Michael B. Krause

http://scriabinop23.blogspot.com
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62 Comments

    • Fri May 16th 17:43 PM | Rating: 0 0
      Commented on:
      Microsoft in Perfect Position to Undercut Previous Yahoo Offer
      Tom S:

      1) My calculations are based on the assumptions that search market share for MSN (and others: Yahoo, Google, etc) are fairly in line with their revenues. I am making (what some may consider disagreeable) a leap saying that search shares are consistent enough to get a handle on valuation. Is 100% of search worth $150B total? Maybe not search alone: but search, display and everything else that comes with it does come to that. MSN is worth more than search, but so are Yahoo and Google. So for blunt measurements (which are practical for such high multiple stocks), I think its appropriate.

      Add up Google, MSN, and Yahoo market caps and you get somewhere close, plus or minus normal volatility (recall GOOG was worth 25% less just a few weeks ago because analysts incorrectly pinned Google's growth curve).

      2. I meant revenue when referring to cash flow, not Cash flow on operations.

      3. I agree it may not be foolish to merge, but at such a high multiple, all benefits from the merger would be likely forgone with such an overpriced initial transaction. High risk, minimal reward.

      Lastly: $47B isn't a merger. Thats a money giveaway.
      View article »
    • Fri May 16th 17:32 PM | Rating: 0 0
      Commented on:
      Microsoft in Perfect Position to Undercut Previous Yahoo Offer
      You are definitely right that 16% earnings yield is not a normal return. You caught my error.

      I was a bit sloppy there - I made a causative assumption saying that since their real returns are much weaker (than even 6% earnings yield on such a high multiple that MSFT offered), that the likely result of such a collaboration would at best create normal (somewhere between the 58 multiple MSFT is offering and the best-case multiple of 6) returns for enormously high risk.
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    • Fri May 16th 16:43 PM | Rating: 0 0
      Commented on:
      Microsoft in Perfect Position to Undercut Previous Yahoo Offer
      $20B?

      Take a look at the latest 10-Q. $10.5B total stockholder equity, 2.2B of that being Alibaba.

      www.sec.gov/Archives/e...

      My estimate of a $30B offer value on Yahoo is nearly a $10B premium on the cash flow valuation estimate, perfectly making up for these 'assets' you mention. Their interest in Alibaba is worth $2.2B according to their own 10-q.
      View article »
    • Sat Apr 19th 11:45 AM | Rating: 0 0
      Commented on:
      ComScore: The Google Fallout
      This just points to how irrelevent factoring in only US click data to determine google valuation is.

      The comscore data will be useful for macro trends. If click data is down 10% q/q from comscore, I'd trust that as a general guide.

      But more than half of revenues are from the international sources, so good points.

      That said, $25 for next year gives you a forward PE of 21. Considering that lines up with growth #s of 20%, this is a fairly valued stock. If google gets yahoo's clicks, pop another $5 onto earnings and you have a $600 stock.

      That said, I don't think there's much upside beyond that unless they find a way to monetize the developing world more aggressively.
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    • Tue Apr 15th 22:42 PM | Rating: 0 0
      Commented on:
      Dear Mr. Bernanke
      Depression? Get over it. Intel can't even give a bust quarter.

      This is going to be a long a protracted unwind, a recession with some defaults, but this is not a depression.

      View article »
    • Wed Apr 9th 19:59 PM | Rating: 0 0
      Commented on:
      Options Trader: Wednesday Outlook
      Agree that oil recovery is more expensive, but you forget one thing: the market doesn't care how much it costs to produce oil.

      The market only cares if there is too much or too little supply, and will adjust price accordingly.
      View article »
    • Fri Apr 4th 14:53 PM | Rating: 0 0
      Commented on:
      An Energy Policy that Makes Cents (and Sense)
      I totally agree with the jist of this... So much that I made my own contribution in a letter to politicians on the concept. Similar minds think alike I guess:

      scriabinop23.blogspot....

      And on ethanol: scriabinop23.blogspot....
      View article »
    • Fri Apr 4th 10:57 AM | Rating: 0 0
      Commented on:
      Chance This Is The Bottom? Zero.
      Oh here's something more bullish. This tells you when to buy.

      scriabinop23.blogspot....
      View article »
    • Fri Apr 4th 10:57 AM | Rating: 0 0
      Commented on:
      Chance This Is The Bottom? Zero.
      I'm not a permabear. I said buy in 1 to 1.5 years. The cycle just hasn't played out.

      View article »
    • Thu Apr 3rd 21:56 PM | Rating: 0 0
      Commented on:
      Money for Nothing: Just Buy S&P 500 Puts
      yes. the near term visibility is too low. Take a look at this.

      scriabinop23.blogspot....

      Corporate defaults are still way too low. This is going to take a while to bottom.
      View article »
    • Thu Mar 27th 18:53 PM | Rating: 0 0
      Commented on:
      Apple's Move: Institutional Run-Up or Rebound?
      This is a perfect bear market short, guys. I love AAPL, but its priced right. (not frothy nor too cheap) AAPL will have a hard time moving far from 120-150 unless the broad market does the same.

      Still too much bad news ahead ...
      View article »
    • Tue Mar 25th 02:24 AM | Rating: 0 0
      Commented on:
      U.S. Dollar Paradigm Shift Underway
      correction: low interest rates ARE not significantly ramping up money supply.

      typed a little too quick.
      View article »
    • Tue Mar 25th 02:23 AM | Rating: 0 0
      Commented on:
      U.S. Dollar Paradigm Shift Underway
      Yes. This 'bail-out' just prevented, as Meredith Whitney of Oppenheimer speculated, a 2.5T forced unwind (imagine the cascade) of credit default swaps.

      The err here is that of the masses blindly following the quants in the quest that greed guides. That, by the way, is capitalism. Judge for yourself the errors of capitalism.

      As far as John's arguments of money supply: My point is that there has been a gigantic amount of monetary destruction going on. The reigning of credit is monetary destruction. When the reserve base falls (as it has due to these bank losses), the total money outstanding is significantly less. Its just like a multiplier reduction. Now even with a new risk assessment mentality, w/ banks being afraid to even loan to each other, low interest rates is not significantly ramping up money supply. Its just helping reduce a barrier of functionality in the system.

      A deflationary environment provides no incentive to run a business. Why invest if your future returns on investment will not pay for your current investment? If you want gold standard, no fractional reserve, etc. then you want a socialist system. Capitalism vs. socialism is another argument for another place.

      But certainly, a strong currency with little innovation is fundamentally sound from the point of view of the fact that no progress yields little in the way of health care tech advances. You're right: you won't need to worry about retirement with a gold standard currency because you won't live more than a few years past working age.
      View article »
    • Tue Mar 25th 00:36 AM | Rating: 0 0
      Commented on:
      Apple and United Technolgies: Bargains Amidst the Recession News
      Thats a little too aggressive on the AAPL I think. Of course anything can happen, but this stock is priced fairly. Long term, fine. But why should AAPL be trading at a forward 32 PE (200) with a 22% growth rate in a battered economy?

      This is a buy at 115-125 and a sell at 140+ until the clouds are gone.
      View article »
    • Mon Mar 24th 20:09 PM | Rating: 0 0
      Commented on:
      U.S. Dollar Paradigm Shift Underway
      This is a great provoker ... I was wrong about the depth of the credit crisis. I'll admit that. But if you read further in the same article, I go on to say:

      If $90+ oil is here to stay, we're only at the beginning of the food commodities rally. Watch corn go to $6.00/bu, soy to $13.00, and forced out wheat acres will repeat this past season's ascent to an even more ridiculous level. Then comes the more expensive to feed pigs, cattle, and resulting milk.


      And to the first writer: The average middle class lives more comfortably (minus the servants) than Rockefeller did at the turn of the century. A move away from gold standard facilitated this.

      To the last poster, you say:

      " For those of you that say innovation has created economic "booms"...I guess there is a sucker born every day. Booms are created by the FED. "

      You are getting it backwards. The flexibility of the money supply helps and does not hinder gigantic productivity and technological increases. It is the fuel to our innovative spirit in the US. Sure it leads to excesses and busts like this, but this cycle is necessary. Greed, fear and risk taking are inherent in capitalist mentality systems; a move to a system that removes the cyclical element takes away the capitalist 'oxygen' so to speak.

      On the other hand, I'm in no way condoning the giant 'herd' screwup that subprime became (not just in the US scene, but the world scene). It is a story of collusion between i-bankers, ratings agencies, and blind faith into flawed statistical models. Perhaps the lesson here is everyone in finance should be required to take 4 semesters of statistics and econometrics to not function like the herd and think for themselves.
      View article »
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