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  • Why Japan, Not China, Should Be Netflix's Primary Target [View article]
    Failure to hedge currency risk on the conference call is an eye opener. Either management is unsophisticated or just does not have the cash necessary to make the hedge. Lack of cash is the problem. Lack of cash and negative cash flow is the issue. They are like Tesla. If they grow fast enough they will make it. If not, then they will have to retreat due to lack of cash and then the collapse comes. Should be interesting to see if either makes it. both stocks trade like Amazon on theory that they have made it. I am not so sure that apple Google or Amazon won't try to derail the growth.
    May 22, 2015. 07:46 AM | Likes Like |Link to Comment
  • Netflix: Time To Care About Sharing [View article]
    If you sign up for NFLX on Apple TV apple gets a cut. Same as on iPhone. Just as the cable providers take 50% of HBO apple will not just let NFLX ride on their box for free. Apple is all about profit. They sell the box for $99 and want to make money off of use. Look at iTunes which is a almost a $20 billion dollar business. The box is an iTunes extension. Thus NFLX either pays to be on the box or pays monthly when users use it.

    The real problem is NFLX is a middleman. Studios - nflx - viewer. Apple most likely will offer movie studios direct access to the consumer for a monthly fee with a 30% cut to apple. Just as apple did with data for iPad, consumer will sign up one month at a time. Thus you want one studio, get it this month, pick another next month. HBO which is $15 on cable and loses 50% to cable can now drop to $10 or $11. That taxes NFLX.

    Nflx is a great service but with negative cash flow and poor earnings, it can't trade higher forever on sub growth. Aol and EarthLink were all about sub growth and where are they now. Also management states they will not hedge currency risk. As the dollar rises as we raise rates while the rest of the world begins qe, foreign profits will never materialize. Meanwhile reed Hastings the guy who last year called the stock price as high, just keeps on selling. Management is not concerned about long term, just putting a ton of cash in their pockets. AOL was a bust but Steve Case made a ton. Research in Motion's founder has made a ton. What is different with this one.
    May 22, 2015. 07:37 AM | Likes Like |Link to Comment
  • Netflix: Time To Care About Sharing [View article]
    Stock is up big on China but they are at least a year from being in China. To be in China you have to have a partner and most likely the partner will have all the video on their servers. China will then have to review all the content further delaying the rollout. Meanwhile, BABA and others who are in streaming or want to do streaming will be up and running.

    The big event will be the Apple TV system coming in June. Apple does not allow people to offload purchases which means that if NFLX comes on the new Apple TV system, they will have to pay a percentage every month per user. That is a margin crimper. Apple could easily tell NFLX no as they have HBO and will have a ton of other content providers. Apple is the real problem. Apple TV could allow every movie studio to stream content for a small fee on a month to month basis. Want to see Disney take it for 30-90 days. Since NFLX is a middle man with a little content, they are not really a necessary on a system.
    May 20, 2015. 03:44 PM | Likes Like |Link to Comment
  • Amazon up 2.2% after Bernstein sets $600 target [View news story]
    US retail operations has $500 million in profitability twice that of AWS last quarter. Yet while all the operating profit with AWS and retail they still lost $300 million if you count foreign currency. Thus they blew $1 billion in other expenses.
    May 7, 2015. 10:54 PM | 2 Likes Like |Link to Comment
  • How Can Amazon Charge $1 For Drone Delivery? [View article]
    AWS growth is mainly NFLX which has near term cash flow issues.

    On Drones, you need to add in that the drones will only last a short time before replacement / maintenance. Lastly, there will be mishaps and injuries. Add in $100 million for lawsuits or an amount for insurance to offset the lawsuits. You walk out your front door and take an Amazon drone in the face is coming.
    May 7, 2015. 01:05 PM | 2 Likes Like |Link to Comment
  • Tesla: Lower Q2 Expectations, Fall In Customer Deposits [View article]
    38,000 battery orders at $3,500 = $133 million. At 20% margin profit is about $26 million. They will need six quarters to make the current orders or about $4 million in profit per quarter. The Powerwall is not material to tesla and thus adds no real value to the company.
    May 6, 2015. 10:14 PM | 13 Likes Like |Link to Comment
  • Amazon: 10 Implications Of A Profitable AWS [View article]
    Retail and AWS are super profitable. See below.

    North America
    Net sales $ 13,406 $ 10,808
    Segment operating expenses (1) 12,889 10,518
    Segment operating income (loss) $ 517 $ 290
    Net sales $ 7,745 $ 7,883
    Segment operating expenses (1) 7,821 7,916
    Segment operating income (loss) $ (76 ) $ (33 )
    Net sales $ 1,566 $ 1,050
    Segment operating expenses (1) 1,301 805
    Segment operating income (loss) $ 265 $ 245

    (1) Excludes stock-based compensation and "Other operating expense (income), net," which are not allocated to segments.

    So we have almost $750 million in profit but the real gem is the consolidated net loss of

    Comprehensive income (loss) $ (298 ) $ 136

    So a billion vanished in stock compensation ($400), foreign exchange ($243) and other expenses. Thus there is no way that AWS is remotely profitable.

    So far all the analysts are drinking the Koolaid and talking about sky high valuations. The real item to look at is cash which declined by $4 billion this quarter. Mainly paying debt down but debt is still $23 billion to cash and marketable securities of about $14 billion. $9 billion in the red is all you need to know. IBM, GOOG, AAPL, and MSFT are flush with billions and billions in cash. If anyone thinks that AMZN with a -$9 billion in cash can compete, they are in fantasy land. Amazon has about 2 years to make money before the debt collapse implodes them.
    Apr 25, 2015. 08:18 PM | 4 Likes Like |Link to Comment
  • It's Still Dumb To Bet Against Amazon And CEO Jeff Bezos [View article]
    What about the kindle. Another flop that they will write off soon. No mention of their hand held electronics because they are dead. Selling crap at cost only to drive revenues will eventually cause a fast and substantial drop. $4 billion in cash vanished from the balance sheet. Cash burn is the new metric.
    Apr 25, 2015. 07:56 PM | 9 Likes Like |Link to Comment
  • Amazon +15%; 3 upgrades arrive, JPMorgan values AWS at $66B [View news story]
    Seems no one cares about the footnote (1) from the AWS segment breakdown. Thus, it is probably not profitable. The retail ops had segment income of $500 million and AWS was $265 million. Yet the real earnings including foreign exchange was -$300 million. Where did the Billion go.


    Segment operating expenses (1)


    (1) Excludes stock-based compensation and "Other operating expense (income), net," which are not allocated to segments.
    Apr 24, 2015. 08:29 PM | 2 Likes Like |Link to Comment
  • Amazon beats estimates, guides in-line [View news story]
    But AWS will save Amazon as it is the largest cloud company with a $5 billion business. Then IBM comes out and states that their cloud business is over $7 billion thus why all the fuss over AWS. If I spent $500 million in expenses to get $500 more in sales I would go broke. Only in Bezos fantasy land does it not matter.
    Apr 23, 2015. 06:43 PM | 7 Likes Like |Link to Comment
  • Is Physical Retail A Threat To Amazon? [View article]
    I agree. The reason for the lack of focus is to divert attention away from all the current unprofitable ventures. We now will do this and that. Tesla is now trying the same approach by adding home battery storage to divert you from the fact that they can't make money on electric cars.
    Apr 22, 2015. 11:09 AM | 2 Likes Like |Link to Comment
  • Beware Of Writers Reiterating Netflix's Talking Points [View article]
    On the conference call management stats that they do not hedge currency risk and had no plans to do so in the future. Looks like they have a poor management team in place.
    Apr 18, 2015. 02:10 AM | 1 Like Like |Link to Comment
  • 'Even When You Win, You Can't Win' - Netflix Edition [View article]
    If you increase the price subs will most likely decrease. If Netflix makes tons of money, the content creators will ask for more money this there is no windfall. If Netflix does go to $15 HBO or any other content owner could offer a cheaper service. The streaming technology is accessible to everyone. Look at HBO, MLB, Apple, Google, and Amazon. Why doesn't lion gate cbs fox or Disney set up a competing service. Disney owns about a third of your cake package. They could crush a ton of people but decided to stick it to Netflix for big money. I assume the deal is not exclusive and thus Netflix is just a middleman. The Internet is eliminating the middleman.
    Apr 17, 2015. 02:53 PM | 7 Likes Like |Link to Comment
  • Netflix: Street Applauds Disastrous Financial Results [View article]
    A chart on CNBC summed it up nicely. 2 quarters up and then 2 down. This pattern has been going for about 2 years. This was the second up. Two quarters ago the stock fell $100 after earnings. That was a big bear payday. For the longs that question the Bears, why? That quarter made me a mint in one day. I Skipped last quarter and the stock got the $100 back. Figured the coast was clear and put my toe back in the water around $470. Now it is time to get short for the next collapse. $535 for a stock with negative cash flow will be fun to watch. Go read the long versus bear arguments on Research in Motion. We know who won that one.
    Apr 15, 2015. 11:01 PM | 3 Likes Like |Link to Comment
  • GM To Deliver Inexpensive 200-Mile EV 2 Years Ahead Of Tesla [View article]
    If TSLA is a luxury car maker why are they planning to make a cheap car. Porsche does not make cheap cars and Apple does not make cheap products either. Clearly Musk does not understand branding.
    Feb 7, 2015. 12:56 PM | 2 Likes Like |Link to Comment