A pair of right-to-work bills are officially passed in Michigan to set the stage for new employees at General Motors (GM +0.3%), Ford (F -0.1%), and Chrysler (FIATY.PK) to skip around union fees. While labor groups are still making quite a bit of noise on the issue, the Big Three have been deathly quiet. [View news story]
This bill only takes away the requirement that an employee joins the union upon their employment. In your scenario, an employee that was treated unfairly could always decide to join the union later on. I think the real problems unions face is delivering incremental value for their cost. A union is not free for an employee, and to many they are just another big bureaucracy that is disconnected from it's members. Unions rake in large amounts of money that is funneled to the top just like any corporate organization. A right to work bill makes them work harder for their members.
Also, unions still exist for small companies and not just large corporations. However, IMO they just seem to get in the way in smaller organizations, especially when the ownership/management (they are usually the same in smaller businesses) cares about their employees. I think unions have a place, but it's not to be another fat cat siphoning off of an employee's paycheck.
Look Out Below: Apple's Unit Profits Are Falling [View article]
Using per unit operating income to determine the direction of a company can be misleading. A big portion of operating income is fixed costs. So the more units sold in a quarter will increase the per unit operating income. Considering Apple tends to sell more this time of year plus a new product refresh, could push that figure higher. Also, even if per unit income declines, if overall net income increases, it's still positive for Apple shareholders.
The foundation to arguments like yours and similar articles is that Apple cannot possibly continue to demand a premium price for their products given the competitive landscape. I would argue that Apple is much better positioned to handle margin compression than their competitors. If margins compress (lower prices) but volume increases, Apple's total profit can still increase. They have a relatively small market share except for tablets but they are in a growing market, especially tablets. However, many of the Android device manufacturers are already lowering prices to gain market share. How will they keep their relatively larger market share if Apple lowers prices? They can't cut prices more because they have no margin to compress.
If Apple doesn't lower prices but volume continues to rise, their profit will be even greater. I would wait until Y/Y earnings stagnate or fall before I would become bearish. Looking at Q/Q for Apple has historically been very misleading.
Baidu (BIDU) is partnering with Lenovo, now China's #2 smartphone vendor (per IDC), to offer the LePhone A586, a $158 device running on Baidu's Android-based OS. The A586 sports a 4.5" display and dual-core Qualcomm Snapdragon processor, and supports Baidu's cloud services. It's the kind of product Baidu needs to see more of as it works to improve its mobile search share and ad sales, and is also the kind that has fueled Android's Chinese share gains - the 16GB iPhone 5 sells for over 4x as much unlocked. (other partnerships) [View news story]
I don't follow BIDU, but after just a quick look at their earnings and price chart they could be bottoming out soon. Their earnings have been growing nicely over the past year (+88% Y/Y). As long as they continue to grow Y/Y, I would hold.
Their P/E is 20 vs their industry average of 19. Buying more here to average your cost down would not be a bad idea. If the P/E falls to 19 or lower, I would definitely buy more. If earnings grow at just 50% next year and they have the same P/E of 20, the price would be $133.50.
I definitely wouldn't sell unless earnings growth began to stall. Otherwise it's only a matter of time before this will be worth a lot more.
An options play on volatility would be an excellent play before earnings. This much movement prior to earnings is a definite set-up for volatility after earnings.
Do you have mix of those indicators that determines your overall view of the possibility of a recession? For example, 8 negative, 8 positive is hold or sell. Or is it a weighted system where some indicators are weighted heavier than others?
The Internet Radio Fairness Act Will Fail [View article]
As you have been pointing out, I don't think Pandora needs the IRFA in order to be successful. They need to increase the quantity of advertising and/or subscription prices. I listen to Pandora with some regularity, about an hour per week on average in my car. I have noticed that audio advertising has been increasing significantly, but not to the point of annoyance for me.
1 year ago I would hear 1, at the most 2, ads per hour. Usually it was 1 or 2 different advertisers so not a lot of variety. About 6 months ago I noticed it starting to pick up with more like 2 to 3 ads per hour, and in the past month I've noticed it creep up closer to 5 ads per hour, and the variety of advertisers is much larger.
I do wonder what impact this will have on their earnings and guidance next week. Their acquisition costs will increase as listening hours increase, but by placing more ads, they will have a two-fold effect of increasing revenue per minute and also, reducing acquisition costs per minute because less time is available for music.
To reshape Pandora as a good and much less risky long-term investment they need to: + Increase revenue per minute. + While at the same time continue to grow listener hours. + Add some type of proprietary content to protect against competition.
The success of the first two elements will become more clear over the next 12 months. I'm not sure if the last item is even on their radar.
I cringe whenever I hear people talking about the royalties as a percent of revenue because of the points you bring up. Does anyone know what the rate is on a per play/per person basis? It seems to me that, regardless, terrestrial radio doesn't pay performance royalties while sat and internet do. Isn't Sirius also interested in moving into on-demand streaming, and would like to see this legislation pass?
I see very little reason to initiate a short position before earnings. The price is not likely to drop between now and then. Two quarters ago the price rose 16% in the days following earnings and last quarter it rose by more than 20%.
If they miss earnings, there would be plenty of time to initiate a short position to gain from the fall, but if they beat earnings, you could make an additional 10% - 20% by shorting it after it rises. It seems like shorting now poses more risk with very little upside.
The time to short Pandora is after earnings. They report next Tuesday. I would watch for shares to drift higher as we approach Tuesday. Pandora has beat 3 out of the last 4 earnings, and if you listen to their service, you'll notice the large increase in advertising compared to a couple quarters ago (quantity of adds and variety of advertisers). That, of course, doesn't mean Pandora is out of the woods, but it does likely mean another beat, which will push shares higher in the short term.
Long-term I agree with davdws that congress will change the rules on internet royalties. It's not just Pandora that wants it to happen. How soon those rules change is another question.
Why You Should Short Sell Pandora Media [View article]
I think P is a high risk stock either way. This includes shorting the stock. Especially since earnings are due next week. The stock has typically been very volatile post earnings, and the last two earnings it has risen sharply.
Also, from a Q/Q perspective, the second quarter showed a lot of positives that aren't really shown in your analysis. Q/Q revenue grew by 25% while content acquisition only grew by 8.4%. If they show similar results in Q3, they will definitely be moving in the right direction.
The Internet Radio Fairness Act could cause a lot of volatility in this stock regardless of whether it passes. News could swing this stock quickly in either direction. If it were to pass, it would significantly improve their earnings.
Claiming its BlackBerrys "have been failing both at inopportune times and at an unacceptable rate," the NTSB says it looking to abandon Research In Motion's (RIMM) hardware for iPhones (AAPL). That makes the NTSB the latest in a string of government organizations to either fully end its BlackBerry use or give employees the option to use alternatives. RIM, which just received FIPS 140-2 security clearance for BlackBerry 10, says it has 1M government customers in North America. [View news story]
The government auctions cell phones all of the time. So the resale value would be important in considering the true cost of the phone.
Ford's (F) ability to avert bankruptcy and its recovery are due to its "One Ford" strategy in which it sells the same products globally. However, the policy has had mixed success in China, where GM and VW dominate by selling cars that cater to local tastes. One problem is that Ford's cars are expensive, although the company is developing a "Value B" sub-$10,000 compact. Still, Ford's David Schoch worries that the company isn't moving fast enough. [View news story]
I'm not sure where you get that most Republicans want the US auto companies to go out of business. Obviously Republicans want US companies to succeed. Many Republican leaders favored a structured bankruptcy for GM versus a bailout/bankruptcy. In a bankruptcy debt is exchanged for equity and the current shareholders are usually wiped out. The business continues to exist.
What the Democrats did, right or wrong, was to ensure that one particular union kept their pensions, but many other unions that represented thousands of employees were wiped out. I'm not sure that it was any more favorable either way since the money was taken from bond holders in order to fund the Union bailout. Bond holders might seem like a wealthy class, but they also represent retirement accounts of millions of Americans.
Claiming its BlackBerrys "have been failing both at inopportune times and at an unacceptable rate," the NTSB says it looking to abandon Research In Motion's (RIMM) hardware for iPhones (AAPL). That makes the NTSB the latest in a string of government organizations to either fully end its BlackBerry use or give employees the option to use alternatives. RIM, which just received FIPS 140-2 security clearance for BlackBerry 10, says it has 1M government customers in North America. [View news story]
I don't have any numbers either, but according to the article above the NTSB says the BB devices are failing "at an unacceptable rate." I'm merely pointing out that it wouldn't necessarily cost taxpayers more if Apple's failure rate were lower than BB's.
Also, you might not consider buying an iPhone second hand, but it doesn't change the fact that their resale value is much higher than most other used mobile phones. Another reason that it might not cost taxpayers more for iPhones.
Claiming its BlackBerrys "have been failing both at inopportune times and at an unacceptable rate," the NTSB says it looking to abandon Research In Motion's (RIMM) hardware for iPhones (AAPL). That makes the NTSB the latest in a string of government organizations to either fully end its BlackBerry use or give employees the option to use alternatives. RIM, which just received FIPS 140-2 security clearance for BlackBerry 10, says it has 1M government customers in North America. [View news story]
It depends, if the iPhone lasts longer than the BB devices, it could offset any additional cost not to mention that Apple's resale value makes the cost of ownership much lower than the initial price.
Also you have to consider the soft benefits as well. If the BB devices were failing at "inopportune times" as the article suggests, how has that affected productivity?
"It's not easy to make the iPhones. We are falling short of meeting the huge demand," says Foxconn (FXCOF.PK) chairman Terry Gou, suggesting iPhone 5 shortages aren't letting up. Another Foxconn exec made similar remarks last month. Analysts have reported Foxconn has enlisted a division that typically makes non-Apple (AAPL -2.8%) products to help address the shortfall. [View news story]
Nov 7th is the ex-date or last day to buy the stock in order to get the dividend, but it takes three business days for it to settle. So November 12th is the record date mentioned above.
A pair of right-to-work bills are officially passed in Michigan to set the stage for new employees at General Motors (GM +0.3%), Ford (F -0.1%), and Chrysler (FIATY.PK) to skip around union fees. While labor groups are still making quite a bit of noise on the issue, the Big Three have been deathly quiet. [View news story]
Also, unions still exist for small companies and not just large corporations. However, IMO they just seem to get in the way in smaller organizations, especially when the ownership/management (they are usually the same in smaller businesses) cares about their employees. I think unions have a place, but it's not to be another fat cat siphoning off of an employee's paycheck.
Look Out Below: Apple's Unit Profits Are Falling [View article]
The foundation to arguments like yours and similar articles is that Apple cannot possibly continue to demand a premium price for their products given the competitive landscape. I would argue that Apple is much better positioned to handle margin compression than their competitors. If margins compress (lower prices) but volume increases, Apple's total profit can still increase. They have a relatively small market share except for tablets but they are in a growing market, especially tablets. However, many of the Android device manufacturers are already lowering prices to gain market share. How will they keep their relatively larger market share if Apple lowers prices? They can't cut prices more because they have no margin to compress.
If Apple doesn't lower prices but volume continues to rise, their profit will be even greater. I would wait until Y/Y earnings stagnate or fall before I would become bearish. Looking at Q/Q for Apple has historically been very misleading.
Baidu (BIDU) is partnering with Lenovo, now China's #2 smartphone vendor (per IDC), to offer the LePhone A586, a $158 device running on Baidu's Android-based OS. The A586 sports a 4.5" display and dual-core Qualcomm Snapdragon processor, and supports Baidu's cloud services. It's the kind of product Baidu needs to see more of as it works to improve its mobile search share and ad sales, and is also the kind that has fueled Android's Chinese share gains - the 16GB iPhone 5 sells for over 4x as much unlocked. (other partnerships) [View news story]
Their P/E is 20 vs their industry average of 19. Buying more here to average your cost down would not be a bad idea. If the P/E falls to 19 or lower, I would definitely buy more. If earnings grow at just 50% next year and they have the same P/E of 20, the price would be $133.50.
I definitely wouldn't sell unless earnings growth began to stall. Otherwise it's only a matter of time before this will be worth a lot more.
This Pandora Rally Screams Caution [View article]
Oct New Home Sales: 368K vs. 387K expected, 369K prior (revised). [View news story]
The Internet Radio Fairness Act Will Fail [View article]
1 year ago I would hear 1, at the most 2, ads per hour. Usually it was 1 or 2 different advertisers so not a lot of variety. About 6 months ago I noticed it starting to pick up with more like 2 to 3 ads per hour, and in the past month I've noticed it creep up closer to 5 ads per hour, and the variety of advertisers is much larger.
I do wonder what impact this will have on their earnings and guidance next week. Their acquisition costs will increase as listening hours increase, but by placing more ads, they will have a two-fold effect of increasing revenue per minute and also, reducing acquisition costs per minute because less time is available for music.
To reshape Pandora as a good and much less risky long-term investment they need to:
+ Increase revenue per minute.
+ While at the same time continue to grow listener hours.
+ Add some type of proprietary content to protect against competition.
The success of the first two elements will become more clear over the next 12 months. I'm not sure if the last item is even on their radar.
This Pandora Rally Screams Caution [View article]
This Pandora Rally Screams Caution [View article]
If they miss earnings, there would be plenty of time to initiate a short position to gain from the fall, but if they beat earnings, you could make an additional 10% - 20% by shorting it after it rises. It seems like shorting now poses more risk with very little upside.
This Pandora Rally Screams Caution [View article]
Long-term I agree with davdws that congress will change the rules on internet royalties. It's not just Pandora that wants it to happen. How soon those rules change is another question.
Why You Should Short Sell Pandora Media [View article]
Also, from a Q/Q perspective, the second quarter showed a lot of positives that aren't really shown in your analysis. Q/Q revenue grew by 25% while content acquisition only grew by 8.4%. If they show similar results in Q3, they will definitely be moving in the right direction.
The Internet Radio Fairness Act could cause a lot of volatility in this stock regardless of whether it passes. News could swing this stock quickly in either direction. If it were to pass, it would significantly improve their earnings.
Claiming its BlackBerrys "have been failing both at inopportune times and at an unacceptable rate," the NTSB says it looking to abandon Research In Motion's (RIMM) hardware for iPhones (AAPL). That makes the NTSB the latest in a string of government organizations to either fully end its BlackBerry use or give employees the option to use alternatives. RIM, which just received FIPS 140-2 security clearance for BlackBerry 10, says it has 1M government customers in North America. [View news story]
Here's just a quick grab of several different auctions:
http://bit.ly/Qi63NF
Ford's (F) ability to avert bankruptcy and its recovery are due to its "One Ford" strategy in which it sells the same products globally. However, the policy has had mixed success in China, where GM and VW dominate by selling cars that cater to local tastes. One problem is that Ford's cars are expensive, although the company is developing a "Value B" sub-$10,000 compact. Still, Ford's David Schoch worries that the company isn't moving fast enough. [View news story]
What the Democrats did, right or wrong, was to ensure that one particular union kept their pensions, but many other unions that represented thousands of employees were wiped out. I'm not sure that it was any more favorable either way since the money was taken from bond holders in order to fund the Union bailout. Bond holders might seem like a wealthy class, but they also represent retirement accounts of millions of Americans.
Claiming its BlackBerrys "have been failing both at inopportune times and at an unacceptable rate," the NTSB says it looking to abandon Research In Motion's (RIMM) hardware for iPhones (AAPL). That makes the NTSB the latest in a string of government organizations to either fully end its BlackBerry use or give employees the option to use alternatives. RIM, which just received FIPS 140-2 security clearance for BlackBerry 10, says it has 1M government customers in North America. [View news story]
Also, you might not consider buying an iPhone second hand, but it doesn't change the fact that their resale value is much higher than most other used mobile phones. Another reason that it might not cost taxpayers more for iPhones.
Claiming its BlackBerrys "have been failing both at inopportune times and at an unacceptable rate," the NTSB says it looking to abandon Research In Motion's (RIMM) hardware for iPhones (AAPL). That makes the NTSB the latest in a string of government organizations to either fully end its BlackBerry use or give employees the option to use alternatives. RIM, which just received FIPS 140-2 security clearance for BlackBerry 10, says it has 1M government customers in North America. [View news story]
Also you have to consider the soft benefits as well. If the BB devices were failing at "inopportune times" as the article suggests, how has that affected productivity?
"It's not easy to make the iPhones. We are falling short of meeting the huge demand," says Foxconn (FXCOF.PK) chairman Terry Gou, suggesting iPhone 5 shortages aren't letting up. Another Foxconn exec made similar remarks last month. Analysts have reported Foxconn has enlisted a division that typically makes non-Apple (AAPL -2.8%) products to help address the shortfall. [View news story]