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Dialectical Materialist

Dialectical Materialist
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  • Why Apple Will Escape The $130 Resistance Level [View article]
    Couldn't we test this? Wasn't it in January 2014 that the stock went down 8% after an iPhone "miss"? The stock dropped on Tuesday January 28th the day after earnings and didn't start to recover until the following Monday.

    And later we found out that Tim Cook had gotten aggressive with the buyback in response to the price action:

    http://bit.ly/1KneiRI

    So it seems to me the buyback didn't start to take effect until at least 5 business days and possibly 6. All that is clear is that the week following earnings the stock climbed. In the next two weeks it almost completely recovered and later we learned Apple was buying big time during that window.

    So in short, it does look like it took several days last time the stock was irrationally beat down on an iPhone "miss".

    Of course, there's no telling if Apple will be aggressive with its buyback as soon as it can (but it seems a logical possibility).
    Jul 23, 2015. 09:03 PM | Likes Like |Link to Comment
  • Apple: 5 Is The Magic Number [View article]
    SA really needs an "ignore" function. I know some people would choose to ignore me, which is just fine. But it would be really great if users could focus on the commenters they thought were most worth their time.

    I'm sure some people would choose to follow beefy136's daily angst. And others would not. Either way, everyone wins... Except Seeking Alpha, of course, which would lose the page views from new comments posted by ignored commenters. It is an exercise for the reader to decide whether the lost page views have anything to do with SA not implementing this much requested feature.
    Jul 23, 2015. 03:04 AM | 2 Likes Like |Link to Comment
  • Apple: 5 Is The Magic Number [View article]
    turnemover, I wouldn't expect you to read any of my previous comments, but you may try re-reading the one I directed to you. I didn't bash you for reporting an Apple store was empty. I took issue with the silly way you said, "I'm not saying Apple cooks its books but..."

    And I said, "I'm not saying you're a troll, but..."

    If that is calling you a troll, then you really were saying that Apple cooks its books. Keep posting, you'll get it.
    Jul 23, 2015. 02:56 AM | 2 Likes Like |Link to Comment
  • Apple: 5 Is The Magic Number [View article]
    I'm not saying you are a troll, I am just saying that the phrase, "I'm not saying" followed by almost anything negative can be a way to express an outrageously negative accusation (such as Apple cooking its books or your being a troll) while seeming to distance oneself from the accusation.

    I'm not saying you must think we're all stupid enough to fall for that kind of rhetorical device, but if you use it again, I'd start to wonder.
    Jul 21, 2015. 09:59 AM | 3 Likes Like |Link to Comment
  • Apple: 5 Is The Magic Number [View article]
    If it does touch 7.1 Million it will be with a very long pole. Like one that is 2.1 million users long.
    Jul 20, 2015. 09:48 PM | 1 Like Like |Link to Comment
  • Apple Earnings Will Blow Past The Pundits, Again [View article]
    Is the fingerprint sensor on the Samsung S6 reliable?
    Jul 19, 2015. 03:40 PM | 1 Like Like |Link to Comment
  • Netflix And Pricing Power [View article]
    jensign57, I did not know that. Not exactly the same rates Apple got :)
    Jul 19, 2015. 02:03 PM | Likes Like |Link to Comment
  • Apple iPhone: Why Slightly Bigger Means Much Better [View article]
    Unrelated, but I just noticed there is an ad for Hidden Valley Ranch Dips on the left column of this page on my computer. I thought it seemed out of place, till I realized they were trying to get me to "buy the dip"!

    Now where was this ad last week when AAPL was in the low 120's?
    Jul 19, 2015. 12:50 PM | 2 Likes Like |Link to Comment
  • Scanning The SA Family For Alpha: 6228371 [View article]
    Paul, Good point. And if you spend enough time in the gold bug neighborhood of SA, you realize people don't even agree about what constitutes money!
    Jul 18, 2015. 12:54 PM | 9 Likes Like |Link to Comment
  • Carl Icahn sells off remaining Netflix position [View news story]
    510432,

    You make a fair point. I have tried to acknowledge that their revenue growth has been tremendous. They are clearly paying to grow, not paying to tread water.

    If it is true my focus here has been on one quarter it is because it is the most recent quarter. I was looking at where their money is being spent. All the revenue in the world will not generate earnings unless it exceeds costs. It is important to realize that Netflix has a real growth engine running. They are adding subscribers and growing revenue at an amazing clip. But to run the engine this hot takes enormous fuel. Maybe they will reach escape velocity and maybe they won't. I agree with you that it is important to take in the whole picture. That includes revenues, costs, subscriber growth, pricing power, content costs... the whole nine yards.

    I am not bearish on the company. I think it has many good years ahead. I do think the share price has gotten ahead of itself. I could also be wrong. It wouldn't be the first time!
    Jul 18, 2015. 12:45 PM | 1 Like Like |Link to Comment
  • Netflix And Pricing Power [View article]
    Debt has been their preference so far. And why not with such low interest rates? But with their new ceiling on share authorization standing at 5 billion and a stock that is up substantially even from when they had their last bond sale (not to mention impending interest rate increases), I suspect they will perform a secondary offering eventually. Unless of course cash flow improves from something like a rate increase as you describe.
    Jul 18, 2015. 12:02 PM | 1 Like Like |Link to Comment
  • Netflix And Pricing Power [View article]
    How and why would you think "contribution profit" translates to EPS?

    Contribution profit is some voodoo metric that Netflix uses. It is not earnings. If it were earnings, their EPS for the most recent quarter would be calculated in the same way you came up with 6.69 -- by dividing the contribution profit by the number of shares. That would be $0.58 EPS. But it wasn't. It was $0.06 a share.

    It is valid to show that a price increase would generate more money, but suggesting it is "EPS" is wildly misleading.

    The use of current outstanding shares without any dilution by 2017 is also a mistake (though a much smaller one). Share count has increased 2.8% over the last two years, and it is reasonable to assume it will be at least this high in the next two years. There is of course the possibility that NFLX will leverage its astounding share price to generate some capital with a new issue. Their cash burn suggests they will either need to issue more shares or borrow more money, and with a share price as high as theirs is, they'd be silly not to take advantage and issue more shares. But that is admittedly speculation. Stock option awards that result in share dilution is a fact of life, though.

    It is indisputable that if Netflix grows subscribers and increases the subscription cost, they will make more money. But the assumptions here seem arbitrary and the conclusion spurious.
    Jul 18, 2015. 03:05 AM | 6 Likes Like |Link to Comment
  • Carl Icahn sells off remaining Netflix position [View news story]
    I'm comparing to the same qtr of the previous year. Exactly what you were doing for revenue. Originally I thought you misunderstood my methodology. I am starting to think you are just unwilling to accept what the data is saying.

    Don't take my word for it. Download their income statements and balance sheets and look for yourself. Their expenses are growing like mad. Other YoY comparisons for other recent quarters show the same thing.

    And their cash burn is undeniable. They didn't borrow 1.5 billion in q1 for fun. They needed the money. Revenue is growing at a great clip. I agree with the point you made. But it is only half the picture. Expenses are growing fantastically as well. It's all in their own statements.
    Jul 17, 2015. 06:58 PM | 2 Likes Like |Link to Comment
  • Carl Icahn sells off remaining Netflix position [View news story]
    510432,

    My increases are based on YoY growth using Netflix's own financial statements available on their website.

    Marketing cost in q2 2014 was 120.7 million.
    In q2 2015 it was 197.1 million.

    G&A was 60 million in q2 2014 and 95.9 million in q2 2015.

    And they've already booked 391.8 million in marketing in 2 qtrs, so I don't know how much faith I'd put in the estimate of $750 million for the year.

    I was using the same YoY by quarter style that you were using. I used a spreadsheet to do the math. No exaggeration necessary. The numbers are right there.

    If you have any further doubts about my numbers, I'd be happy to go in to more detail. Or you could go get the spreadsheet yourself and play around with the data. As I said, I think this business is fascinating. The numbers are very interesting for a business. High growth, high cash burn. Very dramatic.
    Jul 17, 2015. 10:30 AM | 1 Like Like |Link to Comment
  • Carl Icahn sells off remaining Netflix position [View news story]
    YoY Revenue growth has been terrific at 24%.

    But their YoY costs have grown as well.

    Cost of revenue grew 23%
    Marketing grew 63%
    Technology and development grew 37%
    General and Administrative grew 60%

    And of course the interest expense on their debt increased 150% YoY. (They borrowed $1.5B last quarter).

    Their Net Margin fell from 5.3% to 1.6% YoY in q2.

    You can make an argument that some of these costs will be contained when they exit growth mode, but when that happens, their PE will also need to exit growth mode. Can they earn enough to justify today's share price (let alone next year's price)? I think that is the important question in the long run. And it would take some really high growth in both revenue and margins to make that happen.

    Meanwhile they are still bleeding money as their cash flow was -$229 million last quarter. They are forced to spend aggressively to grow as fast as they need to. It is like running a race in a boat with a leak. Will they make it to the finish line before they have taken on too much water? It's a thrilling story to watch.
    Jul 17, 2015. 01:16 AM | 1 Like Like |Link to Comment
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