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porthos

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  • Why Netflix Is A Solid Buy [View article]
    comcast is a thumbs down
    Oct 30 06:01 PM | Likes Like |Link to Comment
  • Netflix: Love The Company, Hate The Stock [View article]
    netflix double counts the dual membership. Customer count was 33 million. I think it's unfortunate they quit reporting unique paid subscribers and churn. While the number of subscribers is impressive it's hard to know exactly what is happening. There were free memberships handed out with a Google product and there will be more free subscriptions that go along with some set top boxes to further obfuscate actual paying subscriptions
    Oct 21 03:45 PM | Likes Like |Link to Comment
  • Netflix: Dare To Short This Momentum Stock? 25% Downside Coming [View article]
    ""Valuation is based on future sub growth and the company sees significant possibilities of penetration in the US with an objective of 60-90 million households. ""

    Last I read on hi-speed internet households, there were 88 million in the US. Can they actually get more than 100% of US households as subscribers? Maybe NFLX will scrape up excess subscribers through purely mobile wifi enabled devices. Never have seen any cable or other media delivery business penetrate more than about 33% of the US market. I think the pricing for the stocks expects them to capture 100% of available consumers in the US and hit HBO-like numbers internationally.HBO has around 114 million total subs and 70 million are international
    Oct 18 09:53 AM | Likes Like |Link to Comment
  • The Big Stock Principle [View article]
    this is a great article

    Thinking a lot about companies like Tesla and Netflix that is the other Big Stock that could be included in this article.

    There have been reams of cyber print wasted here and elsewhere trying to make a case for the actual value of Netflix (or Tesla or AZ take your pick) and why the $XX price at any particular time is absurd. Valuation is a total waste of time and effort--I should know I tried to value Netflix for a couple of years

    The author is dead on --value is irrelevant and valuation exercises are futile.

    I call these Story Stocks but same idea. They are in newish (electic cars and streaming are not new) areas of business with charismatic leaders having a brilliant command of PR-- the addressable market is an unknown but perceived to be limitless. The 1990s internet and tech stocks fit the description perfectly. As long as there is growth in whatever metric investors regard as key, the stocks move up. Find that metric and you can invest with great results until the measure begins to fail. For Tesla it's number of cars sold and guidance for numbers to be sold quarter to quarter.

    For Netflix, it's subscriber additions. As long as those move up in the high teens to 20%, all's well at Netflix and $300 per share is no more ridiculous than $800 per share. It doesn't matter what the PE or the price is. When Netflix lost subscribers it went to $50 -- a very clear demonstration of what investors consider key

    I think you could put Priceline in here too.

    What is the next Big Stock going to be?
    Oct 3 10:09 AM | 3 Likes Like |Link to Comment
  • In spite of Amazon Prime's (AMZN) content-licensing binge, Netflix (NFLX) still offers a much wider selection of the most popular TV shows, says Piper. The firm estimates Netflix offers 33% of the top 75 TV shows from the last 4 years, and Amazon just 7%. Hulu Plus offers an even larger portion (44%), but they come with ads. The gap isn't so great for recent movies: Piper estimates Netflix offers 14% of the top 50 movies from the last 3 years, and Amazon 11%. Movie-only Redbox Instant (CSTR, VZ) is said to offer 10%, and Hulu Plus none of them. (NPD market share data[View news story]
    you missed the point--without subscribers to cable and advertising there will be no new content for Netflix to buy as reruns. If all subscriptions to cable were stopped today and no company in America gave networks ad dollars, producers would have to rely on Netflix Amazon and Hulu to pay for the new stuff. They can't afford it. It's not a matter of waiting for a year or so , it's who is paying the artists the directors etc to make the programming. Netflix can afford around $2 billion per year and still break even--doesn't come close to covering everything people want to see. They can't afford to fund the flood of new stuff coming out daily. You need subscribers paying big bucks (not $7.99) and advertising to float the cash to cable to buy product made by studios and networks.Netflix left to its own devices can't afford it--they can do a handful of series per year
    Sep 27 10:30 AM | Likes Like |Link to Comment
  • In spite of Amazon Prime's (AMZN) content-licensing binge, Netflix (NFLX) still offers a much wider selection of the most popular TV shows, says Piper. The firm estimates Netflix offers 33% of the top 75 TV shows from the last 4 years, and Amazon just 7%. Hulu Plus offers an even larger portion (44%), but they come with ads. The gap isn't so great for recent movies: Piper estimates Netflix offers 14% of the top 50 movies from the last 3 years, and Amazon 11%. Movie-only Redbox Instant (CSTR, VZ) is said to offer 10%, and Hulu Plus none of them. (NPD market share data[View news story]
    ""I know that some on these comment pages argue that the cable and satellite model is still strong. But those who have broken free from the cord will never go back to paying the big bucks that the cable and satellite services have been getting. And that goes double for many younger folks who never had a cord arrangement. ""

    The only things making Netflix able to stream content to cord cutters are subscribers to cable/satellite services and advertisers that have fed money to cable companies so cable companies can buy from producers. They will pay the freight for the nearly $120 billion that content costs are estimated to cost this year--not Netflix. If cordcutters are going to rule the world they are going to have to settle for year+ old content and House of Cards, Orange is The New Black, LillyHammer, Hemlock Grove and one new season of Arrested Development. Until Netflix can foot the entire $120 billion they can continue to benefit from a secondary market funded by cable subscriptions and ads. Either that or Netflix can start charging $3428 per year per subscriber for the present 35 million subscribers
    Sep 26 09:57 PM | Likes Like |Link to Comment
  • Is Netflix A Buy? [View article]
    the margins cited are deceptive

    Combined streaming gross margins using the cash cost of the content and not the reported figures gives a gross margin of 15.4% and an operating margin of 1.1% and that's just marketing and not tech expense and administrative. You can be sure full operating margins and net margins are negative for streaming and that's due to the impact of cash expenses of cost of sales. These have to be calculated--they are not given.

    DVDs have great margins but sadly DVDs are vanishing and total subscribers in Q2 were 7.4 million but that is double counting subscribers that are DVD only and combined. And it's down 2 million from Q2 2012. DVDs have 51% gross margins and 49% operating margins that include marketing only. It's a given that DVDs have positive net margins and positive operating margins that include tech and administrative.

    It's not wrong to put the cost of content in CFFO and as an asset on the balance sheet--it is capex. You just have to use the information they now thoughtfully provide to see how streaming is doing and how its margins and costs look. So far not so good.
    Sep 26 05:54 PM | Likes Like |Link to Comment
  • Netflix: The One Metric Nobody Is Watching [View article]
    good research. Are there more recent months available after June on the chart?
    Sep 23 04:13 PM | Likes Like |Link to Comment
  • Coach Vs. Kors: Who Will Win The Handbag Wars? [View article]
    coach has 58% of the business in handbags with 23% in accessories and 11% men's. Kors is only 16%. In a sense they are not bag competitors. Shoes, watches and jewelry are 84% of Kors business.

    Kors is affordable luxury with watches between $200-$450 and in no way do they comp LVMH starting at $3K going up to $50K. You have to appreciate them for what they are and thats aspirational not the Rolex crowd. They have a long way to run and growth is phenomenal
    Sep 14 01:00 PM | Likes Like |Link to Comment
  • Time To Punch Your Netflix Ticket [View article]
    valuation is irrelevant. That's not what keeps the stock moving up. It's counterproductive to even try to value it.
    Sep 12 03:05 PM | 2 Likes Like |Link to Comment
  • Netflix's Q2 Was Fine; The Stock Is Just Expensive [View article]
    rate of sub additions slowed considerably as co cut marketing. Raising margins is great but at what cost?
    Aug 1 05:59 PM | Likes Like |Link to Comment
  • Why I'm Long Netflix [View article]
    ""Folks, so much of the good stuff will NEVER make it to Netflix streaming!""

    The streaming content library is smallish compared to what Netflix offered with the DVD service. DVDs were cheap --most expensive capex year was $223 million. The acquisition of streaming content in 2012 was $2.5 billion of which $762 million went to liabilities and the rest was cash paid--$1.7 billion. The deep and obscure library that brought them subscribers gives way to sorting out the most viewed shows and cutting the rest. This is not what Netflix used to be about but that's the economic reality of renting series and movies from producers. Every time they re-up or have to decide to re-up on a contract, dollars dictate and the library shrinks. Without pricing power of their own and the box they are in at $7.99 per month, this will be the new Netflix reality until competition fades and that seems unlikely
    Jul 25 07:31 PM | Likes Like |Link to Comment
  • Ponzi Or MLP? Linn Energy's Unsustainable Distributions [View article]
    you need to read better:
    ""
    Historical GAAP cash flow from operating activities was sufficient to cover the distribution with only one material reconciling item, premiums paid for derivatives, in calculating the non-GAAP financial metric of distributable cash flow (“DCF”). As stated before, LINN views puts as a “capital” cost and considers the premiums it pays for derivatives as part of the investment in its business.""

    CFFO will cover distributions sans premium expense. If you and they regard premium expense as a capital cost then by rights it goes one section down in cash from investing along with acquisitions and investing in PP&E. Placed there, it does not impact CFFO and CFFO will cover distributions most years. Read more carefully. In your linked rebuttal from Linn they clearly say they are adding back the premium paid for derivatives.

    You seem to have real difficulty wrapping your brain around distributable cash flow vs free cash flow. The company distribution exceeded distributable cash flow one time in the last six years. Repeat after me--MLPs/LLCs do not base distributions on either cash flow or free cash flow. If you believe you are an instrument of change because you think it's deceptive, don't hold your breath. It's not going to happen. The non-GAAP DCF works for these companies

    If you want to talk about irresponsible fiscal policy in a growth company paying a dividend, that's a different discussion. Linn elected to go the tax-advantaged LLC route and as such they are required to pay cash to unit-holders. It is different than electively deciding to pay the shareholder a dividend you can't afford.

    Unlike C-corps, LLCs distribution is not based on free cash flow and never will be until the laws governing MLPs are revoked or changed. I don't think your series of articles is going to initiate that change. With the lack of clarity and detail and cursory reading of their filings that you seem to have and do, your articles lack credibility.
    Jul 13 11:30 PM | 2 Likes Like |Link to Comment
  • Linn Energy: Many Ponzi-Like MLP Blow-Ups To Follow [View article]
    this article contains so much charged emotional language and Wall Street jargon, it's nearly impossible to read. It fails to bring any understanding to the LLC/LP segment of O&G at all.

    Taking on debt and selling equity to pay a distribution is not a Ponzi scheme. With low interest rates on debt and O&G assets on sale from companies like BP and CHK, it has been a good time for the strategy. Linn only came into being in 2003 and is in high growth mode.It has been the beneficiary of low borrowing costs and a big inventory of for sale fields to choose from and it would be stupid for them not to take advantage of that environment

    You could argue it's fiscally irresponsible for a growth company to pay a distribution and maybe Linn would have been better of as C corp. But unless you are reading and analyzing their tax filing that are completely different than the SEC filings, you really have no business saying anything about what they should be distributing in the way of taxable net income. They cannot hold cash or keep net income without getting the tax bite passed on to unit-holders. This makes them cash poor and unprofitable. It doesn't mean that their strategy is a Ponzi scheme or even unsustainable.

    the SEC is informally looking at the non-GAAP accounting for distributable income. If you would look across the peer group--BBEP,LRE, QRE--you will see they all use a nearly identical formula and there is no line item for derivative expense for anyone. As a non-GAAP measure, I see little recourse for an SEC intervention unless they decide to redefine non-GAAP and try to turn into a GAAP requirement. Distributable cash flow is not intended to be a proxy for free cash flow. Investors looking for sustainable dividends should look at free cash flow and if they don't, it's not Linn's problem. Linn has never claimed it can support distributions from free cash flow. They state very clearly in their filing distributions will depend on debt and equity.

    As such, the distributions with any LLC/LP will depend on how much net income there is to distribute by law. Again, if you are not using their tax filings for your insight, you have no idea what that is. Taxable net income will fluctuate and as investors we can expect the payout to do likewise. Linn does not promise a sustainable ever-increasing payout.
    Jul 7 10:21 AM | 2 Likes Like |Link to Comment
  • "Netflix (NFLX) has exploded the old broadcast television format," says Tero Kuittinen, discussing the implications of Arrested Development's use of a unique/complex episode structure. "Entire 10-episode cycles can be created in a way that makes them far more elaborate and tightly plotted than anything network television can handle." There could also be implications here for Amazon. Though reviews weren't great, one study pegged AD's opening weekend viewing at 3x that of  the acclaimed House of Cards. Also: NPD estimates Netflix had an 89% share of Q1 U.S. subscription TV show streaming activity; Hulu had 10%, and Amazon Prime (AMZN) just 2%. [View news story]
    the downside of a network/netflix/amazon buying a total season (sight unseen in the case of house of cards) is that there is no room for error or tweaking of the series once it is underway. What you have is all you are going to get and it better be good or it will be a huge sink hole for cash. If a network strings out a series it can either be changed or cancelled if necessary based on viewing numbers. There is no such latitude in the series dump all at once business model.
    Jun 8 11:01 AM | 1 Like Like |Link to Comment
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