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  • Time Warner Could Put Netflix Out Of Business Tomorrow [View article]
    Haha, a trip down memory lane. Indeed the Albanian Army did conquer some geographies (including more subscribers in the US now than HBO), and more importantly Netflix is one of the largest customers of Bewkes' Time-Warner by syndicating most of CW's prime time schedule for past seasons. Singlehandedly turning the economics for that network for the benefit of CBS and TWX. Separately HBO syndicated all its out of print library (since it wanted to keep the past seasons of current shows for its own HBO GO and HBO Now SVOD channels) to Amazon Prime to take advantage of incremental monetization of its aged library, largely because Amazon forced to keep up with Netflix content aggregation. Or that TWX's Warrner Brothers Television sold the global streaming rights (first run in most, except US, Canada, Australia, which are past season) of Gotham to Netflix as tha twas the best way to monetize. So Bewkes has to kiss up to his largest customer now.

    Rocco never understood the power and differentiation of Netflix was its ability to build direct-to-consumer distribution cost effectively and therefor was an unique platform to monetize content. Far from the truth of the trite statement that "content is king", the reality is that content is worthless without the ability to monetize via powerful distribution. Of course there are certainly very valuable content brands that are unique and scarce such as live sports (there is only one superbowl but hundred or thousands of pro basketball games or baseball games in a season) and can be most effectively monetized through mass media broadcast. However in the realms of serialized drama or comedy, there are constant supply of new ideas, new stories, new and old talent -- and the majority of those will not succeed. However narrowcast content has more value to an on-demand SVOD subscription model than an advertising -supported mass media linear broadcast network.

    To his credit, Rocco threw in the towel quite awhile ago, and at least went neutral if not positive (I lost track since he went click seeking at Motley Fool I think, but I think he may be back, but out of this name). I always did like Rocco's writing and flair for the dramatic, even though he was fundamentlaly wrong on Netflix (and Pandora too, where he was a bull, which made no sense to me at all), and I was entertained everytime reading his stories.
    Mar 11, 2015. 07:03 PM | Likes Like |Link to Comment
  • Netflix (NFLX) Management Presents at Morgan Stanley Technology, Media & Telecom Conference - Transcript [View article]
    Actually Per, he did precisely discuss the "good-better-best" tiered-pricing strategy at last year's Goldman conference. I think everybody went to that Marketing 101 class on pricing strategy.

    I just got annoyed with my kids hogging up the streaming slots when they started enforcing the limitations so I am at the "best". Will probably need to buy another subscription just to set aside for their iPads.
    Mar 5, 2015. 10:17 PM | 1 Like Like |Link to Comment
  • What Do 1,750 New Stores Mean For Sprint? [View article]
    I read author's rendition, and it sure made me glad that author is only a writer and analyst, rather than running the business. Negative FCF has everythign to do with a tear-up the network and entirely new re-build as well a sthe balance sheet interest that funded it and zilch to do with some store-front employees.

    Sprint is renting 1/3 the store floor (at 1/3 the cost) so establishing "micro" stores to broaden its distribution reach. You can always throw labor at it to meet peaks (such a san iPhone launch) and pull back during lull times, but the fixed costs of the location is the most significant portion of fixed costs. So having the distribution reach of 1750 stores for the the cost of 600 is not insignificant. Similalry Sprint is effectively buying exclusivity with co-branding -- now there will no longer be AT&T and Verizon brands.

    So it makes perfect sense to me, even if only as a "bridge" to expand the distribution footprint immediately in bulk until Sprint can grow through addiitonal organic additons of larger boxes. The author has identified the one weakness of the arrangement, as it reliese on RSH being there to bear the cost burden of the remaining 2/3 of store operating costs and whether its new merchandising model can be sustained longterm -- even if it were cherry-picking the best of hte RSH locations.

    Radio Shack went banrupt because Salus Capital would not waive the covenant that prevented it to close non-productive stores, as well as via bankruptcy, it can right size its balance sheet and get rid of more than half of its leases. Jury still out whether a small box footprint even with 1/3 of the OPEX subsidized is sufficient, or sustainable, for Radio Shack, but that is the bet that Standard General and its other partner lenders are making.

    If 3 yrs from now, there ends up to be a Chapter 22 for shrunken Radio Shack, then Sprint will have had the benefit of hindsight optionality to cherry-pick the then remaining portion of the 1750 locations that it would want to take over entirely (going forward without the 2/3 subsidy being provided by the RSH merchandising).

    The author has just rekindled my interst in taking another look at going long Sprint after I had sold out of it for 2 years now. I was waiting for more hate but probably have missed the window for the bottom.
    Feb 17, 2015. 01:41 PM | 7 Likes Like |Link to Comment
  • Debunking Misconceptions Around Netflix Heading Into 2015 [View article]
    alpine, then you still don't know or understand the SVOD business compared to the PPV business. Pay Per View is a non-exclusive window after theatrical release often just after DVD release and digital ownership ("pay to own") window -- again all non-exclusive in that multiple providers and multiple retailers. Then it goes to an EXCLUSIVE window where a subscription pay channel such as BSkyB, or Canal +, or HBO, or Netflix has exclusive broadcast rights -- the pay per view channels and digital rental channels GO DARK at this time because the pay network has bargained for exclusive access during this Pay 1 window. Some films such as Paramount, MGM, and Lionsgate have currently partnered on pay service Epix which has created a Pay 1 1/2 window in the US by re-licensing it to Netflix, Amazon, and Redbox Instant (before its demise) on a non-exclusive basis. Netflix has publicly stated that it is unlikely to renew if the content is on a non-exclusive basis (particularly since it is getting all the Disney brands EXCLUSIVELY in pay cable 1 beginning 2016).

    You also are confused as probably 80%+ of the actual content are long form premium television content rather than movies, particularly serialized drama. a 13 episode season of an hourly drama is a "13 hr movie", and when not held hostage to the cadence of advertising supported television which has specific time constraints and designed to create various climatic cliff hangers -- in order to insert ads at that moment, or to create impetus to watch the next episode. That whole business has less vertical integration with different studios producing for different networks and then subsequently syndication. For example, the DC Comics inspired and licensed Gotham television show (the historical beginnings of Batman) was produced by Warner Brothers Television (owned by Time-Warner, which also owns HBO, and jointly owns the CW television network with CBS) but distributed for broadcast by FOX (owned by murdoch's 20th century fox which has its own movie an television studios) in the Us, and syndicated to other broadcasters in Australia, Canada and elsewhere. But the EXCLUSIVE back season rights WORLDWIDE have been purchased by Netflix -- so broadcast over the air or through MVPD distribution for broadcast viewing, and then back season for streaming and on-demand binging (to also promote new second season launch by letting viewers catch up on the first season in its entirety) via Netflix's global platform. Absolutely no one else could have done that deal with Warner Bros, as is own sister company HBO itself doesnt have close to the global distribution reach that Netflix has -- and HBO's business model is purely originals with only films from Fox, Warner, and Universal where it has licensed Pay cable 1.

    So your thinking about how you can get pay per view movies on Cablecom probably means that you should avoid the Netflix investment as you are not sufficiently familiar with the business model and the evolving media distribution landscape to understand the disruptive force that is being unleashed by the Netflix, Hulu, Viki, HBO Go, and amazon and other OTT services of the world and how that will impact how television and movie content is produced, financed, and distributed.
    Jan 27, 2015. 11:58 AM | 1 Like Like |Link to Comment
  • Debunking Misconceptions Around Netflix Heading Into 2015 [View article]
    alpine, I assume that you do know that Liberty Global owns Virgin Media, the UK cable operator that was the first to integrate Netflix on its set-top in the UK and is a distribution partner of Netflix. Now followed by the other MVPDs. Netflix doesn't compete with cable. Netflix is just another programming network and competes against other networks, not the pipes or the program aggregators who are distributors for programming networks.

    Dish in the US just enabled its Hopper set-top box to integrate Netflix as well as Dish's own new micro bundle called Sling TV. these guys are more complimentary than competitors.
    Jan 22, 2015. 12:04 AM | 2 Likes Like |Link to Comment
  • Netflix Should Beat On Tuesday [View article]
    where did all the shorts go?

    no more hate on higher content commitments? dilution for overseas expansion? can't possibly grow subs because of all the competition? or even sequential decline on contribution margin in domestic streaming?

    however, I do see a bear trade where there is a downdraft potential: international now big enough to see the same Q2 seasonal slow-down on subscriber net-adds (really a function of the bulge of holiday season activations that on trial that don't convert), coupled with the full quarter financial dilution of AU/NZ launch in Q2. that headwind will bring all the naysayers out of the wood work, and it actually will be reflect in Q1 earnings when company gives Q2 guidance. That probably will create an entry point for long biased who can't get themselves excited to buys something 25% higher than 2 days ago.
    Jan 21, 2015. 11:54 PM | Likes Like |Link to Comment
  • Netflix Should Beat On Tuesday [View article]
    galaxie13, the $6.2B of content commitments isn't a "liability" according to GAAP because it is a commitment for content that is not yet available. If you are going jump up and down about that, you should also talk about "off balance sheet revenues of $18B+" over the first 3 years.

    normally a liability is only a balance sheet item whose repayment is generated by earnings or free cash flow (or refinancing) and such repayment doesn't go through the income statement (other than the interest expense). These content commitment that you refer to as so-called "liabilities" are actually future EXPENSE obligations run through the income statement that are paid for by revenues.

    Just keep on shorting. You will make some money given the volatility, but the guy who is actually long and understand his accounting will make a lot more money than you will (or even the long biased trader).
    Jan 19, 2015. 07:41 PM | Likes Like |Link to Comment
  • Why An 'iPhone 6s Mini' Makes Sense For Apple [View article]
    There's already a 4" iPhone 6 Mini. It's called an iPhone 5 series. They can simply introduce iPhone 5X (or "iPhone 5 Pro") and iPhone 5CX on the existing 5 series platform to include newest generation processor and higher RAM. Why would they screw up the positioning of the 6 Series by further confusing that series with another form factor size?

    The "Mini" designation implies something diminutive, which is not the case for those who prefer the form factor of the 5 series (not me, since I purposely waited to switch to iOS when Apple finally had the larger form factor and went with the 6 Plus), while the "X" designation or "Pro" nomenclature would denote something "faster" or "extra", such as faster processor, more RAM, and improved photo processor.

    In any case, Apple has an excellent history of product line extension to offer a broad line of form factors, colors, and specs, so I have perfect confidence that it will manage its product life cycle migration appropriately without abandoning those consumer that prefer the 4" form factor.
    Jan 6, 2015. 01:10 PM | 1 Like Like |Link to Comment
  • Debunking Misconceptions Around Netflix Heading Into 2015 [View article]
    The funniest thing about misconception #3 is that somehow we live in a world where there is only one channel. That folks will subscribe only to one or the other and that the OTT SVOD market is a zero sum game. Does the fact that CBS has a good prime-time line-up that NBC, ABC, and Fox should just hang it up, let alone CW and its targeted demos. Amazon's success in generating good original shows just means even more talent is gravitating to SVOD distribution rather simply broadcast, basic cable, or the premium pay cable networks. In fact all these are staring to blur where CBS is offering a SVOD option (sans NFL), as will HBO go direct to consumers OTT rather than rely solely on MVPDs, while Netflix is not only SVOD OTT but also now being increasing integrated on MVPD channel line-ups.

    at the end of the day, it's which network has the distribution to best monetise content, either in the form of ratings for advertising monetisation, or via subscription revenue streams, or a Hulu that executes a hybrid model (charge a subscription fee AND sell ad insertions).

    The point of misconception #3 is there is not singularly one instance in the media world where there is only one sole source entertainment channel, where one channel succeeds necessarily means the demise of the other, let alone all the others. All will prosper but in the end content is what is valuable but it takes distribution to best realize that value, and what Netflix has is a huge advantage in low cost distribution acquisition with its direct to consumer subscription model.
    Jan 3, 2015. 08:07 PM | Likes Like |Link to Comment
  • iPhone Surging, iPad Collapsing - Apple May Be Near Its Peak [View article]
    i liked my sammy in ability to swap batteries, but so far my 6+ batteries haven't been a problem so i dont miss it. the build an dfinishes on Apple much better obviously. My sammy didnt have the Touch ID which i find very helpful but new Sammy's have the fingerprint sensor. otherwise I find that Android and iOS not materially different to prefer one versus the other, but the iOS is integrated with all my other Apple stuff (iPad, iMac, iPod, Apple TV, iTunes) so that is both good and bad -- I have my iTunes music without needing to transfer it like I had to on the Sammy. I was happy with my Sammy before (although screen kept on breaking) and I am just as happy or more with my iPhone now. SOem apps that I was used to on Android (a newspaper reader) are not available on iOS or otherwise easily accessed my photo gallery doesn't seem to do so easily on iOS, but there are other features such as ApplePay that I am just starting to try, and FaceTime is easier to use and better quality than Skype if I am video chatting with other iOS devices. Anyway, nothing that I am not convinced that Apple will continue to gain share now that you eliminate the screen size differential, which was my primary constraint previously from switching to Apple iPhone sooner
    Nov 25, 2014. 12:04 PM | Likes Like |Link to Comment
  • iPhone Surging, iPad Collapsing - Apple May Be Near Its Peak [View article]
    Michael, per unit gross profit dollars on iPhone is 2x that per unit gross profit dollars on iPad. So WHO CARES about iPad cannibalization. iPad product life cycle (even though I just bought another IPad Air 2 because my wife got tiered of her IPad Mini 2) is typically longer in terms of the refresh cycle then smartphone, so the original expectations for iPad was flawed. I sit on 3 boards that now distribute board and trustee information via iPads -- there is only one laptop left, and no android tablet in sight, as every single board member uses iPads (except one old school with laptop). The invasion of iPads into enterprise market is only beginning and you are assessing the resiliency of iPad purely from a consumer point of view.

    And Michael, you said that the iPhone was peaking at the iPhone 4S, and then the iPhone 5 was disappointing, and the iPhone 5S the beginning of the end. And now the iPhone 6 is the peak. I suspect that you will be saying the same about the iPhone 8 and iPhone X (they will shift to roman numerals just to be as cool as the Super Bowl) as well. I had been waiting for the upsize in form factor and finally gave up my Sammy Galaxy S3 (I had previously had 3 generation of Sammys) for a 6+, my first iPhone, and there are plenty like me that having waiting on Apple to adopt to new form factor. This will be the Mother of All iPhone Upgrade Cycles for Apple, as it is a category extension, ... to be followed by subsequent sequels again, and again, and again. So far, far, far away from the "peak".
    Nov 18, 2014. 11:11 AM | 7 Likes Like |Link to Comment
  • Samsung Is Sinking, While Apple Garners Robust Demand In China [View article]
    standard protocol for sell-side is to set the bar reasonably high if you are negative on the name ("by going with the crowd"). similarly you want to set a low bar if you have a buy "we are more conservative than consensus but we are a bull".
    Oct 9, 2014. 09:04 AM | 1 Like Like |Link to Comment
  • Samsung Is Sinking, While Apple Garners Robust Demand In China [View article]
    MB, while you have been so focused on your short thesis on Apple, you missed the huge short opportunity on Samsung that was staring at you in the face. Given the product segments where Samsung played (both product line and geography), given its greater vulnerability of commoditization/substi... from other OEM's since on same Android OS, and given its greater vertical integration (i.e. higher fixed cost for its production plants), Samsung was the more vulnerable to all the fears that you articulated in your short thesis. In fact, if you simply substituted Samsung in your various investment rationale on Apple, you would have found yourself to have been brilliantly on point.

    Oct 8, 2014. 10:53 AM | 4 Likes Like |Link to Comment
  • Apple Set To Lose Big Time In EU State Aid Case [View article]
    in the Bloomberg or WSJ article, it also pointed out the magnitude of the exposure may be as high as Euro 211M. did you catch that amount?
    Oct 2, 2014. 03:46 PM | 1 Like Like |Link to Comment
  • Michael Blair's Incredible Journey - Apple's Blowout Launch [View article]
    Michael's main problem is that he fails to read Apple's revenue recognition policy (or that of any other distribution partners). No one recognizes revenues upon "orders", so the whole bugaboo about "pre-orders" is a red herring.

    Orders are only recognized (whether "pre", i.e. before launch, or simply an "order", i.e. after launch) upon shipment, either retail or inot channel partners, which creates a payment obligation, or for retail pick-up, which results in another payment obligation, in lieu of shipping.

    Since every single carrier in the US was out of stock for pre-orders (they set aside a certain number for online purchases, but obviosuly also needed to stock their stores) within hours of the pre-order initiation. Most carriers were quickly out-of-stock in their stores as well by end of first day but they were getting daily inventory refreshes from their distribution centers. The carriers' online stores continue to be back-ordered a couple of days to a week on the iPhone 6, and for weeks still on the iPhone 6+ (which is in much shorter supply relative to market demand).

    So sell-through is not an issue, but supply is currently the sole determinant of sales. Of course this will become less so over time as production continues to ramp and as yields improve, so that supply will evnetually catch up to demand.

    The thing is that Michael will be totally wrong but AAPL may drop 15 points if the overall market has a 15% market correciton and he will tout his short thesis call.

    I agree with author's sentitment that I actually carefully read MW's posting, and chip in my 1c for his click view, in order to fully assess his short thesis. While he is generally wrong, in my own opinion, in how he interprets different information, I nevertheless find value in the raw data tha the cites. however, in this instance, he is simply confused about how "pre-orders" inter-play with shipments and retail sales. Pre-orders (which is only to retail consumers via online store) is simply a metric to guage consumer interest and demand for a new model, while revenues in the near-term is going to be entirely driven by ability of AAPL's supply chain to deliver supply.
    Oct 1, 2014. 02:59 PM | 8 Likes Like |Link to Comment