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Robert McDonald
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FROM INSIDE SILICON VALLEY: Sorting the truth or likely truth from the noise is a key attribute of the successful investor. My commentary is a distillation of some of this effort relative to particular stocks and investment areas. My publishing at this point in time is limited to the blogsphere,... More
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    Facebook, other than its large user base, has no moat and continually abuses the privacy of its membership. They have now surpassed earlier abuses with their new face recognition software. Any smart person should remove their photo to avoid all kinds of scams including some that have already been announced and some of which could be dangerous.

    I believe that it is highly likely that that Facebook's IPO pricing will not meet current lofty expectations, particularly if Google + continues to grow at a rapid rate. Then there's also the possibility of some very public, very nasty lawsuits as a result its privacy violations. 

    As a Google admirer and investor I am very happy about the introduction of Google +. It appears to be a very good product and best of all it appears to provide proper respect for the privacy of its users. 

    Unfortunately however, a major Google weakness has been revealed in its deployment of Android and Honeycomb mobile web operating systems. Management appears to have been totally blind sighted by the need to have strong Intellectual Property rights and associated patents. Where was Eric Schmidt in all of this -- he of all people should have known better and knew full well they were going to head to head with Apple and others. 

    Added to this serious and unforgivable mistake is the clandestine "borrowing" of IP from others, witness the Oracle lawsuit regarding use of Java without licensing rights. These problems are a serious threat to their potential high profit mobile web business. It will be a significant test of management skill in recovering from this debacle. They need to do it with minimal damage but it is likely to be very expensive, witness the expensive bidding for IDCC that will soon be making headlines. All of this bears watching if you are a Google investor.

    Due disclosure: Long Google, Apple and IDCC

    Disclosure: I am long GOOG, AAPL.
    Aug 28 11:48 AM | Link | Comment!
    It appears that debt ceiling deal is about be made and is being done in a relatively benign way relative to the stock market.  However this process has inevitably made bond holders nervous and aware that we are a stone's throw away from rising interest rates reducing the value of their bond holdings.

    Two new relatively safe havens  are emerging out of the debris -- multinational large cap stocks with relatively low P/E's and Technology stocks that are riding in the sweet spot of their business areas.  Here are four of four of my favorite long term recession resistant holdings that I am optmistic about:

    AAPL -- for all the usual right reasons including a very cheap P/E and PEG valuations plus an Apple HDTV that is coming closer to reality -- this article speculates March of 2012

    MSFT -- Cheap and stable by any standard especially now that they now have what appears to be a decent Windows 8 offering for early next year.  It is the first MSFT operating system that runs on ARM processors used in mobile, tablet and server applications. MSFT may take out remains of RIM as the Windows 8 phone will undoubtedly appeal to the enterprise community.

    NETSUITE (NYSE:N): Earnings were down in the latest earnings report last week as they are spending money in order to grow revenues --  23% revenue growth y-y in Q2.  They are gaining traction and are in the early part of what should be as strong growth trajectory  -- they have signed cloud software deals with Groupon and Qualcomm in the last month.  They make software to run businesses in the cloud eliminating or minimizing in house servers and an expensive IT function.  They are focused on small to medium size biz right now  – will be going head to head with as their momentum increases but there is plenty or room and incomplete overlap for both players.  Larry Ellison of Oracle participated in the startup of Netsuite and is on the board  - Ellison says this is a company he could not start internally because the competing internal divisions would be in the way of a success story.

    IDCC: A strong mobile and wireless patent generator that is now an acquisition target.  Due diligence has started and the rumors are flying.  Apple and  Google are expected to be the leading contendors in a bidding contest.  The recent Nortel patent purchases set the stage for a pretty good takeout price. Checkout the action on Stocktwits:

    Disclosure: I am long GOOG, AAPL, N, IDCC, MSFT, QQQ.
    Jul 31 7:37 PM | Link | Comment!
    Today there are again rumors circulating about Steve Job's health.  Let's hope they are false.  In any case, the stock is off today, and even if it drops further, the stock remains a "screaming buy".  Some are saying that Steve Job's health is no longer a factor in the longer term pricing of the stock:

    I think that this is probably the case.  Even if there is a major sell off this is probably a buying opportunity and the valuation twill soon be back 

    Apple is much more than a business cycle play. It is an innovative disruption to normal tech stock plays and goes way beyond technology in its business strategies.

    Apple is not a computer company or a mobile web company. They are much bigger than that. They are involved in a number of key high growth business areas and it can be said that they are much more diversified than Intel, Cisco or Microsoft ever have been or can hope to be based on track record. 

    Apple is the supplier of by far the most sticky mobile web and computing ecosystem in the world –no one else is even close. It is IBM like in the mainframe days. As part of this they are in the business of providing applications for this universe and have large and diversified low cost external resources that are making this available. Apple can maintain control over their products so that they can guarantee a positive user experience while gleaning pure earnings off the top. 

    Related to this they are in the mobile web advertising business which is growing just like Google's. Soon they may be in the debt and credit card as well as relationship card business. This will not only bring in additional earnings with minimal overhead but will give them the opportunity to tailor advertising specifically to the patterns of the individual involved. 

    Increasing cloud computing services will be provided for this ecosystem and to provide increasing levels of fee for service data bases, fee for service analysis software, and computing services in general. This would be for consumers and businesses as well. 

    Right now these Apple’s businesses are designed for consumers but as Apple is sucked more and more in the business world these products will expand into full blown enterprise businesses. The enterprise momentum is being increased by adoption of the iPhone and iPAD as well as increasing Mac penetration 

    One step at a time -- they are going about as fast as they can and are wise not to try to penetrate enterprise as a priority. They have enough on their plate with their consumer oriented businesses. 

    Continuing, they are a provider and retailer of media of all kinds including an expansion into magazine, newspaper and video (look out NETFLIX). Apple has a track record of knowing how to make hay in the media world. 

    And last but not least, they are of course a provider of computer systems and software including Tablets, laptops and desktops as well as video and photo editing products. They may never provide servers and server operating systems but that does not matter. There will be plenty of pick and shovel guys to do this for them (Oracle, MSFT, HPQ and of course Cisco). Let them "eat cake."

    And then there is the home entertainment system possibility, One box does all with iPAD like controls allowing one to recycle all of the individual component remotes and extra wiring. I look forward to that day.

    Disclosure: I am long AAPL, GOOG, HPQ, MSFT.
    Feb 17 3:14 PM | Link | Comment!
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