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kirk otis

kirk otis
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  • Signs Of Amazon.com Mismanagement [View article]
    Agree totally with the premis. Great company for the consumer, and a great short for the investor. If the valuation is ever fair, it is simply way ahead of the company. I know of no other valuation that is so rich.

    The concept you have however of multiple SKUs is not fair in that many of the products will ship directly from the manufacturer with Amazon simply being a catalog and paper pusher (this is very profitable).... and then other items, say the top 10,000 items, will ship directly from a location close to the end consumer so that Amazon will be able to negotiate appropriate rates from the shipper (UPS, USPS and FEDEX).

    What is unclear to me is what share Amazon can achieve in the various categories it participates in, the valuation, while wrong, is based on the premise that Amazon's displacement of traditional retail has only begun. Ok, that may be, but the business will only grow at 50% growth rates and that is not fast enough to justify the price.
    Aug 14 05:38 PM | Likes Like |Link to Comment
  • A provision in the just-passed transportation bill will allow corporate pension plans to use the average interest rate over the past 25 years (high) as opposed to the last 2 years (low) towards calculating future returns. At a stroke, under-funded plans at companies like GM and F just became less so (and reported profits should benefit as well).  [View news story]
    Republic steel used the same trick when acquired by LTV Steel. Then LTV could not make up the short fall and filed for bankruptcy.

    Using the rate over the last two years makes little sense given the FEDS actions that have distorted the rate.
    Jul 1 08:47 AM | Likes Like |Link to Comment
  • A provision in the just-passed transportation bill will allow corporate pension plans to use the average interest rate over the past 25 years (high) as opposed to the last 2 years (low) towards calculating future returns. At a stroke, under-funded plans at companies like GM and F just became less so (and reported profits should benefit as well).  [View news story]
    The words you wrote I suspect do not express what you mean. "under-funded plans at companies like GM and F just became less so", the assumption used to calculate the accounting for the obligation has not changed the amount that will be paid out to pensioners. Thus the obligation has not changed and the amount by which the funds are underfunded has not changed. The change is the estimation of the earnings on the funds currently held. It is correct to observe that if a higher rate is assumed for the earnings on the funds, then the amount of funds required will be less. I suspect I am stating what is understood by all.

    The change in the reference rate I believe is a good change, as the current rate environment will not be sustained. The concept of maturity matching, a concept from the Corporate Finance, Banking and Risk Management worlds is well understood, and sound. Matching long term liabilities with short term assets is not.
    Jun 30 08:33 AM | 2 Likes Like |Link to Comment
  • Tech Report has been tracking prices for solid-state drives (SSDs) sold by OCZ, Intel (INTC), and others since their 2011 releases, and estimates the average drive has seen its price decline 46% since launch time, thanks in large part to plummeting NAND flash memory prices. That has fueled growing SSD use within PCs (I, II), and is one of the reasons (among others) why hard drive giants Seagate (STX) and Western Digital (WDC) have seen their valuations reach dirt-cheap levels.  [View news story]
    1- it doesn't have to be available 100% of the time. Think of the Dropbox model where files are cached locally for performance and when you are disconnected. If 99.9% of what you require is local, and you are connected and the cloud is available 99% of the time you need the data, then everything will work well 99.99% of the time. With predictive modeling, the system will change what is cached in order to provide a better hit rate.
    2- data in the cloud will be encrypted. It is safer there than on a phone protected by a 4 digit pin, or on a notebook computer that can be cracked.
    3- local backups are frequently out of date, and only available locally, and can take hours if not days in practice to allow a restoration.
    4- agreed storage is cheap, and it will be cheaper in the cloud due to dedupe. But the storage media in a multi-tier environment can result in $500 in savings for a home environment.
    5- have you used cloud storage? terribly slow for rebuild if entirely from the cloud, but otherwise you rarely experience any delay due to tiering. Due to virtuallization you can be up and running in minutes.
    6- I would agree it is not 'necessary', unless you want a reliable, safe, offsite and significantly cheaper alternative to a local backup with the added benefit of access to the data from anywhere
    Jun 27 09:33 AM | 2 Likes Like |Link to Comment
  • Tech Report has been tracking prices for solid-state drives (SSDs) sold by OCZ, Intel (INTC), and others since their 2011 releases, and estimates the average drive has seen its price decline 46% since launch time, thanks in large part to plummeting NAND flash memory prices. That has fueled growing SSD use within PCs (I, II), and is one of the reasons (among others) why hard drive giants Seagate (STX) and Western Digital (WDC) have seen their valuations reach dirt-cheap levels.  [View news story]
    The Savitz article doesn't provide any analysis of the cost which is why I asked. No need to provide links already posted. Some good info is available here: http://storagesearch.com, and Woody is very helpful.

    wrt SSDs, are you referring to the scale of the manufacturing capability or the devices? You are wrong on both counts as supply currently outstrips demand; and they can scale, but it is dependent on the file system and its ability to virtualize. Storage virtualization is pretty robust in the Enterprise space, but the larger value is in the consumer space because it is a space where people do not back up, have multiple devices per household, lack the capability to recover because they are non-technical, and are embracing smart devices (smart phones and Pad computing) faster than the Enterprise.

    What will happen is that the technology developed for the Enterprise will be put on ASICs, placed on the controller, and will be deployed in the consumer space at the set top box.
    Jun 24 11:34 AM | 1 Like Like |Link to Comment
  • Tech Report has been tracking prices for solid-state drives (SSDs) sold by OCZ, Intel (INTC), and others since their 2011 releases, and estimates the average drive has seen its price decline 46% since launch time, thanks in large part to plummeting NAND flash memory prices. That has fueled growing SSD use within PCs (I, II), and is one of the reasons (among others) why hard drive giants Seagate (STX) and Western Digital (WDC) have seen their valuations reach dirt-cheap levels.  [View news story]
    Is there any solid analysis of the cost to manufacture HDD vs SSD? When I look at a HDD I see lots of mechanical parts that must be made with precision. There is a limit to how low the cost can go. Then will I look at SSD I see a clean, efficient IC which is limited to the cost of operating a fab. One has high manufacturing cost, one has high capital costs, but my expectation is that SSD has a lower cost to manufacture or soon will. I'd be interested if someone could provide some insight on the economics... some real numbers.

    Cloud storage, and cloud backup is becoming a reality. Such that the need for multiple drives or any drives in a household will diminish in just a few years. In my household of 4 we have 3 desktops, 3 notebooks, 1 backup drive, 2 DVRs, 3 USB drives. I envision each of those devices (except perhaps the DVRs) in 5 years all having SSDs and no HDDs, and that there will be a single 3 to 5T drive that is network attached for archival and backup. Each of the devices will have 250 to 500G SSD. There is no need for more because the actual drive space will be virtualized and will appear to be unlimited, and in fact it will be unlimited (limited only by amount I purchase, not the size of a piece of hardware). Additionally, my ISP will provide, due to the data being in the cloud, accessibity from anywhere, anytime via WiFi or LTE. At the same time, the function of the smart phone, Pad, and notebook will blend as they already are. No longer will anyone say, "oh, I have that number on my phone".

    A single 3T drive will cost (~$150) much less than the 9 drives (~$900) I currently maintain. And with dedup and compression what we currently see as 3T of storage will consume 30% of the space, resulting in much greater capacities than we currently have, and providing better access speeds because the amount of data that is transported across the network will be much less.

    Given the fact that ATT, Verizon, TWC, or Comcast are the primary ISPs across the US, and that most modern homes have a set top box that is connected to the WAN, and the set top box is off most of the time in a 24 hours period, it should be obvious that in a world where the set top boxes manufactures are struggling to provide something of value, and the telco's are seeking to grow their revenues and tie consumers in, it is not hard to see an offer that adds some functionality to the set top box to become a smart NAS that also backs-up to the cloud intelligently. (dedupe, compression, bandwidth aware, prioritizing data).

    Then there are additional headaches that go away.... already, when I buy a new device it is easy load it with my applications and data. With the virtualized storage, it will be even easier, and the environments will be consistent.

    What I find interesting is that CSCO and GOOG are in a great position to push this vision, and both are looking at what they should do with their Set-Top businesses. I've long thought that APPL should acquire the business and remake it in their likeness, but another logical path would be for a HDD to move to that space in an effort to vertically integrate and to create real value for the ISPs.
    Jun 24 09:29 AM | Likes Like |Link to Comment
  • FedEx (FDX -0.2%) says it will be a corporate backer of an expedition to discover what happened to Amelia Earhart over the Pacific Ocean all the way back in 1937. The company is trying to advance the image of its brand as a pioneer in aviation with the Earhart expedition tie-in. [View news story]
    Next there will be a movie announcement with Tom Hanks as the lead.
    Jun 18 10:02 AM | Likes Like |Link to Comment
  • 3D Systems (DDD) -5.4% AH after announcing a $100M stock offering. Given a market cap of $1.63B as of today's close, the offering stands to dilute existing shareholders by over 6%. The 3D printer vendor says it intends to use the proceeds to finance future acquisitions, and for working capital and general corporate purposes. (PR)  [View news story]
    Your math is flawed. Yes each holder will hold 6% less ownership, but because the firm will have $100M additional cash and the market cap will increase by $100M the value of the holding will increase by an offsetting amount amount. Thus there should be no diminution in the value of their holdings, no economic dilution. This assumes the shares are issued at the market price and ignores the cost of the transaction, and if there is a discount, the risk reduction and productive uses for the cash offset those costs (better terms, capital projects, etc.)

    There is however the negative effect of the signals this gives. One is the firm either believes the stock is over valued and this is a great time to grab cash, second, the company needs cash because of the burn rate, or three, companies that are cash rich spend less carefully than cash poor companies.
    Jun 12 10:41 PM | 2 Likes Like |Link to Comment
  • Waiting For The Dip To Buy EnergySolutions [View article]
    And here is the dip
    Jun 11 11:26 AM | 2 Likes Like |Link to Comment
  • Don't Be Fooled By 5 Automakers' May Sales [View article]
    Interesting, apparently their are lots of losers that have taken advantage of the financing programs aimed their way.... err, perhaps its a typo and the author actually meant to write looser.
    Jun 10 08:48 AM | Likes Like |Link to Comment
  • Bloomberg reports when SA moves stocks [View instapost]
    David, you also need to track Dislike, and allow end users to block contributors and commentators that have been Disliked and those I have selected to be Blocked. Increasingly there are people that are belligerent, and those that simply have some other, non interesting agenda (for example I don't find people that repeat the financial history of a stock to be useful as there is no analysis or insight on what will happen going forward and would like to block their content). Such content is useful to others, just not useful to me. By blocking and filtering based on username and dislike:like ratios the content and posts that will be shown to me on the website, in the summary emails I receive, and the notifications tab will be the more relevant and meaty articles. As it is, there are so many good articles I miss that by filtering likely bad articles I will simply have more time to read the great content.
    Jun 9 10:09 AM | Likes Like |Link to Comment
  • The 'Must Own' Stock For A Natural Gas Rebound [View article]
    The number one producer of natural gas acquiring the number two producer, likely an HSR problem. Particularly when the law was created to break up Standard Oil in the first place. True CHK is trading below its intrinsic value due to liquidity and governance problems, but the liquidity issue exists because the natural gas business is not providing sufficient cash flow thereby forcing CHK to diversify into liquids and forcing the firm to liquidate some assets to raise cash. So why would XO expand into a money losing market? The only economic rationale would be to influence or control enough production to control the price, opps.... HSR.
    Jun 8 08:32 AM | Likes Like |Link to Comment
  • Chesapeake's $4 Billion Pipeline Sale A Strong Start On The Road To Recovery [View article]
    This is not the role of the SEC. Their role is to assure there is adequate reporting. Shenanigans are legal as long as everyone knows. Oversight is provided by the Board, who are voted in by the shareholders.
    Jun 7 06:17 PM | Likes Like |Link to Comment
  • A Clearwire Update: New Customers, Investors, And Drama At The SEC [View article]
    The question here is not whether CLWR is positioned well for a potentially huge opportunity as mobile broadband explodes. The question is whether they can fund the CapEX to build their LTE offer and whether the technology choice will be a winner. If CLWR needs more time, it will need more capital and it will have to raise equity diluting current shareholders.

    Yes, they have lots of spectrum, but spectrum is only valuable if it can be used, and to be used CLWR needs a wireless network with a technology people can use. So is LTE-TDD that technology?
    Jun 7 01:47 PM | Likes Like |Link to Comment
  • The Housing Recovery: An Update [View article]
    Does anyone else notice that there are not a lot of homeless people despite there being empty homes all over the place?

    I am in the North Dallas area, and perhaps things are different in our area, but my observation is that there are simply more homes than people that need a home. Even nice newer homes are unoccupied.
    May 24 05:20 PM | Likes Like |Link to Comment
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277 Comments
274 Likes