Seeking Alpha

skibimamex

skibimamex
Send Message
View as an RSS Feed
View skibimamex's Comments BY TICKER:
Latest  |  Highest rated
  • Why I Am Bullish On Netflix Over The Long Term [View article]
    Pat45, that's because NFLX's output deal with Disney studio properties does not kick in until end of 2015. hBO has WB/Fox/universal output deals while NFLX currently has only Paramount/LGF/MGM/Wein... Animation.

    If you were to pro forma the box from last year based upon future long term output deals, NFLX would have had 5 of the top 10 and 8 of the top 20 while HBO's output deals with the 3 majors would have produced 5 of the top 10 and 10 of the top 20 films at the box office in 2013.

    HBO is a strong product and its HBO Go user interface is excellent once divorced from the cable programming grid platform. However why do you think the two are competitive rather than complementary? Like you say, you have both. Just like I assume that you have each of ABC, CBS, Fox, and NBC. The theoretical competition between HBO and NFLX is a red herring. Even HBO has it own Cinemax sub brand that duplicates a lot of the back catalog movies and more action oriented originals - why do you suppose that HBO doesn't think of Cinemax as cannibalistic but thinks of it as incremental growth opportunity? Because there is so much content that all these "channels" complement each other rather than really competing with each other.
    Aug 18 02:23 PM | 1 Like Like |Link to Comment
  • The War Sprint Can't Afford [View article]
    Robert as part of roll out of Sprint Spark and LTE-advanced, it employs 10 MHz of prime low band 800mhz spectrum for both broad geographic coverage and in-building overlay. However his is meaningless until devices in the installed base are designed to utilize the tri-band, which currently only include 4 of Sprint's high-end devices. Actually a price aggressor strategy that accelerates gross adds and churns the installed base to increase the penetration of the latest generation devices is precisely what is indeed needed to improve the network quality perception of the base.
    Aug 18 01:53 PM | 4 Likes Like |Link to Comment
  • Why Apple Won't Build A Cheap iPhone... And Why It Should [View article]
    chfp, the carriers have not "moved away" from subsidies. they just call it leasing because it is an accounting gimick. So rather than "free" with 2 yr contract and a $350 ETF, it is now $0 down, and a $20/mo "lease" (while lowering service plans by $20/mo) --- thus the economic ETF starts at $480 and declines $20/mo. At the end of year 1 to 15 months, the carriers are now offering "early upgrade" programs if you trade in the phone, so another $0 down, and $20/mo lease. In the meantime, the carriers have delayed the EBITDA impact of the subsidy and time shifted it. They used to have a $450 P&L hit up front and an ongoing service contribution stream. Now they have no P&L hit, and instead capitalize the asset, and enjoy the same combined service and lease rental stream as before. Now the subsidy cost is below the EBITDA line and amortized as depreciation on revenue generating equipment.

    Why do you think the 4S is still flying out the door on $0 down payment plans? Because even among the less well-to-do demographics, an iPhone is affordable luxury surrounded by the halo of an aspirational brand.
    Aug 13 10:30 AM | Likes Like |Link to Comment
  • American Airlines Can't Buy Stock Quick Enough [View article]
    But DVL, that's not whats been happening. load factors are up, ASM capacity only growing modestly, and PSM growing healthily. So everything you say could be true but it's not. I take Amtrak more often between DC and NY because the shuttle not necessarily priced outrageously, which it is, but Amtrak jacked its prices up too, but cite-center to city-center was a wash in time. If I have to travel more than 200 miles such as to left coast or any of the other 28 of the top 30 major cities other than my own and one that's 60 miles away, I have to schlep to the airport. And I am certainly not going to sit on Greyhound for 4 days to get to the west coast (even if they dont have crazies beheading other passengers while the driver kept on driving). Practically speaking the airlines have effected a tax on the economy and we have willingly paid it because we have no choice.

    However, I am with you, the minute I see one scintella of evidence of demand stall or see a "$99 fare" promotion, I'm outta here.
    Aug 1 08:31 AM | Likes Like |Link to Comment
  • American Airlines Can't Buy Stock Quick Enough [View article]
    DVL,

    I agree with everything you say about the airline industry for the past 30 years EXCEPT the comment about hyper competition. Because that is what has fundamentally changed. the industry has consolidated so much that different carriers dominate different hubs and routes, and no one is growing capacity as there are no slots or gates as the important markets have been split up among the majors. in the secondary markets the industry has reduced capacity and service levels to dramatically increase load factors.

    I don't fly that much, maybe once a week or so, but there is one thing I know which is that airlines now seem to feel that they have pricing power. tickets seem twice the price they were 4-5 years ago. they charge me for everything including bags, food, different seats, wifi, probably for using the bathroom next. if one guy does something, institutes a new fee -- if you are just thinking about changing your flight but haven't even done anything about it, they will charge you a fee. Any you know what, the other carriers will instantly copy the new fee and do one better. and the flight attendants seem to be constantly trying to up-sell me to the pricier food pack as if they are getting commissions or something.

    that is what has changed in my opinion. it's like the whole industry went through a bible retreat weekend and all came back as yield management zealots. now the question is whether that is sustainable. Even LUV doesn't seem hell bent on adding capacity as its biz model and ops got all screwed up the minute it tried to go beyond short-haul secondary markets.

    I used to have the same sentiment, high fixed capital cost, costly and recalcitrant labor, volatile commodity inputs, and perishable inventory that gave carriers the incentive to price close to marginal cost due to hyper competition. The capital and fixed cost is still the same, but the industry has collectively constrained capacity. Fixed cost is only a burden if you are revenue starved, the advantage of fixed costs is operating leverage if the industry as a whole is restricting capacity while increasing load together (and price fixing at the same time). the labor element has been beaten into submission from pretty much the bankruptcy of every airline and then giving equity or profit sharing to the unions in exchange for labor concessions. commodity volatility have been mitigated when they bot a few MBA's that could figure how to hedge to smooth out commodity costs. Lastly, notwithstanding the perishable inventory, the industry collectively seems to have gone together to the same price fixing school.

    Now, all of this could turn around in a nano second if a 9-11 event occurs and seat-mile demand drops 40% but the Big One could happen in California, and all the intellectual capital will be sucked out of the tech industry. Or as Paul Singer said to his LP's, a solar flare event could send an electromagnetic pulse that blows up our power grid that will send us back couple of centuries that will take us at least 10 years to rebuild. SO how is any investor able to "invest long-term" when there are so many black swan events. Even if i put my money in cash in the bank, if no ATMS are going to work and the bank's computer is fried, I am still SOL.
    Jul 31 10:00 PM | 3 Likes Like |Link to Comment
  • Apple's CDN Now Live: Has Paid Deals With ISPs, Massive Capacity In Place [View article]
    Dan,

    curious if you believe Apple will eventually transport the streaming content that their devices can host. for example, I subscribe my Hulu+ through Apple iTunes -- I could do the same for Netflix too I guess, but it was simply an impulse buy for Hulu subscription (now 3 years ago) when I was using my Apple TV. Right now I assume that when i pull hulu or netflix form the Apple TV, that it turns passive and lets Hulu and Netflix be responsible for delivering the content to the Apple box. however, if I am pulling down a download or rental from iTunes rental or for purchase, then Apple is using its own CDN and responsible for delivery.

    If apple ever becomes a "virtual mvpd" like Dish is planning to do with launch of its service later this year, do you think Apple would ever step up for assuring the QoS and pull Netflix and Hulu content over Apple's own CDN network along with the other streaming VMVPD content that it wishes to deliver?

    I'm just trying to understand why the massive scale in infrastructure. the only app that can use that sort of capacity is video. all the other stuff such as software download or music download or streaming are thin pipe apps, whereas HD Video, and 4K HD would be a quantum leap from how they are using now. Just curious what you hear why Apple planning for such a fat pipe and why it feels it needs it.
    Jul 31 08:53 PM | 1 Like Like |Link to Comment
  • iPad Cannibalization From iPhone 6 Sales Will Be Insignificant [View article]
    Hmmmm 5.5" iPhone 6 Pro will likely have ASP of $750 (like Samsung's Note 3 is +$100 more) and gross margin close to 50%, so that is $325 gross profit dollars for each unit

    the 7.9" iPad Mini has ASP around $400 (mix of regualr and with retina) and has GM% around 30%, or $120 gross profit dollars per unit.

    $350 GP per unit vs $120 GP per unit. Shoot me in the head, which one do I want?

    Oh I forgot, the retail street price of the iPhone 6 Pro will be $299 (either subsidized purchase or initial "down payment" on lease as they are calling the new subsidized purchases) since on average, the carriers buy down high-end iPhones by $450/unit. This will compare to the $400 ASP for iPad mini, so the 'street price of the big Iphone will be actually lower than the street price of the iPad mini, despite Apple making nearly 3x the gross profit dollars per unit.

    As a long AAPL shareholder, I say bring it on, give me as much iPad cannibalization as you can. I love the nearly 3x per unit gross profit contribution that will result.
    Jul 31 08:37 AM | 4 Likes Like |Link to Comment
  • Netflix eyes Seinfeld SVOD rights [View news story]
    "NFLX already has over $7.7B in streaming content liabilities"

    Such analytical triteness. Those are actually "commitments" for licensing that haven't yet been consumed yet, over 5 years (as another commentator commented) and represents 2.5 yrs of the content consumption currently being spent annually. Oh did you forget that the $5.4B in revenue run-rate is growing over 20% per annum so those future licensing commitments are serviced by over $30B in revenues over 5 years (even if you peel back to less than 10% CAGR).

    By the way, NFLX has currently $1.7B in cash and liquid investments on its balance sheet.

    The referenced $3B of cumulative licensing revenues for Seinfeld are for local broadcast and cable over 15 years (3 five-yr licensing cycles). The first 5-yr exclusive licensing cycle for SVOD for a tired and broadly available content (available on many channels), however iconic, should not be more than $200M max (or $40M per year) when you comp to the $180M for the show's first cable network syndication cycle (only $86M during the third 5-yr licensing cycle). just my own opinion. the question is what is the incremental value of on-demand for something that has been over-exposed already; does the incremental value of binge viewing optionality or convenience create sufficient consumer pull to justify paying a premium to keep it out of the hands of others (or do you want your competitors to blow their content budget and crowd out their ability to compete on other product). I frankly prefer that NFLX walk on this unless it is priced pretty cheap per hour -- although it probably can afford to pay the most because of its much larger subscriber base.
    Jul 28 09:45 PM | 2 Likes Like |Link to Comment
  • Why iPhone 6 Won't Reverse Apple's Market Share Decline [View article]
    "reduced subsidies" is such a red herring and mostly voodoo accounting by the US carriers.

    Call it "subsidy" and it hits the income statement immediately as a cost of acquisition. Get the customer to "lease it" with the same $199 down, and 24 payments of $20/mo, then they dont bear a hit until the carrier tries to collect the the remaining balance on a churned customer -- no different than they tried to collect the $350 ETF in the old model. In the old model, the carrier took the income statement hit on the subsidy upfront, but mitigated it if it recovered ETF on the back-end in realizing income, but if the ETF was uncollectible it was income statement neutral since it had previously taken the subsidy hit already. In the new leasing model, there is no income statement hit up front; instead the carriers capitalize the asset and recognize leasing revenues along the way and only take the income statement hit on the back-end if they cant collect the balance from the customer who has left with a remaining lease balance.

    In reality, the carriers are in fact now promoting "early upgrade" options by letting customers "trade-in" at the end of 12-15 months on lease in order to get a brand new iPhone and start the lease cycle again. The carrier's loss is that $240 remaining lease balance less whatever the wholesale recycle market will bear for the 1 yr old iPhone, which usually should largely cover it -- which means that the carriers are incented now, due to their accounting change, to promote the velocity of the upgrade cycle. Guess who benefits from that.

    In fact the bears were focused on the competitive impact on ASPs, but like cars, when you compare the cost of ownership, now crystalized by the carriers supporting early upgrade options, an iPhone is actually cheaper to own than something priced $150 cheaper due to the higher residual value of the iPhone. In this lease accounting paradigm, this will become more clear when you see the promotional behavior of the carriers.
    Jul 28 09:00 AM | Likes Like |Link to Comment
  • Apple And Me: Why I Finally Bought Some Apple Shares [View article]
    but ote, had you done the same trade instead used your monies and bought a $500 Jan 15 call for the same $3K, you would be up >$20K right now.

    If you believe in something back then, better to invest in it for the left bleachers, rather than merely a bunt single for a trade.
    Jul 27 06:49 PM | 3 Likes Like |Link to Comment
  • Apple's Q3 Bonanza: The Real Story May Be Not Quite So Bullish [View article]
    Wow, MB's articles sure brings out the shrill commentary. He catches more attention than a loud fart in church.
    Jul 27 06:40 PM | 1 Like Like |Link to Comment
  • Apple Earnings: Gross Margin Drives The EPS Beat [View article]
    Apple's gross margin decline resulted from the growth of the iPad and its relative portion of the revenue mix, particularly the launch and growth of the iPad Mini. And now it gross margin accretion/recovery is precisely because of the decretion of iPad in Apple's relative revenue mix.

    Weirdos that kept on harping on iPhones' "increasing competitive vulnerability and loss of market share from price competition" never could understand or understand that their theses was contradicted by the fact that Apple's iPhone ASP actually didn't move much from the low to mid $600's.

    Here we go again to bring out the zombie shorts to paul revere "OMG the iPhone ASP is cr*pping through the floor", when in reality it is a mix shift in iPhone to improving market acceptance of the 5C and its greater impact on ASP for iPhone. Initially the potential impact of mix shift to 5C was masked by the far greater success of the 5S relative to the 5C models during first couple of quarters of launch. Now we see that the ASP for iPhone is starting to illustrate that mix shift as the 5C gets an increasing portion of the overall sales mix. But I agree with author that Apple's margin beat during 3Q despite this shifting mix to 5C (or 4S if you believe Michael Blair) suggest the COGS of the 5C is quite competitive in order for Apple to increase consolidated gross margin....and because shrinking lower margin iPad sales.
    Jul 25 05:27 PM | 2 Likes Like |Link to Comment
  • Apple's Q3 Bonanza: The Real Story May Be Not Quite So Bullish [View article]
    "If I am right"...

    but MB, you weren't right, because you can get to the same overall ASP if you did not inflate the ASP for the 5S model like you did. Get to the same answer on overall ASP without your conclusion (that discounted 4S is flying off the shelves) if 5S ASP is $30 less.

    And do you know why you clearly aren't right -- look that the gross margin beat from guidance. Some of that was from lighter iPad volume (which are much lower margin, especially the Mini), but the other is precisely because the 4S did not hugely impact volume mix rather than how you posited.
    Jul 25 05:11 PM | 8 Likes Like |Link to Comment
  • Quantifying iPhone 6's Potential Cannibalization Of iPad, It Is Not Pretty [View article]
    iPhone 6 Pro's gross profit dollars is almost twice that of an iPad Mini (it's closest screen size likely to be displaced). Tell me why that is a bad thing? Oh, you didn't know that iPad Mini's have 20 pts lower margin and half the ASP of an iPhone?

    Enough said.
    Jul 24 12:19 AM | Likes Like |Link to Comment
  • Why The IBM-Apple Agreement Could Fail [View article]
    BBRY is only more secure at the device level but it is becoming extinct. Enterprises are not going to trust / rely on the device OS to protect security. They are going to force solutions vendors to develop app solutions that leave the data in the enterprise's private cloud and only send minimal encrypted data streams that are decrypted within the app itself to wall it off from the rest of the device. In other words those selling hyper security solutions will not accept the security weaknesses of any of the mobile devices and instead design their solutions expecting device security flaws. These are not off-the-shelf mass market consumer apps but rather high value B2B (high priced too) designed to serve the enterprise needs. They will bias to iOS because Android is fragmented, and BBRY is not even in the discussion. BBRY sole claim to fame is security in an email context - it has no presence, ZERO, anywhere in many of the custom applications (largely relational database management) that characterize enterprise application solutions -- and besides, no enterprise application developer would make it through investment decision committee to actually invest in resources to develop a solution that operates on BBRY 10 as its devices are seen in the wild only slightly more frequently than Big Foot sightings.
    Jul 23 06:14 PM | 3 Likes Like |Link to Comment
COMMENTS STATS
424 Comments
493 Likes