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Sunil Shah  

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  • Twitter As An Activist Investor Target [View article]
    Mr Mark, the fact that you bought a battery on a twitter tweet is neither here nor there. The fact is that users need more engagement, more prompting, more interaction than Twitter can possibly provide in 140 characters.

    they are on the road to nowhere, to quote talkin heads.

    that's why farcebook is leaving twitter in the dust in DAU. Thats why everybody worth their tweet is leaving twitter.

    It's an intrinsically impossible problem to solve given the niche twitter has carved for themselves. .the possibiility of monetising their folllowers is being diminished as we speak...

    but tweet away
    Jun 30, 2015. 08:52 PM | Likes Like |Link to Comment
  • Twitter up 3.6% as M&A rumors fly again [View news story]
    hey twitterati, gimme a break. This is classic 'any ol thin with a possible future should fly'. Well this pig aint flying. there is no underlying reason for display ads to actualise: there simply isnt enuf engagement with the customer. If it's tough to get an advertiser to post a display ad on farcebook, do you honestly believe the twitter follower has enuf time to 'buy' on a tweet?? That's the ultimate engagement question of the prospective advertiser.

    Use your head man, seems like so many employees are, as they jump ship...

    Consider this the start of the new age of reason on the monetisation of the digital age.
    Jun 30, 2015. 01:32 PM | 1 Like Like |Link to Comment
  • Twitter As An Activist Investor Target [View article]
    Please gimme a break. This is classic 'any ol thin with a possible future should fly'. Well this pig aint flying. there is no underlying reason for display ads to actualise: there simply isnt enuf engagement with the customer. If it's tough to get an advertiser to post a display ad on farcebook, do you honestly believe the twitter follower has enuf time to 'buy' on a tweet?? That's the ultimate engagement question of the prospective advertiser.

    Use your head man, seems like so many employees are, as they jump ship...

    Consider this the start of the new age of reason on the monetisation of the digital age.
    Jun 30, 2015. 01:23 PM | 3 Likes Like |Link to Comment
  • EBIX: Caught With Its Hand In The Cookie Jar [View article]
    Everything written in this article is factually correct. The author diligently outlines items she is not sure about (that cannot be unequivocally gleaned) but she inferred from 2 consecutive quarterly balance sheets.

    The problem is outlined quite clearly in the 3q 2014 10 Q:
    From EBIX's 10 Q for 3Q 2014:

    “During the three months ended September 30, 2014 and 2013 these aggregate
    contingent accrued earn-out business acquisition consideration liabilities,
    were reduced by $5.8 million and $4.1 million, respectively, and during the
    nine months ended September 30, 2014 and 2013 these contingent liabilities
    were reduced by $7.5 million and $10.3 million, respectively, due to
    remeasurements as based on the then assessed fair value and changes in
    anticipated future revenue levels. These reductions to the contingent
    accrued earn-out liabilities resulted in corresponding reduction to general
    and administrative expenses as reported on the Condensed Consolidated
    Statements of Income.”

    EBIX is, as a result of its accounting treatment, creating a balance sheet
    contingency reserve on acquisition, that is in subsequent periods, released
    to the P&L to synthetically reduce operating expenses and raise the profit
    margin.

    That is the factual truth.

    For calendar 2014, the earn-out release amounted $10.2m, on a pre-tax profit of $77m (or 13% ! of income).

    Now let's be clear:
    -this is consistent with GAAP
    -there is nothing awry in their accounting treatment

    HOWEVER EBIX does itself a huge injustice.

    Anything that can be construed as an ' accounting trick' will be detrimental to Ebix's long term interests. I am unambiguously (as a seasoned CA) of the opinion that this constant synthetic reduction of G&A expenses can be regarded as a deception, as it manifests itself as a significant detraction from profit when arriving at the cashflow and artificially raises the operating margin. (I only discovered it after going through the cashflow with a magnifying glass, and less informed investors are quite likely to cry wolf.)

    In my opinion the problem stems (as mentioned by the author) from using a ridiculous discount rate of 1.75%. This might be the cost of Ebix debt, but it certainly isnt the COST OF EQUITY. THIS PALTRY RATE HAS THE EFFECT OF RAISING THE GOODWILL AND THE EARNOUT LIABILITY on acquisition. As time progresses there is then the need of a future adjustment. And this is what the author is correctly highlighting.

    You need to know 2 things:
    -I have informed management how their accounting could easily be construed as deceptive. I am confident that there will be less scope for 'manipulation' in the future; partly because investors know and partly because the earnout reserve has already been exhausted. (To EBIX MGMT: And dont try to inflate it further with another acquisition + inflated goodwill + earnout liability. )
    -I am very long EBIX. It's a company I have followed for years and have been very vocal and bullish about - here on SA (see my articles) - especially during the Copperfield short attack. I am still very long, despite the recent run.
    -I believe, despite the 'revelations' in this article, EBIX shareholders can look forward to a very rewarding future....Revenue growth is about to accelerate and we are moving to a new ballpark in terms of contract wins. The secular story of insurance carriers outsourcing their back and middle office plays right into EBIX's sweetspot. The hard work has been done already, now it's a question of gaining territories and new markets by an established and legitimate player.
    -Even after abstracting for this accounting gimmickry, on a cashflow basis this company is cheap. Real cheap given its prospects.

    (EBIX Mgmt: as long as you dont sell out like you almost did at $20 to Goldman Sachs!!)
    Mar 30, 2015. 06:20 PM | 6 Likes Like |Link to Comment
  • Whom Should You Trust? Meredith Adler Or Herbalife's Banker? [View article]
    Your counting methodology is similar to HLF's in their tally of successful distributors. OFF by a factor of roughly ten.

    There are 7 bn people on the planet.

    But keep it up, HLF will have 70 bn happy distributors shortly...
    Mar 26, 2015. 08:54 AM | 3 Likes Like |Link to Comment
  • Herbalife: Mr. DeSimone's Neighborhood Of Accounting Make Believe [View article]
    @wez, thanks that helps given my very big short.

    It's a weak wicket,but I can only hope there were holes in this plaintiff's case that cast doubt on the allegation, "HLF should warn investors there are ongoing investigations where it is being judged if it is a pyramid"

    Which current case will determine this? I know there is one with the FTC and others. But which one will determine it and who is the plaintiff?
    thanks
    Mar 18, 2015. 01:21 PM | 1 Like Like |Link to Comment
  • Herbalife: Mr. DeSimone's Neighborhood Of Accounting Make Believe [View article]
    @wez thanks but help me here:

    the allegation that HLF did not disclose it was a pyramid scheme is thrown out. HLF clearly does not claim it is a pyramid scheme and this ruling would be affirmative (ie it would not be dismissed) if the court felt that HLF was actually a pyramid and did not disclose it.

    I think it is a huge win for HLF longs. Where am I wrong?
    thanks
    Mar 18, 2015. 01:03 PM | 5 Likes Like |Link to Comment
  • Herbalife: Mr. DeSimone's Neighborhood Of Accounting Make Believe [View article]
    subject: today's dismissal verdict that HLF is a pyramid scheme:

    @anyone pls explain why this is a non event?
    From the way I read it, the arguments raised by Ackman were presented as evidence that HLF is a pyramid, and the case was dismissed.

    I cant quite believe it, but from a legal standpoint, why doesnt this dismissal dismiss the allegation that HLF is a pyramid scheme - it seems Ackmans arguments were presented and case was dismissed.

    thanks in advance
    Mar 18, 2015. 12:18 PM | 3 Likes Like |Link to Comment
  • Herbalife +5.3%; shareholder lawsuit dismissed [View news story]
    @Roy the allegation that HLF did not disclose it was a pyramid scheme is thrown out. HLF clearly does not claim it is a pyramid scheme and this ruling would be affirmative (ie it would not be dismissed) if the court felt that HLF was actually a pyramid and did not disclose it.

    I think it is a huge win for HLF longs. Where am I wrong?
    Mar 18, 2015. 11:57 AM | 1 Like Like |Link to Comment
  • Herbalife +5.3%; shareholder lawsuit dismissed [View news story]
    typo above: ...why doesnt this dismissal dismiss the allegation that...
    Mar 18, 2015. 11:51 AM | Likes Like |Link to Comment
  • Herbalife +5.3%; shareholder lawsuit dismissed [View news story]
    @Judicious and anyone,
    if this suit was dismissed (which appears to have included Ackman's evidence et al) what chance is there that the other allegations (to FTC DA NY) will succeed??

    All the more frustrating as I believe any new action would have to repeal this action. Please explain! thank you.
    Mar 18, 2015. 11:49 AM | 1 Like Like |Link to Comment
  • Herbalife +5.3%; shareholder lawsuit dismissed [View news story]
    @Judicious pls explain why this is a non event?
    From the way I read it, the arguments raised by Ackman were presented as evidence that HLF is a pyramid, and the case was dismissed.

    I cant quite believe it, but from a legal standpoint, why doesnt this dismissal dismal the allegation that HLF is a pyramid scheme - it seems Ackmans arguments were presented and case was dismissed.

    thanks in advance...
    Mar 18, 2015. 11:36 AM | 2 Likes Like |Link to Comment
  • Microsoft Continues To Focus On Lower ASP Smartphones [View article]
    Randal,
    That's very helpful thanks - there must be some license fee paid by OEMs to MSFT (I know it was about $2bn total to Nokia for a multi year agreement). Now that Nokia Handsets has disappeared under MSFT's hood, the associated license fee has gone too.

    Worryingly I see the new Lumia 640 MSFT bundles a free year of office 365 with the phone (along with Windows 8).

    I paid for Windows 7 when I initially bought my Nokia 535, but it upgraded for free to Windows 8.1, and I also have Office.

    Shockingly, I havent paid a dime!

    This leads me to ask if there is any near-term tangible revenue benefit of Window's phones sold by MSFT (other OEM's will naturally pay license fees but I believe they are an insignificant slice of the Windows smartphone O/S pie).

    Once Windows Phone becomes a significant 3'rd operating system, it will attract ISV's and app revenue will follow. There might even be a cascade effect back to the PC. But that's all in an uncertain future.

    Thoughts would be appreciated!
    Mar 7, 2015. 11:14 AM | Likes Like |Link to Comment
  • Microsoft Continues To Focus On Lower ASP Smartphones [View article]
    Question: how much money does MSFT make DIRECTLY from a new windows phone user? There is some profit from the hardware lumia sale, but I presume very little, given Nokia's gross margins prior to handset sale.

    As for the the windows phone O/s, how much money does MSFT make directly from a sale? I cant think it can be much, given Android's price...

    Long term, there are bound to be benefits as Windows halts their extinction along with the fading PC.

    But it's the near term profitability I am trying to explore.

    Thanks in advance!!
    Mar 7, 2015. 06:43 AM | Likes Like |Link to Comment
  • 2 salesforce.com Mysteries [View article]
    Paulo, I wrote about their dubious extension of the duration of deferred revenues in May 2013. http://bit.ly/17OwjtA

    From article:
    For this quarter, the company registered a 28% increase in YOY revenues. The company also states that Deferred Revenue climbed to $1.7bn, up 30% from the previous year, very impressive numbers given the macro-economic context.

    It is only through reading the fine print that a more ominous concern raises its head.

    Some background. About 2 years ago, the SEC questioned CRM on its earnings disclosures. Particular concern was raised about the nature of deferred revenue and whether CRM was extending the horizon of deferred revenues to inflate growth. Since the enquiry, CRM has been obliged to detail the term of deferred revenue, and this statement from its April 2013 quarter is typical: "Current deferred revenues increased by 33% year over year to $1.67bn, benefited in part by longer invoice durations."


    Market doesnt care. It's going up.
    Mar 3, 2015. 03:37 PM | 7 Likes Like |Link to Comment
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