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  • Netflix: Understanding Its True Liabilities [View article]
    "Yeah, you can add the asset, but it is off-balance sheet anyways, so no need to add asset onto anywhere."

    But your article addresses ratios. If you adjust the numerator but not the denominator for the effect of these contracted payments, do not be surprised if you end up with meaningless figures.
    If you wish to make the argument that the assets that would be acquired (streaming rights) in this transaction are worthless because there will be no subscribers, then do so; but do not just casually ignore those assets.
    May 19, 2015. 09:08 AM | 1 Like Like |Link to Comment
  • Netflix: Understanding Its True Liabilities [View article]
    There may well be a problem, but you will not present it fairly if you increase the liabilities without also increasing the assets and say "oh dear, isn't that awful!" The reason that US GAAP does not require reporting of the liability is because the associated asset is too uncertain. One might argue that the uncertainty is not that great and that therefore the balance sheet should reflect both asset and liability; but clearly to do just one side of the transaction is not appropriate.
    May 18, 2015. 10:24 PM | 1 Like Like |Link to Comment
  • AT&T: Financial Shenanigans, Painful Truth Coming [View article]
    The rest of the article may or may not be correct but the part concerning pensions is incorrect.

    The author writes "The reason AT&T has an unrealistically high return assumption is because it increases the plan's "funded status" and reduces AT&T's liabilities, drastically. This is a financial shenanigan, and if AT&T were to use a more realistic assumption, there would be significant adverse impacts on AT&T's stock price." This statement is not correct. The (unrealistically high) assumed rate of return on plan assets of 8.25% does affect the income statement. In effect, the net pension cost reflected therein is net of a credit of the 'assumed' income on assets at an amount equal to 8.25% * plan assets, even if the actual income on those assets is considerably less.

    However, the funding status of the plan depends on the discount rate used to discount the future pension payments to retirees. In fact, those discount rates have been higher than the average used by peers in the last few years (by between 0.25% and 0.75%). The effect of this overstatement of discount rate is to understate the pension obligation (and the shortfall) by about $2.5B. i.e. the level of underfunding that would be reported if the firm were to use the same level of discount rate as its peers, would be about $8B rather than $6B.
    Apr 22, 2013. 02:44 PM | Likes Like |Link to Comment
  • What Is Supporting Netflix Shares? A Look At Q1 Highlights And Earnings Expectations [View article]
    It may be exclusive to Netflix to stream, but I understand that the series will be coming out on DVD in June - so it will be possible to see it w/o paying Netflix. (It will, however, almost certainly be cheaper to subscribe to Netflix for a short while - even if to watch nothing other than this series, rather than shell out for the DVD.)
    Apr 19, 2013. 09:15 AM | Likes Like |Link to Comment
  • What Is Supporting Netflix Shares? A Look At Q1 Highlights And Earnings Expectations [View article]
    "Starz recently announced that it will not renew with Netflix, Starz owns the streaming rights to Disney and Sony movies." !!!!!!!!!!

    Even the linked article has a sate of February 2012!
    Apr 18, 2013. 10:13 PM | Likes Like |Link to Comment
  • A "good chunk" of House of Cards was filmed in 4K and Netflix (NFLX) hopes to stream its original series in the format later this year, says product chief Neil Hunt. He foresees the streaming world embracing 4K before broadcasters, and expects some Netflix movies to support it "in a year or two." With 4K streams requiring 20-40Mbps (per Deloitte), they could do a number on Netflix's bandwidth bill, which the company is trying to lower via its Open Connect CDN. There's also the question of how many subscribers will have connections fast enough to support 4K. [View news story]
    Consider also how much ISPs will charge for access when unlimited changes from meaning approximately 100GB a month to "an awful lot more than 1TB a month" which seems likely if a single movie needs an 8 layer Bluray DVD holding 500GB. (according to Deloitte report, cited above.) Canadians and Europeans typically pay less for broadband, but I think their usage is, in effect, capped at less than US providers allow without getting excited. A move towards pay-for-what-you-use will impact the desirability of streaming high-bandwidth-using movies.
    Mar 14, 2013. 02:45 PM | Likes Like |Link to Comment