Or maybe I know whereof I speak and you don't. 30% inflation and there would be a revolution. Housing may have hit 20% in one of those 4 years. Nothing else has experienced significant inflation (by significant I mean 10%+. 8% inflation is still pretty annoying and I am sure it's been that in some years).
That's aside from the admittedly extreme gyrations in some food prices, which have been damped somewhat by the government increasing strategic food reserves. I am not trying to minimise the impact of this. It causes hardship. But where food prices have gone up, they have also gone back down, to a complete lack of headlines and no doubt a complete lack of commentary by Shanghai taxi drivers.
Hard Disk Drive Manufacturers Poised To Make A Killing [View article]
Good article. I think you pretty-much nailed it. One thing I am wondering is if we might see HDDs start to be installed in tablet PCs. Contrary to popular belief, HDDs can be very power-efficient, and if installed as part of a tiered architecture with flash, they could even be spun down most of the time. Tiered architectures offer the best of all worlds in terms of price, performance and capacity. I recently changed my desktop PC from using an SSD as the boot drive to using a HDD as the system disk and redeployed the SSD as a cache. Performance actually improved marginally over a pure SSD setup. Next step is to test with different sizes of cache, and I am confident I can maintain the performance with a cache 1/4 the size I would need for an SSD as a system disk.
Is The Western Digital Pop Overdone? [View article]
Dana, thanks for this. Very timely.
WDC's rises and falls are always sudden, sharp and scary. If you look back through its chart it has more gaps than a GenY CV.
As you have heard from me before, I am not all that concerned by encroachment from SSDs. If you took all the flash capacity in all the fabs in the world and turned into SSD drives it could steal about 4-5% of HDD market share. And the fabs in existence now are all losing money so we are not going to see a huge investment in new fabs quickly. I also have confidence that WDC will do the necessary to get into SSDs as required by their customers. There are about 100 SSD suppliers, most of which are losing money, so it is probably not the most urgent thing on their agenda today.
However I do agree fairly wholeheartedly with your thesis that there are potential worms in the apple that need to be watched. HDD manufacturers trade at ford-like P/E ratos and I don't think that's gonna change soon. It's not that it's a bad business. It's a very profitable business and WDC is adding tangible book per share at a fast clip. But the share price is volatile and people are prepared to pay a low multiple and that's that. So I am not expecting a $60 share price soon.
The thing that really hit me on the call is that the guys from WDC were talking about a 5% CAGR by units growth in TAM. Only a few months ago they were talking about 11%, and there was no explanation given as to why the change. My only guess is that these guys see the desktop and notebook market being decimated, perhaps by tablets? Also, they gave EPS guidance of $10 for fiscal 2013, which is less than 4 times the current quarter, so do they see the current quarter as being the highwater mark?
To my mind the bounce is overdone. I'm long WDC.
P.S. I am not stalking you intentionally. If you would just stop writing timely articles about things that interest me, I'd stop following you around the board.
Maybe because China has more than enough coal of its own? I'm sure Mark Anthony can tell us the exact number, but last year's coal imports were about 80M tonnes out of a couple of billion consumed, and one suspects even this small amount was to get around logistical bottlenecks due to the fact that all the coal is in the north.
Apple May Finally Be Turning A Corner To The Downside [View article]
To a certain extent the iPhone has jumped the shark in China. it is still popular and people love it, but in the past 6 months or so the market has been flooded by a plethora of very cheap Android 2.3 smartphones. The iPhone 4S at its very cheapest approaches RMB4500-5000, while you can get a basic Android phone for RMB1000 or less. Looking around a fairly trendy office, the ratio is about 4:1 Android:iPhone, and then there are still some people who have Blackberries or non-smartphones.
China Mobile may be different, but China Unicom and China Telecom have not in my view been big channel for the iPhone, simply because their contracts were not subsidised unless you signed up for very heavy data plans which hardly anyone uses. And even then they were not subsidised much. Cheaper to get your iPhone at the Apple store or a reseller.
The College Education Shakeout Has Just Begun [View article]
It's a very interesting development and I will watch how it plays out with interest. The top Chinese universities have been doing something similar on-campus for some years simply because they do not have the auditorium space to handle the large classes. Lectures have been piped into the dorms by IP multicast since at least 2004. I've also been using web training technologies to deliver tech training across Asia Pacific recently. It works, but for now people praise its efficiency rather than its quality compared to real class time. If people start praising its efficacy as a learning environment then it will really be time to start taking notice.
Your point about research vs. teaching is well taken. But being a great research institution is about attracting faculty, grad students and money. All three of those rely on brand, and brand is at least partly a function of the quality of your graduates. The quality of your graduates is mostly determined by the quality of your intake, not by anything you do to them while you have them.
On the other hand, if I could have had an online class with Richard Feynman instead of a real class with prof. <name deleted to protect the guilty> I'd have taken Feynman every time. We are definitely approaching interesting times for higher ed, and I think the students may end up the winners.....
Mercantilism And Free Trade Aren't The Only Alternatives [View article]
The countries that buy stuff from the US do not sell the things the US wants. e.g. China sells manufactured goods to the US. The US sells hi-tech goods and machinery to Australia, Australia sells commodities and food to China. The US has a trade surplus with Australia, Australia has a surplus with China, an China has a surplus with the US. It is not symmetric, and it is not a zero-sum game.
4 Reasons To Buy Nokia After Today's Earnings Report [View article]
How do those non-IFRS numbers look after restructuring costs? They didn't have the cash to be able to lay people off legally and had to get a cash injection from Nokia and Siemens in order to lay the people off. The layoff spiral will not end, and their customers are jumping ship in droves.
4 Reasons To Buy Nokia After Today's Earnings Report [View article]
Don't go counting Nokia-Siemens to make any contributions. This venture is beyond carcass mode and it will cost Nokia and Siemens to shut it down. I give them 18 months at most, but probably more like 6.
One wonders how good the electricity consumption numbers will be as an indicator of economic activity in the future. I have always watched them avidly as they were about the most reliable and transparent indicator of what was really happening. But I am starting to have to add a small multiplier because China's economy is slowly becoming less energy-intensive, partly through central policy (at the end of 2010 the Central government actually forced some areas that were over quota to have electricity blackouts t meet targets!) and partly due to the current trend away from heavy industry towards lighter manufacturing and service industries.
The Case Against Doubling Your Dividend [View article]
Having covered calls assigned worries me not a jot. If the stock price ends up above strike and gets assigned, you have earned maybe 6% in a month, you have your principal back and there are plenty of other fish in the sea for next month. What's not to like? The fact that the person who bought your call also made some money on the deal is irrelevant except inasmuch as if it never happened, there would be nobody to take the other side of my trades. Having a covered call assigned would only worry me if the amount of opportunity out there were strictly finite, which it is not.
Having the stock go the other way seems a little harder, since unwinding a covered call takes 2 transactions instead of one. Other than that there is nothing to stop you having a stop-loss strategy in place for covered calls. In fact I personally recommend it. You will probably need to have a slightly wider stop-loss band than some traders simply because you are incented to wait until the calls drop to a low value before you buy them back at a profit before disposing of the stock and investing your money in (hopefully) more fertile soil.
Right now almost all of my covered calls are above strike. I find this a little uncomfortable simply because once your position goes above strike you are pretty-much locked in until expiry, and so I have no reason to trade. Good for the soul, but not so exciting. I console myself with the fact that auntie theta is still writing cheques into my position value on a daily basis.
Likely Impact Of Apple Solving The Chinese iPad Problem [View article]
I'd be cautious about predicting a big increase of iPad sales in China because of this. Ipad 2 and 3 are freely available in the resellers, just not in the 4 Apple stores. They are sold 1 at a time to mainlanders who go to Hong Kong for the day. It's no problem for them to bring them back, although they may be required to open the package on the way in. Since Mainland China has a 17% sales tax that Hong Kong has, they might not even get any cheaper. There is also a strong market for second-hand iPad 1s - waiting list is about a month in Beijing and they go for about RMB1000 (USD160) with what seems to be a new battery.
Most people I know with iPads waited until they or a friend went to HKG anyhow, because they are so much cheaper there.
CA Technologies: A Mini-IBM For Your Income Portfolio [View article]
As Paul, says, subjective. But as someone who used to work for a big CA customer, I would have difficulty buying the stock.
CA's business model was always to buy solid software products, double the annual licence fee and then stop all R&D and most support on the products (turn them into cash cows), instead spending budgets on entertainment for the influencers in their customers. To me the approach is unethical and not a good basis for ongoing business.
This goes back over 10 years, and the company may have changed, but caution would be advised.
Too many CA execs have been indicted over the years for my liking, as well.
China's Transition Continues [View article]
That's aside from the admittedly extreme gyrations in some food prices, which have been damped somewhat by the government increasing strategic food reserves. I am not trying to minimise the impact of this. It causes hardship. But where food prices have gone up, they have also gone back down, to a complete lack of headlines and no doubt a complete lack of commentary by Shanghai taxi drivers.
Hard Disk Drive Manufacturers Poised To Make A Killing [View article]
Tiered architectures offer the best of all worlds in terms of price, performance and capacity. I recently changed my desktop PC from using an SSD as the boot drive to using a HDD as the system disk and redeployed the SSD as a cache. Performance actually improved marginally over a pure SSD setup. Next step is to test with different sizes of cache, and I am confident I can maintain the performance with a cache 1/4 the size I would need for an SSD as a system disk.
Check Out Seagate's New Market Share And 4.5 P/E [View article]
Is The Western Digital Pop Overdone? [View article]
WDC's rises and falls are always sudden, sharp and scary. If you look back through its chart it has more gaps than a GenY CV.
As you have heard from me before, I am not all that concerned by encroachment from SSDs. If you took all the flash capacity in all the fabs in the world and turned into SSD drives it could steal about 4-5% of HDD market share. And the fabs in existence now are all losing money so we are not going to see a huge investment in new fabs quickly. I also have confidence that WDC will do the necessary to get into SSDs as required by their customers. There are about 100 SSD suppliers, most of which are losing money, so it is probably not the most urgent thing on their agenda today.
However I do agree fairly wholeheartedly with your thesis that there are potential worms in the apple that need to be watched. HDD manufacturers trade at ford-like P/E ratos and I don't think that's gonna change soon. It's not that it's a bad business. It's a very profitable business and WDC is adding tangible book per share at a fast clip. But the share price is volatile and people are prepared to pay a low multiple and that's that. So I am not expecting a $60 share price soon.
The thing that really hit me on the call is that the guys from WDC were talking about a 5% CAGR by units growth in TAM. Only a few months ago they were talking about 11%, and there was no explanation given as to why the change. My only guess is that these guys see the desktop and notebook market being decimated, perhaps by tablets? Also, they gave EPS guidance of $10 for fiscal 2013, which is less than 4 times the current quarter, so do they see the current quarter as being the highwater mark?
To my mind the bounce is overdone. I'm long WDC.
P.S. I am not stalking you intentionally. If you would just stop writing timely articles about things that interest me, I'd stop following you around the board.
Get Out Of Coal Stocks [View article]
Apple May Finally Be Turning A Corner To The Downside [View article]
China Mobile may be different, but China Unicom and China Telecom have not in my view been big channel for the iPhone, simply because their contracts were not subsidised unless you signed up for very heavy data plans which hardly anyone uses. And even then they were not subsidised much. Cheaper to get your iPhone at the Apple store or a reseller.
Cisco, Left For Dead [View article]
The College Education Shakeout Has Just Begun [View article]
Your point about research vs. teaching is well taken. But being a great research institution is about attracting faculty, grad students and money. All three of those rely on brand, and brand is at least partly a function of the quality of your graduates. The quality of your graduates is mostly determined by the quality of your intake, not by anything you do to them while you have them.
On the other hand, if I could have had an online class with Richard Feynman instead of a real class with prof. <name deleted to protect the guilty> I'd have taken Feynman every time. We are definitely approaching interesting times for higher ed, and I think the students may end up the winners.....
Mercantilism And Free Trade Aren't The Only Alternatives [View article]
4 Reasons To Buy Nokia After Today's Earnings Report [View article]
4 Reasons To Buy Nokia After Today's Earnings Report [View article]
Unmasking The Asian Giant [View article]
One wonders how good the electricity consumption numbers will be as an indicator of economic activity in the future. I have always watched them avidly as they were about the most reliable and transparent indicator of what was really happening. But I am starting to have to add a small multiplier because China's economy is slowly becoming less energy-intensive, partly through central policy (at the end of 2010 the Central government actually forced some areas that were over quota to have electricity blackouts t meet targets!) and partly due to the current trend away from heavy industry towards lighter manufacturing and service industries.
The Case Against Doubling Your Dividend [View article]
Having the stock go the other way seems a little harder, since unwinding a covered call takes 2 transactions instead of one. Other than that there is nothing to stop you having a stop-loss strategy in place for covered calls. In fact I personally recommend it. You will probably need to have a slightly wider stop-loss band than some traders simply because you are incented to wait until the calls drop to a low value before you buy them back at a profit before disposing of the stock and investing your money in (hopefully) more fertile soil.
Right now almost all of my covered calls are above strike. I find this a little uncomfortable simply because once your position goes above strike you are pretty-much locked in until expiry, and so I have no reason to trade. Good for the soul, but not so exciting. I console myself with the fact that auntie theta is still writing cheques into my position value on a daily basis.
Likely Impact Of Apple Solving The Chinese iPad Problem [View article]
Most people I know with iPads waited until they or a friend went to HKG anyhow, because they are so much cheaper there.
CA Technologies: A Mini-IBM For Your Income Portfolio [View article]
CA's business model was always to buy solid software products, double the annual licence fee and then stop all R&D and most support on the products (turn them into cash cows), instead spending budgets on entertainment for the influencers in their customers. To me the approach is unethical and not a good basis for ongoing business.
This goes back over 10 years, and the company may have changed, but caution would be advised.
Too many CA execs have been indicted over the years for my liking, as well.