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Jonathan Hwa  

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  • Coinstar Has Asymmetric Upside: Get Redbox Instant And Rubi For Free [View article]
    Hey Adib,

    Thanks for reading. I'm not surprised that management is putting most of their cash to work instead of returning it to shareholders given their current growth prospects (or lack thereof), so I think acquiring ecoATM is a good development. In my opinion, making acquisitions like this will only be a problem if it becomes clear that new ventures as a whole are not working out.

    What do you think?
    Jul 3, 2013. 12:48 PM | Likes Like |Link to Comment
  • Coinstar Has Asymmetric Upside: Get Redbox Instant And Rubi For Free [View article]
    Hi Clint,

    Agreed - they have some great opportunities with Redbox Instant. It's all about execution from here on out for that particular business. We'll see if management can pull it off.

    Thanks for reading.
    Jul 3, 2013. 09:49 AM | Likes Like |Link to Comment
  • Coinstar Has Asymmetric Upside: Get Redbox Instant And Rubi For Free [View article]
    Thanks for reading, Mitch.
    Jul 3, 2013. 07:46 AM | 1 Like Like |Link to Comment
  • Coinstar Shares Are Woefully Undervalued [View article]
    You're forgetting that OCF adds back depreciation expense. Therefore, increased depreciation will decrease your net income but get added back, resulting in a net cash impact of 0 (assuming no taxes). If there are taxes and they are paid in cash, then the net cash impact from increased depreciation is actually positive. In your words, depreciation is a non-cash adjustment - therefore you add it back to OCF.

    Also, if you include interest expense, you should specify that you're talking about levered free cash flow. By definition, unlevered free cash flow, which is the more commonly used metric, is agnostic to capital structure. Therefore payments to debtholders should be excluded from its calculation.

    Changes in depreciation and interest expense have no effect on free cash flow in a tax-free world. With taxes, they would boost free cash flow.

    Do you have other ideas for what's causing that $29m hole in CSTR's projected FCF?
    Jun 23, 2013. 03:21 AM | 1 Like Like |Link to Comment
  • Coinstar Shares Are Woefully Undervalued [View article]
    Why would changes in depreciation and interest expense affect free cash flow?
    Jun 21, 2013. 03:12 PM | Likes Like |Link to Comment
  • Activision's Market Leadership And Best-In-Class Margins Represent Additional Downside Risk [View article]
    Don't forget that Call of Duty Online will be FTP in China with micro transactions. ATVI might have a soft patch in the near term as I wrote in my article, but long-term they're not clueless when it comes to strategy.
    Aug 16, 2012. 02:44 AM | Likes Like |Link to Comment
  • Activision's Market Leadership And Best-In-Class Margins Represent Additional Downside Risk [View article]
    Black Ops 2 sales are expected to be more or less in line with MW3. It would take a huge upside surprise in sales to really move the stock. The reason I emphasized Skylanders is because it's an incremental revenue stream, whereas Black Ops 2 is likely to more or less sustain the revenues/margins they've had from Call of Duty in general.

    Thanks for the comment.
    Aug 15, 2012. 03:11 PM | Likes Like |Link to Comment
  • Activision's Market Leadership And Best-In-Class Margins Represent Additional Downside Risk [View article]
    I definitely agree that Blizzard's going to be going full-throttle on Titan. I'm not looking out that far, since it's hard to forecast industry-wide trends, but you could very well be right. ATVI is the market leader for a reason, and that will probably play out in the longer-term.

    Thanks for sharing your options strategy!
    Aug 15, 2012. 12:05 PM | Likes Like |Link to Comment
  • Activision's Market Leadership And Best-In-Class Margins Represent Additional Downside Risk [View article]
    Hey Scerabi,

    Thanks for the comment. Essentially, my main point is that the great margins that have caused ATVI to outperform its peers are now vulnerable. If margins just fail to continue increasing (analysts expect upwards of 200bp increases for 2012 and 2013), then there will be mean reversion in the stock to the downside.

    Does that make more sense?

    Also, interesting point on the options. I'm not an options expert, so I'll let someone else take that one.
    Aug 15, 2012. 11:24 AM | Likes Like |Link to Comment
  • Activision's Market Leadership And Best-In-Class Margins Represent Additional Downside Risk [View article]
    Thanks for the comment. I definitely agree that EA making their MMO FTP will be a contributing factor as well. They didn't make much headway when it was priced similarly to WoW, but I think a new pricing model has the potential to compound WoW's woes.

    Thanks for pointing out Pandaria's pre-orders. I'll definitely be watching those in the coming weeks.

    I would say that BO2 could be a disappointment. If you look at MW3, a large portion of the orders were front-loaded, and I think that could be the case with BO2 as well. If so, accelerating pre-orders might give way to disappointing post-release sales. Like you said, the next four quarters are key.
    Aug 15, 2012. 11:09 AM | Likes Like |Link to Comment
  • Activision's Market Leadership And Best-In-Class Margins Represent Additional Downside Risk [View article]
    Hey Stephen, thanks for your comment. I would just be careful about waiting for news regarding WoW subscribers after Pandaria comes out. Management has made it so obvious that an increase is expected once the expansion is released that it would probably take a significant upside surprise in the number of subs to move the stock upwards. That being said, I don't see any reason why the stock might not reach $12.50 or even $13 in the short term temporarily. Good luck!
    Aug 15, 2012. 11:05 AM | Likes Like |Link to Comment
  • Activision's Market Leadership And Best-In-Class Margins Represent Additional Downside Risk [View article]
    Thanks for your comment.

    While the trend towards digital sales is obvious, my point is that rapid deterioration in World of Warcraft will be an even more significant factor to the downside. Analysts seem to be modeling in heavy margin expansion, and I just don't see ATVI achieving 32-33% operating margins.

    If you look at the upcoming pipeline of games the main ones (Bungie, Titan) aren't set for release until late next year. That leaves another entire year of decline for World of Warcraft with only Skylanders to tide them over.

    The main point is that their best-in-class margins are what currently keep them afloat. IF these margins fail to continue increasing or even decline, then it'll be a big hit to the stock.
    Aug 15, 2012. 11:02 AM | Likes Like |Link to Comment
  • Teradyne: An Undervalued Market Leader With High Growth Potential, Margins, And FCF [View article]
    Thanks for reading and commenting.

    I think Teradyne's done an incredible job of finding growth and ways to beat Street estimates despite shrinking CapEx from its customers. For example, Texas Instruments announced that its CapEx was near record lows in the beginning of 2012, and TER still pulled out nice top-line growth. To me, that suggests a great management team that can navigate potential declines in the ATE market.

    Agreed, ATE definitely has a huge upper hand in memory right now. I'm more or less assuming that TER has no market share growth right now, and basing my bull case on LitePoint. If share declines though, it could definitely be a negative. Thanks for sharing.
    Aug 10, 2012. 07:56 PM | Likes Like |Link to Comment
  • The True Value Of An Idea: Why These Social Media Stocks Are Likely Overvalued [View article]
    I agree that technology has removed an unprecedented number of barriers to entry. The one point I would make regarding competition is that for any company to steal meaningful share from Facebook would likely take several years, barring some critical misstep from Facebook - whereas anyone can come along and make better games than Zynga. There's a varying degree of competitive threat to companies within the social media space.
    Aug 10, 2012. 08:33 AM | 1 Like Like |Link to Comment
  • Stock Pickers: 'Somebody I Used To Know' [View article]
    I agree with your skepticism in that the next 6-18 months may continue to be lackluster, simply due to the fact that growth is slowing globally, and both European and American politicians can't seem to agree on sustainable solutions for their respective fiscal situations. However, if we look out over the next 3-5 years, my bet is on equities.
    Aug 10, 2012. 08:27 AM | 1 Like Like |Link to Comment
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