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Gene Chan, CFA

 
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  • Amazon +8%; EPS beat, margin gains overshadow revenue softness [View news story]
    Seng,

    Free cash flow was much less than that. From the press release:

    "Free cash flow decreased to $1.95 billion for the trailing twelve months, compared with $2.03 billion for the trailing twelve months ended December 31, 2013."

    And this doesn't even take into account their capital lease commitments.
    Jan 29, 2015. 05:45 PM | 8 Likes Like |Link to Comment
  • Amazon, Costco And The Wisdom Of Crowds [View article]
    How can you look at the call options only, without considering the puts?

    If you did same analysis on puts, you'll see that AMZN puts are also consistently priced higher than COST puts. The reason for the premium is the underlying volatility of their respective equity, not evidence of investor optimism.

    This doesn't falsify the Wisdom of the Crowds theory, but it certainly debunks your article's application of it.
    Jan 23, 2015. 04:18 PM | 2 Likes Like |Link to Comment
  • Understanding How Amazon's Use Of Capital Leases Overstates Its Cash Flow Metrics [View article]
    OK, no disagreement there.
    Dec 11, 2014. 11:18 AM | 1 Like Like |Link to Comment
  • Understanding How Amazon's Use Of Capital Leases Overstates Its Cash Flow Metrics [View article]
    Again, the point is to show that FCF is not a good number to gauge the economic health of companies with lots of capital leases such as Amazon, yet Amazon keeps telling investors to focus on FCF. So I repeat again, the point of this article is to discredit Amazon's efforts at misdirection.
    Dec 11, 2014. 10:52 AM | 3 Likes Like |Link to Comment
  • Understanding How Amazon's Use Of Capital Leases Overstates Its Cash Flow Metrics [View article]
    I don't think the point of the article is to dispute the GAAP treatment - it is to discredit Amazon's misdirection of investor's focus.

    The point here is that "any other business" would pay attention to earnings, which mutes the impact of capital leases because depreciation is expensed.

    Amazon, however, tells everybody that earnings is not a good number to focus on, instead we should look at FCF. Meanwhile they enter as many capital leases as possible, which renders FCF a number with no bearing on Amazon's economic reality.
    Dec 11, 2014. 10:38 AM | 6 Likes Like |Link to Comment
  • Understanding How Amazon's Use Of Capital Leases Overstates Its Cash Flow Metrics [View article]
    Wow, AMZN is down 21% YTD. Shorting it has been a great bright spot in many people's portfolio.

    It'll probably tank some more as we get to year-end tax loss selling.
    Dec 10, 2014. 04:35 PM | 6 Likes Like |Link to Comment
  • BlackBerry: Are We Turning A Corner? [View article]
    Paulo, your comments seems to reflect a view of BlackBerry as a hardware company. This may have been true in the rearview mirror but you're looking at the wrong things - they are expecting to grow software & services revenue by 100%. Their BES 12 play (and their mobility software stack) supports iOS, Android, WP, and BlackBerry.

    They are keeping the hardware business around so that those customers who must have end-to-end secure solution (from server to device hardware) can buy BlackBerry phones. It is intended to be a niche product going forward. The new devices (e.g. Passport, Classic) are not produced in volume that will cause a write-down, and they are priced at a high enough premium for the niche industry that they are not losing money.

    Your comments would've been accurate for 2 years ago before Chen took over, when BlackBerry was still aspiring to be a hardware play in the consumer market. Focus has completely changed since then, and they are building a lot of traction. As someone else mentioned, every milestone set by Chen so far has been hit or exceeded.
    Dec 4, 2014. 01:41 PM | 20 Likes Like |Link to Comment
  • Rating Agencies Disagree On Amazon Too [View article]
    Did you read? The money is NOT cheap this time - Amazon is paying a higher spread than any investment grade issues.
    Dec 4, 2014. 11:09 AM | 3 Likes Like |Link to Comment
  • Amazon, eBay higher following Thanksgiving sales data [View news story]
    Of course they start smaller, that's what "catching up" means. Otherwise you should be buying Walmart, who still has bigger absolute dollars from retail than Amazon.
    Nov 28, 2014. 03:33 PM | 1 Like Like |Link to Comment
  • Amazon, eBay higher following Thanksgiving sales data [View news story]
    Wow - all other online marketplaces outside of AMZN and EBAY grew 110%? Looks like everyone is catching up and Amazon is no longer a marketshare gain story.
    Nov 28, 2014. 01:32 PM | 3 Likes Like |Link to Comment
  • BlackBerry launches holiday season promos [View news story]
    SMH at the inability of Mr. KIA to tell the difference between "competitors" and "partners". Sign of someone desperately grasping at straws.
    Nov 24, 2014. 10:44 PM | 9 Likes Like |Link to Comment
  • Amazon.com Won't Back Down, And Neither Should Its Shareholders [View article]
    Paulo - I look forward to the article. My back of the napkin math actually shows that Amazon will run into cashflow issues in the near term.

    But I agree that they won't go Chapter 11 right away... Obviously they'll try issue more debt first or (if they're smart) raise money with a stock offering. So it'll be a long road down, with real liquidity problems arising after rating agencies start downgrading their debt, thus raising Amazon's borrowing costs.
    Nov 21, 2014. 01:08 PM | 4 Likes Like |Link to Comment
  • The $800M Secret The BlackBerry Shorts Don't Want You To Know About [View article]
    Good point. They mentioned "fixed royalty payment" so it probably is a flat fee agreed when they had the old device volume, and BlackBerry just amortizes the total flat fee across the actual devices sold.

    It could also be multiple separate deals that were renegotiated and arranged to expire in Nov.

    It doesn't matter that much though - we know the lump sum is 800M, which line it comes from is an accounting artifact and has no bearing on the business.
    Nov 18, 2014. 04:26 PM | 2 Likes Like |Link to Comment
  • The $800M Secret The BlackBerry Shorts Don't Want You To Know About [View article]
    The royalties are typically paid on a per-device basis so it would not be surprising for a big part of it to be COGS. Although some of it could be operating expense if they're licensing some tech for general operations (e.g. running the NOC servers). There's nothing that says the entire 200M/Q needs to come from a single line item.
    Nov 18, 2014. 03:53 PM | 2 Likes Like |Link to Comment
  • The $800M Secret The BlackBerry Shorts Don't Want You To Know About [View article]
    I was just about to write about the $800M of savings in an article called "BlackBerry's Secret Sauce" - thanks for getting it there first, saved me some troubles!

    It's interesting that BlackBerry brought up these 800M savings early in the year, and then never mentioned it again. It's as if they're doing this on purpose. And yet you can't fault them for not disclosing material information. It's not their fault that we have collective amnesia.

    The street fell right into it, setting up for a huge surprise - Chen is probably laughing his head off in his corner office.
    Nov 18, 2014. 02:19 PM | 25 Likes Like |Link to Comment
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