Square Circle

MetroPCS: A Short for 2009

You fail to realize some major problems with respect to your thesis:

1. Unit economics - this is the main reason why MetroPCS has a competitive advantage at the low-cost end of the spectrum. By focusing on low mobility, lower-end customers in major metro areas, MetroPCS can be much more efficient with its capital expenditures, spectrum acquisitions, marketing dollars, etc. Maintaining a nationwide network PREVENTS Verizon, AT&T, etc. from being able to be cost competitive at Metro's levels. This allows PCS to offer its wireless service at a much lower price point and maintain profitability.

2. FCC auction prices are fairly standardized and there are numerous comps to look at. $2.4 billion is a good estimate of fair value.

3. Growth in core markets where there is little investment capex is highly accretive to cash flows. As Metro's markets gain maturity (like 2009 will show), subscriber growth translates into a large amount of free cash flow.

4. If your thesis is based partly on a difficult economy, PCS is just about the worst short among US wireless carriers. They compete well on cost, which is of ultimate importance to an injured consumer. Switching costs have also been substantially reduced by the use of Houdini software.

My Reconsideration: Why Share Buybacks Are Pointless

Guys, you are missing a major point here.

Buybacks are a way for a company's management to efficiently give value back to their shareholder base. Think about this -- if you increase the dividend, then all recipients of said dividend have to pay income tax on the increase. If you instead use that money to retire shares, each shareholder owns a larger percentage of the business (and future cash flows) and does NOT have to foot an increased and clearly suboptimal tax burden. The shareholder can realize this stored value when convenient and pay only long-term capital gains on this, as opposed to normal income tax.

My Reconsideration: Why Share Buybacks Are Pointless

Guys, you are missing a major point here.

Buybacks are a way for a company's management to efficiently give value back to their shareholder base. Think about this -- if you increase the dividend, then all recipients of said dividend have to pay income tax on the increase. If you instead use that money to retire shares, each shareholder owns a larger percentage of the business (and future cash flows) and does NOT have to foot an increased and clearly suboptimal tax burden. The shareholder can realize this stored value when convenient and pay only long-term capital gains on this, as opposed to normal income tax.

Seeing Three Scenarios for GeoEye

Just checked - looks like this was up on Sep 5, the day before the satellite launched.

Seeing Three Scenarios for GeoEye

Sorry guys, I submitted this on Thursday - not sure why it wasn't published until today.

For what it's worth, I looked at this as much as a discussion of options strategy as a specific treatise on GEOY. Also, a successful launch does not necessarily mean that the satellite will function as planned.

Crown Castle and the Tower Operators: The Foundation for Next-Gen Wireless

Firstly, I think any of the 3 majors in this sector would make fine investments, I just happen to prefer CCI to AMT.

Here are a few of the main reasons:

1. Lower share base allows for increased participation in earnings, buyback-related accretion, etc.
2. Margin expansion potential for Global Signal towers
3. Superior locations of tower assets
4. Lower risk international strategy

Crown Castle and the Tower Operators: The Foundation for Next-Gen Wireless

Thanks for the comments, guys.

Nanotube: I would suggest you take a peek at the current and projected free cash flows, as well as the 10-K to gain more comfort with the capital structure and related covenants. Remember the superior revenue and expense visibility that companies like this have.

Nathan: Any data to support your theory and/or information that would help quantify this risk? CCI is more a REIT than a technology provider, so my guess is this liability would lie much more with equipment manufacturers and service providers than the tower operators.

Monster Rally Produces Pricey Valuation for Fuel Systems Solutions

So.. let me get this straight: you are recommending taking a short position in a momentum stock where your potential upside is only 10-15%?

How can you justify this, especially risk-adjusted?

Correct me if I'm wrong, but this seems borderline irresponsible.

Authentic: A Real Buy at Sub-IPO Price

I think you fail to cover some major points in this analysis, including:

1. Market size - PC market is well understood, and limited in size, due to a combination of factors, including lack of compelling use case for consumers (and enterprises, for that matter), and low price point. Mobile opportunity is much smaller but faster growing, and likely driven by m-commerce, which has been predicted to take off for years, and has limited adoption outside of Asia.

2. Competition - UPEK and Validity are formidable, while point product chip vendors always have to consider the threat from new market entrants (especially entrance through tech buys). See Sirf vs. Broadcom/Global Locate or look at Omnivision for examples of this. What is Authentec's sustainable competitive advantage? If you don't understand this, you better not invest. FYI, IP is a very limited defense (and is almost always fleeting in nature). If this ends up being a commodity product, good luck competing with the large IC vendors.

3. Valuation - you mention relative multiples (i.e. P/E vs. comps), P/E vs. growth and DCF as your methods for valuing the business, but fail to elaborate on the inputs for the DCF, and your ability to confidently forecast earnings in a nascent, and some would say, niche market. If the "E" and "E growth" are significantly lower, a compelling P/E doesn't really mean much. Analysts often are wrong, and always are conflicted, so it is poor form to agree without providing justification (3rd party research is wrong more often that the Street).

4. What do people misunderstand about the opportunity that leads them to value it incorrectly?

Why Visa Should Thrive

One thing that it seems most people are missing in this discussion is the massive network effects and virtuous cycles associated with the massive scale and branding that Visa enjoys.

As some have touched on, Visa enjoys an unmatched suite of merchants. It isn't even close. This is an extremely difficult thing to do and is one of the primary reasons why switching costs for banks are so high. Think -- would a bank who is already enjoying 90% of the fee revenue through Visa really care about 1-5% more of the pie when it means *major* sacrifices of breadth and therefore revenue? Conversely, would a merchant switch networks if it meant that it would dramatically inconvenience potential customers? The answer to both is an emphatic no, and is an enormous barrier to entry for V.

For an easy example of this, look to Google. There are massive network effects in search (and, more importantly, search advertising).

In the network business, scale begets scale and is tremendously difficult to overcome for the competition.