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Dana Blankenhorn
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Dana Blankenhorn has been a business journalist since 1978, and a futurist all his life.He warned about the coming Houston oil collapse in 1979. He began making a living on the Internet in 1985. He launched the first e-commerce daily for CMP in 1994, warned of the... More
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  • Are We Hitting Peak Google?

    No one sees a tech stock's peak before it happens.

    No one saw Microsoft (NASDAQ:MSFT) losing its battle with the U.S. Justice Department so decisively. No one saw Apple's (NASDAQ:AAPL) deep dive last year. No one, except those who did.

    Well, it now appears we're hitting peak Google (NASDAQ:GOOG).

    To this must be added the growing balkanization of the Web and the rise of "national" search engines like Yandex in Russia and Baidu in China, the increased pushback in Europe on privacy and other issues, and the firm's continued trouble with patents, where it recently lose decisions to both Microsoft and Apple .

    It's not definitive, but the cracks coming before the fall never are, until after the fall comes.

    In order to justify its P/E of nearly 28, Google needs to maintain its 25% top-line growth rate, and grow the bottom line by at least 10% this year. That would mean gross revenue of $62 billion this year with profits near $12 billion - so far it's on $28 billion in revenue and net of $6.5 billion. The assumption is that the second half of the year, especially the fourth quarter, will deliver the goods, but eventually the law of large numbers catches up with everyone.

    What does Google have right now that will move the needle, a lot, in a positive direction? Just as Microsoft remains a Windows-driven company, and Apple remains a device-driven company, Google remains, essentially an ads-driven company. Increased sales of devices through its Motorola unit don't deliver the bottom-line results of its ad sales, and their profitability on all fronts pales in comparison with Apple.

    Plus the natives are getting restless. Samsung continues experimenting with non-Android operating systems like Tizen. Amazon says its devices are based on Android, but Google is making nearly nothing from them, either before or after the sale. And then there's the anti-trust issue, where it still hasn't settled with the European Union over last year's charges and is practically daring the U.S. to open another case against it.

    It all smells like drift. Is it time to take some Google dollars off the table?

    Disclosure: I am long GOOG, AAPL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

    Tags: GOOG, short-ideas
    Sep 18 10:12 AM | Link | 2 Comments
  • YELP And Its Claimed Push Into Delivery

    YELP (NYSE:YELP) began as a social site for chow hounds.

    It's had a controversial run at that. The system can be gamed. Often, it is. When it is, people stop using it. Usage peaked in January and is not rising

    Remember. This is a company that's never reported a profit, since it went public last year. Quarterly revenue is up 75% in that time, but expenses are also up. Cash balances have been declining steadily. Cash flow is barely breakeven. And none of the analysts following the company expect that to change in the current quarter or for the fiscal year.

    The only way this company can survive to profitability is to toss new ideas into the air and hope one sticks. So they're now calling the company and planning to do food delivery. Actually, two partners will do food delivery in limited areas.

    What the company is promising, through its blog , is that spas, yoga studios, salons and dentists - all sorts of professionals - will start booking appointments through its service. Why? Isn't this OpenTable (NASDAQ:OPEN) for other niches? And how is it that Yelp missed its home niche but is somehow going to out-do a company that knows how to do reservations in other niches?

    That's not to say OpenTable is great shakes, either. But it is profitable, and revenues are rising, albeit with declining margins over time. Still, I'd be a lot more willing to bet that OpenTable can execute a program of reservations for other purposes - since that's its business - than that a failing recommendation engine can do it.

    I hold no personal animus in writing this. I don't own YELP stock. I don't own OPEN stock. It's just that I've seen companies manage themselves through press releases many times in my 30 years as a tech reporter, and the story almost always ends in tears.

    That's the way to bet this time, too.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

    Jul 10 2:49 PM | Link | Comment!
  • Want Some American Vanadium?

    Usually I avoid penny stocks. If an investment is sound, what's it doing priced below $1/share?

    There are lots of bad reasons for this. A company could be a classic "pump and dump," a scam run by someone who will publicize a "discovery," get the price up, then dump their own insider shares for a fast profit. Penny stocks live in a sort of investment purgatory, many of them based in Canada, with investment advisors who are sketchy at best.

    With all those caveats, how about some American Vanadium? Here is its Google Finance page. It trades on what is called the Canadian Venture Exchange.

    The stock presently trades near 70 cents/share. That price looks solid, given that $2.5 million has just been placed in the company, with investors holding shares at that price and warrants offering additional shares at CD$1 each.

    American Vanadium has spent most of its corporate life blowing through cash, as its December 2012 and March 2013 statements show. Most of the managers are old mining hands, with the exception of President Bill Radvak, although Radvak also claims a mining degree.

    Radvak's bio on the company Web site says he raised $50 million for Response Biomedical, a Toronto stock (TSE: RBM) which last traded at C$2.30/share. Response makes diagnostics tests for clinical and environmental applications. The company is presently worth $15.4 million and seems to average $3 million in revenue each year.

    Radvak has been busy talking up American Vanadium to anyone who would listen. Here he is with a contributor to TheStreet, here he is blogging at The HuffingtonPost, and here he is making an InvestmentPitch printed at Reuters' site.

    American Vanadium sells what it calls a "vanadium redox" battery, dubbed the CellCube, made by a German outfit called Gildemeister, which can scale its storage and power levels independently, an important advantage in this market. More important for investors, American Vanadium has a mining operation in Nevada, the Gibellini Prospect, which leaches the metal out of of ore and could become the world's low-cost producer, although it presently has just 5% of the world's output.

    There are other vanadium redox makers other than Gildemeister, like Prudent Energy, which was also profiled by the IEEE. If the capabilities of these batteries are proven, it could dramatically hike the demand for vanadium, and thus the value of American Vanadium's mine.

    Now here is the thing. I've studied renewable energy extensively over the last few years. They're right. Vanadium does have unique properties. Grid storage is an immense opportunity, with a ready business model. There is huge untapped demand, and maybe vanadium can tap it.

    This is a sweet spot in the smart grid market. For every Gigawatt of energy throughput, the Department of Energy figures it really needs 200 Megawatts of storage, both to handle renewable energy inputs and to deliver cleaner, more reliable power to computers. The DoE estimates that outages cost customers $79 billion/year, in a $250 billion market, and the agency has been tweaking its rules, most recently in the form of FERC 890, to make certain storage has a business model. The market potential in 2014 has been estimated at $5 billion in 2014.

    So you have a company worth $22 million, with an inside track at an opportunity that will be worth $5 billion next year, and should grow quickly from there.

    If it can tap this market in a meaningful way American Vanadium skyrockets in value. The company has hired Scarsdale Equities as its investment advisor, a sort of Broadway Danny Rose among investment bankers with a half-dozen other clients, all of them penny stocks. But I could find no obvious ties to crooks or fraudsters or criminal records of financial crimes when looking at this company, just a guy who thinks he can make a market in a metal, with assets in place to take advantage of it, and a serious shot at doing just that.

    Want to take a flyer?

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

    Tags: long-ideas
    Jun 28 12:04 PM | Link | Comment!
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