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Money McBags is the preeminent financial humorist and money maker in the world. While known for his ability to find and invest in undervalued equities, Mr. McBags is also a world class dick joke teller, an aficionado of lovely ladies, and avid reader of books without pictures in them. With... More
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When Genius Prevailed
  • Small Company Update: A Hot Piece of SAAS

    Money McBags wanted to finally get to SAAS today because he has mentioned it a fuckton but has just never found time to cover it in full detail (likely because he has spent way too much time covering this in full detail) and it deserves it's own break out.  This is one of Money McBags' favorite names right now (he likes the name even more than he likes the names Madz Negro, Dick Blewitt, and the soon to be immortalized Harry Baals) so it's time to roll up the sleeves, break out the excel, the thesaurus, and the urban dictionary, and get down to business:

    What the fuck do they do? inContact is the actual name of the company (and Money McBags would love to be in contact with Jayme Langford, but that's a different story), and they have two basic businesses.  One sucks more dick right now than Tori Black in A Shot to the Mouth and is more irrelevant in the long-run than something called Lady Antebellum (or the entire Grammy Awards show) and the other is more awesome than a Mickey Mantle letter.

     

    The crappy business is their legacy telephony business which basically aggregates and provides telecommunications services to companies and that might be one the least interesting and most irrelevant businesses other than providing computer repairs for the Amish.  They basically go to Verizon, Qwest, and Global Crossing and then act as the middle man (the telephony Lucky Pierre if you will) and resell those companies' various telecommunication services and products in a bundled offering to their own clients.  This is and has been the majority of their business and is the main reason no one has given a fuck about this company because frankly, it's just not going anywhere.  As technology gets better and long distance telephony becomes more competitive, reselling other companies' plans has a future about as bright as that of JOEZ jeans, so a big fucking yawn.

     

    That said, the sizzle to this steak or the extra F in the MFF scene is their cloud computing, software as a service (and yes those two terms are mostly redundant but the more Money McBags types them the harder his dick gets because those usually result in premium mulitples applied to a stock) call center business.  This business basically takes all of the big legacy equipment out of the call centers, optimizes the call routing, and allows for call center employees to work at home.  Their 10K has the gory details, but in their words their software:

     

    "includes automatic call distribution (“ACD”) with skills-based routing, interactive voice response (“IVR”) with speech recognition, computer telephony integration (“CTI”) capabilities, reporting, work force optimization, e-learning, call center agent hiring and customer feedback measurement toolsTaken together, the inContact solution creates an integrated solution for call centers, including those with distributed workforces – either at-home or multi-site."

     

    In Money McBags' words, their software is full of fucking awesomeness because it cuts the costs out of an unneeded business expense that traditionally has relied on big upfront equipment spend and ongoing real estate and maintenance costs, while also better optimizing the whole fucking process.  Seriously, Money McBags dreams about businesses like this (such as CNQR, KITD, and fleshlights) because they are scalable, take the place of more expensive alternatives, and automate the process.

     

    So now that we know what this company does, here are the interesting points (though not as interesting as these points):

     

    1.  Their software business is growing ridonkulously fast, even faster than Sofia Vergara's son's reputation on "Take your Mom to School" day.    Since 2006 the software business has grown annually at 240%, 48%, 46%, and probably ~20% in 2010 which is spanktastic.  They are penetrating a market that has yet to take advantage of this kind of software and their business has gone from $4MM in revenue to $35MM in four years and they are both winning new customers (~35 per Q) and also upselling old customers (by adding 22 upsold contracts in Q3 2010).  The obvious question though is what the fuck happened in 2010 that the growth rate was cut in half (in Q3 they said the lost two large customers of ~$225k in revenue), because seriously, that is more concerning than finding pants that fit is for a polyorchid.

     

    Normally, when Money McBags sees a growth rate falling like that huge red flags shoot up faster than a heroin addict trying to get rid of the DTs, and those flags did shoot up, but Money McBags talked to one of SAAS' biggest investors a couple of months ago and was told that the declining revenue growth rate was from an internal sales fuck up (Money McBags has not confirmed this with the company so he is relating information from a third party, and as always, Money McBags is just some random guy on the internet with a predilection for dick jokes and Alice Eve, so take all of this for what it is worth).

     

    The story Money McBags was told is that SAAS tried to launch the next version of their software before it was completely finished and that version didn't have some of the capabilities that the old version had, so customers basically said "fuck you very much" and decided to wait for SAAS to work out the kinks before upgrading or buying the new version.  This caused sales to get pushed out and as a result SAAS told the new version of the software to go fuck itself, stopped trying to sell it before it was ready, and went back to selling the shit that works until the new version is 100%.  As a result, their sales should start to pick up again because the sales force isn't going out with some confusing message about two versions of a software.  It passes Money McBags' sniff test (unlike Paris Hilton's vagina or asparagus urine), though it does raise questions as to management's capabilities.

     

    2.  Their revenue and earnings look deceptively shitty: Without looking at their two businesses separately, their revenue has basically been flat since 2005 at ~$82MM, they have had negative EPS, and negative cash flow from operations until this past year, so um, seriously?  At first glance, Money McBags would run further away from this company than the lovely Meredith Whitney seems to be running away from congress or Gary Busey seems to be running away from sanity, and that is why this company is still under the fucking radar.

     

    Their shitty legacy telephony business has gone from ~$75MM to ~$48MM in revenue and that is masking the growth of their cockriffic software business.  Not just that, and this is really one of the two key points to this whole story, management is OVERINVESTING IN THE SOFTWARE BUSINESS right now because they want revenues to rapidly grow in order to get scale.  Their software marketing costs were up 28% last Q which is outpacing revenues and obviously not a way to run this business in the long-run.  At $100MM in software revenues, this business becomes hella fucking attractive to a CSCO or whoever else has tried and failed with this kind of solution so management is stepping on the pedal to try to ramp up revenues as fast as possible.  Shit, if you strip out that unnecessary marketing costs, the software business would be profitable today.  In 2010, the software business will have lost ~$6.25MM in income while their legacy telephony business will have earned ~$6.10MM in income (EBITDA has been positive for the last 9 quarters).  They are using their shitty legacy run off business basically to fund growth, it's a great strategy, but hidden in their financials which causes fund managers to overlook them when running screens.

     

    3.  The market opportunity is ginormous and scalable, like Kim Kardashian's ass, (though if you are going to try to scale Kim Kardashian's ass, make sure you have an experienced belayer).  In their latest presentation the company estimates this is ultimately an ~$8B global opportunity and again they currently have only ~$35MM in sales so Money McBags will address that opportunity with a "hell fucking yeah" (though throwing that $8B number out is a bit preposterous as it is more divorced from current reality than Lindsay Lohan, but whatever.  Money McBags is sure this is a big opportunity, shit maybe it's only 1/2 of what they think, but if so, that's still a $4B market and they are only ~1% of that right now).  They estimate there are ~3MM call center reps in the US and 72% of them are in enterprise sized contact centers that would be able to use their services which is their current market focus.

     

    4.  Their competition sucks.  They have two competitors, legacy premise based businesses and other software based models. Compared to premise based call center providers, SAAS offers better service, at cheaper prices, with more flexibility, scalability, and security.  It's like going from a palm pilot to an iPhone or dating 2005 Heidi Montag to dating 2010 Heidi Montag.

     

    As for other software solutions, as far as Money McBags can tell no one has yet matched what SAAS can provide in terms of functionality (shit like ACD, IVR, CTI, WFO, and JIZZ solutions.  And only one of those is made up).  Money McBags knows Salesforce.com and CSCO have tried to compete with SAAS but as of now, SAAS still has the best technology (though CSCO should buy them to combine their sales force with SAAS' software in a marriage that would be as cocktacular as peanut butter and chocolate or strings and bikinis, but alas SAAS seems too small for CSCO to care about right now even if the potential market is huge).  SAAS is the only cloud based solution that can offer "telecommunications services with contact handling and performance management optimization."

     

    5.  It fits a need in the market and trends are in their favor.  SAAS' software is basically a cost save to enterprise companies.  It allows people to work from home, it cuts hardware costs, and it increases efficiencies which equates to a 28% cost save for companies with 25 seats all the way up to a 45% cost save for a company with 400 seats.  Now Money McBags is not sure what percent of a company's total cost is typically related to call centers, but a 45% savings in anything is nothing at which to sneeze.  With margins soon to be compressed across the globe as input costs rise, companies need to continue outsourcing and becoming more nimble, and this is one easy way to do that.  Plus SAAS offers the first solution for the middle market that is affordable.

     

    But it's not just the cost save as the trends are all pointing towards solid growth.  Cloud based computing is becoming trendier than Power Balance bracelets or NSFW muff guessing.  With more people already out of work, working from home is becoming an easier option and SAAS allows call center reps to stay the fuck at home and thus not have to be functioning members of society.  Most importantly, CRMs/ERPs/whatever acronym you want use are looking for this kind of bolt on type offering.

     

    6.  There exists a place in this country called Sacopee. Yep, Sacopee, Maine, its mascot is the fighting colonoscopy bag (or the Hawks, potato-puhtato) and it is located just south of Mouthnipple, Canada.  This of course has nothing to do with SAAS, but it is something Money McBags thought you would all be curious to know.

     

    7.  SAAS is a SAAS model which is the best revenue model in the world. SAAS is software as a service and it basically means companies sell the software on an ongoing basis and thus the revenues are recurring and stickier than the pages of an old Juggs magazine.  This model is much preferred to the traditional software model (though not preferred to the traditional runway model) where you actually sell the software in a one-time transaction and then maybe get some maintenance fees because this doesn't lead to the lumpy quarter problem and it is easier to predict revenues.  The point is, Money McBags loves this kind of recurring revenue model and SAAS has 92% retention rates (which is actually a bit low, but given the ponzeconomy™ it is possible that they saw an inordinate amount of customers going out of business).

     

    8.  There are a lot of fucking issues:  They are unprofitable and have had to raise funds in the last year, there are bigger companies out there who have more resources to eventually do this better, their management team took way too long to put all of this shit together, their legacy business blows, there is some sort of issue at the playboy mansion causing people to get sick (perhaps Pauly Shore went skinny dipping in the grotto), sales in their software business are slowing (but again, Money McBags hears their management team just cocked up the sales pipeline in the last few Qs to try to push out a new version of the software, so that should be getting better, but one never knows), they lost two large customers last Q (~$225k in revenue), and margins fell.

     

    Valuation: Valuation gets a bit tricky because the company is overspending on marketing right now to ramp up quickly.  That said, lets look at a reasonable upside scenario,.  Say their legacy telephony business stays flat...TO READ THE REST GO TO THE AWARD WINNING WHEN GENIUS PREVAILED....

    Tags: SAAS
    Feb 15 9:36 AM | Link | Comment!
  • Economic Update: Lies, Damn Lies, and The B(L)S Jobs Report

    Wow.  Just f*cking wow.  Even with stability in the Middle East more fragile than an osteoporosis sufferer's boney coccyx as Egyptian government officials join in the protests against their own government (which is a bit like Alan Greenspan protesting against fiat currency or Camille Crimson protesting against hummers) and Jordan contemplates reforms to lessen the monarchy's power (and newsflash King Abdullah, you might want to do some reading on Czar Alexander II because once you let Pandora out of the box, she's not going back in, it's called entropy (though if it were Brooklyn Decker's box that she were let out of, perhaps she would go back in)), with the jobs report not just relatively awful by missing guesses by a f*ckton, but absolutely awful by showing fewer jobs are being created than in Whoopi Goldberg's pants (and Money McBags is not entirely sure what that means), and with propoganda being spread to impressionable of age females that a rise in cancers are linked to oral sex, the market still went up.  Unf*ckingbelievable.  As the market seems to care about geopolitical unrest, a national depression, and anything tangible about as much as Mark Sanford cares about family values, all we can do is buy the f*cking rip.

     

    The big news was obviously the B(NYSE:L)S jobs report which headlines lauded as a fantastic report as the unemployment rate dropped to 9.0% in a mathematical sleight of hand that would make Fibbonaci proud and Bernie Madoff's dick hard, the private sector added 50k jobs which would have been more if not for that frisky weather (and um, the f*cking depression), and the last two months of data were revised upwards by 20k each month (apparently the checks got lost in the mail).

     

    So while analysts try to spin this number as positive (even though it was more disappointing than the book Cooking with Pooh is for coprophiliacs who order it sight unseen) as it was way below their guesses of 145k and way f*cking below the whisper number of 180k (and as always, Money McBags only cares about whisper numbers if Kelly Brook is doing the whispering and the number is 69), Money McBags will break it down for you and show why it was so ugly that not even Bill Clinton would sleep with it.  So below are Money McBags' thoughts on the B(L)S employment situation report and the Street's reaction to it:

     

    1.  Using the weather as an excuse for the ginormous miss is just f*cking absurd.  Honestly, the weather has now been blamed for everything from lower retail sales (except retail sales were actually decent), to the Protests in Egypt, to the Fat Boys breaking up.  Analysts point out that a big reason for the miss was that construction jobs were down 38k and transportation jobs were down 32k and those two sectors are most levered to bad weather (construction is also most levered to the glut of foreclosed homes available and the crash of home prices, but that's not important).  That said even if we add back the 70k jobs that were "weather related," the jobs report number would still be 25k below guesses.  But that is not the most important point here.

     

    The most important point is that these numbers are SEASONALLY F*CKING ADJUSTED (bolding intentional, because, yes Money McBags is yelling) which means that they should TAKE IN TO ACCOUNT THE WEATHER because, you know, THAT IS THE WHOLE F*CKING POINT OF SEASONALLY ADJUSTING SOMETHING.  Now look, Money McBags is no Willard Scott (and not just because he doesn't have a GMILF fetish), but as far as he can tell, the weather this past January wasn't any kind of anomaly (like Carrot Top's career), it was just kind of an average January, or at least within one standard deviation of a normal January.  So given that, the seasonal adjustment should have seasonally adjusted for the f*cking weather and thus this huge miss shouldn't have been caused by a little snow.

     

    2.  The economy didn't really add 50k jobs, it only added 36k because the government cut 14k jobs which is a trend that promises to get worse than Rick Rolling or promise rings.  That said, there were 11k fewer temporary jobs which took away from the numbers, so one could say 47k permanent net jobs were added to the ponzeconomy™.  Either way, you need to keep your eye on these government numbers because they are only going to get worse (more importantly though, you need to keep your eye on these numbers).

     

    3.  The 9% unemployment rate is more misleading than Citigroup's corporate derivatives team and it only takes third grad math to figure it out.  Just think about it.  All else being equal, if only 36k jobs were added and ~150k people enter the workforce every month, right off the f*cking bat we have ~100k more unemployed people going in to the population, and using the theory of something called Mathematics, that should cause the unemployment rate to increase, not decrease.  Of course the actual calculation has more moving parts than a Rube Goldberg machine or the Octomom's vagina, so it's not quite that clear cut (though it should be), but the point is that just using the headline numbers and saying unemployment dropped by .4% is intellectually bankrupt.

     

    Here is a simpler, logical way to think about it.  The unemployment rate went from 9.4% to 9.0% with the addition of 36k jobs, so that would imply that for every 9k jobs added, the rate goes down by .1%, holding everything else equal (and Money McBags would like to hold these equal).  So, using basic math, for a 1% drop in the unemployment rate, the ponzeconomy™ just needs to add 90k jobs and thus to get the rate down from 9%, to a cockposterous 0% full employment, never been reached before level, the ponzeconomy™ just needs to add 810k jobs.  Ok, sounds simple enough, but here is the part where our minds get blown (and please let it be Alice Eve doing the blowing, and it not be our minds), according to B(L)S' report, there are 13.9MM unemployed people, so if 810k jobs get added (and thus take unemployment to absolute zero, according to our calculations above), we'll still have 13.1MM people unemployed.  That's right, using the B(L)S' math, 13.1MM unemployed people equals a 0% unemployment rate which only makes sense in the land of Make Believe or Art Laffer's head.  Perhaps it's a derivative of the Heisenberg uncertainty principle, we'll call it the Hildasolis uncertainty principle where the more you know the unemployment rate the less you know the number of unemployed.   So just step back from the numbers and think about this for a second (and then step back from that and think about this for a few hours).

     

    Anyway, the real reason unemployment dropped by .4% was that more people simply dropped the f*ck out of the workforce and thus the labor force participation fell from 64.3% to a record low 64.2%.  If the labor force participation rate had stayed at 64.3%, an extra ~300k people would have been added back to the unemployed bucket and back in to the labor force, boosting the 13.9k unemployed to ~14.2k and yielding an unemployment rate ~9.3%, which is pretty much flat with last month's number (though there is still some fudging in there that would bring the rate higher, but whatever).

     

    In all honesty, this remains the most brilliant government strategy since giving Marilyn Monroe a key to the back door.  Last month Money McBags called it the "F*ck off" strategy because simply telling the unemployed to f*ck off, and thus kicking them out of the labor force, is the quickest and easiest way to get the unemployment rate down.  Sure it doesn't make the economy better, and sure it is a bit heartless, but remember, the important thing isn't the numbers, but it is the perception of the numbers, and a 0% unemployment rate would be perceived as something as awesome as Tolstoy's War and Peace or Malene Espensen's t*ts.  So if you all elect Money McBags to office in the next round of elections when he heads up the BOGUS party, he promises you in his his first afternoon of work he will cut unemployment to 0% with just the stroke of a few keys.  Now that is some f*cking change we can believe in (and apparently another change we can believe in is ending sentences with prepositions, as somewhere the great William Safire rolls over in his grave).

     

    4.  Just some quick stats:  6.2MM of the 13.9MM unemployed (which is 42%) are long-term unemployed, with the other 7.7MM being pre-long-term unemployed.  2.8MM were considered marginally attached to the workforce (up from 2.5MM) and they are as marginally attached to the work force as Egyptians are marginaly attached to Mubarak or Taco Bell is marginally attached to beef.  Of those not counted in the labor force, 1MM of them are "discouraged", which means the other 1.8MM are "f*cking discouraged."

     

    5.  The U6 unemployment rate was 16.1%, unless you want it seasonally adjusted (and the seasons Money McBags likes in his adjustment are cayenne pepper and stripper juice), then it was 17.3%.  And since the U6 rate is a better measure of all employment because it includes the discouraged, the perplexed, and Mickey Rourke, and since it also negates the effect of the "f*ck off strategy," it is more bizarre that we don't refer to this when talking about unemployment than it is that trying to grow meat in a lab is so f*cking hard (because really, if you want to grow meat, just look at a picture of Sofia Vergara).

     

    6.  Whatever this meinmyplace thing is, it is deliciously awesome (though unclear why it takes so long to load).  And yes, this has nothing to do with the jobs report, but one can only look at made up numbers for so long without a break.

     

    7.  The last 2 months were revised up by 40k lifting job creation in November to 93k from 71k and in December to 121k from 103k, while dropping the B(L)S' credibility from none to Lindsay Lohan.  And this brings us to our most important point:

     

    8.  ALL OF THESE NUMBERS ARE FULL OF SH*T ANYWAY (even moreso than Manuel Uribe's colonoscopy bag):  The B(L)S manipulates the numbers more by using seasonal adjustments, the fictitious Birth/Death goal seek model, benchmark revisions, and telling numbers it won't love them anymore if they don't do what it says.  It is these benchmark revisions which shoot down any credibility the No Labor Department might have had.  For instance, the 2.3MM job losses from April 2009 to March 2010 were just revised up to 2.6MM.  Come again?  And if you are Jennifer Metcalfe, then by all means, please come again.  But seriously, how the f*ck can they change numbers from over a year ago?  Sh*t, if tomorrow the NFL awarded the Arizona Cardinals the 2009 Super Bowl or the AVN awarded Kelly Madison 2010 MILF of the Year, don't you think those fine organizations would lose credibility (even if the lovely Ms. Madison deserved it)?  So why did Money McBags just waste all of his time analyzing this sh*t if it will just be a different number next month, next year, sh*t even next f*cking decade?

     

    Here is an example of how ridiculous these numbers are:  The Birth/death model black box model (and as always, the only model with a bigger black box is Nyomi Banxxx) had all of its numbers from the past year changed in the benchmark revisions.  No really, the numbers which were completely made up anyway, are now a different set of completely made up numbers so any analysis done with them (and Money McBags always shows the preposterousness of them) was all for f*cking naught.  Money McBags was so perplexed by these numbers having changed and by the birth/death model number for January coming in at an unheard of -339k (which is so far out of the norm that not it is not even within a Kim Kardashian fat tail of the mean), that he emailed some guy named Mish to see if he had any f*cking clue (and Mish got all down and dirty with it so Money McBags wouldn't have to, so enjoy, and if you need something to wake up after reading that, enjoy this).  So the 36k jobs added include a non-seasonally adjusted 339k somehow mashed in there.  Sounds credible to Money McBags.

     

    9.  Ok, Money Mcbags has harped on the math plenty so far, but there is one more thing he is having trouble understanding (other than people who watch American Idol and how Minnie Driver has a career), so bear with him.  Last month, there were 14.485MM people unemployed, this month there were 13.9MM, for a difference of 585k.  So if 36k got new jobs, and the labor force was reduced by 504k (though the people not in the labor force only went up by 319k, so um, explain that, oh right, the total population fell by 185k somehow, must have been a breakout of that terrible "rounding error" disease), where did the other 45k to 230k people go?

    -

    December Unemployed 14,485 Reduction in Labor Force (504) Jobs Added (36) ???? (45) January Unemployed 13,900

    or

    December Unemployed 14,485 Increase in "Not in Labor Force" (319) Jobs Added (36) ???? (230) January Unemployed 13,900

     

    Perhaps the unaccounted for are the new "Lost Generation."

     

    As usual, if you care about the made up numbers that are going to change anyway, here are the details from Table B:

     


    January Change in Jobs # Government Jobs
    Govt Full Time (14,000) Total Govt (14,000)

    Permanent Private Sector Jobs
    Financial Servives (10,000) Other 5,000 Professional Services 42,400 Information (1,000) Transportation (38,000) Retail trade 27,500 Wholesale Trade 9,200 Education and Healthcare 13,000 Leisure and Hospitaility (3,000) Mining 1,000 Manufacturing 49,000 Construction (32,000) Plug (1,700) Total Permanent Private Sector 61,400

    Temporary Private Sector Jobs (11,400)

    Total Permanent Jobs # 36,000

    Birth/Death Model Plug An anomalous -339,000

    Actual Jobs # Go F*ck Yourself

     

    So now that we have established that the jobs report was not just awful, but manipulatedly gibberish and likely to be changed later anyway, you should all write your news reporters/columnists/prevaricators when they hype up how great the drop in the unemployment rate was.  Sh*t, even Bloomberg ate a dick on this one as they reported:

     

    "The improvement underlying the drop in the unemployment rate is in sync with reports that show the economy is gathering momentum, which in turn would bolster job growth in coming months."

     

    Umm, Bloomberg, please read the above 2k words to see THAT THERE WAS NO F*CKING IMPROVEMENT UNDERLYING ANY JOBS REPORT (except for 36k more jobs which will do as much for fixing the economy as a kleenex will do for Barbra Streisand when she sneezes).


    Anyway, Money McBags always has more at THE AWARD WINNING WHEN GENIUS PREVAILED.  And if you need your Money McBags fix during the day, he is known to frequent the Twitter, the Facebook, and the Rick's Cabaret where he is not just a shareholder (who happens to be up 13% in a month since buying back), but he's also a client.

    Feb 08 10:08 AM | Link | Comment!
  • Surely You Can't Like CRUS. Money McBags Does Like CRUS, and Don't Call Him Shirley.

    Money McBags did a quick analysis of CRUS yesterday and today he was able to go through their transcript and he has to say, he was actually pretty f*cking surprised by how positive management sounded so perhaps there is still nice upside here.  Below are Money McBags' takeaways from the call.

     

    1.  This company is still driven by AAPL, but sh*t, if you're going to be driven by something other than Malene Espensen, then why the f*ck not AAPL?  54% of revenues came from AAPL and they "are engaged with them on multiple new developments" their relationship continues to be "outstanding," visibility "remains excellent" and they expect to grow revenue with AAPL "substantially this year."  And yes, for any CRUS shareholder that should have made their dicks hard (or for female shareholders, their pedicures dry quickly).  As the AAPL relationship goes, so goes this company and while AAPL has a reputation for not letting suppliers get any kind of bargaining power over them, CRUS is still just one little f*cking socket in what AAPL does, like a tick on a whale, or a mole on Gabourey Sidibe.  In theory, AAPL likes CRUS because their audio chips kick the sh*t out of the competition and there is supposedly a pretty wide gap between CRUS and their competition (though not as wide as the gap between the hotness of Mark Sanford's mistress and his cheated on wife, which explains why he eschewed his BS family values schtick like all good politicians).  So as long as AAPL is concerned about quality, there is no reason for this relationship to end any time soon, that said, Money McBags does worry about pricing power even if guidance is for that to be steady.

     

    2.  There is now a tablet opportunity for their chip and this could be really exciting, like an invitation to Charlie Sheen's new house. Management was kind of coy about this on the call saying:  "It is one of the ones you would want to be in. I'm not going -- we're not in all of the ones I would like to see us in the long-term but at the same time, it is definitely in one of the better names. It has got a pretty good channel.  A customer we've currently got a reasonable amount of business with as well." So, umm, it certainly could be the iPad and if so, that could be a f*cking huge boost to earnings because iPads continue to sell faster than money or tickets to an Alice Eve taint tickling booth.  This bears keeping an eye on (while this bears keeping two eyes on).

     

    3.  There could be some upside in the energy business, but who the f*ck really knows.  This Q was hurt by their seismic business which they said on the call is always hard to forecast but picked back up at the end of the Q.  They also seem to remain bullish on their power meter business, that said, they talked about a really f*cking interesting potential opportunity with their LED business.  Now look, Money McBags is no engineer (though he is always happy to be first in line to run a train if need be), and he's not 100% sure of what this LED market opportunity really is, but on the call management said about the LED potential: "if you look at the landscape in the market place, sometime between now and 2015, you go from a $40 million unit kind of a market, $40 millionish to $1 or $2 billion, and so you know, we're probably not going to get 100% of that market but I don't mind splitting a billion units." So um, who doesn't like a market that is going to grow from nothing to f*cking something really interesting in four to five years.  Money McBags wouldn't forecast anything from this in his numbers, but it is definitely something that could provide upside.

     

    4.  Management is kind of a bit douchey.   Ok, Money McBags is sure this sounded better than it read, but CRUS' CEO said "Our biggest problems are that our largest customer is the best company in the world" and "It will be a challenge to hire enough engineers that meet our standards in order to staff everything we want to do going forward." First of all, Vivid Video is not their largest customer, so the first statement is false, but secondly, hey good for them that they are all up in AAPL's dilznik right now (and that may be an overly technical term, but whatever), but that statement reeks of the beginning of hubris and this company has nothing about which to be cocky since they have almost no control over their sales.  Yeah, it was a meaningless and kind of flippant comment, but Money McBags knows the second you start getting cocky about sh*t like that and take your eye off the ball, you figuratively and literally get a dick in the face.  This is what Money McBags would have liked to have heard "our biggest problem is that even though out largest customer is the best company in the world, it means we have to try even harder to diversify our revenue base and continue to raise our standards to meet that large customer's needsFinding the talent to keep doing that will be challenging, but our goal is to continue to find success for the long-term."  Was that so f*cking hard?  And trust Money McBags, if he is the one coaching you on CEO-speak, you may want to take that extra management class.

     

    5.  NOLs are coming (and not just because they recently found the work of Riley Steele).  This isn't that big of a deal, but it should make their GAAP financials look a bit different from now on.  They are going to take a $100MM non-cash income benefit in Q4 in order to properly value their deferred tax asset and then use a 35% non-cash tax rate for.....READ THE REST AT THE AWARD WINNING WHEN GENIUS PREVAILED

    Tags: CRUS
    Feb 01 9:37 AM | Link | Comment!
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