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  • 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
  • "There's no way" Sprint's (S) attempt to buy Clearwire (CLWR +0.6%) succeeds without a higher bid, says Taran Asset Management's Chris Gleason, one of many institutional Clearwire investors planning to vote against Sprint's $2.97/share offer at Tuesday's meeting. Reuters has uncovered investors holding 31% of Clearwire's public (non-Sprint-owned) shares who oppose the current deal; Sprint needs a majority of public shares to be voted in favor. Clearwire is trading 10% above Sprint's offer price, and 1% below Dish's $3.30/share offer price. (previous[View news story]
    it doesnt make sense for any long holders to vote for the deal except the passive index funds that vote based upon the vote of ISS etc.

    the typical risk-arb play is to arb a discount to the deal price. CLWR here offers a strange dynamic for a short risk-arb trade.

    here's the dynamic. the stock trades like water. an arb creates a large boxed position. in other words, every long shr he buys, he shorts a share to "box" his position, i.e. he is hedged. After the record date, he can unwind his long (and would still keep the vote, since he was the record holder at the record date), so now he's short at 10% above the deal price, and he has stripped off the vote from his long shares to vote his shares.

    he's got two risk, maintaining the borrow if the borrow comes in if his lender want to vote the shares, and then where would the stock trade if the deal was voted down. does it go up? Where's the next offer when Sprint isnt selling. will it go up if CLWR threatens bankruptcy; it would the first bankruptcy in 20 years of investing in distress names, that the stock of a company goes up when the company threatens or actually files bankruptcy. so how does the stock go up,..only if Sprint offers a higher price. And Sprint already has locked up the 13% of SIG control shares at $2.97, so why would it raise the price versus simply following through and buying that slug at $2.97. There will be plenty of opportunities for Sprint to provide capital at economically dilutive prices.

    What I think will happen is that they delay the vote, and which forces CLWR to take another $80MM, and then let CLWR miss its coupon to use its 30 day grace period, then delay the vote again and take another $80M, so now CLWR has gotten $160M towards the $260M coupon. Then let the vote fail (or maybe the gnats will be tired by then). Lastly by that time, the lock-up expires in November and just wait. ClWR aint going anywhere. Just keep it on a leash..
    May 17 08:58 PM | 3 Likes Like |Link to Comment
  • Clearwire (CLWR) receives yet another alternative financing proposal from a money manager. Hedge fund Aurelius Capital is offering Clearwire $80M in convertible debt financing as a replacement for the funds it's receiving from Sprint (S). Last week, Crest Financial offered Clearwire $240M in convertible debt financing. Though taking Sprint's money and still officially supporting its $2.97/share buyout offer, Clearwire still hasn't made a final decision on Dish Network's $3.30/share bid. [View news story]
    Too bad that the company already has a contractual agreement in place. any alternatvie financing requires the approval of the majority shareholder (Sprint) and Sprint has pre-emptive right on any equity financing or equity-linked financing anyway. The merger agreement only gives CLWR the option of taking a draw from Sprint or not, it doesn't have the option to take any alternative form of equity-linked financing to Sprint without Sprint's consent. CLWR is also contractually obligated to take the merger agreement to a shareholders vote; the only recourse at this point is for the special committee of the board to withdraw its recommendation. Notwithstanding any withdrawal, Sprint can terminate or choose to take the shareholder vote to conclusion. The merger agreement is only terminated if the non-sprint shareholders do not vote affirmatively for the merger (i.e. an abstention is a No vote). Upon completion of the shareholder vote, and assuming minority shareholders have not voted for the merger, then Sprint will complete its purchase of the shares held by the other CLWR strategic investors (the cable guys) and will have locked up defacto negative control (nothing strategic or financing can be done at CLWR without Sprint's consent). In addition, the original trading lock-up that was put in place originally at CLWR will expire in December this year at which time, Sprint is free to purchase CLWR shares in open-market purchases and to accrete ownership or not as it sees fit. Alternatively, it can execute the same asset stripping deal that Dish wanted to pursue, which is to use the monies that Sprint didnt have to pay minority shareholders and instead cherry-pick 40mhz of the contiguous BRS spectrum at the same price as Dish's proposal, and use the monies to retire CLWR debt or otherwise to make CLWR spend it to build out "hot spot" network supplement to Sprint's 1.9ghz LTE network at Sprint's bidding since Sprint is the only customer of CLWR's network anyway. Once stripped of the contiguous BRS, the remaining CLWR spectrum consists of some remaining BRS and the leased EBS spectrum and the shares will go down into the 1's as Sprint simply parks the spectrum until the recalcitrant shareholders say "uncle". After Son takes over Sprint, he's got brass knuckles and balls, and he's not going to play nice with these activist shareholders. Minotity shareholders are "minority" for a reason.
    Apr 10 11:20 AM | 3 Likes Like |Link to Comment
  • Netflix: A Glass Half Empty [View article]
    Is there only 1 channel on television? Despite all the wonderful programming that HBO has, has it put Showtime out of business? has it affected HGTV, or even low-brow fare of REal Housewives of [name that city].

    Netflix is another programming network that aggregates, curates, distributes content from partners who have decided that distributing through Netflix is one of their best means of monetizing that content as evidenced by what NEtflix is willind to pay (funded by its subscriptions).

    Despite 400 other channels that any viewer can watch, and held hostage to a distirbution model via MVPD gatekeepers that extract 50% of revenues, HBO makes $2B a year for Time-Warner.

    Just exactly where does a big money new entrant buy their programming - the exclusive movie studio output deals are locked up as "exclusives" (look that up in the dictionary if the meaning is confusing). Even the faux exclusive of PAramount/Lionsgate/MGM is pre-committed to Epix and only subsequently avaialble on non-exclusive basis in a pay cable 1.5 sub-window.

    Even among hand-me-down back season TV broadcast programs, some of these are being locked up as exclusives. So you think Google would convince HBO or Showtime to sell their back season content?

    Netflix is no different than any other paid subscription channel OTHER than its delivery system currently bypasses the MVPD gatekeepers (except Apple TV acting as a billing agent) and it is not wed to a linear broadcast model limted to appointment viewing -- that's teh power fo a Subscription Video On Demand. Others can do the same thing, they just need to spend a lot to capture new subscribers, go at risk for licensing content, and then pray alot. Hulu has developed a niche of same season television (catch-up TV) and with balanced ad-supported and subscription model. Amazon, bundles it as part of its shipping bundle but no matter how aspriational it wishes to compete, it's not going to get access to Disney's studio output until the next decade or Sony's output (since it jsut renewed with Starz), or Lionsgate films for pay cable 1 (currently commited to Epix until 2015 which then switches to Starz for another long-term window, 5yrs?).

    If you want to buy a name for cash flow, buy AAPL, or an utility -- others may wish to invest in something with continuing growth opportunities such as AMZN to reinvest contribution. If you don't like the fact that Netflix is executing a strategy of pre-emptive international expansion and investing cash cow cashflows from mature DVD biz, then sell the stock or short it. I want Netflix instead to go faster, spend more monies to lock up ever more content, grow its footprint like a banshee, and create substantional barriers for entry. The debt investors who fought among themselves to be allocated part of the $500MM and the pleasure of a 5.75% fixed return understand the investment contemplated by the business model -- and I applaud the company for taking that money, and hopefully spend it on more content and faster geographic expansion, so that shareholders can reap that return 5 yrs, 10 yrs from now. A they say, "we've all seen this movie before"
    Feb 13 01:13 PM | 3 Likes Like |Link to Comment
  • Clearwire's Options Are Arranged Or Forced Marriage [View article]
    DISH's dream proposal is not a real "offer" if it's contingent on events that will not happen (i.e. Sprint agreeing to give up its governance rights and let DISH strip the assets first and then suck the economics out of CLWR afterwards) or where it only needs follow through conditioned upon that the world is flat.

    DISH's proposal is only the illusion of an offer (which is really a non-offer) in order to asset strip CLWR for its best spectrum (presumably the contiguous EBS channels) and leave CLWR shareholders with an obligation to spend money (i.e. to build to DIsh's specifications) leaving a pile of debt and burdensome lease obligations (both spectrum and towers) for CLWR shareholders.

    DISH's "offer" is "Let me take the better, smarter, and more attractive kids, along with the fancy cars, and all the jewelry" and leave the frumpy wife with the mortgage and credit card debts and the sick smelly dog" with the promise that "I'll be sure to come back to take you from this mess, but only if you convince the bank to give up their claim and you convince the neighbor to give up his rights,...and oh by the way, please keep on sending me checks to educate the kids and to pay for the chauffer to my fancy car". Oh and if you can't get every one of these unachievable conditions satisfied, DISH has long absconded with the best assets and says as the Japanese say "sayonara"..

    And why would the CLWR board agree to this Frumpy Wife Trade?

    Answer: they wouldn't but they will do the best they can to use it as a stalking horse to convince Sprint to bid against itself. Sprint may just be dumb enough to do so, but it's really Softbank's money and maybe Son doesn't feel like being a chump.
    Jan 29 02:23 PM | 3 Likes Like |Link to Comment
  • Netflix: The Long Term And The Short Term Of It [View article]
    Unfortunately you simply don't understand the business model.

    The studios did not invest in Hulu Plus. The Media conglomerates who own Hulu (from Day 1) includes News Corp (Fox), NBC Universal -Comcast, and Disney.

    Of course Disney just entered 10 yr exclusive output deal for its studios with Netflix (following expiration of its output deal with Starz), and did non-exclusive catalog deal, and a non-exclusive exclusive for its Disney branded content (to supplement Disney channel) distribution.

    Oh Warner Bros studios did exclusive prior season deal on its serialized dramas such as Revolution and the Following (which both appears on competing NBC broadcast network for first run broadcast).

    Oh and NBC-Universal's Universal Studio's actually has long-term output deal with HBO for its studio product - despite the fact that it also owns equity (but now passive) equity interest in Hulu.

    News Corp's Fox Studio actually also has long-term exclusive pay cable 1 output deal with HBO that's up for renewal like 2016/2017 time frame.

    That's because Hulu is positioned as same-season (i.e. current season) "Catch-up" TV, and CEO Jason Kilar just resigned because he could not get the support that he felt was required (i.e. money) in order to grow Hulu, and the owners themselves had differing strategic visions of what Hulu is.

    HBO is most similar to Netflix in that it is both a distributor of exclusive studio output deals (Warner, Fox, and Universal and actually lost its Dreamworks Animation output deal to Netflix last year) as well as so-called "original" programming (both drama and sports verticals such as boxing), as well as some catalog product and late-night content (for its Cinemax patform mostly). But the difference is that HBO is currently reliant solely on MVPD's that suck 50% of the subscription fees as gate-keepers. That's why it is testing a direct-to-consumer strategy in Scandinavia in following Netflix in that country. BTW, "originals" simply they pay for the development and production,n ot some magic sauce -- every one of their originals has been pitched to most of the studios and actually are produced by some of those studios as well.

    So bottom line, Netflix, ;like HBO, Showtime, ESPN, Hulu, ABC, CNN, etc. is simply another programming network. All of these differentiate themselves based upon programming content, distribution strategy, and degree of "Exclusive" and non-exclusive content. The difference is that the traditional programmer broadcasts "linearly" -- one piece of content at a time for each channel slot. The only time-shifting was performed by the consumer on his dVR. This is evolving given the capabilities unleashed by broadband and the internet and cloud storage capabilities, to a consumption model that has nearly infinite channels since it is an on-demand model that let's the user pick what he/she wishes to watch when he/she wishes to do so. In that world, the actual size of the library becomes and important differentiator,...because it enables small niche programming, such as bollywood, b-movies horror genre, or military history, etc. to find its audience.

    Most pundits who talk about competitive threats seem to think there is only a winner-take-all world and dont understand that networks are distributors of content and often-tiemes includes counterprogramming (i.e. program something that's different or which others dont have). In their world of competition, there is no Starz, Epix, Showtime, Encore, Movie Channel, because there is already a HBO. OMG, how can a Fox ever establish a network when there is already ABC, CBS, and NBC,...let alone a CW with programming targeted to teenage girls like Gossip Girl and Vampire Diaries. or ABC Family channel with ti s set of programs which are totally different than its Disney or DisneyJr products.

    A programming network is a distributor -- it curates and selects and underwrites/funds programming that it believes can find an audience, either to sell eye-balls (ad-supported) or via subscription/retran fees (or ideally both). Netflix is no different but what is different now is that its US distribution just surpassed what HBO took 30 years to build, and what Netflix added in one quarter is what took HBO over the past two years to grow (while being dependent on MVPD's and charging 2.5x at $18/mo "rack rate). HBO is desperately trying to figure out alternative direct to consumer distribution without getting into fight with its existing cable operators. It looks at the value of its content and the brand positioning where it sits, and it sees the huge amounts of monies that is leaking to the cable operators, and it wonders how it can go direct-to-consumer before Netflix laps it again.

    Disney was not dumb. It chose to align with Netflix because it knows the maximum monetization of the value of its content is to leverage the strength of those with the greatest distribution and that would be Netflix, because that distributor would be in the best position to pay the most.

    Netflix is going a 10 bagger over the next 10 years. because there is no competition that is anywhere close, and content deals are either very long-term such as studio output deals or medium term for television syndication (and even those upon renewal, the guy with the largest subscriber base can CHOSE to pay the most if he wants -- but as oppose dot broadcast networks who must rely on ratings, an internet distributor SVOD operator knows an infinite amount of information and the value of every piece of content).

    That is why you are only seeing the beginning of the Netflix story - it's like HBO in 1980, the next 2 decades is going to be the opportunity of a life-time. Sony Columbia is up next, and Time-Warner has to really think twice whether to allow Warner Bro studios shop its content to auction (where Netflix is already the preferred partner for Warner Television Studios) or let it "sell" it at 1/3 the price internally to HBO. That's an interesting debate to be had.

    Streaming is not a "business" but rather an enabling technology for a programmer to distribute content without gatekeepers. Those who confuse different "streaming options" as competitors are blissful in their ignorance of what the new media paradigm that is simply a variation of the old. After-all, except in North Korea maybe, does any one really believe we live in a world where there is only one channel on TV?
    Jan 27 06:09 PM | 3 Likes Like |Link to Comment
  • Android Is Dead - Part 6: Nokia Triumphs [View article]
    But Larry Page pissed $12.5B away on Motorola because he didn't know that Standards Essential Patents are useless in a patent war by a practicing entity (rather than a troll). That's because the counter-party can sue you to kingdom come too but because all SEPs are FRAND encumbered, only the guy with non-SEP IP has ultimate leverage.

    Anyway, we'll have to wait another year for GOOG to generate another $12B of cash for them to piss away on driverless cars, geek-wear eye glasses, or asteroid mining ventures.

    "Do Only Evil" -- that's the ticket.
    Jan 10 06:51 PM | 3 Likes Like |Link to Comment
  • Motorola Mobility (GOOG) has agreed to license some of its standards-essential patents to Apple (AAPL) in Germany. The deal doesn't cover Motorola's non-standards-essential software patents, one of which led to a German iCloud ban, and 7 of which were recently asserted in an ITC complaint. The deal could be a way for Motorola, which is in a better patent position than Android rivals, to appease regulators worried about its use of standards-essential IP in patent suits. (earlier[View news story]
    Appple and Microsoft have always been willing to license Standards Essential Patents on FRAND terms. Motorola wasn't willing to license it except to demand 2.25% royalty on the end product value for what it calim was FRAND rate. So a $75K BMW automobile with built-in WiFi via a $1.25 chip would in theory should pay Motorola a royalty of $1700 for each automobile tha thad a built-in wiFi capability. It was a totally absurd position attempted by Motorola to leverage into a cross licensing agreement from the counter party that party's non-SEP patetns that are not subject to FRAND obligations.

    Essentially the court room gymnastics in Germany forced Motorola into the positon to agree to license its SEP patnets (since it was arguing that it was fulfilling its FRAND obligation requirement to all licensees) at a rate to be determined by the court to be appropriate for FRAND. It now doesn't have any counter balancing hammer fight against Microsoft and Apple. Apple just won a final injunction against Motorloa today on another non-standard essential patent and can pay a bond to force Motorola to not only stop selling teh offending android products in Germany but to also recall those that it has already sold.

    The noose is tightening around Android every day one little bit at a time. While Microsoft is willing to be bougtht off for licensing fees (to make Windows Phone OS relatively more attractive to OEMs) but Apple's objective is not money but primarily focused on maintaining product differentiation by forcing Android OEM's to deliver product that are noticeably different than Apple iOS devices.

    Unfortunately, Motorola doesn't have much other than the FRAND stuff, although it recently just launched a second wave of non-SEP patents to attack Apple. Presumably it finally figured out that its strategy of using FRAND encumbered SEP patents was going to get no where fast (although MMI had already ripped off Google for $12.5B in cold hard cash by waving its SEP fanny at Larry Page who was too ignorant to know the difference -- too bad for GOOG shareholders).
    Sep 13 03:03 PM | 3 Likes Like |Link to Comment
  • Amazon's New Epix Deal: The Death Of Netflix? [View article]
    Epix content was already "non-exclusive" since it was already on Epix and available through Epix HD's streaming. Besides Amazon Prime, Epix will also likely be licensed to Verizon's RedBox Instant as well. The net result is that this will LOWER Netflix's cost for Epix content --- while it will help Epix, as multiple non-exclusive licensees are expected to pay more in the aggregate than what Netflix was willing to pay Epix for the faux-exclusivity. Most of these writers evidently don't actually subscribe to any of the services that they write about. Their brain is too small to think about that maybe the programming world is not a zero sum game. Our household subscribes to each of Hulu Plus, Netflix, and Amazon Prime, and we also get Epix HD (only on our two TV's connected to Roku streamers, but not on the 3 other TV's connected to Apple TV boxes), along with each with access to HBO, Showtime, and Starz channel pkgs from Verizon's FiOS.

    Anybody that actually uses Amazon Prime knows that Amazon's strategy is to inter mix its Prime Instant Video content (free with SVOD) with much larger library of its PPV (rental ala carte) offerings. It's really somewhat annoying, as opposed to Apple TV, where I know when I go to iTunes, I'm looking at pay-per-rent offerings, but that I can go to either Hulu Plus or Netflix for my subscription offerings. On Amazon, I'm instead constantly didsappointed by which program that i clicked instead is a pay rental rather than part of my Prime subscription.

    So the "death of Netflix" blah, blah, blah is so much ado over nothing. You are not going to wrestle away Netflix from my kid's iPads and get them to watch Amazon Prime (oops, forgot, Amazon Prime is not available on their iPads) because the content they watch isn't on Amazon Prime, and even if it were, they are perfectly happy with what they already have from Netflix in terms of user interface and ease of use, and this despite the fact that we are ALREADY Amazon Prime subscribers as well.

    Why don't we get rid of one streaming service offering versus the other then? Because they do different things and are imperfect substitutes (and always will be given the licensing regime) for each other! I can't get free shipping with my Netflix subsciption for my Amazon purchases, I can't get decent streaming selection, quality user interface, and access via the various devices that are conencted to our various TV's to use Amazon and in order to cancel Netflix, and I can't get rid of Hulu Plus because it offers current-season catch-up TV and last season whole season binge/discovery viewing of key broadcast networks. Although I can only stand so much of Hulu because it forces us to watch ads but it will never be replaced by the other gusy given how the content is split among the different platforms. And for what, to save $8/mo - easier for me to cut out Starbucks one day every 2 weeks instead.

    The whole point is that none of these streaming "networks" are direct competitors to each other and will each evolve to find a content library position thatare complementary and which serves their own best self-interest to maintain and expand their subscriber base, not a mutually exclusive market. It's the silliest thesis to think that Amazon getting 20 recent movie releases a year that Netflix already has will be the deathknell of Netflix, or any one else for that matter and reflects a lack of knowledge of what each of these streaming networks' value proposition actually offers to the customer.
    Sep 12 01:00 PM | 3 Likes Like |Link to Comment
  • Sprint Raises Additional Debt To Fund Network Upgrades [View article]
    Notwithstanding the generic legalese disclosures about "general corporate purposes, including potential funding for Clearwire," Sprint raised $1.5 billion in new 2020 bonds and then the next day announced redemption of nearly $1.5 billion of Nextel bonds due in 2013 ($472MM) and 2015 ($1B). This was simply refinancing to push out maturity ladder in order to afford plenty of financial flexibiity nearer term. No more magic than that. You and I do that with our mortgages too.
    Aug 15 03:27 PM | 3 Likes Like |Link to Comment
  • With the next iPhone (AAPL) maybe just a few weeks away, Sprint (S) has quietly slashed the price of the 16GB iPhone 4S to $149 from $199. This could be a sign of weak demand ahead of a refresh, or it could be an indication Sprint is saddled with a ton of 4S inventory due to its purchase commitments, and is scrambling to clear it while it still can.  [View news story]
    or it may be simply, as Apple has done in the past with all its carrier partners, dropped the price ahead of a product refresh (since Apple always drops the price of prior generation products upon new generation release), so that Sprint is pre-emptively doing this. Manufacturers typically offer mark-down protection to protect price of retailers' inventory on price adjustments -- otherwise no one would take any shipments in front of a new product model release. This simply confirms that the iPhone 5 is coming soon.

    You have to realize that Apple already allowed the regional cellular carriers such as Alaska Telecom, Ntelos, etc to sell the 4S at $149 back in April. Now Apple allowing major carriers to do same to keep sell-through goign through the new product launch. Apple controls the retail price points that the carriers sell at.
    Aug 6 06:08 PM | 3 Likes Like |Link to Comment
  • Google TV? You Betcha! [View article]
    KC size market will cost $500MM to build, not counting operating losses. GOOG probably has a waiting list of mid-size and large cities that want to be next on the list.

    to answer the question of whoever presented the question, why doesn't TWC or T do the same thing. Answer is that it may require a total re-architecting of the network. and given that TWC's asset base enterprise value is worth $400MM (~100k subs at $4K/sub), to have to spend another $500MM for total rebuild, or even if 50% of that, it either devalues existing biz by $250MM unless there is incremental profit stream to justify the incremental capital investment. But if it requires a WACC of 10% for TWC, it is not clear that GOOG is not pricing its capital at its opportunity cost for its cash. Nobody in the industry believes that they can justify such an investment for the returns that they see from video MVPD and traditional broadband (even if you throw telephony at it for Triple Play).

    GOOG just blew away $12.5B of shareholders' monies for Motorola, which lost $233MM under 5 weeks of GOOG ownership; that annualizes to $2.4B loss per annum, so hopefully they will do major things to improve the situation and maybe get it to stop bleeding. So arguably, I would say that GOOG is perfectly happy to act like a drunken sailor and spend gobs of capital on zero or negative ROI investments in search of what it believes to be long-term strategic value. It is impossible for a dividend paying telco or capital disciplined cable MSO to compete against such an economically reckless competitor (or rather competing against a competitor willing to wreck the economics in the data pipe business because it believes that it can recoup profits by controlling the search and other monetization opportunities going through the pipe). It's pretty much, bend over, shut your eyes, and smile.
    Jul 26 11:48 PM | 3 Likes Like |Link to Comment
  • Behind Sprint's Recent Outperformance [View article]
    good if Abe you can get your facts straight. recent $2B bond financing were at 7% and 9.125% and both bonds are trading above par, meaning the yields are lower today, and thus any new issuance would be at lower rates. the undrawn credit facility caps out at L+400bps (that's 4.2% currently whre LIBOR is to help with the math) so that could be drawn to pay off-all the remaining maturities through 2013, except that makes little sense since the IPCS floating bond that matures in 2013 is at rate of L+212.5, or around 2.35% currently. more importantly, the remaining $1.6 maturities that remain for late 2013 and 2014 are Nextel bonds whose coupons are 6 7/8% and 5.95%, so replacing with vendor financing (just like what Sprint just did, $1B of vendor debt matched with $1B of prepayment of a late 2013 maturing bond) will actually be cash flow accretive, and certainly not the additional "$330M+/yr" as if current debt doesn't cost anything.

    Lastly, new vendor financing facility probably should be lower priced at lower spread than Sprint's credit facility since they are pari pasu and certainly no worse because OEM vendors have provided credit wrap (in exchange for them enjoying their gross profit dollars on the network vision project). so I dont know where you pulled your estimate of "north of 11% interest" from, but it wasn't based in market reality, or any familiarity with current market conditions.

    And yes basic tenet of corporate finance, notwithstanding your point of view, is such that one should explore vendor financing as it often represents an appropriate and attractive form of subsidized financing, since in essence the OEM vendors use their gross margin dollars to either buy-down the price or otherwise credit enhance the credit facility. Why do you suppose that if you finance you nice new car with the automaker's own captive finance co, you often get better financing rates than from financing with your local bank. So I dont particularly understand why you would criticize the company for taking measures to diversify its sources of liquidity and credit capital -- that's what any non brain-dead CFO should be doing to seek the lowest form of capital and to maintain diversified sources.

    anyway, I too look forward to signing off this post as well since it gets tiresome to try to be helpful to someone who just cant seem to get facts straight and only wants to believe what serves his own perspective. one last point, Moffat (bernstein) is a true mullat; when you start listening to an equity research analyst attempting to calculate implied default risk from CDS pricing, you might as well ask him about your horoscope or his predictions from the mayan calendar, because he is more likely to get those right before his feeble attempt at credit analysis (I'm sure that he can do brain surgery and fix your computer on weekends too).
    Jun 15 11:10 AM | 3 Likes Like |Link to Comment
  • If You Own Google, Watch These 3 Trends [View article]
    RM, the consistent pattern of "Do Only Evil" at Google seems to be a cultural bias that has it genesis from Google's market dominance in search. Google's succes in search breeds unrependent arrogance and instills delusions of immortality, and in the end, will undoubtedly sow the seeds of Google's eventual and ultimate downfall. I certainly agree with your sentiment of needing adult supervision at Google but I don't think that will happen because the corporate goverance structure at Google forces everyone to be locked-in to the Larry and Sergei show, for good or bad. I used to be a fan of Google and its history of innovation but was disgusted by the lack of corporate goveranance restraint that allowed Larry Page to throw away $12.5B of GOOG shareholders' money on MMI. It is a ridiculously stupid investment, and guess what, the shareholders can't do anything about it....other than to sell their shares and tune into a different channel. Such a shame. I've since sold all my GOOG shares and hard for me to see when I can make the case for buying it again because I simply have lost faith in who is driving the car (into the proverbial ditch at some point).
    Jun 5 12:51 PM | 3 Likes Like |Link to Comment
  • Can Windows Slam The Shutters On Google? [View article]
    GOOG/MMI and Samsung are the only ones seeking injunctions for Standards Essential Patents against infringers. Microsoft, along with Apple, (and I think Cisco) have all stated public policy statements that they will uphold fRAND principles and will not pursue injunctive relief on SEP, and each of Apple and Microsoft also stated that they would require the same for any assignees of their SEP's. This is far different than the tactic that GOOG/MMI is pursuing that has found it in the crosshairs of EU Competition review.

    FMueller points out that GOOG itself assigned some patents to Mosaid ( so this is funny that GOOG would complain about NOK and MSFT doing same.

    It is only going to be a matter of months before GOOG/MMI gets its hand slapped hard on abusing SEPs (Western District, EU, FTC intervention at ITC) . Then the fun will begin. AAPL, MSFT, RIMM, and NOK dont seem to have a problem not suing each other (at least AAPL and NOK settled with each other since 2010 with mutual detente bi-lateral licensing); why do you suppose it's only Android devices that have bore the brunt of the industry's wrath. I guess the boys from Googleplex never memorized the commandments that said "thou shall not steal" before their "Do Only Evil" motto.
    Jun 1 06:22 PM | 3 Likes Like |Link to Comment