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Steve Birenberg, CFA
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Steve Birenberg is founder and President of Northlake Capital Management, LLC. Northlake specializes in managing portfolios for high net worth individuals using a unique strategy combining monthly ETF rotation based on major market themes supplemented by carefully selected media and telecom... More
My company:
Northlake Capital Management, LLC
My blog:
Media Talk
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  • Advertising Forecast Cut Behind the Curve

    I have been following advertising forecasts closely for many years.  I have long thought that Zenith Optimedia provided some of the best forecasts and had the most insights into big picture trends.  However, Zenith has been way behind the curve on this downturn.  As a result, I find little value in their latest forecast cut which was outlined in Tuesday's Wall Street Journal.

    Zenith now sees US ad spending at -8.7% vs. a prior forecast of -6.2%.  The new global forecast is -6.9% vs. +0.2%.  The prior forecasts were made at the UBS Media Conference in December 2008.

    My thought reading this Journal article was "Zenith, tell me something I don't already know." I think that the lowered forecast contributed to lagging performance in ad-supported media stocks on Tuesday.  If that is correct it is an overreaction and media stocks could rebound if the market turns up soon.

    Beyond the daily movements, I think the recent big rally in media stocks assumes a stabilizing ad envrionment with improvement late this year.  I think that might be a bit optimisitic and would be careful putting new money in the group at current prices.  In fact,. I trimmed my position in Discovery Communications (NASDAQ:DISCA) last week even though  DISCA has among the strngest advertising growth profiles for 2009.

    Apr 14 2:10 PM | Link | Comment!
  • Mobile Data Explosion

     

    SNL Kagan (http://www2.snl.com/media_comm/) has an article out today discussing the potential upgrade to 4G wireless networks.  The article quotes a recent forecast (http://www.cisco.com/en/US/solutions/collateral/ns341/ns525/ns537/ns705/ns827/white_paper_c11-520862.html) from Cisco Systems (NASDAQ:CSCO) with some astonishing statistics:

    • Global mobile traffic will exceed two exabytes/month by 2013 (An exabyte is equal to: 1 billion gigabytes; 1,000 petabytes; 250 million DVDs);
    • Global mobile traffic will increase 66-fold in five years;
    • Nearly 64% of the world's mobile traffic will be video by 2013;
    • Mobile video will grow at a CAGR of 150% between 2008 and 2013;
    • Mobile broadband handsets with higher than 3G speeds and laptop air or data cards will constitute more than 80% of global mobile traffic by 2013;
    • Latin America will have the strongest mobile growth at a 166% CAGR, followed by the Asia Pacific region at 146%; and
    •Asia Pacific will account for one-third of all mobile data traffic by 2013.

    Despite competion and slowing wireless subscriber growth I think AT&T (NYSE:T) and Verizon (NYSE:VZ) are winners as the upgrade path will consume capital gradually and data ARPU will offset voice pressures.  If cable companies can charge for ad-ons like digital cable, HD, and DVRs, telcos should be able to charge for incremental data consumption. 

    Obviously, the trend toward data is great for smartphone providers.  Apple (NASDAQ:AAPL) and Research in Motion (RIMM) remain in the driver's seat as a rising tide of penetration lifts all boats.

    CSCO, T, and VZ are held in Northlake client accounts including my personal accounts.

     

    Apr 14 10:12 AM | Link | Comment!
  • Box Office Boom Continues

    The weekend box office for the top 12 films was up 61%.  It was the second best April weekend ever, trailing only last weekend.  It was also the best ever Easter weekend.

    The top three films all performed well.  Hannah Montana The Movie met high expectations with $34 million and provided a much needed boost for Disney (NYSE:DIS), which had been in a box office slump.  Fast and Furious held well at #2 given the genre and massive opening weekend.  Monsters vs. Aliens firmed up, falling just 30%, taking full advantage of school vacations on Good Friday.  Dreamworks Animation (NASDAQ:DWA) is now looking at a solid North American performance for the film relative to expectations.

    For the theater stocks, the news is all good.  Look for more estimate increases and higher stock prices for Regal Entertainment (NYSE:RGC), Cinemark Holdings (NYSE:CNK), Carmike Cinemas (NASDAQ:CKEC), and cinema advertising leader National Cinemedia (NASDAQ:NCMI).

    The next two weekends should offer solidly positive comparisons before the summer movie season gets underway the first weekend in May with X-Men Origins: Wolverine which will do well but faces a tough comp from the $98 million opening weekend of Iron Man a year ago.

     

    Apr 12 3:15 PM | Link | 2 Comments
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