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  • Care.com Turning Losses Into Profits, Maybe [View article]
    btw, about the CEO, not that I actually have enough information to arrive at this conclusion, but I think Marcello is a good fit for the company.

    She might not be a very calculative and thorough decision maker, but she has the necessary big picture abstract understanding and other key strengths. Fully committed to the company and very energetic keeping the company busy at capturing the market opportunity. Focuses on what's best for the company over the long-term. Probably good at creating culture and getting people to give their best effort, which I think shows when comparing their site, overall concept and new initiatives against the rather bland and less dynamic Sittercity. In addition, she understands the customer base, and is capable of being the face of the company.

    Hopefully they learned a few lessons from the costly CL acquisition. If the reason behind the CL growth setback was indeed the overly promotional model of CL, that's the kind of stuff that the former CFO should have understood. Overall, I can't really say that they are bad at doing acquisitions, since their previous acquisitions have done much better. Probably the IPO money was burning too hot in their pocket this time around. But mistakes happen.
    Mar 24, 2015. 07:21 AM | Likes Like |Link to Comment
  • Care.com Turning Losses Into Profits, Maybe [View article]
    slsmag,

    You are correct that every market has a plateau level. I doubt Care.com is near that level.

    Care needs evolve over time, and the Care.com service offering is comprehensive. Maybe you need a babysitter now and after school care for the kids later on. Perhaps you have elderly parents living on the other side of the country, and you might find the elderly care related services useful. You might get a dog at some point and need to hire a dogsitter. Maybe you want a housekeeper.

    I don’t want to get carried away here, but, as care needs evolve and the platform offers a wide variety of services, a customer relationship could in principle last for decades despite inactivity periods in between. This isn’t your “monthly active users” type of business. Childcare is the most developed segment, but the other segments are likely to gain greater share in the overall mix. Even the childcare segment keeps evolving. For example, childcare companies are increasingly hiring directly from the platform.

    Last year the company wasn’t able to get meaningful operating leverage, since they actively chose to invest aggressively to scale the platform and overall infrastructure to capture the market. So, let’s just extrapolate that and forget the 2015 outlook? The whole “economies of scale” thingy doesn’t make much sense anyway. Especially not with this business model, right?

    As for the cash flow, you are correct that if the business would stop growing for some reason, and/or if they wouldn’t get operating leverage, they would eventually run out of cash. However, as I explained in the article, I think they will grow and they will gain operating leverage. I guess we agree to disagree.

    It’s interesting that you think that the management thinks that the business is seasonal when it actually isn’t seasonal. Now, that would be funny.
    Mar 23, 2015. 06:40 PM | Likes Like |Link to Comment
  • Care.com: An Online Marketplace Of 13 Million Members [View article]
    Fully answering in your comment would be a long story indeed. Knowing your previous over the top negative articles, habit of distorting facts, endlessly lengthy and numerous response comments, as well as your relentless focus on a single company that you supposedly have no position in (you're probably just trying to help?), I'm not even going to dare to attempt.

    However, I do partially agree with your comment regarding the 13 million figure, but I don't think its nearly as meaningless as you imply. I recommend considering the type of the service, the nature of customer relationship activity, and the growth pattern in the more recent years. In terms of factuality, the number of registered members is correct and probably has grown by another million by now.

    By "simply doing the math" you must refer to your financial analysis, which you so generously presented in your previous articles, about practically extrapolating current cash flow trends - including acquisitions - until they supposedly run out of cash. Surely you aren't being serious? Although, perhaps you have some people convinced, which is adequate considering your motivations. Too bad not everyone is going to fall for it.

    I recommend applying your method of financial extrapolation to every growth company. I'm surprised that you got as far as year 3 in your analysis of Care.com. Seems a bit optimistic? You might also educate the current VC people sitting on the board, they must have missed the pending doom when they approved the acquisition. Live long and prosper, my friend.
    Mar 1, 2015. 07:32 AM | 1 Like Like |Link to Comment
  • Care.com: An Online Marketplace Of 13 Million Members [View article]
    I chose to focus purely on the marketplace in this article. Perhaps I will write another article about the profitability and financial position of the company. However, based on my analysis, I don't think the company is even close to "going broke". With its business model characteristics and current growth estimates, achieving profitability seems very realistic within couple of years.
    Mar 1, 2015. 04:58 AM | 2 Likes Like |Link to Comment
  • Symantec's Renaissance Is On The Way [View article]
    I think you made several good arguments that are both relevant and reasonable.
    Feb 26, 2015. 10:09 AM | 1 Like Like |Link to Comment
  • Should You Care About Care.com [View article]
    slsmag,

    Could you provide the source for Breedlove leaving the organization? Thanks.
    Sep 22, 2014. 06:10 PM | Likes Like |Link to Comment
  • More Reasons To Short Angie's List [View article]
    You said "That brings us to the ultimate reason for the short: the business model is flawed and it cannot sustain growth in revenues and users without dramatically increasing costs each quarter."

    While the costs are obviously also increasing, could you elaborate on the business model related reasons and logic behind this statement? In other words, why exactly would they be unable to gain significant operational leverage over time?

    Thanks.
    Sep 20, 2014. 09:13 AM | Likes Like |Link to Comment
  • Care.com: Where Dollars And Portfolio Managers' Track Records Go To Die [View article]
    Disciplined Contrarian,

    While assessing the company, I have been struggling with the question of what is the sustainable number of US child care customers for CRCM and how could one calculate an approximation of plateau level annual revenue for this line of business. Would you have any ideas about how to approach this question? Thanks.
    Aug 7, 2014. 08:25 AM | Likes Like |Link to Comment
  • Apollo May Be The Government's Next Victim In Its Aggressive Oversight Of Financial Aid Recipients [View article]
    It's rather easy to tell one side of a well-known story, and much harder to take into account both the negatives and the positives, especially in relation to the price of the company.
    Jul 29, 2014. 08:15 AM | 1 Like Like |Link to Comment
  • Staples: Why Lousy Companies With Great Managements Are Still Lousy [View article]
    Many good points in your article. You wrote that "Sales on Staples.com fell around 8% in 2013". However, in the quarterly releases the growth rates mentioned for Staples.com are 3% in Q1, 3% in Q2, 3% in Q3 and 1% in Q4 or 10% if 53rd week and currency exchange rates are excluded from the Q4 numbers.
    Apr 3, 2014. 02:30 PM | 1 Like Like |Link to Comment
  • Applied Materials Is Substantially Overvalued [View article]
    You said that you don't want to use earnings or cash flows because of the cyclicality/volatility. You also mentioned that the return on equity is lower than the cost of equity. How did you calculate the "return" part of ROE when earnings are cyclical?

    If you are trying to adjust for cyclicality, why have you selected a time period from 2009 to 2013 instead of a full cycle? For example, from 2003 to 2007, the average P/B was well above 3.50.

    If the correct P/B should be 0.57 as you say, what then would be the cyclically adjusted earnings/cash flow yield?
    Dec 26, 2013. 11:51 AM | 2 Likes Like |Link to Comment
  • Both Apollo And Career Education Shares Went Parabolic This Week. Which One To Short? [View article]
    Fund Manager,

    Instead of current trends continuing to infinity, could there be inflections in some negative trends like enrollment and high youth unemployment? Could the market be predicting an inflection in advance after 11 quarters of declining enrollment?

    What do you think is the value of APOL? To what extent then has the market already priced in the obvious problems that you mentioned?
    Oct 26, 2013. 02:08 PM | 3 Likes Like |Link to Comment
  • Office 365 Free For Students Is A Big Deal [View article]
    In the latest 10-K, pages 6-7:

    "Office, comprising mainly the core Office product set, Office 365, SharePoint, Exchange, and Lync"
    "Office [...] generates over 90% of MBD revenue"

    Dynamics is the other component of MBD.
    Oct 17, 2013. 07:43 AM | Likes Like |Link to Comment
  • Applied Materials Loses Top Spot In Solar Equipment Market [View article]
    Couple of things to note:

    You make it sound as if AMAT had acquired Varian because of its solar tehnology, which quite cleary isn't the case.

    In your article you write: "Applied Materials passed on an opportunity to invest in privately held SolarPA" and make it sound as if this would have been a major opportunity that AMAT missed.

    At the end of your profile, you describe yourself in the following way: "Also in the solar area, he is CEO of SolarPA".

    So, basically you're the CEO of a company that AMAT didn't invest in? This could also be part of the reason why your latest two articles have been perhaps overly negative on AMAT.
    Jun 12, 2013. 03:36 PM | 2 Likes Like |Link to Comment
  • Marvell In Transition - Future Profitability At Risk? [View article]
    Thanks for the insightful comment.

    OCZ is a single example of a larger trend. STX and WDC will say anything to make it sound like the companies are safe and sound.

    I agree that Marvell and LSI currently have a strong position in the SSDs. However, the point is that the long-term sustainability of this position is at risk. Marvell is an innovative company, but so are its competitors. It's in the nature of high tech companies to gain and lose technology based competitive advantages. You're extrapolating the current competitive position even though the competitive environment is changing.

    I agree with that you say about higher ASPs that come with SSD components in the hybrid drives. However, I'm less sure it will translate into higher profit margins. It will more likely be an extension of the HDD margins since Marvell and LSI are likely to dominate hybrids. In addition, maintaining three major product lines, HDDs, SSDs and hybrids, is operationally less efficient than a purely HDD based product portfolio.

    If HDD ASPs begin to fall, the probabilities are that it will affect all the components that go into an HDD. Why wouldn't it? The STX/WDC duopoly has enough negotiation leverage to make sure that the burden is shared. In addition, scale contributes to margins. If the number of HDDs sold goes down, the scale advantages diminish.

    You say that the risks are already priced in. I would say that an average scenario is priced in. A negative is not.

    When competition gets fierce, there's no rule that states that one company will have a substantial enough lead to command a significant price premium. Intel is an anecdotal example that is not generalizable.
    Jun 3, 2013. 02:50 PM | Likes Like |Link to Comment
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