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  • Why The IBM-Apple Agreement Could Fail [View article]
    No one is going to bet on BB as no user will be "bringing" those devices. You think Android is more secure than iOS? Which version of Android as there are 5 flavors out at any time - you think that makes it more secure? The reality the type of apps and software solutions that have value in the enterprise segment are going to drive to the tablet devices first rather than on smartphones. Tablets are not BYOD devices as the applications that an enterprise wants to migrate are corporate centric and the device budget displaces laptops.

    P.s. Written on a corporate issued iPad.....
    Jul 22, 2014. 11:08 PM | 5 Likes Like |Link to Comment
  • Update: Netflix Winding Down DVD Business [View article]
    pauldeba has been talking about bankrupting Netflix for as long as I can remember. The DVD business is entirely different thant he streaming business. the former is based upon first sale doctrine which means there is no licensing limitation -- however, Netflix has agreements with the major studios for significant wholesale DVD discounts (also avoided costs such as no packaging) in exchange for Netflix agreeing to delayed release up to 60 days from retail release of the DVD. Outerwall doesn't agree to this (and pays higher through wholesale distributors) because its Redbox kiosk business is more reliant upon impulse and early release customer.

    100% of the Big 6 Studio new release movie content (and the bulk of the remaining except the small independent studios) are PRE-COMMITTED to EXCLUSIVE licensing windows (definition in Websters is that only one guy gets the show it in the subscription pay cable 1 window when it first is available for streaming or broadcast to paid subscription providers -- this is AFTER the PPV or rental window). Universal-Fox-Warner are with HBO, Paramount is with its own Epix, SonyColumbia and Disney are with Starz (all of Disney are going to Netflix after 2015).

    So sherlock paul, the DVD business is during the NON-EXCLUSIVE DVD and PPV window, and everyone and there brother (WalMart, K-Mart,Best Buy, Amazon, Target) can sell the same physical product, and then again everybody and their brother can rent the PPV product: any of which includes cable PPV, via internet streaming, or physical DVD rental. Those that offer "rental" on a pay per rental or PPV basis include: cable/sats, Apple iTunes, Amazon, GooglePlay, SamsungMedia, WalMart'svudu, Redbox, Netflix DVD (on self-determined delayed release), etc. Everybody within this window have non-exclusive access to all the content. The digital / broadcast version of this content (i.e. non DVD) will GO DARK and be unavailable during the the EXCLUSIVE pay cable 1 subscription window tha thave been licensed exclusively by HBO/Showtime/Netflix/S... etc. Epix has subsequently sub-licensed Paramount, LionsGate, and MGM studio output on a 90-day delayed release basis (so-called pay cable 1.5 window) to each of Netflix, Amazon Prime, and Redbox Instant.

    So the scenario where Netflix DVD "moves its" deep library and early release content to streaming service is not possible given current licensing regime, AND, the fact that Netflix's positioning is a deep and broad library as opposed to "immediacy of recent releases such as RedBox plays (Redbox has limited shelf space in the kiosk to house a deep library silo'd in each kiosk and its business model is premised upon velocity of rentals and utilization), means that Netflix's DVD service is literally the only place to rent that "deep and broad library" solution.

    Netflix's mail delivery service is dependent upon USPS who tried cut all mail delivery service on Saturdays but Congress would not allow that so USPS has instead cut back everything except first-class and premium services.

    There will be a core DVD-by-mail customer - think of the vast parts in rural america, where their nearest access to a general store is 5 miles or more, let alone a super market or a WalMart. That guy gets a subsidized delivery system from the USPS -- his cheapest form of transport is DVD-by-mail, and he probably doesnt even have the bandwidth for streaming (but may have access during the PPV window from his cable provider on recent release content). Nobody can offer the deep content library (its not economic other than on a scaled distribution center basis to aggregate/cache physical content inventory).

    the key is that Netflix has proven that it can manage the DVD-by-mail business (as it always said that it could) as a pure variable cost business so that it can maintain percentage margins (actually it has grown them slightly due to cut-backs in marketing costs) even as the revenue base shrinks. So Netflix is exercising the classic business strategy of milking the cash cow in order to redeploy the cash contribution elsewhere to fund the streaming business which is in capital consumptive stage of development.

    Getting out of DVD, or claims that the DVD business will become unprofitable, or that the DVD business will totally disappear are all naive statements at best, or simply blissful ignorance. The only one scenario where that may be different is if the studios never made any of their content available on DVD's -- and the margins for the studios are simply too high for the studio to consider that for now. It's true their digital COGS is even lower, but the rev share toll extracted by the distribution bottlenecks (remember all those useless "middlemen") still makse the physical content distribution more attractive economically to the studios.

    Jul 17, 2014. 05:30 PM | Likes Like |Link to Comment
  • An Office And Industrial REIT Positioned To Deliver Alpha - Chambers Street Properties [View article]
    what is your view on overall macro issues such as the rising interest rate overhang on entire REIT sector? wouldn't steepening yield curves and higher absolute interest rates put a ceiling on yield stocks like CSG and other REIT stocks?
    Jul 12, 2014. 09:41 AM | Likes Like |Link to Comment
  • Iron Mountain's Growing Dividend And REIT Status Should Attract Investors [View article]

    Dude, you are looking at the Australian entity Iron Mountain Mining Ltd. There is also a Canadian entity (Iron Mountain Ltd.) also with same name that is a jobber and maintenance shop for pulp mills and sawmills.
    Jul 9, 2014. 01:44 PM | Likes Like |Link to Comment
  • Chinese government calls for phone subsidy cuts; UBS sees iPhone impact [View news story]
    just because some idiott speculates that this is a protectionist move, don't believe it.

    100% of iPhones are made in China, and pretty much every single other OEM's as well.

    I just opened the back of my Samsung Galaxy -- guess what? "Made in China"

    There is no "protectionist conspiracy". the gov't watchdogs don't feel that chinese consumers should spend beyond their means and the large subsidies are compensated with higher recurring service fees so the high subsidies on higher priced phones acts as what is viewed as an undesired inducement for the chinese consumer of limited means to over extend themselves financially. Very paternalistic gov't those chinese.
    Jul 9, 2014. 01:18 AM | 1 Like Like |Link to Comment
  • Apple: Time To Scrap The iPod [View article]
    iPod Touch has the one thing that iPhone doesn't have -- it strips out the QCOM com processor and saves a bunch of cost in order to deliver a lower ASP. The Touch is exactly the screen size as the 5c/5s and has all the functionality except the cellular connectivity. therefore without the $50-$100/mo bill.

    iPod is the gateway drug intended to introduce trial and seed the addiction
    Jul 6, 2014. 09:24 PM | 2 Likes Like |Link to Comment
  • Don't Tell The iWatch What It Can't Do [View article]
    there were all these mini-CD players and portable MP3 players before iPod showed up and totally re-imagined the user interface.

    there were all these MS-DOS-based PC's and even Apple's own, until the Mac showed up with a different user interface; Of course Xerox had been working on that 10 years before.

    interesting that 7 years later, Apple introduced the iMac using NEXT's operating systems that was re-named OS-X. Of course everything it did, mostly, was also done by Windows.

    By the time of the introduction of iPhone, there had been many years of "Smartphones" (originally coined by Compaq for its iPaq) relying on the Palm platform and RIM. They all could access the internet by 2007. So what the iPhone "could do" had all been done before.

    At the introduction of the iPad, others had conceived different forms of mobile computing, including laptops, netbooks, and other PDA and tablet type devices (even Apple's own failed Newton). So the concept of mobile or portable computing was certainly not new.

    The point is that nothing is EVER new and almost any new successful product that resonates with the mas market all had previously failed versions that had various "pain points" for the consumer that the ultimate successful product eventually solved -- but almost everything it "did" was done before but maybe not in the same seamless and effective user experience.

    I agree with you that we have no clue whether this new iDevice will be successful but just because other have conceived similar functionality and may or may not have more success doesn't mean that it is certain there is no opportunity for Apple to iConceive the product and user experience differently. I certainly wouldn't "pay up" for this unknown iWhatever, but I think the bet is well paid for by the existing cash flow stream and expectations of a robust iPhone refresh cycle with a free option on maybe some unknown iDevices. Hell, iBeats headphones is a $1.4B business out of the box; who know whether that has legs to become a $3B biz relatively quickly leveraging Apple's distribution footprint and marketing prowess.
    Jul 3, 2014. 07:00 PM | Likes Like |Link to Comment
  • MBIA hit again even as PREPA makes payment [View news story]
    "another downgrade for mbi could put them out of business. negative outlook not looking good"

    What exactly business would they do? they haven't written a new piece of business since 2008. they dont borrow to fund but are running a portfolio in run-off.

    Granted, if they have a 2 notch downgrade at National, can't write any new muni business (or tough to compete with AGO), but there is no new muni business to write currently anyway until interest rates rise when bond insurance can have value.

    If they give up the ghost of future relaunch of National, then they should just return excess capital to shareholders.

    so I am not exactly sure about "another downgrade" putting them out of business -- they actually had recent ratings upgrades, and now an "outlook" downgrade, not a ratings downgrade. in any case if the ratings downgrade does come, then it may delay impair or delay the prospects of the muni relaunch but it doesn't "put them out of business".

    In any case stock probably gets cheaper -- whereas MBIA used to be a levered ride on RMBS put backs, now as it gets cheaper it becomes a play on PR restructuring event. another event trade stock.
    Jul 3, 2014. 06:41 PM | Likes Like |Link to Comment
  • Iron Mountain's Growing Dividend And REIT Status Should Attract Investors [View article]
    The E&P distribution is fully taxable to flush/cleanse the accumulated c-corp earnings and profits, and taxable irrespective of form of stock or cash. The purpose of the 20% cash is presumably to pay the personal tax liability for the dividend -- however this doesnt affect pensions or most institutional investors who measure their returns on a pre-tax basis. The share distribution is economically equivalent to a share split. Obviously if you have IRA or self-directed 401-K that is insulated from such tax effect, that's a good place to buy these shares for the catch-up and 1-time as well as to park the multiple expansion trade (and get paid coupon while you wait).

    Having said that I suspect many may not necessarily book the dividend properly, but it should be included in your broker's annual tax statement (I know, mine screwed it up initially) as qualified corporate dividend (the special dividend would be, BUT the regular dividend including any dividends received from 2104 to-date would be "non-qualified" as it is REIT dividend income and taxed at ordinary income rates).
    Jun 30, 2014. 02:57 PM | Likes Like |Link to Comment
  • Don't Tell The iWatch What It Can't Do [View article]
    I think the first point that the author pointed out is that Paulo Santo's so-called analysis was simply silly. Paulo has a history of being LMFAO spot-on on his Apple calls like when he was Paul Revere-ing How Apple was gong to buy this loser German TV manufacture for their designs ( Often wrong, never in doubt.

    OMG, the market for digital cameras is so tiny and no one makes any money at it -- oh whats that you say that the number of digital photos is now 5x-10x than before because all incorporated in the smartphone. And with the added connectivity of digital image capture combined with Instagram, FB, Twitter, that the utility of taking digital photos has exploded. My little girls are running around taking pictures with their iPod because they can share the pics with others (while their digital point and shoot cameras sit in their drawers gathering dust) via wifi on picture sharing apps.

    My point is to think of wearable computing as a "watch" is just kind of feeble-minded. However, I personally have no opinion on what a wearable can do -- certainly my losing battle with weight gain tells you that I wont be standing in line for all the good health features. I am reminded how Jimmy Kimmel was making fun of the iPad (with someone strapping it to their head like a phone) as something of little use and debating with a some MBA grad at a cocktail gathering where he thought it was of limited utility since netbooks had already proven a failure-- remember this is when no one had actually handled it and experienced the UI personally. The concept of a media consumption device or a migration to an app-centric computing world was not on anyone's radar (certainly not the mass market).

    My only point is that I have no clue whether the product will resonate with the public mainly because I really dont know its utility, and it may even fail initially. I have the original hard disk based Apple TV and remember buying the Mac Mini just because it looked cool (but less so once I kludged it with cheap Dell monitor and a logitech keyboard). The one thing that I know is that smartphones took over the functionality of digital photography and greatly expanded it because of ubiquidity (you always had your phone with you) and connectivity (that let you discover a new functionality which was sharing the image with others was more valuable to you than simply taking the image or god forbid, printing a picture from it). Similarly, telling time is a commodity functionality, however, one thing about watches is their ubiquidity (on a lot of wrists) and who knows what the advantage of connectivity (either WiFi or via blue tooth to a WAN device) will create.

    So as a long holder, I just figure that I have an option on the ups of wearables for free, and by the way, it is not merely the gross margin stream of what incremental iWatch revenues can add, but how it further secures and entrenches the iOS ecosystem. My wife bought the Samsung Gear which didnt really integrate well with her Note II -- she returned it after a few weeks. That doesn't mean that she wont try again and get the Gear 3 (whenever that next generation comes out when they eventually will get more utility) --- and this is a gal that normally only wears jewelry for a watch (i.e. nothing less than 4-5 digits) on her wrist so I am intrigued by her interest in such a device. You know what functionality she liked.. ability to take a picture (although it was lousy camera and needs better) when she doesn't have her phone, the linking to health monitoring, and she missed the ability to answer calls or responding (this was Gear 1). So who knows, Dick Tracy and Captain Kirk may have it right after all. But one thing I do know, is that if some future version of Gear resonates with her, she will remain stickier and more loyal to her Samsung ecosystem (rather than just Android ecosystem since there are integration compatibility issues between the wearable and the smartphone that requires getting the same OEM for best results) so that's the real payback.
    Jun 30, 2014. 01:50 PM | Likes Like |Link to Comment
  • Significant Dividend Income Opportunity Remains In Iron Mountain After IRS REIT Conversion Approval [View article]
    They said that aggregate cash dividend would double, not necessarily per share, because if keep per share divvy constant, will end up increasing aggregate distributions >8%.

    Appreciate your first contribution to SA. Zvi Bar did almost the same piece on IRM about 3 hrs after yours was published, so you still got the first flag at the top of the mountain.
    Jun 30, 2014. 12:43 PM | Likes Like |Link to Comment
  • Iron Mountain's Growing Dividend And REIT Status Should Attract Investors [View article]
    Jefferies was just a shill for the shorts.

    Current stock price gets a bit of a discount as you pointed out from the $0.50/shr catch-up dividend (the difference between old c-corp divvy rate paid for the first half versus the expected divvy rate as REIT), and the cash special dividend of around $0.73/shr (tax make-whole for the E&P flush to convert).

    You didn't put a target on the stock once it reaches normalized REIT dividend capitalization rates of 4% yield or better for industrial and storage REITs. That would make it over $50/shr stock price on the current share count (before the share dividend adjustment). That will likely take upwards to a year.

    Of course, like all dividend plays, the REIT sector, including IRM shares, will be vulnerable to significant interest rate risk if rates expectations for higher rates come to pass.
    Jun 30, 2014. 10:47 AM | 1 Like Like |Link to Comment
  • Significant Dividend Income Opportunity Remains In Iron Mountain After IRS REIT Conversion Approval [View article]
    Harry, one correction. The Company did not say that it would hold the regular dividend after the share distribution. If anything, it went out of its way to emphasize the aggregate $ distribution rather than the per share distribuiton. So I believe that your last point may be a bit flawed to think that the share price would adjust theoretically for the share issuance (agreed) while the dividend would not.

    So I disagree with you that the resulting yield will fatten up, the real opportunity is that the shares as a REIT should trade at 4% yield or lower, and that means there is upside to above $50/shr (on current share count) as the stock migrates into REIT investor indexes and to REIT buyers. So agree with your conclusion nevertheless that this is good upside.
    Jun 30, 2014. 10:35 AM | Likes Like |Link to Comment
  • Netflix: Risk Is Increasing [View article]
    it's not whether they are rosier but what metric makes sense; or rather you multiply by different multiples depending what measure you are using. EBITDA or OIBDA basically the same except for Other income/expense. However OIBDA/EBITDA for Netflix and most media companies that are amortizing content licensing (which are fixed term) dont make alot of sense because the amortization expense is real -- just like the depreciation expense is real for a car rental company -- or rather not material differences between true eocnomic life and accouting depreciation. However for a TV broadcaster or MVPD cable operator, those are generally measured on EBITDA (actually even above EBITDA at BCF for the broadcasters to look at station performance without the corporate overhead). For programming networks, the more relevant metric is EBIT (compared to EBITDA). You are welcomed to use whatever metric you desire and make your investment decisions based upon that but you would pretty dumb using a P/E on GAAP Net Income for a financial services when everyone is analyzing the business on return on equity and multiples of book.
    Jun 28, 2014. 04:15 PM | Likes Like |Link to Comment
  • Netflix: Risk Is Increasing [View article]
    GAAP, guffaw. I guess you don't know what EBIT is.

    The distance between GAAP EBIT and GAAP NI is Interest expense/(income), Tax accrual (not cash), Other Inc/(Exp) such as FX marks on inter-company or other balance sheet marks that are marked to market. Those are largely cap structure related.

    So assume debt free (which is worst case as shareholders should want leverage and tax shield), and assuming 2/3 of profit stream is ROW (similar to Hollywood's movie box office as a proxy for entertainment consumption) which are much lower tax rates than US, if you were to use a fully taxed tax rate of 23% (i am using AAPL's accrual for proxy of global developed country stat tax rate), then 30% EBIT margins is 23% after-tax Net Income margins.
    Jun 25, 2014. 11:14 PM | Likes Like |Link to Comment