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Boris Marjanovic  

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  • If YouTube Is Valued At $80 Billion, How Much Is Netflix Worth? [View article]
    "Despite accelerating revenue growth, YouTube’s operating model isn’t quite as good or as profitable as Netflix’s business. Netflix probably deserves a premium to YouTube."

    Whoever says that YouTube's "operating model isn't as good as Netflix's" clearly doesn't understand YouTube's operating model!

    YouTube, unlike Netflix, benefits from a tremendous self-reinforcing network effect. The more people use YouTube, the more people are going to use it and the more YouTube content will be uploaded (by the way, the majority of that content is free...YouTube doesn't have to pay for it like Netflix). It's a wonderful competitive advantage that Netflix simply does not and cannot have.

    Moreover, Netflix is not profitable on a cash-flow basis. Sure, it has positive net income, but net income is just an accounting number. It's not real money. Netflix's free cash flow has been deteriorating for years (and is negative now). Netflix also has billions in off-balance sheet content liabilities, which continue to grow every quarter, so its financial situation is also worsening. Simply put, Netflix is a literal "House of Cards." YouTube doesn't have any of these problems and, as mentioned, benefits from a tremendous network effect advantage.

    In short, if I had to chose between the two businesses I would chose YouTube. It's a superior business in every way.
    Jul 28, 2015. 08:56 PM | 2 Likes Like |Link to Comment
  • Buying Apple: Consider The Scale Of The Potential Investment [View article]
    investingInvestor,

    "Model FCF for 4 or more years for every revenue stream. Do not get complacent!"

    As someone who actually used to do that for a living (I used to be an analyst...not something I'm proud of), I can tell you that modeling is complete BS! I've seen thousands of models made by Wall Street analysts and they all have one thing in common -- they are always wrong! In fact, the more sophisticated a model is, the more wrong it tends to be. (Anybody who has a basic understanding of probability will understand why this is so.) In short, attempting to make precise predictions about the unknowable future is junk science done by charlatans.
    Jul 23, 2015. 03:10 PM | 29 Likes Like |Link to Comment
  • A New CEO Won't Save Twitter [View article]
    Joemaht,

    "From my experience, the most important person of the company is the leader or CEO of the company, no matter how big or small the company is. I stopped reading after the summary!"

    Your experience is anecdotal and is not a valid argument. The objective empirical evidence is what matters, and it strongly suggests that the competitive advantage of the company matters more than the CEO.

    Moreover, the fact that you stopped reading after the summary suggests that you only read things that agree with your preconceived opinion. This is not how you learn new things. People like you believed that the earth was flat -- even though the evidence proved that it was in fact round. I think it's best for you to stop commenting, it only shows your laughable ignorance.
    Jul 19, 2015. 10:04 PM | Likes Like |Link to Comment
  • A New CEO Won't Save Twitter [View article]
    cheninNY,

    "Guys a good CEO can turn around the company period."

    You clearly did not read my article. I cited a lot of example where good CEOs failed at managing struggling companies. In fact, according to studies that looked at hundreds of management changes, bad companies are rarely made good by bringing in a good CEO. The objective empirical evidence is what matters, not what you "feel" is the truth. Your feelings and subjective opinions are meaningless (and usually wrong).
    Jul 17, 2015. 10:50 AM | Likes Like |Link to Comment
  • A New CEO Won't Save Twitter [View article]
    firehouse92,

    "People did questioned mark's ability to monetize the platform. No one questioning now. I believe he could do the same to Twitter if he were to run it."

    Facebook was profitable within a few year after it was started. Twitter has been around for a decade and never earned a penny.

    Zuckerberg got lucky with Facebook. In my article I mentioned an interview in which he clearly stated that he did NOT create Facebook in order to generate revenue. In another interview he said he originally created the website with the intention of only getting 400 to 500 users at the most.

    Facebook, at least the Facebook of today, was clearly never planned. It was an accidental success -- Zuckerberg himself has mentioned this countless times. If he left Facebook and ran Twitter, he would struggle just like all of Twitter's former CEOs. Twitter is simply an inferior business . . . not because it has poor management, but because it was less lucky than Facebook.

    People have this illusion that the managers at the top change everything, but they simply do not and cannot. The economics of the business matter most. Put me in charge of running a company like Google and I guarantee it will continue growing and generating record profits. If I was forced to run an inferior business like Yahoo, on the other hand, it would not be as easy -- in fact, I would probably fail. In short, bet on the horse (company), not the jockey (boss).
    Jul 17, 2015. 10:44 AM | Likes Like |Link to Comment
  • A New CEO Won't Save Twitter [View article]
    celina,

    At least Facebook was profitable and had many more users. Comparing Twitter to Facebook is like comparing apples to oranges . . . Facebook is a significantly better business, it's not even a fair comparison.
    Jul 16, 2015. 12:32 PM | Likes Like |Link to Comment
  • A New CEO Won't Save Twitter [View article]
    "Ignore the celebrity CEOs and invest in the hard working dedicated, unsung heroes of capitalism."

    Very good advice! The more time a CEO spends trying to be a celebrity, the less time he is spending on building the company.
    Jul 16, 2015. 12:30 PM | 1 Like Like |Link to Comment
  • A New CEO Won't Save Twitter [View article]
    Bizlike,

    "I agree that TWTR will never have as many users as Facebook, but I think the reason has not so much to do with network effects as it has to do with its target use and public."

    Okay, I can largely agree with you there. Then what Twitter needs to focus on is greatly increasing ad revenue per user. The problem is, of course, Twitter's platform is not as well suited to display ads as Facebook's is. Twitter needs to make some major changes, and there is no guarantee that these changes will be worth the effort and money that needs to be invested.
    Jul 16, 2015. 12:27 PM | 1 Like Like |Link to Comment
  • A New CEO Won't Save Twitter [View article]
    Bizlike,

    "For he who only tries ones, luck is very relevant; for the perseverant one however, he who tries over and over, he who never gives up, luck ends up being more like an anecdote."

    Luck always plays a role, sometimes in a big way. Of course, if you work hard and never give up it greatly increases your chances of success. Then again, both of my grandfathers worked hard for many decades -- in fact, worked two full time jobs for the majority of their lives, and yet they never achieved any great success . . . perhaps it's because of the lack of "lucky opportunities" in the place they were born, or maybe having to live through and fight in multiple wars also had something to do with it.

    It's easy to sit there in your comfortable little chair behind your keyboard and say hard work is the only thing one needs in order to achieve success. You don't know what true hard work is my friend. There are 7 billion people on this planet -- the majority of them will remain poor their entire lives, not because of a lack of work ethic and perseverance, but because of the unlucky circumstances they were born into.
    Jul 16, 2015. 12:19 PM | 1 Like Like |Link to Comment
  • A New CEO Won't Save Twitter [View article]
    Contrarian724,

    First of all, I want to say that I'd love to be proven wrong. I want the company to succeed. I am not shorting this stock, so I have no incentive for it to do poorly. With that said, it is obvious -- and every rational investor would agree -- that Twitter is an inferior business when compared to a Facebook or a Google. The company has been around for nearly a decade now, went through several CEOs, and still has not earned a single penny. The business model obviously sucks. If foolish investors weren't giving it free money to burn, this company would have disappeared a long time ago.

    All I am saying is that, according to the vast amount of empirical evidence, a company that has always struggled will likely continue to do so. If I was forced to bet my entire net worth on whether or not Twitter would succeed, I would bet that it would fail. It's the rational thing to do. Sure, there will be rare exceptions once in a while, but over a large sample size, bad companies remain bad and good ones remain good. Management changes (and the research proves this) make little difference when it comes to corporate performance.

    Again, I try to be as objective as possible. I hope the company succeeds, but the evidence suggests it probably will not.
    Jul 15, 2015. 07:39 PM | 2 Likes Like |Link to Comment
  • A New CEO Won't Save Twitter [View article]
    "That it does not enjoy the network effect?"

    Twitter does benefit from a network effect, albeit a weak one, when compared to Facebook's network effect. That's why Facebook had more than 2x the users when it was Twitter's age.
    Jul 15, 2015. 02:42 PM | 1 Like Like |Link to Comment
  • A New CEO Won't Save Twitter [View article]
    "Put the right CEO on charge and it will turn TWTR into a $50B company in a few quarters."

    The market cap could increase temporarily, the question is will the business improve? The empirical evidence suggests it won't. Most poorly performing companies continue to perform poorly regardless of who is in charge.

    The difference in financial performance between Twitter and Facebook is so huge that it can't all be attributed to management . . . luck has a lot to do with it.
    Jul 15, 2015. 02:38 PM | 3 Likes Like |Link to Comment
  • A New CEO Won't Save Twitter [View article]
    mrgoriganti,

    Yes, luck plays a huge role in every aspect of life. That is correct. Sadly, people too often think skill is all that matters.
    Jul 15, 2015. 01:53 PM | 2 Likes Like |Link to Comment
  • A New CEO Won't Save Twitter [View article]
    monfrere,

    Whenever someone angrily says an article or research paper presents "nothing new," it usually means that it's very well written and brings up interesting arguments. In academia, for instance, some of the best papers (like those that won the Nobel prize) presented "nothing new" according to the critics. I take it as a compliment.
    Jul 15, 2015. 01:51 PM | 4 Likes Like |Link to Comment
  • A New CEO Won't Save Twitter [View article]
    Stocks99,

    Judging from your angry comment, it's easy to tell that you are a Twitter investor who lost money. It's not a big deal, we all make investment mistakes.

    "Looking for objective views and what might be possible with the right leadership."

    As I mentioned throughout this article, there is no "right leadership." Costolo wasn't as bad as people make him out to be, he was just unlucky in the fact that he was the leader of a bad company. There is a lot of luck involved in corporate performance. The simple fact of the matter is that Twitter does not have the same advantages that Facebook has. Facebook has these advantages, not because it's better managed, but because it was more lucky. It doesn't matter who the new CEO is, Twitter's performance won't change much. The economics of the business itself matter most, not the management team.
    Jul 15, 2015. 01:46 PM | 3 Likes Like |Link to Comment
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