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  • Comcast - A Buy With Burke Leading NBCU

    I am going to buy as much Comcast (NASDAQ:CMCSA) as I can get my hands on. Why? Because every piece of television I watched yesterday is a product of NBCU, and I bet it's the same for you.

    From networks such as CNBC, E!, Golf Channel to any of my favorite sitcoms including The Office, 30 Rock, Are You There, Chelsea? or Up All Night; the depth of the NBCU lineup is unbelievable. This winter I watched the Super Bowl on NBC.com from the Hong Kong airport, this spring I have been glued to the NHL Playoffs and this summer I, along with millions of other people looking for something to cheer for, will be tuned into the 2012 Olympics.

    Looking at the breadth and quality of their offerings; it only makes sense to be long Comcast.

    I buy stock in companies that produce quality products. I own Apple because I'm always on my iPhone, Nike because I look like a "Just Do It" commercial when I run outside and Comcast; because I consume their product(s) almost all day.

    Comcast is down this morning, despite a large earnings beat as investors seem to be taking cash off the table in light of a disappointing jobs number this morning & Comcast's recent run (+29% YTD). Comcast's profit rose 30% as the media giant benefited from a 5% increase in broadband subscribers and revenue from it's NBCU unit rose 18% to $5.47 billion dollars.

    Specifically bolstered by advertising revenue related to the Super Bowl, the NBCU unit carried the company to the strong beat.

    Most analysts and authors out there this morning took Comcast CEO Brian Roberts at his word when he warned Comcast's first quarter is traditionally the company's best and not to expect results like the 1Q numbers for the rest of the year.

    However, this year is different and there is one man who is to thank: Stephen Burke. Burke, who spearheaded the On Demand platform and led the successful integration of the AT&T broadband network during his tenure as President of Comcast Cable, is at it again creating value for shareholders and putting the 'team on his back'.

    Burke, who since taking the reins negotiated and inked the deals that brought the NHL Playoffs and 2012 Summer Olympics to NBC networks, has television in his blood (Father was a TV Exec) and it is evident.

    Although many analysts say that the most predictable revenue stream for the company is it's cable subscription service, I believe the most predictable event in this hazy economic environment is that I will turn on CNBC every morning, root my Philadelphia Flyers on in the NHL Playoffs, watch my favorite shows and be glued to the NBC networks during the Olympics this summer.

    According to numbers released Friday, I am not alone, as 929,000 viewers tuned in for the first round of the NHL Playoffs - which ranks as the highest level ever. Want advertising revenue? Put every game on national television and have 32 one-goal games and 16 overtime games. Boom.

    I'm not saying it generates the same per ad revenue as the Super Bowl, but the Super Bowl is one game. With a few weeks of the NHL Playoffs and a few weeks of the 2012 Olympics from London, I expect the 2Q & 3Q results from Comcast to be again carried by revenue generated by NBCU and Steve Burke.

    Disregarding the sporting event driven revenue, the company has additionally successfully focused on it's broadband service and as mentioned earlier, it's TV lineup is unrivaled.

    Now if the cable & broadband units don't carry their weight, Comcast could struggle despite the strength of NBC but assuming they continue to at least flat line, Comcast is a buy. Unless of course you actually enjoy watching washed up hosts on late night (Jimmy Kimmel on ABC) or take pleasure in overproduced reality shows like its 2001.

    Disclosure: I am long CMCSA.

    May 02 11:03 PM | Link | Comment!
  • Money, Power & Nukes
    As this winter has unfolded and the Greek saga has momentarily moved stage left, I have begun to sober up & realign my priorities.

    I, along with the rest of the market, have put more importance on single words that have come out of Angela Merkel's mouth this past year than we have the numerous reports, warnings and signs from international agencies, governments and allies about the serious nuclear threat posed by Iran.

    I feel like about three weeks ago I pulled my head out of the Adriatic sands, began to recount on the last year and realized that I only had a hazy rememberance of the multiple revolutions that had taken place in the Middle East over the past year.

    While on vacation in South Carolina during late January, I slowly came to realize that I had the same level of understanding and remeberance regarding the Green Revolutions in the Middle East as I have of late night trips to Wendy's during sophmore year of college - I don't remember who was involved or why it happened; and I only know it happened because I woke up with chicken nuggets in my bed - or in this case with the headlines thrown in my face throughout the summer and fall in the elevator at work.

    Now I am obviously discounting my understanding a bit for dramatic effect, but honestly, I think the market has massively underappreciated the historic political and economic effect these revolutions have had in the area and on the global diplomatic stage.

    With the frustrating feeling of not knowing everything fresh in my mind, I, to the frustration of my ever under-appreciated family, dove back into my research, this time focused not on the words of a freely elected leader of Germany, but instead on those of erractic power-hungry leaders in the Middle East.

    As I have come up for air, I have found myself unable to avert discussing Middle Eastern politics with everyone from my 2 year-old nephew to my dentist. It's all I think about because I am excitedly frightened.

    In my mind I have painted a picture of what I think may unfold and it looks something like this:

    Ahmadinejad has a terrible situation on his hands. Despite his best efforts to develop nuclear weapons (which have been abated through the extension of deadlines and lack of serious sanctions until recently) and effectively gain leverage on the West, he has been unable to lock it up. In the mean time the global recession has cratered on the Iranian economy, his economic policies & political strategies have failed and all of this has taken place at time during which social media has proven to be a very effective mobilization tool for young educated citizens (see Stop Joseph Kony video for an example of the power of social media in organizing and mobilizing movements)

    Last week when Netanyahu visited Obama, it was fresh on the heels of economic sanctions on Iran which effectively created hyper-inflation overnight by cutting off the supply of Dollars. During the meetings I suspect Obama agreed to supply the necessary bunker busters and in-air refueling jets to Israel if Netanyahu & Jerusalem allowed the most recent non-violent efforts of the international community (currency warfare through sanctions) to unfold and have a political effect. It is Obama's hope that stoking inflation in Iran and worsening the economic environment will allow for the Green Revolution to rise again, and if not gain power, atleast allow for a more moderate President to defeat Ahmadinejad in the May elections and avoid a full-scale conflict.

    But in light of the recent revolutions in the Middle East and the violent, illogical efforts of unpopular leaders to retain power, it doesn't seem likely that Ahmadinejad will simply drift off into the Persian sunset in May.

    I believe Ahmadinejad will continue to antagonize the West, as he did again Monday in Tehran , attempting to re-direct the frustrations of his people & the Ayatollah on external enemies (Israek & US) and as a result the market will only become more anxious.

    As I write this from Texas, the hair on the back of my neck is standing up at the thought of another full-scale armed conflict in the Middle East, this time involving Israel & presumably everyone else.

    It is this exact standing hair risk that has made me reallocate my focus this year and specifically target the sector I believe will see the most volatility as a result of the global political flamethrowing and potential conflict: energy. I believe other investors will have this same hairs stand up when they fully grasp the delicacy of the situation and that will drive the energy sector to outperform into this summer.

    The big boys in the Gulf of Mexico are still undervalued as a result of the Macondo spill and that is where I have been parking my money. With the Gulf of Mexico legal issues rescinding and the 'hair raising' risk premium associated with Iran persisting - I believe RIG, HAL, WFT & BHI are poised to crush it during the summer of 2012. Picture 2008 with no Sarah Palin.

    Anyway, I'll be back rambling when I come up for air again soon. Until then; I'm praying for Iranians in my generation and praying for an American President who will actually play point gaurd, not sit on the bench trying to wave at his mom in the stands.

    Disclosure: I am long RIG, HAL, WFT, BHI.

    Mar 12 6:15 AM | Link | Comment!
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