Mr WaveTheory's Comments

YouTube and Sequoia Go Long Google Stock

Tue, 10 Oct 2006 08:21:10 -0400

Below are the Google (Nasdasq GOOG)/ Youtube comments from Wall Street Analysts. All of the firms below make markets in Google stock and/or options, so take their advice with a grain - make that 2 grains - of salt.

While it is counter to Google's general preference to build rather than buy, and the company already has a similar offering in Google Video, we believe Google recognizes the value of YouTube's leadership position and its strong brand name in the fast-growing video space. … By owning YouTube, Google may be able to bring content holders to the negotiating table earlier and in a more strategic way than otherwise might be possible.
--Douglas Anmuth at Lehman Brothers, who has an "overweight" rating and $530 price target
* * *

Read More Analyst comments on Google Deal

Google's YouTube Acquisition May Just Work

Tue, 10 Oct 2006 01:44:05 -0400

I wrote that Google should buy YouTube and how Mark Cuban was wrong about YouTube. My argument is strictly based on valuation of comparable companies in the space - that is a company like YouTube is more similar to Comcast than it is to WPP. In defense of Mark Cuban, I do want to mention that Mark is right about one thing. All of this is being made possible my magical Google stock which is building in very aggressive assumptions about its growth trajectory. Depending on whose numbers you believe at any given them, Google would have to grow 70-90% annually to justify its current valuations. That is a crazy assumption that investors are making. However, if everyone is crazy, some of us are less crazy than others for doing crazy things. Google, Larry, Eric, and Sergei are not crazy. They are in fact the few who are less crazy than others for doing the deal. The crazzies are the investors and analysts who got the stock to $500 in the first place. More about Youtube deal

GoogTube Would Be Most Expensive, Defensive and Riskiest Acquisiton Ever

Sun, 08 Oct 2006 13:26:26 -0400

I read Mark's blog posting Some Thoughts on Youtube and Google and I disagree with Mark's view. Mark believes that Google (Nasdaq GOOG) would be moronic to buy YouTube. I say they would be moronic not to buy.

There is only one #1 player in any given market as Internet entrepreneurs and investors have discovered with the outsized valuation given the Google. Leaders like MySpace and YouTube deserve significant premiums because they not only are synonymous with the product being delivered (MySpace/social networking, YouTube/video sharing, Google/search), but users gravitate towards those services because of their reputation. It takes no convincing to get a user to try MySpace, YouTube, or Google because chances are someone they know already uses it - and recommends it.

An advertising deal with YouTube would solidify Google as a #1 in video ads, but a buyout would solidify Google as the leader in Web 2.0 video.

Pop Quiz (Multiple Choice). Select the best answer below.
What do you want to be when you grow up? Do you want to be

* A) WPP Group Plc (selling advertising) (Nasdaq WPPGY)?
* B) Viacom, Inc. (broadcasting content) (Nasdaq VIAB)?
* C) Comcast Corporation (the leader in cable television, content and delivery) (Nasdaq CMCSA)?

The answer is ...

Former MySpace Board Member Claims the Site Was Intentionally Sold for Less Than it Was Worth, Files Suit

Fri, 06 Oct 2006 15:09:32 -0400

If Rosenblatt did strike a secret deal with Fox, then I think this would effectively annull any secret payment that has yet to be paid. Who knows. Maybe the Fox people leaked this secret deal to Brad so they can still Rosenblatt. On other hand, I must add that Brad may be underestimating the role that Fox played in promoting MySpace into the number social networking brand.
MySpace ...

MySpace Founder Alleges News Corp. Merger Defrauded Investors Out Of Billions

Fri, 06 Oct 2006 15:09:17 -0400

Most venture capitalists, including those at Redpoint and Vantagepoint Venture Partners, would probably agree with that they sold MySpace too early. However, you can't blame them. After 4 years of lackluster returns (no exits in fact) from their portfolios, Redpoint and VantagePoint were probably ecstatic to show any exit to their limited partners. VCs have bosses too! They are public pension funds and corporate investment funds that rely on these investments to pay for your retirement. MySpace ...

Jupitermedia CEO Attacks Shutterfly

Thu, 05 Oct 2006 12:46:07 -0400

It sounds alot like sour grapes. The truth is that Jupitermedia is not growing that fast either.

I wrote earlier about ShutterFly in the post Will the ShutterFly IPO Fly? in which I wrote that it wouldn't. ShutterFly broke its IPO price just two days after the offering. Read more

Chinese Tech Stock Weekly Update

Thu, 05 Oct 2006 03:57:55 -0400

The difference between speculators and investors is this: speculators care about returns that can generate 5-10x their money, investors care about preserving their capital. Venture capitalists are speculators, because they bet on ideas that have a 1 in 10 chance of succeeding. Speculation makes sense when the odds are good. Mutual fund managers want to make 5% with 80% certainty - and even at that, alot of them fail. I wrote about how to invest in China stocks and the difference between speculating in small China companies and investing in large ones. I will dive into speculation today.

mrwavetheory.blogspot....

Marvell Technology Lowers Expectations In Line With the Semi Industry

Thu, 05 Oct 2006 03:56:23 -0400

I wrote a few weeks ago that Marvell is no super hero. Today, Marvell warned and its stocked tanked 18%. Marvell Technology Group Ltd (Nasdaq MRVL) issued a press release is here. Congratulations to everyone who acted upon it!

* Marvell's acquisition strategy is not working
* Revenues are running short of estimates
* Problems with back dating stock options

mrwavetheory.blogspot....

Is eBay Trying to Buy Online Ticket Marketplace StubHub?

Thu, 05 Oct 2006 03:55:35 -0400

StubHub raised $12 million earlier this year and competes against RazorGator. As you can see, StubHub is kicking RazorGator's A** in terms of traffic.

mrwavetheory.blogspot....

Hedge Funds Are Risky Business: It's Surprising Anyone Ever Lost Sight of That

Thu, 05 Oct 2006 03:54:44 -0400

While the business rags are raving about the big disaster that was Amaranth Advisors (in case you were wondering what an amaranth is: it's a weed), few have talked about the massive losses at Vega Asset Management based in Madrid Spain. Vega, or should we call Vegas, which managed $12 billion just a few years ago and $6 billion in January, now has about $3 billion in the bank. They've lost about $9 billion in assets even more than the $6 billion lost by Amaranth. The Vega Select Opportunities Fund, once the flagship, now manages $1.4 billion. Manager Ravinder Mehra took all that money to Vega(s) and bet against bonds. Oops! He's down 17.5% this year. To make that back, he has to roughly make 35% just to break even. Below is the data courtsey of Lipper.R... More

Plug Power CEO Talks About His Company

Thu, 05 Oct 2006 03:53:29 -0400

HBK is the latest hedge fund to be nailed by the Feds. The fund was caught short selling stocks ahead of their PIPEs. PIPEs are private investments in public equities - they are private stock offerings which means that investors agree not to short sell the stock ahead of the offering, because investors get access to private information. HBK abused the knowledge and short sold stocks of Plug Power Inc. read more

An In-Depth Look at Shutterfly's IPO

Tue, 03 Oct 2006 03:13:45 -0400

Nice post Bill. I would add that ShutterFly has:

* A very large market opportunity
* Serious pricing pressure from Snapfish (including a 50% price cut in the last 6 months)
* A rich valuation.

I looked at the prospectus and here are my thoughts

ShutterFly, Inc.'s pending IPO proves that dot-com IPOs are back. ShutterFly enables consumers to upload, share, and print & print photos online. ShutterFly, Inc. is trying to sell 5.8 million shares at between $13-15 per share in an IPO worth roughly $73 million. With the excitement over photo sharing and the growing popularity of services like FlickR, I took alook at the ShutterFly prospectus to see for myself whether to snap up some shares on the IPO.

Market Opportunity

ShutterFly is going after a very broad market opportunity.
We are an Internet-based social expression and personal publishing service that enables consumers to share, print and preserve their memories by leveraging our technology, manufacturing, web-design and merchandising capabilities. Our vision is to make the world a better place by helping people share life’s joy. Our mission is to build an unrivaled service that enables deeper, more personal relationships between our customers and those who matter most in their lives. Today, with the evolution of digital cameras and technology, millions of people around the world are capturing their memories and communicating in more meaningful ways. We provide a wide range of products and services that allow consumers to upload, edit, enhance, organize, find, share, create, print and preserve their digital photos.
What I like about the photo sharing market is that it takes an existing business that used to be offline and transplants the entire industry online. The company's market is very large and that is why the company has shown some great numbers.

Read More

One Page Annotated WSJ Summary: Friday, Sept. 29

Mon, 02 Oct 2006 09:48:13 -0400

Research in Motion Ltd (NASDAQ RIMM) had a blowout quarter and is up 20% (+15.91) at $101.97. If anything, it indicates that the push email market is still growing very fast. I wrote about Visto's $250 million venture capital financing ( "Google That! $250 million in Venture Capital for Visto!" ) and RIMM proves again that there is an extreme amount of investor enthusiasm for mobile email. MSN is saying that RIM smashed expectations for the quarter. Bloomberg also thinks the numbers were good. The earnings announcement was positive.
Read more

Research in Motion Comments on Blackberry Pearl Reception

Fri, 29 Sep 2006 09:15:08 -0400

Research In Motion Shares Soaring in Pre-Hours Trading

Fri, 29 Sep 2006 09:14:51 -0400

Encouraging Stupidity: Analysts Up in Arms Over 'Outrageous' MySpace Valuation

Thu, 28 Sep 2006 22:18:27 -0400

Forever Geek has a great post on how MySpace is really hyping its 100 million user number to the press. It's a great study. The study checked out 303 profiles and found that 50% of users don't even show up in a month. That's a very high attrition rate! I wonder what happened to those 50 million users?

Here's what I think are possible explanations:

* MySpace users have 2 accounts. Like free email accounts (think Hotmail and Yahoo), many people own more than one account - one for personal email and one for spam. So, if indeed, the average MySpace user has 2 accounts, then it makes sense that 50% of them won't show up after a month.

Read More

Zecco To Offer Free Stock Trading - Threat to Online Brokers

Fri, 22 Sep 2006 13:18:02 -0400

Zecco - Is "Free" a Business Model?

The hot startups today all seem to have one thing in common today - they all have "FREE" as a business model. That is why when I read about Zecco.com, the free online stock trading site backed by the funder of Skype, my eyes rolled over. Have I heard this story before or what? Once and for all entrepreneurs, I would like to address the question that is on every Web 2.0 entrepreneur's mind: Is "FREE" a business model?

Facebook's User Experience Error, and Why Yahoo and Viacom Tried to Acquire It

Fri, 15 Sep 2006 01:30:50 -0400

Good News for VCs and Web 2.0 Companies: Viacom Looking for Small Acquisitions
In a move that probably surprised some investors, Viacom announced there probably won't be any big acquisitions on the horizon. Instead, it will take the venture route, investing in small, emerging businesses that could potentially complement its media properties.

DivX Sets Price Range for IPO

Sun, 03 Sep 2006 01:28:59 -0400

This is far from being a done deal. DivX depends on Google Toolbar for roughly a fifth of its revenue. And with Firefox installing GOogle Toolbar, the market will be saturated. I show that without Google, DivX would not have been profitable.