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  • Yahoo Q3 Earnings: Core Business Is In Trouble
    Yesterday, 1:19 PM YHOO 33 Comments

    Summary

    • Yahoo! reports quarterly earnings after-hours today.
    • The company's core revenue and operating income has been in decline. I expect it to continue going forward.
    • The company has several billion in cash on hand for acquisitions or buybacks that could be a boon to the stock. I rate Yahoo! a hold.
  • Will iPhone 6 Success Propel Broadcom To New Heights?
    Yesterday, 12:03 PM BRCM 3 Comments

    Summary

    • Broadcom is set to release earnings after-hours today.
    • The company produced break-even results for Q2. A rapid increase in revenue should fall to the bottom line going forward.
    • As a supplier for the wildly successful iPhone 6 Plus, Broadcom's earnings should rise. The stock is a buy into earnings.
  • ITT Educational: Short-Squeeze Drives Shares Up 65%
    Yesterday, 7:30 AM ESI 4 Comments

    Summary

    • A short squeeze drove ITT Educational's shares up 65% on Friday after the company revealed sufficient liquidity to remain in business.
    • With 13 million shares sold short and 14 million shares traded, short covering may have run its course.
    • Going forward, investors should focus on earnings fundamentals instead of short-term market movements.
  • After Losing Lawsuit On Royalties, Sirius 'Not Happy' With The Turtles
    Mon, Oct. 20 SIRI 31 Comments

    Summary

    • Musicians Flo & Eddie won a recent court ruling requiring Sirius to pay them royalties for streaming their pre-1972 recordings with "The Turtles".
    • The ruling could set off a plethora of similar lawsuits across the country.
    • Content costs could increase for Sirius and Pandora going forward. I rate both stocks a sell.
  • Apple Q4 Earnings: After A Record Quarter, What Next?
    Mon, Oct. 20 AAPL 28 Comments

    Summary

    • Apple is set to report earnings after-hours today.
    • It is expected to report record revenue on the strength of iPhone sales.
    • Other key factors are gross margin, lagging iPad sales, the European Commission tax probe and future guidance.
    • If the company's expected profit growth disappoints the market, Apple's 16x p/e multiple could take a hit.
  • Is China's Lenovo Group Making A Bid For BlackBerry?
    Mon, Oct. 20 BBRY 232 Comments

    Summary

    • Just as BlackBerry is close to returning to profitability, takeover rumors are surfacing.
    • Internet chatter suggests Lenovo could make a bid for $15 - $18 per share.
    • If BlackBerry returns to profitability it could fetch multiples of Lenovo's rumored offer.
    • I recommend investors focus on BlackBerry's earnings fundamentals and ignore the rumors.
  • Caesars Bringing Senior Lenders To Bargaining Table, Stock Soars 13%
    Sun, Oct. 19 CZR 20 Comments

    Summary

    • In early October Caesars' second-lien bondholders filed a notice of default.
    • Caesars has 60 days to cure the default or be forced to pay off about $3.7 billion in second-lien debt.
    • Friday the company started formal negotiations with first-lien bondholders to pare its debt.
    • Bankruptcy, which could result in dilution to equity holders, appears imminent.
  • Molycorp: 2 Reasons Why Leon Black Is Providing Mullet Money
    Sun, Oct. 19 MCP 14 Comments

    Summary

    • In July I argued the payoff from Leon Black and Apollo's investment in Molycorp bonds did not warrant the risk involved.
    • Molycorp has since received a $400 million lifeline from Oaktree Capital.
    • Oaktree's debt is higher up the capital structure than Apollo's, and Molycorp's cash burn has gotten worse.
    • Apollo's investment represents mullet money and the bond's value (52 cents on the dollar) reflects it.
  • John Chen Is Happy You Can't Buy A BlackBerry Passport, Covets China
    Sun, Oct. 19 BBRY 268 Comments

    Summary

    • After receiving 200,000 pre-orders during its launch weekend, the BlackBerry Passport remains sold out in most major markets.
    • Canaccord Genuity lowered BlackBerry's sales estimates due to low availability of the Passport.
    • CEO John Chen reiterated that BlackBerry purposely kept low inventory of the phablet.
    • Chen believes that a sold out Passport is a good problem to have - so do I. I am long BlackBerry.
  • SanDisk Down 5% After-Hours On Revenue Miss, Apple Overhang
    Fri, Oct. 17 SNDK 6 Comments

    Summary

    • SanDisk reported Q3 earnings after-hours on Thursday.
    • The company missed on revenue and experienced an earnings decline sequentially and Y/Y. The stock fell 5% after-hours.
    • Gross margins declined Y/Y from 49% to 47% due a suspected Apple overhang.
    • I rate the stock a hold.
  • ITT Educational's Short Squeeze Is Here
    Fri, Oct. 17 ESI 9 Comments

    Summary

    • ITT Educational Services just released financial and operational statements for nine months ended September 30, 2013.
    • The company reported net income for the period was $12 million during the period and cash on hand of $170 million.
    • The stock was up 40% Thursday due to short covering. The short thesis is dead for now.
  • Will SanDisk Be Bullied By Apple Again This Quarter?
    Thu, Oct. 16 SNDK 2 Comments

    Summary

    • SanDisk is set to report Q3 earnings after-hours.
    • I expect the company to report double digit revenue growth Y/Y.
    • However, gross margins may be compressed if it tries to appease Apple again by selling NAND flash and SSDs at lower margins.
    • I rate the stock a hold based on potential margin compression.
  • NetFlix Gets Its Comeuppance
    Thu, Oct. 16 NFLX 7 Comments

    Summary

    • NetFlix reported Q3 earnings on Wednesday.
    • The company fell just shy of revenue estimates, but beat on eps. In addition, subscribers only grew 6% sequentially which disappointed the market.
    • Down 26% after-hours, NetFlix is one momentum stock that is finally going to get its comeuppance. I rate it a sell.
  • Netflix Is A Sell Into Earnings
    Wed, Oct. 15 NFLX 70 Comments

    Summary

    • NetFlix reports earnings after-hours today.
    • Analysts expect Y/Y revenue growth of nearly 30%, yet higher content acquisition costs to grow internationally will tamp down earnings growth.
    • At 169x trailing earnings, the stock has gotten ahead of the growth story. NetFlix is a sell.
  • Limited Availability For The BlackBerry Passport: Longs Should Rejoice
    Wed, Oct. 15 BBRY 309 Comments

    Summary

    • Canaccord Genuity lowered revenue estimates for BlackBerry due to limited availability of the Passport.
    • BlackBerry has purposely limited supply of the Passport in order to create frenzied demand.
    • The strategy is working to perfection as the phablet is sold out in several markets, leaving customers clamoring for it.
    • Frenzied demand should help the Passport return BlackBerry to profitability during the November quarter. Longs should rejoice.
  • Qualcomm One-Ups Microchip In $2.5 Billion Acquisition Of U.K.-Based CSR
    Wed, Oct. 15 QCOM Comment!

    Summary

    • Qualcomm announced its $2.5 billion acquisition of UK-based CSR this morning.
    • CSR makes computer chips and components expected to benefit from the "Internet-of-Things", which complements Qualcomm's presence in mobile devices.
    • CSR had a 5pm deadline today to respond to Microchip Technology's takeover attempt. Qualcomm trumped that deal.
    • With headwinds from the end of quantitative easing and a slow down in the U.S. economy, I rate Qualcomm a hold.
  • With Sales In Freefall, Will Samsung Smartphones Go The Way Of BlackBerry And Nokia?
    Tue, Oct. 14 SSNLF 21 Comments

    Summary

    • Samsung warned that Q3 profit could decline by as much as 60% Y/Y. Its smartphone business is the worst performer.
    • Smartphones are being hit on the low end by Chinese competitors and on the high end by Apple.
    • Samsung's sharp decline is reminiscent of Nokia and BlackBerry, both of which once held commanding market share.
    • If sales continue their freefall over the next several quarters, Samsung's smartphones could go the way of Nokia and BlackBerry.
  • Samsung's Chip Expansion Antagonistic For Micron? Wall Street, 'The Crowd' At Odds
    Mon, Oct. 13 MU, SSNLF 51 Comments

    Summary

    • Wall Street and certain members of the crowd are at odds over Samsung's intentions for its new $15B chip plant.
    • Analysts believe Samsung is gearing up to supply explosive demand in memory, in particular, demand for the 2015 iPhone.
    • Certain crowd members believe Samsung could attempt to steal share in semiconductors to offset losses in mobile phones. I am riding with the crowd.
  • Does Standard General Have RadioShack 'A Little Bit Pregnant'?
    Mon, Oct. 13 RSH 19 Comments

    Summary

    • With RadioShack facing bankruptcy, Standard General had a tremendous amount of leverage in negotiating its financing package.
    • The onerous deal terms - ABL financing and equity sweetener with no skin in the game - implies RadioShack was a little bit pregnant.
    • Deal terms require RadioShack to secure additional financing in Q1 2015, maintaining Standard General's leverage.
  • Mountain Pass Bottleneck Solved, Will Molycorp Return To Profitability?
    Mon, Oct. 13 MCP 9 Comments

    Summary

    • Molycorp recently divulged it was close to solving a major bottleneck inhibiting Mountain Pass from becoming fully operational.
    • Management also intimated that Q3 results would include more operating losses and cash burn.
    • Longs interpreted the news as bullish. Given the company's track record, I would not expect Mountain Pass to become fully operational until 2015.
    • Molycorp's vision of becoming the low cost rare earth producer will most likely have to wait until 2015, if at all.
  • Is Google Turning RetailMeNot Into Kindling?
    Mon, Oct. 13 SALE 16 Comments

    Summary

    • RetailMeNot's Q2 results were negatively affected by declining website visits after Google tweaked its search algorithm.
    • Google recently shuttered its own digital coupon business - Zavers - after clients balked about sharing customer information with Google.
    • RetailMeNot has a business Google covets (digital coupons). Its e-commerce aspirations would also make the company a Google competitor.
    • RetailMeNot's dependence on a potential competitor for search results makes the stock a sell.
  • Have Caesars And Leon Black Been Checkmated By Second-Lien Bondholders?
    Mon, Oct. 13 CZR 14 Comments

    Summary

    • Caesars' major shareholder, Leon Black, has been playing a chess game to restructure Caesars' debt, while maintaining control of the company.
    • Second-lien bondholders of $3.7B in debt, filed a default notice claiming Caesars pledged collateral to senior creditors without giving them similar claims.
    • Caesars has 60 days to take action to avoid such default.
    • Next for Caesars could be repayment of $3.7B in debt or a restructuring leading to bankruptcy or substantial equity dilution.
    • Caesars remains the short of the year.
  • The Kool-Aid Is Evaporating For Sirius And Pandora
    Fri, Oct. 10 SIRI, P 96 Comments

    Summary

    • Pandora traded up after Apple's $3 billion acquisition of Beats was leaked in May.
    • Sirius, which also competes in music streaming, traded up as Pandora takeover rumors spread. Some even suggested that Sirius should buy Pandora.
    • After months of speculation and no deal, investors will focus on both companies' fundamentals, which are not pretty. Both stocks are a short.
  • Samsung CIO Wages War Against Apple, IBM And BlackBerry In Enterprise Mobility
    Thu, Oct. 9 BBRY 245 Comments

    Summary

    • After announcing a 60% decline in profitability for Q3, Samsung is looking for new streams of revenue.
    • Samsung recently hired former BlackBerry CIO, Robin Bienfait, to lead it efforts in enterprise mobile.
    • Since its value-add in offering a strong ecosystem and best-in-class security may be limited, Samsung may compete on price.
    • Competitors Apple, IBM and BlackBerry should be able to beat back any threat from Samsung.
  • Sorry Dorothy, Micron Will Not See $50
    Thu, Oct. 9 MU 195 Comments

    Summary

    • Barron's thinks Micron could reach $50 per share.
    • Samsung's DRAM supply expansion and the end of quantitative easing will keep Micron from reaching $50 per share.
    • Longs who think otherwise are in denial. I rate the stock a hold.
  • Will Wildly Successful iPhone 6 Be The Final Nail In Samsung's Smartphone Coffin?
    Wed, Oct. 8 AAPL 114 Comments

    Summary

    • Samsung's disappointing Q2 2014 results were the "canary in the coal mine."
    • Xiaomi and Lenovo are eating Samsung's lunch on the low-end of the smartphone market in China.
    • With the iPhone 6 making inroads in the premium segment of the market, Samsung could be finished.
  • Micron Should Be Worried By Samsung's Plans For New $14.7B Chip Plant
    Tue, Oct. 7 MU 80 Comments

    Summary

    • Samsung recently announced it was investing in a new $14.7 billion chip manufacturing plant.
    • As its smartphone business gets hit by Apple and low-end manufacturers in China, Samsung is making a larger bet on semiconductors.
    • Barron's recently placed a $50 price target on Micron due to expected growth in computer memory.
    • Samsung's expansion cannot be good for semiconductor prices or Micron's business prospects. I rate Micron a hold.
  • Is BlackBerry Channeling iPhone And Air Jordan To Create Frenzied Demand For The Passport?
    Mon, Oct. 6 BBRY 259 Comments

    Summary

    • BlackBerry limited the initial launch of the Passport to only three countries.
    • The Passport received 200,000 pre-orders in one day, creating substantial buzz.
    • BlackBerry seems to be following the playbook for how Nike created a frenzy for Air Jordans and Apple created a frenzy for iPhones in China.
    • I expect frenzied demand for the Passport to help BlackBerry turn a profit in its November quarter.
  • iPhone 6 Selling Poorly On China's Gray Market: Are Xiaomi, Lenovo Hurting Apple?
    Mon, Oct. 6 AAPL 145 Comments

    Summary

    • Apple received 2 million pre-orders for the iPhone 6 in China in a matter of hours.
    • IPhone 6 sales on China's gray market dried up in a matter of weeks - this could be a bad omen for future iPhone sales.
    • Some attribute weak gray market sales to competition from well-heeled, local smartphone manufacturers.
    • At a 16x p/e multiple and headwinds from the end of quantitative easing and an EC investigation into tax treatment in Ireland, I would avoid Apple at these levels.
  • Molycorp: Anticipate S&P Upgrade Any Week Now, Will Shorts Get Cooked?
    Mon, Oct. 6 MCP 36 Comments

    Summary

    • After Molycorp's $400 million Oaktree financing was announced, S&P placed the company's debt on credit watch with positive implications.
    • S&P wants to ensure the company has enough capital to meet cash flow needs over 12 months.
    • My high level analysis shows Molycorp with [i] cash on hand of $400 million - $410 million, [ii] potential cash burn of $300 million.
    • I expect an S&P upgrade within weeks. Molycorp has short interest of 60MM shares. The short sellers who remain will likely get cooked.
  • Bonds Hawkish After Recent FOMC Meeting, Equities Follow The 'Smart Money'
    Mon, Oct. 6 BXUB, BXUC, DIA 8 Comments

    Summary

    • Janet Yellen confirmed the Fed's intent to end quantitative easing and gave a 2% target for inflation.
    • Bond prices rose and yields declined as investors projected less economic growth. Equities declined as investors anticipated slower corporate earnings growth.
    • I believe bond investors are right, and plan avoid the general market due to economic headwinds from the wind down of quantitative easing.
  • Standard General Offers RadioShack Lifeline, Receives Equity At $0.29-$0.40 Per Share
    Mon, Oct. 6 RSH 12 Comments

    Summary

    • RadioShack received a lifeline from Standard General, including $120 million in cash and additional loan capacity to fund inventory for the holidays.
    • The Standard General consortium has the option to convert its $120 million cash into equity at 50%-80% of the company.
    • The consortium's buy-in price equates to $0.29-$0.40 per share - steep discounts to RadioShack's $0.99 share price.
    • I expect the stock to decline on Monday.