks for putting those names out there. I wanted to mention AMC because they're the largest exhibitor of 3D and IMAX screens, but it keeps withdrawing its IPOs. Depending on how the summer box office shapes up over the next month, exhibitors will probably deserve their own articles.
MCS is an interesting story because its quarter ends on the last Thursday in May. So its results will have box office from both The Hunger Games and The Avengers. It also will have results from Memorial Day weekend for the quarter. We'll see if any of that is priced into the stock yet, it seems to have traded relatively flat for the past 3 or 4 months.