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  • Tesla's April Sales Begin Flowing In [View article]
    Might be the most illuminating comment since Mr Santos began writing his thesis in peak tesla. Makes perfect sense, you ship overseas the first month in order to book the sales in the last month. This would also explain "peak US tesla" bc at the end of the qtr they are shipping to US exclusively and can't ever meet the demand due to supply constraint.

    Santos, no offense, but your theory is definitely in jeopardy, but you may not realize it until 2015! That's a lot of punishment for shorts to be wrong, if Carl Koo is correct.
    May 13 02:05 PM | 6 Likes Like |Link to Comment
  • The Web Services Problem [View article]
    Paulo, it's a nice theory... so far; but, you've really not done enough research.

    #1 Cloud Revenue: "it depends on what you count".
    How much of what MSFT counts is actually another product, such as Office, Outlook, or Microsoft-OS server rentals for customers stuck on their OS? None of those should count, as they are just Microsoft's traditional application revenues ported to "cloud". 100% of Amazon's cloud revenues are legit, bc they didn't have any legacy application products to port to cloud. Google is a more accurate comp for AWS, and that's probably what you should use; especially, since they are the leader in price reductions vs MSFT.

    #2 Apples to Oranges comparisons:
    MICROSOFT (and Google too) likely has to spend in bursts, in order to justify the lower pricing. Thus for a short while, they can buy in bulk and claim that they can make up the cost in X number of years. But this assumes constant pricing, and pricing has never once shown to be constant in this business. It is FAR easier to be the leader here, as AMZN can spend their capex incrementally as demand picks up. Or, as a leader not afraid of future demand, they can take advantage of component pricing when opportunities arise. Whereas MSFT nor Google can count on future demand, just as their customers can't REALLY count on Google staying in the business. Google has shown a great ability to abandon projects, not by selling them, but shutting them down. Orkut, several social networking attempts actually, Reader, and I wouldn't be surprised if they unload (or already did) Blogger. But let's not focus on Google's mishaps, let's instead focus on the fact that Amazon doesn't have to buy in massive geographic expansion clumps like Microsoft does. The leader is already there, and adding incrementally, based on demand. Whereas the followers need to justify lowering of prices (bc how else can they compete if not on pricing, AWS is clearly the best service so far) by making large capital outlays based on the newest low component prices, and backdoor into cheaper pricing.

    #3 One Year does not a full analysis make:
    Again, you're arguing that AMZN could trade to $100 based on FCF going to zero for a single year. Has this worked in the past? AMZN has had EPS go to zero twice, and yet Wall St gives them the benefit of the doubt due to long-term focus, and takes the stock price higher based on far-future earnings potential. The same here. AWS will get credit so long as they emerge on top. So why are you making a futile argument, that Wall St will all of a sudden make FCF important in AMZN's stock price? Bezos was able to borrow money in the early days to keep his money-losing dream alive, and that was when they were REALLY losing money. Why is that going to change, isn't AMZN and Bezos doing the same thing they've always done? The only times AMZN stock was penalized became massive buying opportunities. FCF going down for one year is not a disaster. But you haven't even supplied enough data anyway.

    #4 Amazon AWS is not Microsoft.
    You make an assumption, or at least try to project, that AWS will need to duplicate mSFT's spending. YET, you do not provide the data required to even make this a decent supposition. By what % did MSFT increase it's capacity with the latest capex? How does that relate to how much AWS needs to spend to grow its capacity? You simply assume that if MSFT had to spend in the last 12 months a certain amt, then AWS will have to spend that same amount.
    As many good retorters have already reminded you, AWS is already in the lead, and doesn't need to play catch-up to a business they already dominate. Thus, they won't have to "spend like MSFT" to maintain the business. Sure, there will be capex, but you've offered no evidence they have to do it in one year.
    Furthermore, one year doesn't matter in this particular business. Would you have argued that the Sands Hotel was doomed bc the casino company had to put forth all that capex in year one? Lastly, as AMZN had proved many times, it's not your upfront FCF that matters, its what you get to reap in the end if you win the ultimate game. Sure, nothing's been proved in ANY of AMZN's business yet; HOWEVER, AMZN HAS made some positive FCF after all these years of massive upfront capex spend, so there's something to be said for looking long term.
    and listen to Google, they essentially argue that upfront spends are part of a big company's job in society, to take the big capital risks that others cannot. You can't start a space company in your garage, or at least, get it moving quickly.
    AMZN knows this (as Bezos is involved in space as well)

    The best evidence in your article is the MSFT map. It shows a doubling of centers.
    But this leaves the question un-answered, does AWS need to double its centers?
    What is the state of AWS geographic expansion? I can't imagine AWS isn't already spread out, given that's a basic requirement for being in this business (duplication, spread out duplication of data, that is).
    So without providing the same map for AWS, you're map actually provides evidence that MSFT's capex spend is likely "catch-up".

    You claim Amazon's fire phone is a dud, using top 100 electronics scores. Fire Phone isn't for sale, it comes out July 25th. It's on ONE carrier, a carrier that plans to carry it in STORES, in a market where most people buy their phones in cellular-branded stores, not Wal-mart and Amazon. To theorize the phone is going to fail this early, is marketing not research.
    Also, same theme, you suppose that AMZN mis-priced their phone high. This should sound familiar: "it depends on what you count". specifically, if you think the "extras" amazon includes with the phone are of no value, such as: a year's subscription to Prime ($99 value), the live support, the 3D gaming effect (which other phones do NOT have) via 3 extra cameras, the book borrowing service, etc.... , then I guess yours COULD be considered a stronger theory. But unlike say iFixit who documents the costs of components, you haven't done this. So you don't even know that in just phone-component terms if Fire phone is actually a good value or not.

    #7 Good-sounding headlines & conclusions-- but lacking evidence to support theories, and research is only half-baked. I'm actually interested in your theory, albeit at MUCH smaller relevance/merit since Wall St won't care about a single year's capex at Amazon, but you've got a lot of work to do to make it a sounder argument. I suggest a re-write or re-traction when you've actually gathered enough evidence to make/break the strong theory you've layed out. As it stands, you've not convinced me of anything with this article, no matter how small a value it is.

    I like your theories, but you are one-sided and without the proper support or research to really make a successful claim. I think by continuing to not acknowledge the flaws in your theories, you set yourself up for less people taking you seriously.

    disclaimer: I'm short a little bit of AMZN prior to reading your article. But my thesis is a bit different than yours. I appreciate your attempts, but they are of little value other than thought provokation.
    Jul 9 11:08 AM | 5 Likes Like |Link to Comment
  • Why Chrysler Needs to Declare Bankruptcy [View article]
    Bankruptcy is desired in order to rid the car companies of union, dealer, and debt burdens. The biggest mistake American made was helping Lee Iacocca in the first place. Had we let Chrysler go bankrupt back then, perhaps we wouldn't have destroyed GM. This time around, we'll save GM and Chrysler (again) and destroy Ford. Way to go politicians, way to destroy all the car companies, instead of letting the strongest survive.
    Apr 24 11:17 AM | 5 Likes Like |Link to Comment
  • Tesla's April Sales Begin Flowing In [View article]
    They can fill it every quarter, in the first month, or towards the end of the qtr after meeting sales goals.

    Paulo, I think you're very thoughtful, but there's two wierd things about your Tesla commentary:
    1. you don't have a stock position? why? Why aren't you short? If not to short the stock, what's your motive for the continued observations?
    2. I sense some lawyerish defense of your thesis, not once have you ever acknowledged that anyone else might have a valid point. This came to light during your refusal to acknowledge you overstated your case concerning the Yuan/China reservations for signature (vs. normal) Model S. In that respect, you were just as illusive as you claim Tesla mgt to be.

    I'm not even saying you're wrong yet, but just saying you may not be as objective as you or SA readers might think.
    May 13 02:14 PM | 4 Likes Like |Link to Comment
  • Blaming Bankers When Government Is Really at Fault [View article]
    You missed the #1 government error of all, the cause of the problem at its source: leaving the gold standard in 1971. Nixon, Kennedy (Vietnam), and Johnson ("Great" Society) gave our country a legacy which resulted in this 2nd Great Depression-- a Depression which in magnitude will eclipse all others in history.
    Apr 24 11:14 AM | 4 Likes Like |Link to Comment
  • Bailed Out Executives Will Repeat Mistakes if We Keep Rewarding Their Failures [View article]
    It's even worse than you portray, because not only are the bad rewarded, but the good are punished with these bailouts. Witness AIG is lowering rates on competitors to the point where well-managed insurance companies must back off from offering too-cheap premiums. Thus, AIG is using our taxpayer cash to write bad premiums below market. Meanwhile, the well-run insurance companies suffer from lack of business and will likely go bankrupt themselves. So please don't forget that not only are the evil rewarded, but the responsible annihilated!

    Obama and Bush will both prove clowns-- a vote for Republicrats or Demublicans is a wasted vote-- they are the same party. Vote Libertarian (or whatever 3rd party matches your bent best), it actually changes policy even when your candidate loses because the dumb-dumb parties both move towards your causes in order to attract swing voters (members of the crowd that vote for the #3 party)
    Jan 28 01:22 PM | 4 Likes Like |Link to Comment
  • The Web Services Problem [View article]
    Absolutely INCORRECT. CRM is traditionally an application, which CRM them moved to the cloud. It's a company born from PeopleSoft and Oracle. Salesforce's revenues are the same as Office 365, it's a business not related to selling a cloud commodity. Salesforce might SAY their product is a commodity, but this is absolutely untrue. The switching costs are significant.

    If you're using Office 365 revenues, you've clearly exposed your hand in this article, and now I completely understand that you wrote it for effect not reality.

    AWS is a commodity product with an element of service and switching costs, but mostly it's a commodity. PaaS would be closer to the CRM business, but still not the same level of customization. AWS is mainly IaaS. AWS's customers are going from buying their own machines, to renting them from a bigger buyer.

    Microsoft, to the extent they are expanding capex thanks to Office 365 growth, is as far away from AWS concerns as one could possibly be. You'd have done MUCH better to write an article about shorting MSFT, bc the costs of their "Office" cash cow have now climbed significantly vs the legacy product (which was stored on all those CUSTOMER'S computers which were ALSO a big revenue source for Microsoft).
    Ha, by revealing your mistake, we've uncovered that you wrote a much more interesting article than I thought, you just picked the wrong company to short.

    Amazon's AWS capex will be entirely UNaffected by Microsoft Azure's capex spending. There's my theory, and it's true, but I'm not going to write an article about it bc I have no incentive.

    I've read the series of articles, they too are frought with error. Altho, it's ironic, I think AMZN the stock is headed for mid double digits and there's a chance it goes away entirely in a bloody battle with a better competitor.
    Jul 9 12:00 PM | 3 Likes Like |Link to Comment
  • Apple's Antitrust Reality Distortion Field [View article]
    Why not nip the problem in the bud. Sherman Anti-Trust is one of the most damaging things the US has ever done to itself in world history. Minus this law, Standard Oil would control world oil prices and supply as well as keeps jobs in America, and the Middle East wouldn't be a problem. Instead we have wildly fluctuating prices, a government that interferes with the market place causing huge imbalances not to mention multiple wars which shed it's young's blood for zero effect, and a total loss of the forces of the market to correct monopolies anyway. AT&T broke up the Western Union monopoly on communications, just like wireless end-arounded the wireline phone companies. Big steel was toppled by mini-mills, and railroads suffered at the hands of trucking. If you let the market correct itself, it works. monopolies get too big and too complacent to last very long. But even worse, monopolies form due to efficiencies, which cause stability in the market place and giant increases in productivity and serenity.

    Sherman Anti-Trust is pure evil. Next to the blatant stealing the Fed does from the pockets of Americans via money-printing, it's the most damaging self-immolation the US has undertaken on itself. These bad decisions are multiplying, and soon it will result in a very weak economy, and internal war.

    No one is hiring more and faster than Apple and Google, and yet these are the companies doing real good for the country whilst the gov't takes potshots at them. Simply amazing how ignorant and damaging our politicians are to America's biggest sources of strength. No wonder we don't have any factories here.
    Dec 4 12:39 PM | 3 Likes Like |Link to Comment
  • Apple's Loser Strategy [View article]
    iPhone IS much higher quality than Samsuck, Nokia, HTC and the rest of the competitor OEMs. I don't know why this is such a tough concept to understand. Continue telling yourselves that your cheap plastic thrown-together phones with dorky "innovations" like 'swipe air over phone' are superior phones. They aren't, and they can't be. They can't be superior phones bc they ONLY compete on price, thus they have to use the lowest quality ingredients possible. Apple doesn't have that problem, so what you get is superior right down to the packaging.

    iPhone IS the Lexus and BMW, and Samsuck IS the low-end Chevy.
    Sep 12 09:43 AM | 3 Likes Like |Link to Comment
  • A Long-Term Threat To Apple [View article]
    thousands of absolutely horrible cruddy and even sometimes evil businesses out there, and you spend your days criticizing Apple? Why do you waste yours and everyone else's time? yawn.
    Aug 15 10:22 AM | 2 Likes Like |Link to Comment
  • A Few Positives And Negatives For Microsoft [View article]
    mobile IS likely lost for MSFT, bc the game isn't over yet and already they are way way behind. Contrary to Sony in the 80s and 90s trying to get consumers to buy all-Sony, Apple is in a much different condition as they are not only the quality leader but also the low-cost provider. This makes it difficult to NOT buy Apple mobile products as Tim Cook has end-arounded all other OEMs of mobile electronics.

    Enterprise cloud is lower margin than the enterprises already using MSFT. You're forgetting that MSFT already HAD a monopoly on corporate customers, so enterprises switching to cloud isn't a great opportunity for MSFT as it might be for say Salesforce or Apple who began life with small corporate mkt share. MSFT is rolling customers, others are getting green field customers.

    The whole Intel "positive" isn't much of a positive. It's more of a catch-up. What's worse for Wintel is Intel could soon be losing Apple as a customer, as Apple pushes their chip lineup up stack. VERY bad news for Intel, and indirectly MSFt.

    A good outline Mr Santos, but where's the retail/in-home/Xbox commentary? It's not such an unimportant daliance for MSFT anymore. It's almost become critical due to its effects on the rest of the company.
    Aug 13 01:08 PM | 2 Likes Like |Link to Comment
  • Apple: Yes To iPlay - Hybrid Console/Streaming TV Product [View article]
    Thinnest 40 inch panel but without sacrificing any capability;
    Light but durable;
    Handsome but inexpensive;
    Motion and Siri controlled Gaming Console without the spaghetti wires;
    Remote Controls already in your home phone;
    Finger ID user control, security, and childproofing;
    MacPaint on a giant canvas with your arms and fingers;
    Seemless Siri+Facetiming interface for communications;
    Change channels or order up movies with your watch;
    Beautiful World Class Multi-Function Centerpiece to your Living Room.

    Does this sound like something you might be interested in?
    Apr 1 01:57 PM | 2 Likes Like |Link to Comment
  • Wall Street Loves IBM Again [View article]
    Lack of investor interest is because IBM's FCF has had NEGATIVE growth from 2009 ($16bn, the bottom of economy) to 2013 ($11bn, top of economy) at a whopping (9)%. WOW.

    Capex (investment in the future) has gone down by a billion dollars (25% drop) while acquisitions have been steady (to keep the dream alive) even tho they haven't added anything to FCF in 4 years after no less than 18 billion in acquisitions! WOW. What ARE these acqns which aren't producing?

    Oh, and the company trades for 19x the average cash flow from 2007 (when IBM's FCF was $10bn) to 2013, not exactly cheap when you consider Apple's multiple or FCF performance over that same time period.

    I think people that own IBM like to play with numbers (CEO-approved numbers like what you have displayed in your article which needs to go back to 2003 to avoid the embarrasment of the 2009-2013 period, apparently), but aren't looking at the constant and continual deterioration in their business model, which is obfuscated by a simple aggressive acquisition plan along with shareholder filatio in the form of dividend and mainly stock buybacks.

    IBM spent 64% more than their FCF in 2013 on throwing money at shareholders, thus adding another $2bn to net debt on the balance sheet. A net debt that's worth the next 4 years (assuming they maintain their 2007-2013 average of $10.04 per share, which by the way is an avg 45 cents higher than the 2013 number) in FCF.

    So to even HAVE a multiple based on reality, IBM needs to at least continue their positive cash flow average for the next 4 years, and THEN they can properly be evaluated on a multiple at that time. Are you prepared to bet IBM's FCF downtrned won't continue (from $16bn in 2009 to $11bn in 2013) for the next 4 years and result in some metrics which are even uglier in in 2018?

    So yeah, I can see why IBM stock is taking a breather. What I can't see is why Warren Buffetted is once again speculating in companies that lend their customers plenty of money after having his yarbles stomped last time he did this with the big financials pre-2009 when all of us small-time taxpayers had to bail his rich "curmudgeonly" @ss out of some well-needed losses in his portfolio.

    Oh well, maybe IBM investors are thinking they can't go wrong betting alongside a guy that makes money on his speculations when economy going well, and hands his losses to the government when economies stutter?

    Also, what happens as Gen Y takes over all those vacated positions from the baby boomers and realize all those IBM-sponsored golf games don't make any sense to justify the massive overspending of large corporates in IT when we have cloud companies like AMZN and GOOG reducting computing costs by 20-85% in a single year? Sure, it's tough to switch off a platform, but when prices are SCREAMING downward at the leading edge of IT, the old fuddy-duddy contracts from yester-year are going to take an awful lot of golf-games and (god knows what else IBM saleforce uses to ply baby boomer corp execs?) cheap customer-financing to be renewed.

    IBM is simply a hiding spot for lazy investor money, as well as a resting ground for large corporates who'll eventually have their lunch eaten in the next downturn or from smarter competitors who succeed by valuing innovation over stability.
    Mar 28 01:59 PM | 2 Likes Like |Link to Comment
  • Herbalife Could Damn Well Be The Next MBIA [View article]
    This write-up is short on reasons to short Herbalife. Everything you're saying is insinuated and based on what you THINK Ackman is alluding. ignoring 2013 financials are audited. do you not take them at face value? So what if 90% of goods are bought by distributors, that doesn't constitute a ponzi. ponzi schemes the buyers are left with nothing in the end, not a product. So it really doesn't matter how many sales are outside network. Sure, it's a great sign if many ARE out of network, but it doesn't have anything to do with ponzi.
    Almost all of your words have to do with Ackman's disposition, which has zero relevance on Herbalife. All I got from this is that you worship Ackman. Ackman MIGHT have a perfectly great short case and will end up tonning it on his short, but what's become obvious is that you don't. no offense. I recommend shortening your prose, and getting more drilled down on the reasons you're short Herbalife, not the reasons you like Ackman.
    Dec 4 04:25 PM | 2 Likes Like |Link to Comment
  • Pandora Is Falling Behind The Competition: An Indirect Survey Using Twitter [View article]
    One thing you forget is an error of omission. Pandora has been around for a long time, people aren't going to post "news" of liking Pandora better than ANY of the newer offerings. So what you're missing is all the omitted opinions. Your sample has only those who are writing, which are people who think they've found a better NEW solution. Overall I think Apple Radio IS a great offering, especially for music discovery; however, I wouldn't confuse Twitter feed for a reliable source. Pandora lovers don't need to be vocal, they are already #1. If you go search for reviews of Nokia Lumia operating system, you'll also find tons of support and probably think it's going to take over the world from Android and iOS, but going from 1 to 3% market share while good isn't going to affect anything until it gets to double digits.

    Q3 is going to be painful for shorts, no matter if it occurs at $40 $30 $20 or $10 per share for Pandora shares. It's THAT type of market, valuation doesn't matter, what matters is what you're reporting. Had you lived thru 1999 you'd understand this and not be shorting at $31 or any other price ahead of Q3 earnings.
    Nov 19 09:33 AM | 2 Likes Like |Link to Comment