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Bill Wolf

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  • U.S. Conservatives Too Influenced by Mistakes of the Austrian School [View article]
    You need to do some reading on Austrian economic school of thought. The point is that the excesses wouldn't be as extreme without government intervention (primarily the federal reserve). Yes, they acknowledge that greed can fuel overinvestment. But, their position is that without free money (provided by central bankers), the train doesn't leave the station AND have fuel added as it heads over the cliff.
    Government had nothing to do with accounting abuses? How do you think the GSE's were set up? Don't you realize they became a tool of the push for "affordable housing"! Don't you realize that the quasi-government backing (ie original intervention to subsidise housing) led to an assumption that the GSE's debts were guaranteed by the government, and that led to further government intervention?
    Also, who do you think wrote legislation requiring ratings, and also setting up an oligopoly to provide those ratings? Government? Maybe? Oh yes!!! That's not a market based solution.

    You sight private short-sightedness, unrestrained greed, and accounting abuses and credit ratings all caused this crisis. The government is behind every one of those reasons with free money (easy credit) and legislation creating special entities. Do a little more research before publishing such gibberish...
    Jan 28 10:57 AM | 15 Likes Like |Link to Comment
  • Why Netflix Could Be Bankrupt Within A Year [View article]
    streaming costs are only "debt" as you term them and paid back with "net income" if you consider their cost of goods sold as 0. Streaming costs are discharged through COGS, so your analysis is 100% flawed. Streaming content deals are their inventory, not debt. Does any company "pay" for their inventory by charging COGS when matching revenues are recorded? Yes, just as Netflix will.

    When you say, "So to summmarize, as of 6/30/11, Netflix had $175 million in cash. Most of its other assets consist of the streaming content library that has an expiration date. They've made $128 million in net income year to date, and have generated negative cash flow YTD (-$19 million). Yet Netflix owes $1.157 billion within a year." you demonstrate little understanding of their financial model. True debt doesn't get discharged through Cost of Goods Sold. Future inventory purchases will and thus are essentially paid off by revenue, not cash on hand or net income. Their revenues EASILY cover any obligation they have undertaken on the streaming content, with a nice margin to boot.
    Oct 11 01:14 PM | 8 Likes Like |Link to Comment
  • Microsoft's Blind Bulls [View article]
    Boy this looks just like a business that is about to fall off a cliff and die in 2 years...
    Revenues from FY-Q1 2005 to FY-Q1 2011
    climsy.com/7Xkdal4k0b.jpg
    Remember, Google Docs launched in June 2006... Big impact there!
    Operating Income from FY-Q1 2005 to FY-Q1 2011
    climsy.com/7Xkd4l4k0b.jpg

    Remember, at 8X earnings (and with FCF equaling earnings), in about 8 years they could buy back the whole company if earnings are just flat...

    May MSFT be gone in 20 years? Yes, but its priced as if its going away in 4. As Pygmalion mentioned, price matters, and the downside is priced in.
    Apr 14 05:38 PM | 8 Likes Like |Link to Comment
  • Knight Capital Group: An Object Lesson In Emergency Financing [View article]
    Sorry John, you've reached the point when you do have something on the line and I think you know it.
    Aug 7 10:47 AM | 5 Likes Like |Link to Comment
  • Tesla's Troubling Risk-Reward Profile [View article]
    and the "future returns to shareholders" are derived from profits of selling products and services. You can't estimate future returns without having a view on the product. Its tough to have a view of the product if you don't go try and experience it. To say its of no interest is intellectually lazy. Best of luck to you too, sincerely.
    Jun 7 10:12 AM | 5 Likes Like |Link to Comment
  • Tesla's Troubling Risk-Reward Profile [View article]
    So you can pontificate on stocks (especially on a one product company) without thinking about their products? Genius, John. Companies are the sum of the products and services they sell, no?

    Also, no comment on the "sales statistics" of A6 and BMW 5 series bc they don't fit your thesis? Hmm...
    Jun 7 09:48 AM | 5 Likes Like |Link to Comment
  • Why Netflix Could Be Bankrupt Within A Year [View article]
    Rocco, I argue b/c the accounting used to justify the argument is wrong. If you think it is ok to compare apples and oranges, then I can safely say we will disagree.
    Oct 11 02:09 PM | 5 Likes Like |Link to Comment
  • Why Netflix Could Be Bankrupt Within A Year [View article]
    Be glad to help. First though, don't forget, the current streaming accounts are accounts payable and offsetting inventory. ie, working capital. Not debt!

    Here is their gross margins for the last 14 quarters.

    31.7% 31.8% 34.2% 35.2% 34.2% 34.1% 34.9% 38.0% 37.8% 39.4% 37.7% 34.4% 39.0% 37.9%

    Those average out to 35.8%. Their COGS ex-content cost has been running at about $260mm the last 2 quarters. Lets annualize that and put it at $1.04 Billion. Now the content costs they will incur in the next year are on the balance sheet as "current content library" + the off balance sheet content costs that you cite, = 499.434 + 624.545 = $1,123.979. So, if we add up the two categories content COGS and non-content COGS, we get the amount of COGS they will have to cover which = $2,163.98. We now divide this number by (1-Gross Margin average of 35.8%) to get the revenues needed to cover this COGS level. that comes out to $2163.98 / .642 = $3370.68. So, if they have these revenues, they won't have problems covering the nut that you are worried about. Looking at Wall St. estimates for the next 4 quarters for NFLX on my Bloomberg, I get an average of $3813.4mm in revenues according to the sell side. In other words, NFLX is expected to have about 400mm revenues more than necessary to cover their content costs and achieve a 35.8% gross margin.

    Finally, one thing to remember, accounts payable is the amount of inventory that publishers have agreed to fund for up to the next year. It does not run through COGS, as the inventory line does.

    Hope this helps.
    Oct 11 02:04 PM | 5 Likes Like |Link to Comment
  • Tesla's Troubling Risk-Reward Profile [View article]
    Your comparisons to Leaf and Volt are ludicrous. Look at the volumes of audi A6s sold and compare the cachet of that luxury vehicle vs the Tesla Model S. your buyers of this vehicle are not the Leaf buyers. They are luxury car consumers, that like the added perceived value of being environmentally conscience on top of having a vehicle with better performance. it's the brand that has the value going forward. They have proven they can technically build them. I believe they can build them at a profit given their timely purchase of the NUMMI factory. If volumes ever come close to Audi A6 numbers in the next 10 years a $3B market cap will look like a pittance.

    PS, Audi sold >200,000 A6s in 2011 at about $50-55k. BMW sold 300,000 5 series (touring and sedan) in 2011.

    http://bit.ly/KWHQsd

    http://bit.ly/Lx4MKh (pg 25)

    Finally, John, have you sat in one of the cars? If you haven't, you should as minimal due diligence before pontificating on their product on a daily basis.
    Jun 7 09:02 AM | 4 Likes Like |Link to Comment
  • Why July's Weak Capital Goods Orders Were Possibly Misleading [View article]
    LOL!
    Aug 25 01:44 PM | 3 Likes Like |Link to Comment
  • The Number Receiving Unemployment Insurance Is Down 25% [View article]
    Always optimistic, and likely losing clients' money nearly as often...
    Jul 1 04:18 PM | 3 Likes Like |Link to Comment
  • Coinstar: Medium-Term Catalysts Present Shorting Opportunity [View article]
    Interesting article and nice job doing detailed work. Make sure you read these articles. While your marginal analysis is relevant, remember boxes mature over time...

    Please read these articles to see how the kiosk economics are performing. It's actually much better than you portray.

    http://seekingalpha.co...

    http://seekingalpha.co...
    Mar 28 07:01 PM | 2 Likes Like |Link to Comment
  • Home Inns & Hotels Management: Opportunities In Chinese Lodging Defy Macro Uncertainty [View article]
    Kevin, you state, "Over the past year, macro concerns have reduced HMIN’s P/E ratio from around 65x to the current 50x level."

    This is incorrect. My guess is that you are using the shares outstanding they publish * the share price for the Nasdaq issued HMIN. Remember, each ADS (HMIN share) represents 2 shares outstanding. So, divide the shares they publish in earnings releases by 2. Their market cap is roughly $1.2B. In 2010, they did $55mm in net income. That is 21.8X earnings. Moreover, also note that on page 3 of their 20F, http://1.usa.gov/szKzA3
    they note Earnings per diluted ADS in $ terms was $1.28 for 2010. That is a 20.7X PE. (Difference is due to slight change in shares outstanding from issuance of 20F to today, due to options).

    In either case, the PE is about 21, not 50.
    Dec 27 10:21 AM | 2 Likes Like |Link to Comment
  • A Value Investor's Case For Clearwire [View article]
    Cale, very good write up. Nice work.

    One thing I think that has been missed in the analysis of the overall performance of CLWR stock (since March or so, down from $6) is that in a deflationary, credit crunch affected world, highly levered entities suffer. You note that equity dilution fears seem misplaced, but the overall funding environment is poor and worsening. This gives less margin of error for the operating results over the next 18 months. May not be rational or fair, but it is reality when you are not relying solely on internally generated capital. Equity dilution fears would be overblown in a global macro environment of expanding credit. Unfortunately, that is not the times we find ourselves in.

    Again, good analysis.
    Sep 28 10:50 AM | 2 Likes Like |Link to Comment
  • Coinstar: Tablets Killed The Video Kiosk Star? [View article]
    Read the article my friend. Its about substitute products and time allocation. I didn't say that people are necessarily watching movies on their tablet!
    Feb 11 10:49 AM | 1 Like Like |Link to Comment
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