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  • 2 Takes From Arch Coal's Earnings [View article]

    How far out do your calls expire? Jan 2015? Earlier?

    Feb 6, 2014. 02:50 PM | Likes Like |Link to Comment
  • 2 Takes From Arch Coal's Earnings [View article]

    How far out are you going in terms of time? Jan '15? Jan '16?
    Feb 5, 2014. 04:44 PM | Likes Like |Link to Comment
  • Medallion Financial Trouble Brewing Quickly [View article]
    The CEO of TAXI was on a radio show earlier this week (Brian Lehrer, on WNYC Radio) where he was asked if Uber posed a significant threat to his business. He didn't seem to think so, and his reasoning (while self-serving) was that Uber is more likely to be a threat to livery companies, rather than vehicles such as cabbies that can be picked up off the street through a hail.

    A logical comeback to the latter point is that Uber is basically a virtual taxi hail, is significantly more ubiquitous and offers better service. However, I think he is right in many ways.

    A typical taxi-ride off the street that requires a hail would go to Uber only when taxis are not available, i.e., at times when demand is high and plentiful and Uber is needed as a way to provide surge capacity. When taxis are plentiful, you're more likely to hail a passing cab than punch an app and wait 5-10 minutes for a ride.

    Uber is more ubiquitous, but that does not help someone looking for a cab unless he/she can't find a yellow cab in sight or down the block. And lastly, Uber is more expensive, sometimes by more than 100%, and that too w/o surge pricing.

    He also pointed out that many yellow cabs actually are on Uber as well, presumably to take advantage of the unregulated prices or as a hedge against the competition.

    My guess is that Uber will put many livery companies out of business. Whether it will also depress TAXI is a function of how ubiquitous it gets - there is a point at which having too many vehicles on Uber will be self-defeating.
    Jan 10, 2014. 01:35 PM | Likes Like |Link to Comment
  • Is IBM In Trouble? [View article]
    Of all your points, the one I find most persuasive is that IBM is unable to generate organic growth. That suggests that their strategy of buying leading-edge businesses (principally in software) as a means to both provide differentiated solutions with services layered on top is not yielding fruit.

    However, the fact that they are still able to generate copious cash flow which they can utilize for share buybacks and thus keep EPS growing steadily suggests that they are high-priced relative to the competition. So long as their customers do not crib, they should be able to keep this game going. Indeed, Buffett referenced the amount of IBM's business that is "repeat business" when he talked about why he decided to buy IBM's shares. But this model is a dangerous one, as there is no obvious reason that the likes of Accenture, HP, etc. can't mimic it eventually and drive prices down. In theory, IBM's purchase of advanced software businesses is supposed to give them an edge, but the fact that they can't seem to grow organically suggests that they haven't succeeded in doing that as yet.

    I have personally been a skeptic of the integrated software + services model being able to deliver a 1 + 1 > 2 value proposition, since IBM's Services arm is supposed to be vendor-agnostic in its choice of technologies that they recommend and deploy at their customer sites. Let's see where things shake out eventually.

    That said, IBM's management has been brilliant in their divestiture strategy, always getting out of commoditizing businesses before they get hurt by the low margins (e.g., PCs, Disk storage, Printers, POS Terminals, etc.). At some point, if they figure out that this plan isn't working, I suspect that we will see an IBM break-up, which will vastly benefit shareholders. For that reason, I think IBM is a reasonably safe bet, though I am not long (or short).
    Dec 29, 2012. 08:29 AM | 1 Like Like |Link to Comment
  • QE3 Is Not Inevitable [View article]
    ACtually, what I said was that Romney has said that he will NOT re-nominate Bernanke for another term. Therefore, Bernanke wins only if Romney loses, under the assumption that Obama will re-nominate him to the Fed if he wins.

    And Bernanke's roll of the dice to ensure that would be another round of QE to goose the economy along so Obama can win. Yes, there is a lag between action and reaction. But if the stock market reacts positively (which it will), the cosmetic good-feelings it creates may push things in Obama's favor by a smidgen. And, in a close election, that could be enough.
    Aug 25, 2012. 08:32 AM | Likes Like |Link to Comment
  • QE3 Is Not Inevitable [View article]
    Romney just announced that he would not re-nominate Bernanke for another term if elected President.

    QE3 is now a certainty - it represents Bernanke's roll of the dice to ensure another term for him and - in his own mind at least - a role in history as the man who staved off the second Great Depression by not repeating the mistakes of the first one.
    Aug 24, 2012. 08:30 AM | Likes Like |Link to Comment
  • Note To Netflix: It's Not 1999 Anymore [View article]
    I agree. Though Reed Hastings is a visionary, he also has the arrogance and certitude of a missionary. That is fine so long as you're bringing converts into the flock and the church is expanding. When it instead starts to bring out the peasants with pitchforks, it's time to consider humility.

    It's becoming more and more obvious to this watcher that Hasting's humility when he was forced to back off the Quixter spin-off was entirely feigned and that I made the right choice in canceling my subscription and refusing to re-subscribe.

    It's high time Hastings was pitched out and someone with a better sensibility for running a public company that is fast maturing is brought in. If it wasn't obvious on the journey down from $300 to $80 that the bloom is off this rose, it should be obvious now on the way down to $50 and parts beyond.
    Jul 25, 2012. 08:23 AM | 1 Like Like |Link to Comment
  • 10 Predictions For 2012 From BlackRock's Bob Doll [View article]
    These were Bob Doll's predictions for 2010. Look at the last one before you go to Intrade to place your bets for a GOP trifecta this year:

    1. S&P 500 rallies to 1250
    2. Emerging markets outperform developed markets
    3. U.S. outperforms other developed markets
    4. Earnings growth of 20% Plus
    5. U.S. economy grows at 3%
    6. Job growth turns positive early in the year but unemployment remains high
    7. Inflation remains low
    8. Expects rates to rise across the curve
    9. Stocks outperform cash and bonds
    10. Overweight health care, tech and telecom — Underweight financials utilities and materials
    11. M&A picks up because of strong cash flow and slow growth
    12. GOP makes gains in House and Senate but Dems continue to control Congress

    [In theory, since the new Congress didn't get sworn in until 2011, he was correct about Dems continuing to control Congress. :-)]
    Jan 6, 2012. 02:28 PM | Likes Like |Link to Comment
  • 10 Predictions For 2012 From BlackRock's Bob Doll [View article]
    No one ever asks political pundits for their predictions on the stock market, mainly because they are so pathetic forecasters of events in their own chosen trade that it seems hilarious to assume they'd do better in a different one. The same ought to apply for financial services professionals.

    Normally, CNBC will ask someone making forecasts about stocks if they or their family own shares in the companies being mentioned. Did they ask Doll if he was a Republican or a Democrat?

    At this point in time, the election result is unknowable.
    Jan 6, 2012. 02:22 PM | Likes Like |Link to Comment
  • Kindle Fire Reviews And Apple Snobs Sell Amazon Short [View article]

    That the Kindle Fire is being sold below cost isn't a "meme" with no substantiation.

    It was the result of an analysis of the Kindle Fire's Bill of Materials by iSuppli, which is a well-respected research firm in the semiconductor and high-tech space. And yes, they fully understand cost- and volume-based price curves in the semiconductor space (it's kinda their job to).
    Dec 31, 2011. 11:22 PM | 1 Like Like |Link to Comment
  • Kindle Fire Reviews And Apple Snobs Sell Amazon Short [View article]
    My principal problem with the Kindle Fire is the strategy, not the product. Even if the Kindle Fire 1.0 sucks, Amazon has enough smart people that they'll eventually get it right. However, I find it curious that there is very little commentary on the fact that you don't NEED a Fire to access and its wares. Why sell a device below cost to drive people to your site?

    I understand why the Kindle itself made good sense - Amazon is in the business (partly) of selling books and driving adoption of e-books is a logical next step to further disrupting a market they've already disrupted. But I fully expected that they would eventually exit the e-Reader market once they had seeded it and focus on e-books. The fact that they haven't, and have in fact doubled down on this strategy with the Fire is worrisome.

    The analog that springs to mind is AOL's "walled garden" strategy of driving its users to content that existed on the domain. It worked for a while, but when people figured out that you could easily gain access to a much wider world of content by simply typing a few letters into your AOL browser, that was the end of THAT growth story. Almost no one who buys a Fire is going to be as un-savvy as the first generation of Internet users who flocked to AOL to go online.

    There is a HUGE amount of capital investment that goes into being a hardware vendor, even when you outsource the "tough" stuff, like manufacturing and supply chain management. I can't but believe that Amazon would have been better off spending that capital on boosting their content - both on their website and especially on their streaming video content.

    Dec 29, 2011. 09:26 AM | 1 Like Like |Link to Comment
  • Dell's Free Cash Flow Cushion Limits Downside [View article]
    Developing their own phone makes little sense in a crowded market.

    A better idea maybe to re-sell someone else's, say Nokia's, cheap low-end Lumia. It would be a win-win for both. If Dell gets good traction through its channel, developing one on its own may then be an option. If they would prefer an Android option, I'm sure there are already options available in the China market or down the line in the Smartphone league tables.
    Dec 24, 2011. 11:17 AM | Likes Like |Link to Comment
  • Zombie Stock Nokia A Takeover Target, Not So For Research In Motion [View article]
    As a Nokia shareholder, I would love to see a buyout at $10. However, I don't expect one.

    The Google buyout of Motorola Mobility will go down in history as one of the dumbest technology deals in history. Google is blowing $12B in cash to buy an asset with (relatively speaking) miserable gross and EBIT margins, in the hope that Google will have better access to a reference mobile platform and a cache of patents that will protect the Android ecosystem from Microsoft's patent-driven attacks on Android handset makers. They could have provided the same benefit (if indeed there is such a benefit to be had from Motorola's patents) to their ecosystem by buying Motorola's patents and counter-suing Microsoft, eventually settling with a cross-licensing deal. Instead, they overpaid for a mediocre platform and set themselves up in competition with their own ecosystem of handset makers. This was most likely a result of the marriage of Google's excessive cash pile with Frank Quattrone's able representation of Motorola Mobility.

    HTC, Samsung and other Android handset makers are all now likely to be open to advances from Microsoft, and must be waiting to see how Nokia's handsets do. If Nokia does well in the marketplace, they will be tempted, defensively at least, to want to work with Microsoft as well as with Google, just to provide a check-and-balance to Google's potential partiality towards its inhouse platform (Motorola).

    Google may in turn be forced to divest the Motorola hardware platform (minus patents) when they see this happening, possibly to HTC or Samsung, and at a substantial discount to its likely value. Net benefit to Google would be likely negative, without much incremental value added from preserving the viability of the Android ecosystem.

    Microsoft has proven itself capable of doing dumb deals (e.g., aQuantive, Skype), and they might be tempted to buy Nokia. If so, more power to them (or rather, to me and other fellow Nokia shareholders). But the strategic benefit is dubious to non-existent. All the benefits from integrating software with hardware can be had without owning a hardware platform; indeed, hardware makers are typically very very eager to work with OS and app makers to drive more apps to their platform. It's really hard to see how much more "optimized" Windows 8 can be made for Nokia's platform than the current close alliance has already made it.

    Google's move to buy a commercial hardware platform has potentially created an opportunity for Microsoft to sow divisions within the Android community. They'd be stupid to lose it by buying Nokia or RIM.
    Nov 2, 2011. 03:00 PM | 4 Likes Like |Link to Comment
  • Netflix Continues To Distort Reality For Investors [View article]
    Looks like a bear raid is under way!

    I agree with the sentiment behind the bear raid - a hasty decision like this is clearly a sign of panic, and that even in the two weeks that remained in Q3 after NFLX announced the split, they must have seen a horrendous erosion in their subscriber base. Sweet justice for those - such as Mr. Pendola and the likes of the Montgomery Scott analyst who has also been a long-time skeptic.

    On the other hand, analysts from Goldman to JP Morgan have used the opportunity to reiterate their targets while gently chiding management for their arrogance and lauding them for changing their minds.

    There is a constant temptation on the part of lesser mortals such as yours truly to want to take sides in this battle. But it is probably a much wiser decision to watch and learn.

    My instinct (which I cheerfully admit I don't have the ba**s to follow through with a bet) is that, at the end of the day, Reed Hastings will find a way to win. This guy is either Steve Jobs (indomitable and arrogant, but more right than wrong) or Bernie Ebbers (all spectacle, little substance and a crooked streak). I think he's more the former than the latter, but am going to wait and see how this all plays out.

    Trading in NFLX shares on Oct 26th is going to be fun to watch - either a massive short squeeze or an utter bloodbath.
    Oct 11, 2011. 10:54 AM | Likes Like |Link to Comment
  • 2 Stocks That Will Not Recover From the Meltdown [View article]
    So, what's the bottom on NFLX? $10? $100?
    Aug 8, 2011. 07:06 PM | Likes Like |Link to Comment