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Nick Abe, CFA  

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  • Netflix Beats Again...Sorta [View article]
    I understand all that, but NFLX says they are expecting lower overall profit in 2015 despite the increase in margins you're talking about and they are looking to raise an additional billion dollars.

    So it just appears like the margin gains in domestic are either exaggerated (in that G&A and technology spending is increasing proportionately) or international will continue to be a huge drag on performance. Meaning that despite the increases in international revenue, international costs will be growing at a faster rate.
    Jan 21, 2015. 10:32 AM | Likes Like |Link to Comment
  • Netflix Beats Again...Sorta [View article]
    Thank you for your comment. I assumed it was such, but it is somewhat misleading to investors. The reality is that previous quarters should be viewed as having slightly higher EPS and this quarter as materially lower (since the majority of profits were actually booked in previous quarters).

    If this were actually taken into account the beat would've looked more like $0.48 to $0.50 vs expectations of $0.45 instead of the $0.77 vs $0.45 that is being widely reported.
    Jan 21, 2015. 10:09 AM | Likes Like |Link to Comment
  • Three Things To Look For In Netflix's Earnings Tonight [View article]
    Spoke too soon I guess. As I said three things to look for on the call, I guess what Carl Icahn is going to do was the most important of the three.
    Oct 22, 2013. 05:32 PM | Likes Like |Link to Comment
  • Three Things To Look For In Netflix's Earnings Tonight [View article]
    Well as I said in the article, the short term stuff is just a gamble for a very small part of the portfolio. Nice if it pays off but not devastating if it doesn't.
    Oct 21, 2013. 04:55 PM | Likes Like |Link to Comment
  • Three Things To Look For In Netflix's Earnings Tonight [View article]
    Well I was hilariously wrong on this earnings call. I will admit that their domestic adds were very impressive. I am however a bit surprised at the lack of beat (3c vs Street) given the much larger than expected (on average) number of subscribers.

    I'm very curious to see the increase in SCO.

    Part of the problem is everyone wants to be short this name and it's one of the most hated (by certain analysts and PMs). So it seems that a small beat and raise still gives the stock a lot of juice.
    Oct 21, 2013. 04:23 PM | Likes Like |Link to Comment
  • Three Things To Look For In Netflix's Earnings Tonight [View article]
    I'm sure it will come out on the call. I know it's on the balance sheet, I was talking about the change from last quarter. The more important number than the overall number is probably the growth in 1 year obligations. That's theoretically what they are paying in immediate costs, whereas the stuff greater than 1 year isn't necessarily reflective of the complete set of future obligations required to maintain current content (i.e. as new deals get signed, etc).
    Oct 21, 2013. 03:36 PM | Likes Like |Link to Comment
  • Three Things To Look For In Netflix's Earnings Tonight [View article]
    I think that's wishful thinking. He has a huge cushion to play with and if the stock drops 50 bucks as a result of him selling his whole position he wouldn't care. If, however, he slowly starts selling then he is signaling to the market that he is a seller. If the stock drops 50 bucks (or any other arbitrary number) on that news, then he has screwed himself over (as he would still be holding the majority of his position).
    Oct 21, 2013. 01:47 PM | 1 Like Like |Link to Comment
  • An Open Letter To BlackBerry Management And Directors [View article]
    I did want to go into more detail on the points you mentioned but the article was long already.

    Removing the buttons was a mistake. They should have made a hybrid version of the swiping systems with the old buttons. This would have allowed people a chance to transition without the steep learning curve.

    The Z10 release before the Q10 was not really my primary issue. They built $1billion worth more than they needed (what's that like 5 million devices, 3?). But even that said, releasing the Z10 first has a few possible outcomes (bear in mind it's the same form factor as iPhone, etc):
    1. BlackBerry hardcores (the only people who were likely to buy BB10 at launch) try the Z10 and determine they:
    a) love all touch screen and don't need a keyboard
    b) love the swiping and new operating system
    c) tell their friends
    So if A+B are true, then C will happen and you'll get a nice grassroots marketing campaign. If just A is true then C won't happen and it removes the one roadblock for device switching from current BB users ("but I need a keyboard!"). If neither A or B is true then they're probably just a frustrated customer that got forced into buying something they didn't want because Q10 wasn't ready yet.

    The point being that the risk/reward of releasing a product that you had failed on 5 times previously (storm 1, 2, 3, 4, playbook) as your flagship product puts you at serious risk for both a media crapstorm and carrier nervousness. Perception is reality in both cases and can (and likely did) lead to lower sales for your other devices where you had a competitive edge (i.e. Q10/Q5).

    Just because two well recognized CONSUMER brands are having success in selling a particular product type (Apple/Samsung or Apple/Google if you want to look at it that way), doesn't mean that you HAVE to follow the herd. Following the herd cost shareholders at least $1 billion so far, and further billions in share price degradation.
    Oct 1, 2013. 01:05 PM | 2 Likes Like |Link to Comment
  • An Open Letter To BlackBerry Management And Directors [View article]
    I think you're letting current management off the hook way too easily. Fact is that current management have had their positions since January 2012 and had 15 months to make any changes required to anything (operating system, order sizes, marketing, etc) and they failed in virtually every possible category (with respect to BB10 launch).

    As for participating, you could suggest to Mr. Watsa that he launch a sole purpose private equity fund to fund the purchase. Then individual investors could invest in the fund.
    Oct 1, 2013. 09:33 AM | 6 Likes Like |Link to Comment
  • 3 Things (Most) Investors Just Don't Understand [View article]
    I agree, it doesn't provide any insurance for me... but if it helps some people sleep better at night, then maybe the utility provided is greater than the cost (for those people).
    Sep 16, 2013. 03:53 PM | Likes Like |Link to Comment
  • 3 Things (Most) Investors Just Don't Understand [View article]
    I understand where you are coming from. I think if having 5% or 10% of your portfolio in gold helps you sleep better at night (as insurance against what you mention) then that's fine. My general issue is with advisors or analysts who seem to be implying that gold or gold stocks should be a large (20% or greater) part of your portfolio. The 'true believers' who say it is the only real money.

    As an aside to your comment, didn't the USG take gold from people in WWI or WWII? Can't remember exactly when.
    Sep 14, 2013. 10:55 AM | 1 Like Like |Link to Comment
  • 3 Things (Most) Investors Just Don't Understand [View article]
    The point was to illustrate that the value of gold measured against the very thing that we are supposedly printing too much of is quite high. I could have compared it to, for example, how many football fields of copper it would take to be worth ~$7 trillion (13,125 if they were the same size, FYI). Point being that all these measures of 'rarity' are arbitrary. What if we only had 1 football field of nuclear waste, would that make it valuable?

    As to your further points about Newtonian laws, money is a medium for exchange. It is not matter, gold is matter. So yes, you can apply the properties of matter to gold, since it is in fact matter. But then again, so is Kraft Dinner. It's not really relevant to its financial worth.

    Edit: I agree with your point that I do hope paper money holds up. But I don't think that if it failed (and in an orderly non war fashion) that the US (or any country's) net worth would be valued on just the gold it held. People would still need food, shelter, expertise, products, etc. Stuff that the US has in spades and would barter for with whatever the new medium of exchange would be.
    Sep 13, 2013. 01:00 PM | 5 Likes Like |Link to Comment
  • 3 Things (Most) Investors Just Don't Understand [View article]
    Thanks for the comment. I'd just like to point out that in the analysis you're speaking of (mining + scrap = new issuance) you'll see that I took (jewellery + technology = buybacks).

    I tend to take the view that scrap is melted down jewellery, which I know may not be entirely accurate. But if you don't count scrap as supply, then you also can't count jewellery as demand. Much of that scrap is going toward making jewellery (or you could take the opposing view that scrap goes to bars and mine supply goes to jewellery). Either way unless jewellery + technology + investment = scrap + mine the price will fall (or rise, depending on which side has the imbalance).

    So that's a long way of saying my analysis is the most bullish possible for gold (counting scrap - jewellery - technology). Otherwise you could just say that new investment in gold must equal 2,400 tonnes (mine supply) x $1,350/oz x 32,150 oz = $104 billion per year. This can come in any combination of investment, jewellery, and technology, but is obviously much larger than the $13 billion per quarter I mentioned.
    Sep 13, 2013. 12:28 PM | 2 Likes Like |Link to Comment
  • Netflix: Red Is The New Black? [View article]
    Thanks for the comment, I agree with what you're saying to a point. The problem is just that 10x P/E or 15x P/E is too much. They are entirely reliant on iPhone and iPad sales to make current P/E but are under heavy margin pressure on both products as competitors come out with similar designs at lower prices. The app store is an interesting value add for shareholders, but I would suggest that app store sales are heavily linked to new sales.

    With respect to your new products comment, what have they come out with really? They developed the original iPod (mp3 players already existed, they just improved the interface). That evolved into the iPod Touch. That evolved into the iPhone. Then they made a big version (iPad). Then they made a mini version of the iPad (iPad Mini). All of their products are evolutions of that iPod touch. Their next products are rumoured to be a tiny version (iWatch) and a huge version (iTV). I would say they are a super successful marketing company that has lost their best marketer in Jobs more so than a technological innovator.

    I personally own AAPL, Android, and BBRY products and I can tell you that I buy far more apps when I first get a new product than ones that I have had for a while. Also I see a department of justice meeting in AAPL's future over the app store. If MSFT did the same thing (made it so the only way you could buy software for their OS was through them) the DOJ would be all over them. In a weak economy and with AAPL soaring high no one was willing to jump on them. I suspect that as the economy strengthens and AAPL lags they will have to do something to open iTunes (iOS based products) up to competition.

    So I would stand by my original comment that I would not pay 10x P/E for AAPL because I don't really think their "E" will be anywhere close to what it currently is in 10 years.
    Jul 22, 2013. 02:38 PM | Likes Like |Link to Comment
  • Netflix: Red Is The New Black? [View article]
    My theory is that the valuation will correct on or near a quarterly report. So I generally buy short term put spreads to take advantage of that. I try to price the spread such that I triple or quadruple my money if I'm correct. That way even if I only have a 40 or 50% chance of being right then my expected value is still above $1 per dollar invested.

    Last quarter I did a put and a call spread, both with quadruple payoffs. The net result was an approximate doubling of my money when the call spread paid off. Obviously you do this with relatively small amounts of your total capital, as being wrong means you lose 100% of what you invested. This quarter I am just looking at put spreads because I think the valuation is so ridiculous that it shouldn't go much higher (i.e. my expected value on $1 invested in a call spread is under $1).

    Hope that helps.
    Jul 22, 2013. 02:01 PM | 1 Like Like |Link to Comment
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