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William C

William C
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  • Standpoint not a fan of AMZN but ex-employee pushes the bull case [View news story]
    Standpoint had the courage to go against the crowd and the consensus buy rating. Like it.
    Oct 28 02:27 PM | 1 Like Like |Link to Comment
  • Consumer Discretionary Still Not Feeling the Love [View article]
    I disagree with your statement "consumer discretionary still not feeling the love."

    Over the past year, retail stocks have performed exceptionally well. Here are some returns for retail stocks over the past year:

    Fossil - up 228%
    Lululemon - up 193%
    Priceline - up 176%
    Netflix - up 140%
    Tractor Supply - up 117%
    Abercrombie & Fitch - up 113%
    Tiffany - up 103%
    Foot Locker - up 90%
    Limited Brands - up 90%
    Amazon - up 85%
    Polo Ralph Lauren - up 73%
    Coach - up 62%
    Signet Jewelers - up 62%
    JC Penny - up 59%
    Macy's - up 58%
    Bed Bath & Beyond - up 53%
    Dick's Sporting Goods - up 51%
    ....and many more.

    These are outstanding returns. The question is...can they sustain this strength over the next 12 months? Who knows, but right now you have to stick with these strong relative performers.
    Jun 28 12:55 PM | Likes Like |Link to Comment
  • Bill Miller Versus the S&P 500 [View article]
    Below is a "letter to editor" from Investment News written by someone else. I thought it was a good advice for investors who chase past performance.

    ========

    "Miller is a poster child for what investors should avoid"

    I had to read the article "Comeback Kid? Bill Miller vaults to the top of the fund heap" before I realized that is was touting the fund manager's one-month performance.

    It is very disappointing to have a serious investment publication run such an irresponsible article. Mr. Miller's story is a model for what investors need to avoid - buying past performance.

    Even if an investor invested Day One with him and experienced years of market-beating performance, they would trail the S&P 500 today. Of course, the dollar-weighted returns are even worse, as most investors had never heard of Mr. Miller until many years of market-beating performance had occurred and therefore missed many of the good years before buying in.

    Although I don't blame Mr. Miller, he is the poster child for why we should never sell past performance.

    xxxx
    President
    xxxx
    xxxx, Conn.
    Mar 24 04:20 PM | 1 Like Like |Link to Comment
  • Stop Losses Are for Losers: See Green Mountain, Garmin [View article]

    Chuck...I enjoy reading your articles but this time you're way off-base. Many investors have been damaged and more money has been lost because people are unwilling (or psychology unable) to sell their losers.

    The "true value" of a business is HIGHLY subjective. The world changes rapidly. Black Swans occur. No matter what you think a business is worth, the "true value" is what someone will pay for it at the end of the day and that, my friend, is the current price of the stock.

    More investors would benefit if CNBC would replace one day of programming with a static screen for 12 hours that says this…

    "To make money in the stock market, kill your losses."
    Mar 3 10:08 AM | 3 Likes Like |Link to Comment
  • Is Netflix Overvalued? [View article]
    Watch this video...

    A noted short-seller makes a strong case on why NFLX is massively overvalued and will coming crashing down in January.

    www.cnbc.com/id/158402...
    Dec 3 02:25 PM | Likes Like |Link to Comment
  • What Is Amazon's True Free Cash Flow? [View article]

    One day soon.....Amazon will have to collect sales taxes like most other online retailers. As reported in the 10-Q, the State of Texas is suing Amazon for $269 for back taxes from 2005 to 2009. Other states will follow as the cash-strapped governments need the money. The WSJ article is below.

    Note that in the 3Q, Amazon had $7.6 billion in sales but only $231 million in net income for a paltry 3.0% profit margin.

    ===============

    From the WSJ....


    Amazon.com Inc. said it received an assessment of $269 million for uncollected sales tax from the state of Texas.

    The Seattle-based online retailer received the assessment in September for uncollected taxes, interest and penalties for the period from December 2005 to December 2009, according to Amazon's latest 10-Q filing with the Securities and Exchange Commission.

    In the filing, Amazon said Texas "did not provide a sufficient basis for its assessment" and said it was without merit. "We intend to vigorously defend ourselves in this matter," it said.

    In a statement R.J. DeSilva, a spokesperson for the Texas Comptroller's office, said that Amazon was audited for sales tax, and sent a bill in August. "The company has requested a re-determination which means this is an ongoing audit and could be decided as part of the administrative hearings process. The company would send documents and this process will continue," he said.

    This is far from the first time that Amazon has battled cash-strapped states over this issue. The company is currently in legal battles in North Carolina, New York and Colorado over efforts by those states to collect sales tax from the company.

    In a study last year, Michael Mazerov, a senior fellow at the Center on Budget and Policy Priorities in Washington D.C., found that Amazon has warehouses in at least six states in which it doesn't charge sales tax on its own sales. "What Texas has done is evidence that the states are losing patience—particularly when there is very aggressive tax avoidance behavior like Amazon has exhibited with its warehouses," he said.

    An Amazon spokeswoman said it has an existing fulfillment center in Texas that is an affiliate, but not subsidiary, of the Amazon retailing entity.
    Oct 25 07:53 AM | Likes Like |Link to Comment
  • Netflix: With Every High Flier Comes Competition - Then a Fall [View article]
    Below is an article on Netflix that was published yesterday in the Toronto Globe & Mail. It focuses on the company's move into Canada. They conclude that the move into Canada is positive but really not that big of a deal, amounting to only about $140 million in revenue at its peak. It's an interesting read....
    ----------

    At Netflix, the picture is darkening

    DAVID MILSTEAD | Columnist profile | E-mail
    From Wednesday's Globe and Mail
    Published Tuesday, Oct. 05, 2010 6:45PM EDT


    Netflix NFLX-Q, with a series of deals to stream movies and television shows over the Internet, seems poised to make a technological transition that its floundering competitor Blockbuster Inc. failed to do.

    Yet investor belief that Netflix will be one of the last content providers standing has created a stock that is, at a minimum, well valued, perhaps even overvalued. There are a number of potential short-term hiccups coming for both its top and bottom lines, and some serious long-term competition coming from names you know.

    Netflix’s current frothy value suggests investors are looking past those negatives. At the all-time high of $174.40 (U.S.) it set last week, it’s up 2,225 per cent from its May, 2002, initial public offering. At Tuesday’s trades in the $150 to $160 range, it has a market capitalization of $8-billion. The stock is trading at more than four times its last 12 months’ revenue of $1.9-billion and roughly 60 times its $136.8-million in earnings, according to Standard & Poor’s Capital IQ.

    Netflix’s market cap “is a pretty big number,” Greg Maffei, chief executive officer of Liberty Media Corp., which owns the Starz movie cable channel, told CNBC last week. “I was having lunch with Charlie Ergen [CEO of satellite broadcast company DISH Network] recently, and he noted it was worth more than DISH. He thought that was a little odd.” (DISH posted revenue of $12-billion and profit of nearly $750-million in the past 12 months.)

    Netflix became an investor favourite by doing to Blockbuster and other video chains what Amazon.com has done to bookstores: It exploited the inefficiencies of the competitors’ expensive brick-and-mortar retail network with a business model built on warehouses, the Internet, and the U.S. Postal Service.

    Yet there are still costs to that model of buying, storing and shipping all those little plastic discs. Not as much with streaming movies over the Internet: Barclays analysts Douglas Anmuth and Ronald Josey estimate a user could stream about 16 two-hour movies for the same delivery cost to Netflix as one DVD. (Five cents per stream versus 81 cents per DVD, to be specific.)

    And that is where the growth is: Standard & Poor’s credit analyst Jayne Ross believes the broadband home-video market is expected to increase by more than 50 per cent annually over the next several years, even as the overall movie rental business will be flat to slightly up.

    The good news is that a move to streaming distribution will boost Netflix’s margins. Mr. Anmuth and Mr. Josey of Barclays estimate the streaming-only plans would increase gross margins by five to eight percentage points above the roughly 82-per-cent margin on its $8.99-per-month by-mail plans.

    The downside, however, is that Netflix will likely cannibalize its own subscriber base as it gains in streaming. The company also has $13.99, $16.99 and $23.99-a-month plans in the United States that allow users an increasingly larger number of DVDs; by offering unlimited streaming as part of the $8.99 price point, Netflix will likely decrease its average revenue per user.

    That, combined with unusually high adoption rates this year, worries Wedbush analyst Michael Pachter, one of the most bearish Netflix analysts with an “underperform” rating and a 12-month target price of just $78. Mr. Pachter notes that Netflix has rolled out its service to the iPad and the three major video-game systems – the Nintendo Wii, Xbox 360 and PS3 – in the past 12 months. “Once the installed console base is saturated, we expect to see new subscriber additions only from new console purchasers, slowing the rate of growth.”

    These are the short-term knowns. Less clear is the cost of acquiring all that studio content for its services, something that could roll back some of the gains from streaming.

    The biggest unknown, however, is competition: Amazon and Google, which have made steps into the streaming business, dwarf Netflix in size and brand recognition; Hulu, the television-streaming site planning a premium offering, already has a more sizable library than Netflix.

    At the same time, however, Netflix has a head start with its existing customer base. “There will be more competition for Netflix in digital streaming than there has been in DVD by mail, but the barriers to entry for a streaming subscription service are significant,” say analysts Michael Olson and Andrew Murphy of Piper Jaffray & Co.

    “It would be difficult for any of these companies to offer a strong title library, with no existing sub base to offset content expenses.”

    A BOOST, NOT A BONANZA

    So what does Netflix's entry into Canada mean for the stock?

    It's a positive, but not a huge one, argue analysts George Askew of Stifel Nicolaus and Michael Pachter of Wedbush Securities.

    Both expect Netflix to achieve the same level of household penetration in Canada that the company enjoys in the United States. Mr. Pachter thinks that will happen in “the very long run,” while Mr. Askew estimates it will take about three years.

    If Netflix can duplicate its U.S. success in Canada, it will add between one million and 1.5 million subscribers. Canadian revenue could add up to about $140-million (U.S.), Mr. Pachter figures.

    That would be a nice boost for Netflix, but not a bonanza.

    David Milstead
    Oct 6 08:27 AM | 2 Likes Like |Link to Comment
  • Cramer's Lightning Round - No Limits for Limited (9/13/10) [View article]
    Limited Brands a "Back-to-School" play? I didn't know teenagers bought new underwear for the school year at Victoria's Secret. Or that they bought scented bath soaps from Bath & Body Works. The Limited Brands no longer sells clothes to teens. Cramer is talking about the "old" Limited.
    Sep 14 02:14 PM | Likes Like |Link to Comment
  • Aeropostale: Profitable and Growing [View article]
    Could Aeropostale, selling at 9x EPS, be a value trap? According to the WSJ, the answers is yes. ARO is in a price war with American Eagle and Ambercrombie & Fitch. ANF has significantly lowered prices to compete better with ARO and AEO. This could make margin expansion and EPS growth very tough for ARO, considering the company is near peak margins. Below is the WSJ story...

    HEARD ON THE STREET
    SEPTEMBER 11, 2010.

    Price War for Teen USA .Art

    By JOHN JANNARONE

    Teen stars can make life look effortless. Until the day it all comes crashing down.

    That is the condition of Aeropostale, the teen-focused apparel retailer that posted over 10 straight years of rising sales and managed to thrive straight through the recession. The company's gross margins rose about seven percentage points over the past five years, while pricier rivals Abercrombie & Fitch and American Eagle Outfitters saw theirs decline, says Brian Tunick of J.P. Morgan. But the winning streak may have ended recently, with the company acknowledging that aggressive discounting by competitors has put its market share at risk.

    The trouble is that Aeropostale has no real option but to fight back with discounts of its own, likely meaning a prolonged price war has begun. The fight could be brutal because Abercrombie, with the highest gross margins in the group, has plenty of scope to cut prices at its Hollister stores that compete with Aeropostale.

    The experience of other retail battles bodes poorly for Aeropostale. Macy's recently managed to take share from J.C. Penney by introducing more items designed to compete with its lower-end rival.

    Of course, Aeropostale looks dirt cheap at eight times consensus earnings for the year ending January 2012. But with no sign of a truce in the price war anytime soon, investors should avoid buying into a value trap.

    Write to John Jannarone at john.jannarone@wsj.com
    Sep 12 07:25 PM | Likes Like |Link to Comment
  • Amazon: The International Opportunity [View article]
    Don't forget that over 50% of Amazon's business is from selling "media" which consists of books, videos, and music. All 3 are rapidly moving to the digital format. Do they need more warehouses? Not so sure...

    Amazon is a great company but may not be such a great stock going forward. Selling at over 50 times earnings, a lot of very fast growth is already built into the stock price.
    Aug 11 10:20 AM | Likes Like |Link to Comment
  • Apple iPad Free Advertising Comparable to Palm Market Cap [View article]
    Jason made the comment "Expect to see numerous upgrades over the next few weeks". Right now according to Bloomberg, 40 analysts have BUYS on Apple, 4 analysts have HOLDS, and zero analysts have a SELL on the stock.

    Who is left to upgrade the stock?? Who is left to buy the stock? If you like the story, you already own the stock.
    Apr 5 07:48 AM | 1 Like Like |Link to Comment
  • Airline Revenue Datapoint of the Day [View article]
    Baggage fees are one of the best things to happen to the airline industry in a long time.

    The airlines are finally using ala carte pricing to charge for services. This is the way most businesses operate. If you go into a restaurant, don't you expect to pay for your drink, appetizer and dessert? Those don't come free with the price of a meal. The same applies to the airlines. If a traveler wants to take 3 suitcases, buy drinks and food, or sit in a premium seat, he/she should pay for it. Why should a traveler with a briefcase and a carry-on subsidize someone with 3 suitcases?
    Oct 9 09:13 AM | Likes Like |Link to Comment
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