Seeking Alpha


Send Message
View as an RSS Feed
View skibimamex's Comments BY TICKER:
Latest comments  |  Highest rated
  • Samsung (SSNLF.PK), unsurprisingly, plans to appeal its harsh legal loss to Apple (AAPL). Apple's response to the jury's verdict: "We applaud the court for finding Samsung’s behavior willful and for sending a loud and clear message that stealing isn’t right." Samsung's response: "It is unfortunate that patent law can be manipulated to give one company a monopoly over rectangles with rounded corners, or technology that is being improved every day by Samsung and other companies." (more[View news story]
    IncomeYield, "hope is not an investment thesis". Why don't you review the 12 patents in various jurisdictions that Android devices have been found to have violated Microsoft or Apple patents, .. and yes, all the cases in Germany, in particular, are adjudicated by highly specialized technical judges.

    See here for the list of Android violations found in various jurisdictions worldwide:
    Aug 24 09:43 PM | 4 Likes Like |Link to Comment
  • Leap Wireless: A Sale Of The Company May Be On The Way [View article]
    $3.3B of funded debt PLUS $1.7B of operating lease obligations (mainly long-term tower lease obligations). Not clear that stripped of the spectrum (even if you believe the $3B figure bandied by Leap mgmt) that the residual network and subscribers along with operational burn may not be negative NPV.

    T-Mobile will benefit most from the AWS spectrum that LEAP holds (excluding the c-block PCS spectrum from Leap's original 22 small markets that no one cares about) but it will see negative NPV from assuming Leap's subscriber base (cost to convert to GSM) and unwinding LEAP's network that T-Mobile can't use (and it must decommission in order to get access the AWS spectrum).

    AT&T has largely abandoned the AWS band when it had to give T-MUSA a sugar daddy break-up fee from their pre-nup agreement, so LEAP's AWS spectrum is of limited strategic interest to AT&T currently, and AT&T has no use for the CDMA network or the customer base that is held hostage to it.

    Verizon has already cherry picked AWS spectrum from LEAP in small drops (to keep it under the FCC/DOJ radar) and can readily assimilate the CDMA network but it hates the types of customers that LEAP holds. Except the Alltel deal, which was largely about getting 850mhz spectrum where VZW didn't hold it, and the original RBOC roll-ups (in prior century) (again of 850mhz spectrum) that originally formed Verizon Wireless, VZW's history is largely an acquiror of spectrum and NOT of network or customers.

    Sprint is a logical buyer of the LEAP customer base (in that it would be the only one willing to do so) but has zero need for AWS spectrum that is sub-scale and woudl not fit Sprint's spectrum profile. Sprint wouldn't mind taking the additional PCS spectrum but again those are in third-tier markets where the spectrum is "nice to have" but not "need to have". And it would have to look very hard at the $1.7B in tower obligations to see if it made any sense to take on the network. Sprint is better off to simply rent its network to LEAP (let LEAP decide to go dark on its own and become MVNO). In any case, Sprint has no compelling rationale to do anything that could disrupt its roll-out of Network Vision as quickly as it can and any kind of merger integration of LEAP would be highly diversionary. BTW, remember that Sprint paid like $140/sub for Virgin MVNO subs which even if you double for Leap's higher ARPU sub-base, still puts you underwater on the $1.7B in tower liabilities on the duplicative network (before addressing teh $3.3B in funded debt).

    Oh by the way, LEAP has no ability to refinance to pay its pending 2014 maturity. Because it is junior debt, LEAP can't refinance with senior debt to pay off junior debt except a payment in the ordinary course within 1 year of maturity (i.e. after July 2013). And, by the way, its debt incurrence limitation is 6.25x trailing OIBDA - which means LEAP has very little headroom to incur additional debt unless it rapidly grows OIBDA; that's why Elliott has figured out that he has to start generating both OIBDA and FCF. But the challenge is if LEAP were to attempt to grow (rather than liquidate its customer base like it just did in Q2 to generate OIBDA), it dilutes its operating results with CPGA and upgrade costs. When LEAP introduces the 10 new handsets in 2nd half 2012 which will be "more competitive and offer acceptable value proposition" (i.e. better handsets that customers actually want to buy at cheaper prices), LEAP's CPGA will shoot up as will its CCU from bump in upgrade costs (LEAP has no way to enforce contracts and ETF to prevent its customers from upgrading early -- that was ok when you didnt subsidize handsets, but not when you have to eat the subsidy these days on expensive smartphones).

    So where do we end up, same answer as in 2010 when LEAP hired Morgan Stanley to shop itself. No one interested, other than to pick off pieces from the carcass. The best thing that came out of the conference call is that new CFO seems to "get it" and like any AA meeting, the first step towards recovery is recognition and admission "I am a cashburnaholic and have not earned an adequate return from my spectrum, network, or CPGA investments." I agree with author, from the tone of new CFO, it clearly indicates that he knows that LEAP is in precarious circumstances, and notwithstanding the perpetual happy-go-lucky spin of Hutcheson, Elliott seems to know that his degrees of freedom is rapidly shrinking. However, "hope" alone is not an investment thesis. Not clear that even the bonds can come out whole, let alone any recoveries to the equity when you understand the operational liabilities that encumber Leap's spectrum.
    Aug 7 11:06 AM | 4 Likes Like |Link to Comment
  • A 4G LTE version of Research In Motion's (RIMM +3.5%) PlayBook tablet will finally arrive on July 31, MobileSyrup reports. The device is said to feature a dual-core 1.5 GHz. processor, dual cameras, and 32GB of storage, and carry a $550 price tag. Given the PlayBook's negligible market share and the consumer preference for Wi-Fi-only tablets, odds are against the launch having much of an impact. (yesterday)  [View news story]
    Actually both I believe. The author is correct that more than 80% of tablet sales have traditionally been wifi only devices -- and therefore if history is judge, then this is not likely to have much of volume dent or significant financial impact. On the other hand, the critique before about RIM not having the 4G Playbook is that prior RIM management announced the product at Barcelona in Feburary 2011 ( and obviously it was vaporware at that time as it didn't ship until 18 months later. Alternatively, RIM mgmt ultimately realized (belatedly) that it was a resource drain to devote development efforts towards 4G for a narrow niche of the tablet market and also at a time when chipsets and LTE performance was still somewhat immature.

    In any case, the good news now is that I believe that this is the first LTE device shipped by RIM on devices that employ its QNX OS platform (so-called Blackberry 10 when the same OS is shipped for smartphones, but I'm not sure if they call the Playbook version of the OS the same), so we can observe real world performance of the new OS with LTE (i.e. battery management, connection resiliency, integration with 3G and wifi etc), and if there are any software speedbumps, RIM can debug it while it's only a limited universe of RIM zealots with the LTE Playbook (presumably only RIM fanboys are likely to rock this new LTE Playbook) in order for RIM to get a handle on potential issues (and solve them) before the glare of spotlight when the new generation of LTE Blackberry 10 OS smartphones finally ships in early 2013. So I see this as a good sign of RIM making steady progress towards commercial deployment of LTE devices on Blackberry 10 -- just another important milestone, more significant as a marker for RIM engineering progress than any financial impact from sales of a very nichey product.
    Jul 24 03:08 PM | 4 Likes Like |Link to Comment
  • Apple TV Will Revolutionize Content Delivery And Advertising [View article]
    bobbobwhite -- you described Google TV exactly and why it was a failed user experience (well unless you count the 20 people that bought it, excluding Googler employees, a raging success).

    the other problem the author doesn't realize is that the reason that cable channels are not offered ala carte is that the programming networks themselves don't want it. their busienss model is largely driven by advertising and selling access to eyeballs. allowing user selectivity and turning everything to a user selected subscription model will mean the inability for large portions of the media world to find any audience of sufficient scale (or that it will be so expensive to achieve that it will limit new content) if they can't accidentally be found when someone is channel surfing (I'm thinking the bikini travel shows on HD Net, or the reality TV shows on Bravo). But then, come to think about it, maybe that's a very good thing.
    May 21 03:54 PM | 4 Likes Like |Link to Comment
  • Apple: iPhone Subsidies Are Not The Issue [View article]
    I dont understand. The author provides a historical summary but other than the fact that carrier subsidies are a normal part of the business, it doesn't explain why this is not an area of focus for carriers to try to reduce. iPhone subidies has single-handedly compressed the operating margins of all the major US carriers because of Apple's unbridled success -- and they are getting flak from Wall Street for that. Already the carriers are taking steps to mitigate this --- they are extending the length of the upgrade cycle, to 21-24 mos, increasing ETC charges, increasing activation charges for upgrades. None of these steps are directed solely at Apple per se, but because Apple has benefitted the most from the carriers' largesse, in both the amount of average subsidy per unit and Apple's propensity to stimulate upgrades among its rabid user base, the result of these carrier actions to slow the upgrade cycle will likely have a greater impact on Apple.

    Apple's only solution, as it continues to demonstrate, is to create new products that its customers can't seem to do without. My daughter for example upgraded to an Android Nexus and hated the keyboard so went back to a refresh on her Blackberry. But when Sprint finally came out with the Apple iPhone 4S a few months later, she begged for the new phone despite already having used up her bi-annual upgrade allowance. So what did we have to do, inorder to stop teh begging, I had to buy the iPhone from Sprint at $650, and sold the barely used Blackberry Bold used to That unfortunately is the power of Apple and I hate them for it (but my daughter is happy, and sated for now,...until the next phone Apple introduces).

    The point is that the risk to Apple related to prospective carrier actions to mitigate their subsidy payments is very real -- it's probably the largest expense item on wireless carriers' income statements, but that doesn't fully capture who has greater leverage in this relationship between carriers and Apple, nor whether Apple at its current valuation relative to its earnings growth and cash on hand appropriately discounts that risk already. When an analyst takes those risks into consideration and then illustrates how that affects his finanical projections relative to street expectations, and therefore, the expected earnings growth and its relationship to current price, then it's time to take notice, as opposed sweeping statements of what the risks are or are not. The real risk is whether Apple can continue to innovate to create products that consumers will lust for -- that probably affects the multiple that you are willing to pay for that earnings stream, as an intuitive assessment of their future sustainability.
    Apr 18 01:26 PM | 4 Likes Like |Link to Comment
  • Time Warner Could Put Netflix Out Of Business Tomorrow [View article]
    Rocco, you do know that NFLX is one of TWX's largest customers via the 4 year licensing deal signed with CW Network (Warner Bros and CBS JV) in October last year. TWX's interest as it is with CBS and otehr content owenrs is to leverage NFLX's distribution to monetize those content libraries or as AMC does to use past seasons to help promote new season viewereship.

    How again does the title work? Exactly what could TWX do tomorrow? I'm still waiting for the punch line. But I agree it is a catchy title and did make me stop to click the blog.
    Apr 11 12:57 PM | 4 Likes Like |Link to Comment
  • Recent Sprint Downgrade Is Unjustified [View article]
    First of all Apple agreement is not "take or pay" if you would simply read the disclosure; they got pricing based upon a long-term volume commitment which Sprint beleives that it can easily exceed -- no different than what AT&T and Verizon had to for their own volume pricing commitments, or any other major carrier for that matter with either Apple or other major OEM's, all subject to certain major outs.

    Moffat is a mullet. His inane analysis that teh long-term commitment translates into 75% of Sprint's currnet post-paid base for the 4 1/2 yr supply contract doesnt seem to recognize that on average customers upgrade phones every 20 months or so and with Apple zealots in particular, being manipulated by Apple to refresh their handsets even more frequently.

    Companies that can do "drive by" financings and craise $2B in an hour such as Sprint to pile on $6B in cash on the balance sheet (plus over $1.1B undrawn revovler) aren't typical candidates for immininent bankruptcy as Moffat would suggest. It's always funny that equity analysts trying to add value by masquerading as a credit analyst -- sort of like a chiropracter telling you how to do brain surgery.

    Moffat's basic thesis is that installing cell sites is "complex" (what he calls Network Vision), that Sprint's LTE is non-competitive or that somehow Sprint's iPhone 5 wont have LTE (I guess he's sort of confused because current iPhones do not support AWS frequency band 1.7ghz/2.1ghz which is unique US band, and that's why T-Mobile in the US which currently uses AWS for its HSPA+ so-called 4G network overlay hs yet to get iPhone yet, that therefore the new Iphone 5 wont support 1.9ghz PCS band that Sprint is implementing LTE on because that's different than the 700mhz that VZW/T initially rolled out on -- but the iPhone already supports 1.9ghz band), and that his analysis he counts agaisnt free cash flow sprint's 2012-2013 maturinng debt which Sprint already has pre-funded premptively through all maturities through 2013.

    Anyway, the inacurracies and jump in logic in Moffat's piece are simply too numerous. Sprint will be annoncing new HTC One X LTE in a couple of weeks and it will be launching along both the Samsung Galaxy Nexus and LG LTE handsets before Sprint's June LTE launch, so there's plenty of time for people to decide how "competitive" an unfilled 5x5 LTE network is well before the iPhone coems out next fall (as well as a dozen otehr LTE devices in Sprint's line-up).

    On LTE network, just do the math, AT&T and Verizon each has 2.5x the postpaid subscribers that Sprint has and they have to fit those subs initially on a 10mhz carrier -- let me see, 2.5x more cars going through a highway that's only twice as wide as another, I wonder if there's going to be dramatic difference in AVERAGE throughput speed at rush-hour between those two highways.....

    Mind you there is plenty of Sprint execution risk, but the risks that Moffat has called out are simple blocking and tackling and not leaps of faith.
    Mar 21 06:47 PM | 4 Likes Like |Link to Comment
  • American Airlines Can't Buy Stock Quick Enough [View article]

    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 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
  • 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
  • What Was Tim Cook Thinking? An Analysis Of Beats Electronics [View article]
    You got me at Aeropostale which you analogized as teen fashionable -- that's when I stopped reading because you dont seem to be in tune with marketing positioning of various brands.

    Aeropostale and Hilfiger are lower-end demos that are "aspirational" value-priced brands (read "copy cat") that piggy-back the luxury brand teen fashion brands such as Abercrombie & Fitch.

    I personally think getting 60 share of the high-priced premium headphone segment with supposedly lousy product is absolute genius. The reality is that Beats designs its product to emphasize bass which adds to its fashion statement and which probably appeals to those who prefer certain types of music -- nobody is listening to a Mozart piano concerto on a Beats headphone (frankly they should not even accept the signal loss on the MP3 player and instead be playing Mozart in an in-home environment to simulate the concert hall effect). Luckily for profit-making enterprises, the fattest part of the market is not the audiophile market, but the mass market where affordable luxury such as Beats products is an easy impulse buy. I give Iovine cred for marketing acumen and genius in creating and mass marketing the category
    Jun 10 09:13 AM | 3 Likes Like |Link to Comment
  • NTELOS - Don't Fall For The Yield, Sprint Contract A Risk With 50% Downside Potential In Share Price And Dividend Cut Likely [View article]

    Wells Fargo calls this the "best possible outcome" that she could imagine for Ntelos. Exclusivity for both CDMA and LTE through 2022, plus Ntelos gets to use all of Sprint's 800mhz, 1.9ghz, and 2.5ghz (the latter is the EBS spectrum that Clearwire accumulated while Ntelos itself had the better BRS contiguous spectrum). So Ntelos traded off modestly lower rates in exchange for the use of Sprint's spectrum. That 800mhz is going to kick ass supplemented onto Ntelos network with vastly improved coverage and in-building penetration on the existing 1.9ghz cell site spacing. Ntelos will also immediately get the benefit of the Sprint's 1.9ghz since it is on the same band class as Ntelos' current CDMA network (meaning entire installed base of handsets can immediately access) and that extra pipe eliminates any capacity build requirement, letting Ntelos instead focus its capex $'s on its LTE over-build with 800mhz plus 2.5ghz. The additional 2.5ghz will also supplement Ntelos' 2.5ghz to let it fully pursue fixed wireless with Dish on TD-LTE that leverages the same network infrastructure.

    Win-Win for both parties. That idiott Dixon at FBR proven wrong again about "imminent" overbuild or "imminent" drastic haircut -- he had no clue about the network challenges of an overbuild. I am ROFLMAO. :-)
    May 22 09:59 AM | 3 Likes Like |Link to Comment
  • Apple Buying Beats - Method Behind The Madness [View article]
    LBP, I am not exactly sure your rationale of using off-shore cash is at all relevant. Beats Entertainment LLC is an US LLC entity. Using AAPL's off-shore cash that has yet to pay US corporate income tax in order to buy US securities (whether public or private) is considered a repatriation and therefore subject to an acceleration of US taxable income from foreign sourced earnings that previously enjoyed the tax deferral so long as it was invested off-shore. The US tax system is one of few that taxes global income based upon citizenship notwithstanding where the income is generated, and only allows a "loophole" of tax deferral so long as it is re-invested off-shore. Now does that seem like it keeps US companies competitive with its global competitors?

    So no free lunch on your Q# 2, and frankly it is irrelevant in this situation.
    May 13 10:54 AM | 3 Likes Like |Link to Comment
  • Apple reportedly drawn to Beats' streaming service; sell-side has its doubts [View news story]
    I am not sure that you can justify/rationalize by any act of stupidity that FB may or may not have done to justify this move. I am neither favorable nor negative -- I just know that I am ignorant.

    I think there seems to be many who think the Beats products are poor quality and overpriced -- I for one, applaud that "branding power". What do you think Louis Vuiton or Burberry are? Perhaps some would claim that those are at least "high quality" luxury goods. I guess the real issue is whether Apple should invest in an adjunct brand to its core "Apple" brand. I frankly dont know until we have a better view of the strategy, and so dont know why we wouldnt just wait to hear the strategy articulated.

    The other school of thought seems to suggest that the price paid is too high. Since doesn't report publicly and we have zero information as to how its financial performance would benefit from being under Apple's stewardship, again it seems that assessment is simply pre-mature. similarly the rumored price is compared with what Carlysle paid for a minority interest in past year -- but a strategic buyer is always able in theory to pay more because of the strategic synergies that it may enjoy that a financial investor may not.

    My conclusion is we don't know anything yet to have any informed opinion on price, on rationale, on strategic synergies, on financial performance,... and just about everything else. So take a chill pill and just wait rather than speculating. In the meantime, $3B is a gnat on an elephant's butt in the case of financial impact to AAPL.

    May 12 05:43 PM | 3 Likes Like |Link to Comment
  • Why I Won't Be Buying Netflix Anytime Soon [View article]
    who do you think will provide "good movie content". Fox, Warner Bros, and Universal tied up with HBO for cable 1 rights EXCLUSIVELY with HBO long-term (I think Univ just re-upped or maybe Fox -- one of the two). Sony Columbia just re-upped with long-term EXCLUSIVE with Starz, as well as Lionsgate, after its commitment to Epix ends in 2014. Disney (Marvel, Lucas, Buena Vista, Disney) just entered into long-term (minimum 5 years, more likely 8 yrs) after 2015 EXCLUSIVE with Netflix, and Netflix also has long-term exclusives with Weinstein and Dreamworks Animation. Paramount and MGM (bond franchise mainly) have EXCLUSIVE with Epix which they co-own and which are sub-licensed in a pay cable 1 1/2 non-exclusively to each of Netflix, Verizon's Redbox Instant, and Amazon Prime (probably Hulu too if rumors play out). Showtime has existing exclusives with Summit (but Twilight has run out) and various independents. All of these are long-term contracts that renew every 3-8 yrs.

    So how exactly does someone else will "pass them by"? Where do you see the point of entry -- the Big 6 studios have probably 80% of the new release calendar and are locked up under long-term exclusive contracts (albeit they roll off at different times) among HBO, Netflix, Epix, Starz, and Showtime for pay cable 1 in the US. This changes in other countries -- BSkyB currently has all Big 6 in the UK. Some countries are output deals while others, such as Latin America, are licensed on individual titles. So before you postulate what will happen, it would be helpful if you actually do some due diligence on how studio licensing works. BTW, you need to understand the SVOD and pay cable network window is the first exclusive window BEHIND non-exclusive distribution which happens first in theaters (lots), then EST and DVD (again lots of distribution for ownership model), and then followed by PPV/rental (either physical with delay and then or broadcast and on-demand via agency model, again non-exclusive). After you do your due diligence you can be in better position to understand different business models in the space and their economics.
    Jul 23 09:35 AM | 3 Likes Like |Link to Comment