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  • Facebook Investors: Your Nightmare Has Just Begun [View article]
    Hi milkchaser,

    We agree that Yammer and Chatter are really good tools that drive productivity. But it's hard for us to see how FB gets in the game. That tools is viewed as "outside of work" and usually blocked at most firms. This would make it hard for FB to take share in this space.
    Aug 1 11:57 AM | 1 Like Like |Link to Comment
  • Facebook Investors: Your Nightmare Has Just Begun [View article]
    Zing!
    Aug 1 11:54 AM | 1 Like Like |Link to Comment
  • Facebook Investors: Your Nightmare Has Just Begun [View article]
    Hey Schnids!

    Good points, as always. But our question is: what gets you to 18x 2013 EPS? What is the magic of 18x?

    $10 - $12 would be awfully tempting down there.

    -IM (Mack)
    Aug 1 11:53 AM | 1 Like Like |Link to Comment
  • Facebook Investors: Your Nightmare Has Just Begun [View article]
    Do you have a confederate dollar? That would be awesome.
    Aug 1 11:45 AM | 1 Like Like |Link to Comment
  • Facebook Investors: Your Nightmare Has Just Begun [View article]
    Hi FWS,

    We agree with @mjk0259 - no one made investors buy the facebook stock. All this information was public and provided in the S-1. We don't think $FB did anything illegal, just a crappy job of offering stock at a reasonable valuation and a really poor job of managing dilution.
    Jul 31 06:08 PM | 1 Like Like |Link to Comment
  • Facebook Investors: Your Nightmare Has Just Begun [View article]
    Don't most companies pay Facebook when are clicked (CPC), not just impressions (CPM)? We hear that companies want to direct ROI analysis with clicks vs. impressions.
    Jul 31 05:40 PM | 1 Like Like |Link to Comment
  • Red Hat Is Overvalued [View article]
    You comparison only contains those of relatively low P/E. Why not include $RAX, which is trade at 70 P/E, $VMW, which is trade at 52 P/E. Red Hat is the first billion company in open source and it has FCF almost $7/share. If you count these, it should be traded at fair price.
    Jul 27 10:04 AM | 1 Like Like |Link to Comment
  • Salesforce.com Grossly Overvalued [View article]
    Cash is a better gauge of corporate health than earnings b/c you can't manipulate cash like you can earnings.

    As for the CFO selling, that is a red flag.
    Jul 22 06:49 PM | 1 Like Like |Link to Comment
  • Watch Your Head, The Sky Is Falling [View article]
    Hi Neal,

    Fair point, and we appreciate your thoughts. Hopefully we are being intelligent with our analyze -- in an attempt to avoid being armchair quarterbacks, which does happen a lot these days. But our take is that Central Bankers may not know what us really good for a country, or certainly do not have the incentive to make hard, but logical long-term decisions. They want to stay in office and let the next guy take the fall when the shit hits the fan.

    Just the recap, the risks we called out are:
    1) Excessive spending by central banks
    2) Zero interest rates in Europe and U.S.
    3) Slowing Chinese economy
    4) Disastrous economy in Spain

    With a market at 13x 2012 EPS, we think market is not pricing in these risks. Especially with such low-quality earnings based on federal governments being so in debt and pumping money into system.

    Thanks for the thoughts! We love the debate / discussion.
    Jul 9 10:53 AM | 1 Like Like |Link to Comment
  • Buy A Chipotle Burrito, Not The Stock [View article]
    Thanks for the comment Moon! I have to disagree though. Chipotle is almost single handedly revolutionizing the fast-casual industry. More and more quick-service restaurants are transitioning into a more fast-casual type of approach because they see the success restaurants like Chipotle are having. If it was just a fad restaurants like California Pizza Kitchen would not be making brand extensions into the fast-casual segment by introducing CPK ASAP. The quality of food Chipotle is able to produce at their current price-point is unparalleled across the restaurant industry, which is why they are here to stay. Again, I am arguing against Chipotle's valuation, not it's fundamentals.
    Jun 27 03:30 PM | 1 Like Like |Link to Comment
  • A Deep Dive Into LinkedIn's Q1 And How You Can Justify The Valuation [View article]
    Dear IMPAROOO,

    You don't have to be rude. We are simply sharing our analysis on LinkedIn and thoughts on valuation. We just want to provide an in-depth analysis of the quarter, and help people make informed investment decisions. We are happy to engage in thoughtful dialogue on the investment thesis, but we are not interested in engaging with people that just want to attack us.

    We do wan to address some of the points you brought up because we have a different take on the situation:

    NO MOAT?
    We think there is a massive moat being built around LNKD because the whole business model is built on the power of the network effect. With millions of professionals and recruiters on LinkedIn, and no competitive alternative, LinkedIn distances itself from the competition everyday. The information that professionals (job seekers) are providing voluntarily is robust and highly valuable to recruiters. The growth in paying customers (on the recruiter side) proves this point.

    Just like you don't want to switch from Facebook because all your friends are there, job seekers and recruiters have very little incentive to switch because they spent all this time and energy building their network on LinkedIn. This is the definition of customer captivity / high switching costs. Remember, the market will value Facebook at $90 billion and LinkedIn at $13 billion - so the market agrees that friends is a bigger business than professionals (at least for now), so it's o.k. to think that Facebook is a better platform -- you will pay for it in the stock price.

    Also, the ability to build a professional brand online is super powerful. Just because you don't value your resume or career as much as your friend network on Facebook, that doesn't mean the rest of the population thinks that way. Using one data point and extrapolating that across the world is not a intellectual accurate approach to industry / stock analysis.

    People invest heavily in their career, and LinkedIn is providing a unique platform to make this easy and accessible to employers that want to hire people.

    INSIDER SELLING:
    We are fine with this as part of the reason to go public is to provide liquidity for early investors and management. However, your point will take on more importance if it becomes more prominent.

    WHAT IS THE EARNINGS POWER?
    We focus on the cash generated by the business model. For example, in Q1, LNKD generated $0.57 in Cash From Operations per share and $0.37 in Free Cash Flow per Share. So the non-GAAp measure actually understates the earnings power of the company.

    CASH FLOW LONG TERM
    Yes, we do believe that this quarter was an inflection point in cash flow. Most companies earn cash flow for very long periods of time, so we are not sure why your think this assumption is hard to believe. Now that LNKD has built the foundation and investing in heavy marketing, they are benefiting from a lower on-going cost structure. Combined with increasing revenue growth, this will drive higher cash flow for a long time to come.

    VALUATION.
    We are arguing that by looking at 2013 EPS, the stock valuation can be justified. The market looks ahead 12 months, so looking beyond 2012 EPS is logical -- we're already 35% through the year.

    Hope these responses address you concerns.
    May 9 02:53 PM | 1 Like Like |Link to Comment
  • Red Hat: A Software Investment For The Next 30 Years [View article]
    Barry,

    Awesome explanation of the business model, industry, and valuation. We think Red Hat is Best-of-Breed in the software / cloud computing industry, and have a N-T fair value of ~$50 (35x our forward EPS estimate).

    Customers are definitely trying to avoid traditional software and platform lock-in as they move to the cloud, and RHT offers one of the best solutions on the market.

    -Evan, CEO of Investors Mosaic
    Feb 13 10:37 AM | 1 Like Like |Link to Comment
  • Deep Dive Analysis Of Rackspace's Q3 [View article]
    I guess I view it differently. Since servers cost money, they are a cost. Therefore, getting more revenue from the same asset (that costs you money) is a good thing. Hence, why server utilization matters.
    Nov 23 06:40 PM | Likes Like |Link to Comment
  • Rackspace: The Best Business Model In The World [View article]
    Fair point. But I did say that I am willing to pay 50x forward earnings or 15x EBITDA for this business.

    Here's the quote:
    "The company's services, along with their competitors, are so instrumental to the proper working of the modern internet we think the company deserves a premium valuation. Specifically, we are comfortable paying 50x forward EPS and 15x EBITDA for this business. We have a hard time finding a business model that has such a long runway for growth, such a sticky business, and innate competitive advantages."

    I am betting on continued strong execution by management, so if this does not play out, the stock will certainly fall meaningfully.
    Nov 21 11:36 AM | Likes Like |Link to Comment
  • Why I'll Never Short Salesforce.com [View article]
    Another example of why CRM can't be shorted.
    Nov 21 11:31 AM | Likes Like |Link to Comment
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