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  • Facebook F8 Wrap-Up: Bullish On Messenger And Oculus [View article]
    Instagram was a nice acquisition for the price. What's Ap cost five times as much and was a terrible purchase. Put it all together and Zuckerburg started out FB's public life by mostly blowing 25+ billion dollars plus selling 10 billion worth of stock himself. And yet Wall St worships him and thinks he can do no wrong. I dissgree and am calling the Emperor Has No Clothes.

    Facebook is a great company which cannot make much money, therefore the stock should be priced accordingly. And active users who spend nothing should not be valued at $700+, they should be valued at around $15.

    I am an active FB user for many years, and I can tell you this. There is a big scam going on inside FB to gin up the "active user" numbers. This in turn gins up the ad prices. The true number of active users who have any means of buying anything is much lower. And a large portion of the "active users" are pages FB activiates themselves automatically, plus tens of millions of phony bot pages (eye candy and click bait with no one home) plus pages which are ads themselves. PLus as many as half FB users are developing country poor people with no credit cards. And even those seem to be losing interest in FB.

    I estimate that the true "active user" number is 300 milion. That's a lot but 99%of them spend nothing on FB and they should not be valued at more than $20 apiece maximum. That would give FB a market cap of about 10% of what it has now even including a big premium for assumed future growth. But right now the stock price has perfect growth priced in for about 15 years, plus the assumption no one will ever successfully compete with Zuckerburg and Co. And that makes this the riskiest stock in the entire market. And just ask Elon Musk is all comic geniuses are perfect and never run into serious problems. Zuckerburg is a lot like Musk. And both have failed in China. Zuck may be learning Mandarin but the chances of FB ever getting richer in China are slim to none. But yes they are very popular in poorer countries where entire generations of young people have FB pages, active or not. With no money to spend, so almost worthless for advertisers.
    Mar 30, 2015. 11:29 AM | 1 Like Like |Link to Comment
  • Apple Could Go Down In The Class Struggle [View article]
    I completely disagree. Expect the luxury gold watch to sell out within minutes and be in high demand esp in CHina and the Middle East. And this adds value to the standard watch as it enhances the brand name as a luxury brand.

    History has shown that Apple customers actually WANT to pay more to get the best. Like no other brand, we have seen this over and over. It enhances Apple as the #1 aspirational brand on earth and explains why millions of middle or even lower income people are willing to skrimp and save in order to get the latest Apple product, then once they have it it becomes the most important possession they have.

    Nice try though.
    Mar 30, 2015. 10:50 AM | 8 Likes Like |Link to Comment
  • Facebook F8 Wrap-Up: Bullish On Messenger And Oculus [View article]
    You can be bullish all you want, but Oculus, What's AP, Messenger, Payments, you name it make no profit, and most dont even make any revenues, so this is all pie-in-the-sky aspirational vision by Zuckerburg and company and except for some modest revenue for What's Ap, none of these services yet make a dime, and it is also possible that some never will.

    What's AP also cost 19 billion which has never priced into the bottomline, so in effect FB has still not made any real profit yet. Meanwhile, the market cap of their stock now exceeds Disney, though FB has very few paying customers and seems to be betting everything on revenues from mobile ads and cramming as many ads and come-ons as possible onto facebook pages.

    My analysis shows that Facebook is lying about active users and also the value of these users. When you globe trot around the developing world as I do, you see that entire generations of young people in poor and developing countries have free facebook pages. This accounts for probably half their active user base. and these type of customers are almost worthless in terms of ad revenues or on-line purchases. Plus, I sense that even those kids are migrating elsewhere gradually, maybe to Instagram, but may also elsewhere and that process will always be ongoing and a big risk to Facebook. Quite simply, it is not that difficult for a new younger version of Mark Zuckerburg to emerge, nor would it be that difficult for Apple to crash the party with an ad-free social network of their own. But that is difficult is for Facebook to remain kings of social media, and at the same time to make any significant amount of money.

    Oculus is virtual reality and that may or may not be a craze in the future, but remember that Apple, Google and many others also have VR divisions and Apple's is top secret and probably tied in with their acquisition in Israel of the company that invented Kinect. If and when Oculus finally tries to make money, there will be stiff competition.

    Messenger and payments is being touted by Zuckerburg with his usual self-confidence and bragadoccio, but here again he is trying to compete with the big boys. And how on earth facebook can create from scratch a next generation Western Union without first spending billions is anyone's guess.

    Again, I know the developing world and in every country from Pakistan to COlombia every neighborhood has its Western Union agent, a bricks and mortars presence for decades and therefore trusted. Large amounts of cash being sent around the world must be 100% secure and reliable, and I simply cannot picture how facebook achieves this. Can you?

    The bottomline with facebook is that the reason they have 300,000+ active users per day (the real number when you subtract all the bots, scams, ad pages and third world kids) is that iot is all free. Costs nothing. SO the moment Facebook tries to charge you for getting these services, their active user base shrinks exponentially. ANd yet to justify even half their way over the top market cap (did I say more than Disney now?) they must start making 10 billion dollars a year at least in profits, and they simply have no realistic way of doing even half that.

    Also, I doubt top developers will be much interested in turning away from Apple and IOS where they get rich to helping Zuck with his free service. Zuck might have to pay them upfront. And even then he will only get second class Google type developers.

    Bottomline, with ad revenues alone (which may be peaking) even if Facebook can grow 50% per year, they cannot ever justify even half their current market cap. and if they don't grow 50%+ per year, which is more likely, the market cap and 80 PE become obscenely obvious evidence of a huge bubble, which will then burst.

    Already priced to perfection for 10-15 years, FB the stock has virtually no upside. But boy is there a huge downside. The book value of this company is only about $10 per share and with the premium it has earned (not pie in the sky hopes) maybe $30 per share tops. Plus, Elon Musk has started blowing it, and so can Zuckerburg. All iconic geniuses fail from time to time, even Steve Jobs did. and there are potential competitors to Facebook who Zuckerburg simply cannot beat, and the biggest one is Apple.

    Ask yourself this, how happy is Apple that Facebook is trying to get into mobile money transfers and payments? And who needs the other more, Apple or Facebook? Plus what happens when Madison Ave realizes that throwing money at Google and Facebook for ads isn't resulting in enough additional sales? What happens then?

    I have no position, and have never shorted a stock before, but if FB goes up to 89 I see it as a no brainer short similar to Tesla at $300 with a possible 50% upside. Great company and very popular (for now) on Wall St but the mostr overvalued major stock in the market, huge longer term vulnerabilities and increasing or unpredictable competition and bottomline, no real profits. Just remember FB has spent 25 billion on acquisitions, so subtract that amount from anything they have made in the last few years and you will see they are still well underwater.
    Mar 29, 2015. 05:33 PM | 6 Likes Like |Link to Comment
  • New Apple TV? Ask Why, Not When [View article]
    Please everyone be patient and trust Apple on their video revolution in progress. It all ties in with Beats and streaming music and internet and Homekit and everything else.

    My source in Hollywood (a VIP who used to run a studio) tells me that Apple has been developing this new quantum leap for years but the timing and opportunities haven't quite been right. They were negotiating some kind of a leap forward the Comcast (rumored anyway) but perhaps the Net Neutrality push by Obama stopped that. So now they are going in a new direction whereby they hope to blow away Netflix and Amazon and any others not by producing TV shows themselves, or creating games, but by paying and leveraging themselves into first-run position on everything they can get.

    HBO is the crown jewel of video content. They are making arguably the best shows on earth and though Netflix and Amazon have made nascent attempts to compete with HBO, and Netflix got lucky with two shows being hits, Netflix is wholly deficit financed. They have no real earnings yet because they are hocked up to their eyeballs to get this far. That is where Apple's muscle really comes in, as their mountain of cash enables them to outbid anyone for any first-run deals they want, and their HBO deal proves they are starting to do this and starting at the top.

    According to my source, all the studios who can will now fall into line for Apple, as well as artists in music and film, and some game makers too. There are a few temporary content lock-up deals Apple will have to wait to expire (Netflix and Disney the biggest) but expect Apple to grab that away from Netflix once it expires.

    Netflix made a great comeback from $55 a share, but all this time Apple has not been a competitor. Now they are, and except for in-house productions, Netflix will not be able to hold onto any advantages vs Apple going forward. Sony will probably also resist since they imagine themselves a powerhouse in this game, but they too will fall by the wayside and either join Apple or be defeated by them.

    And remember, Apple TV has the ability to go global very quickly, whereas Netflix has to spend millions in borrowed money to try and expand globally, and this is a very difficult and risky process.

    I heard heard analysts say that Netflix cannot make true profits unless or until they expand globally and become #1 internationally as well as domestically. Apple TV has probably just quashed any hope of Netflix succeeding. In which case, Netflix could be back at $55 a share within a year or two and then perhaps even go out of business.

    Recent history has showed that while competitors vs Apple can survive for awhile, they are always relegated to the lower ends of the market where Android and Windows users of lower income levels are the norm. The lower echedlon then becomes a very crowded field with many companies undercutting others and even giving away products and services for free or next to nothing in order to gain market share. meanwhile, Apple is left alone at the top with the top 30% of the market. It used to be the top 10% but I think Apple's eyes are on 30%. Which is why they are now using Foxconn to start a huge new Android trade-in program whereby Foxconn buys and renovates Android devices (and others) in exchange for credit at Apple stores or Apple.com.

    This is how APple continues to grow , not just in market share, but in premium only market share and even better, in massive profit share. It will be the norm, and is already in some places, that while Apple has only 20-30% of the device market share, they have 90% of the profits. And this is how Apple makes so much money. This is also why AAPl is such a cheap undervalued stock whereas stocks like Netflix, Facebook, MSFT, GOOG and others who play in the same sectors are overvalued. I include FB because Apple recently bought a company that monitors social media metrics and they are also starting a big push into advertising sand hopefully search, so it could be that within a year or two, Google and Facebook's ad revenues could both be in big trouble.
    Mar 29, 2015. 05:13 PM | 13 Likes Like |Link to Comment
  • It's High Time For A High-End Apple TV [View article]
    Apple May Already Own Luxury Bauhaus TV Designer

    * See article below, that Loewe was bought by among others an ex-Apple executive. This may be Apple buying them in disguise. Lately it has been reported that Apple uses third party subsidiaries and agents to buy things under a different name than Apple as they do not want the world or the seller to know that Apple is involved. This is for trade secrecy as well as keeping acquisition prices down. It is well known that Jony Ives admires this kind of bauhaus design such as we see in Bang-Olufsen and I am quite sure that Ives has had a luxury "work of art" TV in mind for years, since Jobs was alive in fact. But Apple does not rush things. They will release a luxury TV when they are good and ready and in conjunction with a big upgrade to Apple TV's box, first-run content deals and delivery system. Only then does it all fit together and become "wroth it" for millions of affluent buyers to spend $1000+ for a TV.


    TV Maker Loewe Gets Investment from Ex-Apple + B&O Chiefs
    By Mike Wheatley 20 January 2014, 8:19 am BST

    Germany’s high-end TV manufacturer Loewe has announced that new investors will be taking over the business, in a move that should secure the company for the foreseeable future.
    Loewe TV
    The investor’s consortium is made up of the Munich-based investment firm Panthera GmbH, as well as former Apple and Bang & Olufsen executives Constantin Sepmeier and Stefan Kalmund. The deal, which was confirmed on January 16th, means that the new investors will acquire a “significant part” of the company. The price of the sale was undisclosed.
    The announcement finally dispels any lingering fears that Loewe might fall into bankruptcy. News of its financial troubles first surfaced last summer, when it was revealed that the firm had applied for creditor protection. Some reports suggested that Loewe had in fact applied for bankruptcy, but the company contacted HDTV Test to deny this was the case, saying that the insolvency process was purposely initiated by directors in order to gain time to find new investors.
    According to the new owners, Loewe’s TV business will be restructured in order to target a “wider, younger, design- and tech-savvy base of customers throughout Europe, Russia and China.”
    Leading the company’s strategic realignment will be Jan Gesmar-Larsen, a co-investor and former head of Apple in Europe, who has now been appointed as Chairman of the Advisory Board for Loewe. The company said that he’ll be working closely with current CEO Matthias Harsch to bring its plans to fruition. Gesmar-Larsen brings with him a wealth of experience, having previously fulfilled a number of board and management positions with tech firms like Apple, Dell and Bang & Olufsen.
    “We want to develop home entertainment and digital lifestyle products to excite our customers with their design, ease of use and technology,” Gesmar-Larsen stated in a press release.
    Loewe’s new owners said that going forward, the company will focus more on high-end digital consumer products, and would foster a closer relationship with its Chinese partner Hisense. In addition, the company is planning to relocate its headquarters from Kronach in northern Bavaria to Munich, the capital of Bavaria state.
    Mar 29, 2015. 12:49 PM | Likes Like |Link to Comment
  • If You Think Amazon Is OverPriced Do Not Think Of Buying Facebook [View article]
    Twitter is also overvalued, but at least Twitter seems to have affluent adults as their active user base, ie people with credit cards who can use them. FB's active user base are 50% third world children, bots, juvenile scams, other advertisers and inactive pages which Facebook activates automatically by sending things like pics of the day.

    See those TV ads for "we'll create your own Facebook page for free. How cool is that?" Two things about that ad. It needs to tell us Facebook is still "cool", and it also admits that it will activate the page by sending comments and other posts to try and make it active. So you can see that Facebook itself is its own activator of pages.

    Also, the money sending service FB proposes now is a lot easier said than done. I would not trust it with my money until it has about a year of successful history without theft, fraud, snags or hacking. I simply cannot see how facebook can safely send my $1000 to Botswana, for instance, and the agent at the other end safely dispursing the cash. Western Union I would trust because they have so many agents and offices in faraway places. FB not yet. And even then, FB says this will be a free service, so it hurts earnings, doesn't create more.
    Mar 29, 2015. 12:29 PM | 1 Like Like |Link to Comment
  • If You Think Amazon Is OverPriced Do Not Think Of Buying Facebook [View article]
    The true value of FB is around $30 per share. And even that price assumes sector dominance for about 4-5 years, plus successful ways to monetize users (ie get them to actually pay for something) which so far does not exist. Ad revenues alone cannot create enough earnings to justify even $30. And the same is true with GOOG at $550.

    FB - 80 PE
    GOOG - 28 PE
    AMZN - 100+ PE
    AAPL - 13 PE
    MSFT - 15 PE

    Which is the best buy of that list? And who actually makes record breaking nose-bleed high profits? You do the math.
    Mar 29, 2015. 12:23 PM | Likes Like |Link to Comment
  • If You Think Amazon Is OverPriced Do Not Think Of Buying Facebook [View article]
    FB has a PE of 80, not 32. 32 might be reasonable, but 80 is way out of sight pricing the stock to perfection for about 10+ years. The $83 price or 240 billion market cap says that traders (not investors, FB is no longer an investment it is a momentum based flier) value Facebook active users who have any buying power (subtracting third world poor, bots, other ads, artificially activated pages etc.) at about $700 per user when none of them buy anything on Facebook. It also assumes there will be no competition for Facebook, Instagram and What's Ap for the next decade and that there are enough social media users in the world to propel each of these companies to 1000% growth. It also assumes that the 19 billion paid for What's Ap should be ignored because it isn't real money. FB is a strong sell or avoid or short. Because look at this one story today.

    "Meerkat works around Twitter social graph, Vine gets 720P update, and Instapaper adds 'speed reading'
    A trio of popular media apps received updates Friday, with live broadcasting app Meerkat gaining upgrades to compete with Twitter's Periscope, while Vine moves to 720p video and Instapaper adds Instant Sync and Twitter "textshots."

    THis story proves nothing except Facebook does have competition, and it can come out of anywhere at any time in any form. Apple could even start a social media division. Or the next Zuckerburg could emerge, which unlike the next Steve Jobs is fairly likely to happen.

    Amazon is a different kind of overvalued stock. It takes in a huge amount of real cash. And it has the power to raise or lower its declared profits at will. They simply have to raise prices and commissions a little. Of course if Amazon raises prices it can lose market share, but it has plenty of market share to spare.

    Both stocks I would avoid except maybe after sharp deep drops in price as a short-term trade. But FB is the most expensive major stock in the world now relative to its real earnings, and I have stated before, in actuality, Facebook has no earnings yet, since they have not yet paid pack their 25 billion in acquisitions, which except for Instagram seem to all be grossly overpaid for.

    If FB shareholders dont believe me, remember that there is only one ad-based service more successful than FB and that is Youtube, and we recently found out that even Youtube makes no profits. Because ad revenues are slipping and datamining ad revenue systems may already be at peak saturation points. How many more ads can they cram in without chasing away users? And what happened to the old Zuckerburg's manta to stay cool and not sell out? In the movie you can clearly hear that once a website sells out and becomes commercial, it can be no longer cool to young users (or olders ones).

    There is onme simple solution to these two stocks problems, avoid them, sell them and buy AAPl instead. AAPL has a 13 PE and much higher real earnings growth that is nowhere near saturation.
    Mar 29, 2015. 12:19 PM | 1 Like Like |Link to Comment
  • Why Google Should Acquire Level 3 To Grow Fiber [View article]
    No,. Apple does not need to buy anyone. And Goog cannot buy themselves out of this, they tried with Motorola.

    Apple has won the war. Everyone else is either a suirvvor or cannon fodder. And because Wall St doesn'te understand this yet (except Carl Icahn and a few others) the stock is still super cheap. GOOG has twice the PE of AAPL and Apple is growing ten times as fast. If Goog is still growing at all. Do the math.

    PS: Apple does not fear Xioami, their CHinese class B- copycat. Xioami is a CHinese government spying program. It is subsidized by the government targeted to chinese middle classers only. If they try to sell outside China Apple will sue them in a heartbeat for total obvious copyright infringement. But inside China they cannot sue. The suggestion that Apple should buy Xioami only makes sense if it is really just a 10 billion dollar government bribe. I know Tim COok would do that. He is ethical. And doesn't need Xioami anyway. Do Mercedes/BMW.Audi need Kia?
    Mar 29, 2015. 12:21 AM | Likes Like |Link to Comment
  • Why Google Should Acquire Level 3 To Grow Fiber [View article]
    Google has a lot bigger problems. First they need to come clean with Wall St. They are not growing anymore. They need to write off the Motorola loss. 9 billion worth. Then they need to stop trying to copy Apple and just accept they are a lower quality "works okay" system which should not try to be on the cutting edge. Otherwise they just throw money around pretending they can even clsoe the growing distance between themselves and Apple. Thios is a perfectly good $300 stock. It is not a $550 growth stock anymore.

    Sell GOOG and buy the company that is eating their lunch instead. You know which one.
    Mar 29, 2015. 12:18 AM | 1 Like Like |Link to Comment
  • Why Apple's Slow Response To Disruptive Streaming Music Market Matters [View article]
    Spotify will suffer enormously once APple Beats/ITunes releases its big new platform. for one thing, Apple will pay the most popular musicians more. That means Spotify is F'ed since they are cheap.

    Apple is the king of internet music. Make no mistake. Nobody is going to challenge their throne. And if they do, it will be very temporary.
    Mar 28, 2015. 08:57 PM | 1 Like Like |Link to Comment
  • Why Apple's Slow Response To Disruptive Streaming Music Market Matters [View article]
    Beats fones are one of the hottest brands in the world, more valuable than all of GoPro yet Apple bought them for a song. No pun intended.

    Remember Beats has a top of the line streaming service which Apple is transforming for them now. And Iovine is the Apple dealmaker in Hollywod now. And Dre is their man to woo top musicians to debut albums on iTunes/Beats. Put it altogether and looks like Apple got a 10 billion dollar company for 70% off.
    Mar 28, 2015. 08:56 PM | 6 Likes Like |Link to Comment
  • Why Apple's Slow Response To Disruptive Streaming Music Market Matters [View article]
    Beats will make more profit next year than Facebook and repay Apple's purchase price within two years. I sat next to the comedian Sinbad on the plane and he was a big early Apple music enthusiast. He told me the history of Beats and why the streaming technology was so valuable and important. Apple got a bargain. And they got Jimmy Iovine and Dr Dre for free, both opf whom are worth billions.

    COmpare to Facebook paying 19 billion for What's Ap which may never make a profit. Then do you really want to question Tim COok's judgement on this obvious winner acquisition? And if you are invested in some smaller streaming service, get out of the stock fast. Apple is going to announce the big Beats upgrade soon.
    Mar 28, 2015. 08:54 PM | 9 Likes Like |Link to Comment
  • It's High Time For A High-End Apple TV [View article]
    The integrated addictive IOS ecosystem is indeed Apple's secret weapon. As Icahn says it turns every customer into an annuity. Every year they will buy and upgrade more. And the numbers will grow and grow and grow.

    This is why the stock is so undervalued. One typical Apple customer is now worth at least $1500 in profit to Apple. If you do the math this shows AAPL should be worth over a trillion dollars. But instead, Wall St gives is a below average 13 PE (lower than MSFT and INTC) and a 750 billion market cap which is only 550 billion ex cash and real estate, about what Apple will be earning in the next 9 years.

    The Market treats AAPl with great disrespect. Other big tech stocks get priced to perfection for years, or in FB's, case, decades but never any premium for AAPL. APPL must always prove itself beforehand. The Market forces Apple to show it the money every quarter before they bid it up to the next step. And inbetween quarters they always diss and doubt it. Like right now. Why the 11 point drop in the last six weeks? NO reason. And no talk in the business media about how Chinese New Year just provided Apple with a second Christmas season, profit-wise.

    This underestimation of AAPL creates a nearly constant sharp upside. Another spike upward is likely to happen once again in late April and beyond, and then again and again. YUp two steps, down one, then up two again, etc. Because of this, AAPl is a strong buy even in a jittery market, especially on dips like we saw last week, and should not be sold below 180 unless it is a swing trade on margin or something.
    Mar 28, 2015. 05:47 PM | 6 Likes Like |Link to Comment
  • It's High Time For A High-End Apple TV [View article]
    If and when Apple makes a premium TV set, it will be a work of art. 2-3 years ago Apple quietly bought a German industrial design firm for Jony Ives and that company has patents on designs for futuristic ultra high quality TV's in the neo Bauhaus type style. Such an Apple TV will not be for everyone anymore than a gold Apple Watch is, but they could sell a few million probably, and if the price is $2000 and their cost is $1000 that is all frosting on the cake, and the piece de resistance for an Apple home and entertainment system.
    Mar 28, 2015. 05:43 PM | 2 Likes Like |Link to Comment
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