Seeking Alpha


Send Message
View as an RSS Feed
View krk's Comments BY TICKER:
Latest  |  Highest rated
  • 3 Ways To Increase Shareholder Value At Best Buy [View article]
    Seems Google has been quite effective in enforcing UMRP.

    Check the prices for a Nexus 7 16GB 2013 version (2B16) that I was shopping for recently. Pretty much $229 everywhere (even at a warehouse club like Sam's Club).

    Interesting thing is, Google is undercutting its retail partners by offering a $25 gift card for buying direct!

    And seems like its will be following this playbook too.
    Dec 11, 2013. 11:09 AM | 1 Like Like |Link to Comment
  • 3 Ways To Increase Shareholder Value At Best Buy [View article]
    Can you talk about UMRP (Uniform Minimum Retail Pricing) that brands like Apple & Bose have been doing for a long time and Sony, Samsung, Panasonic,LG, Nikon now do selectively on some products?

    It used to be mentioned often, but not much lately, as a way for brands to stem value erosion by online discount channels and help support the survival of B&M showrooms which are vital for a brand's marketing ecosystem.
    Dec 6, 2013. 07:34 PM | Likes Like |Link to Comment
  • The Pricing Power Tell [View article]
    Can you apply the same analogy of railroads vs. coalmines to online commerce platforms vs. 3P merchants?
    The duopoly now are Amazon and Ebay.
    And with Alibaba on the horizon.

    All other wannbe 3P platforms from Wal-Mart to Google to Sears to Best Buy have so far simply floundered in this regard.

    Nov 27, 2013. 04:56 PM | Likes Like |Link to Comment
  • You Should Take Profits In Amazon [View article]
    Thanks Michael for clearing a few things.
    But why is it not okay to add that cash back in?
    After all they are phantom dollars as the employees were paid in wampum whose book value is very little regardless of what the sugar daddy market values it at.
    And at these elevated valuation, the dilution for that level of payroll underwriting is quite negligible (about 1%/year?).
    And it is all turning out to be a virtuous cycle as far as Amazon is concerned where it is accessing very low cost financing for talent payroll as it builds out its runway for game changing stuff, like AWS which in turn may end up helping it grow into its valuation, a luxury afforded none of its competitors.
    Nov 22, 2013. 06:31 PM | Likes Like |Link to Comment
  • Nobel Laureates Fama And Shiller Duel Over Bubbles [View article]
    Let me share some excerpts from a recent Hussman commentary pertaining to the relationship between stock valuations and interest rates:

    Stock valuations are far less sensitive to 10-year Treasury yields than Wall Street seems to believe. It turns out that the presumed one-to-one relationship between the 10-year Treasury yield and equity yields (specifically the “forward operating earnings” yield) is nothing more than an artifact of a 16-year disinflationary period between 1982 and 1998, when bond yields declined diagonally and a secular bull market in stocks gradually morphed into a valuation bubble. Outside of that span, the tight relationship between stock yields and bond yields assumed by “Fed Model” has a laughably dismal record, and yet Wall Street and Janet Yellen appear to reference it as fact because they are evidently too convinced by the rules-of-thumb in their heads to actually examine the data (see the August 2007 piece ( : Long Term Evidence on the Fed Model and Forward Operating P/E Ratios) for a trip down memory lane, as I tried to disabuse the same beliefs at that market peak. Spoiler alert - nobody listened, and the market plunged by 55%.
    Nov 22, 2013. 05:15 PM | Likes Like |Link to Comment
  • You Should Take Profits In Amazon [View article]
    When you say ".. the value of the stock the employees bought..", did you mean to say the value of the stock the employees were given as RSUs?

    And can you elaborate on the relationship between the change of equity and the unrecognized RSU costs that Amazon reports? As I understand, the fair market value of the RSUs given to employees is recorded as paid-in-capital and expensed as an unrecognized compensation cost. What are the implications of this shrewd way of financing their payroll by a sugar daddy stock market? I can only see it as a great way of getting cheap capital with marginal dilution at these elevated levels.
    Nov 22, 2013. 03:51 PM | Likes Like |Link to Comment
  • Wal-Mart Or Amazon? Who Will Be The Winner? [View article]
    I think Wal-Mart is a wrong competitive benchmark for Amazon.

    While merchandise retail is all of Walmart and most of Amazon, the later is also so many, many things as it evolves into more than an online discount retail powerhouse. Efforts to pin down its potential is like the story of "Blind men and an elephant" and that is great fodder for Amazon's institutional boosters and patrons. And the market sentiment favors their spin over any bottom-line, rational-projection exercises that Paulo Santos here on SA so valiantly attempts.
    Nov 22, 2013. 01:36 PM | 1 Like Like |Link to Comment
  • Compugen Is Doing Something Amazing [View article]
    Not being snarky, but just curious ... with the potential you articulated so well, why aren't you long CGEN?

    And what do you think about CGEN's spin-off Evogene:EVGN which just recently had its US IPO (it used to trade in Tel Aviv). In their 3Q CC, Compugen indicated owning a $4 million position in Evogene available for sale. Don't know if they unloaded in the IPO. EVGN seems promising and has been doing well since their US debut.
    Nov 22, 2013. 11:06 AM | Likes Like |Link to Comment
  • In Hotel QE, You Can Check In But You Can't Check Out [View article]
    Mark CFA-
    There are all the semantic gymnastics about "printing money" akin to Clinton's meaning of the word "is" which make my eyes glaze over.

    The issue is whether these QE programs will result in the economy getting showered with more credit than its output capacity - the classic too much money chasing not enough goods.

    But banks are content with the 0.25% they earn on the reserves, as at the QE-engineered suppressed rates it is not sufficient to compensate them for the credit risk i.e. return of the money and the possible reversion to the mean in rates.

    With the bank's balance sheet now repaired both because of the post-crisis changes in mark-to-market rules and decline of rates at the high end of the curve which helped them lightened their balance sheet of MBS by selling to the Fed at inflated prices, it will be a steeper yield curve which tapering is expected to bring about that will make it worth their while to convert their reserves into loans and that may actually help boost economic activity and inflation. OTOH, regulations regarding credit standards will dampen their capacity to lend.

    As a layman with just a rudimentary understanding of the voodoo of monetary policy, common sense indicates that the Fed continuing its QE is actually suppressing the pulse of the economy and may actually be contributing to frustrating their twin QE goals of higher employment and inflation.
    Nov 21, 2013. 07:14 PM | Likes Like |Link to Comment
  • Survey says: Online prices lower at Amazon than Wal-Mart [View news story]
    I think Wal-Mart is a wrong competitive benchmark for Amazon. It has a higher minimum order size for free shipping of $50 vs. Amazon's $35 (though it has free in-store pickup and returns for many items with no minimum order size). Plus, their customer service sucks.

    There are other emerging developments which might evolve to more effective push back at Amazon. For instance, American Express has teaming up with ShopRunner (which had a recent large investment from Alibaba) where Amex card holders get free 2-day 2-way shipping without order minimums. This should diminish the appeal of Amazon Prime regardless of the recent move by Amazon to raise the min order size to $35 for non-Prime free shipping in order to nudge shopper to sign up for Prime.

    Notable ShopRunner partners are ToysRus/BabiesRus, (owned by Walgreens), FTD, MacMall, NewEgg, TigerDirect, PetsMart, etc.

    Target too offers a not well publicized free shipping program to its in-house credit card (RedCard) account holders with no order minimums plus a 5% discount.
    Nov 18, 2013. 12:38 PM | 1 Like Like |Link to Comment
  • Losing Relative Market Share To Wal-Mart And Google [View article]
    Yes Paulo, good points in breaking down the aggregate GM.

    But nonetheless, concerning the issue of "price-match", I am still perplexed by the hollowness of the competitive response by big box B&M and Amazon bear's misguided expectation that it will help brake the relentless juggernaut from rolling over them.

    Only hope is Amazon stumbling from overreach and consumer fatigue with online commerce and will have nothing to do with the motley crew of competitors who seem so bafflingly inept.
    Nov 17, 2013. 11:55 PM | Likes Like |Link to Comment
  • Losing Relative Market Share To Wal-Mart And Google [View article]
    "..Walmart is running commercials on television that they will match pricing at Amazon. So is Target. "

    I don't understand the competitive strategy of price-match. As a customer, in an online shopping scenario, why would I bother with jumping through the hoops to get a price-match from Best Buy/Wal-Mart/Target... when with another click I could as well proceed to order from the place I already found has a better price?

    Only one I could think of would be the faster gratification and free store pickup regardless of order size and convenience of return to store.

    And why should it be a "price-match on demand"? That implies an admission that their prices may be higher, but they would grudgingly sell for less when shamed about it. Are they thinking this would promote a form of reverse show-rooming where shoppers research and decide on what to buy on Amazon and then schlep to their store to get it? Too much trouble for a shopper and moreover, the store might not carry that item.

    Better policy would be for them to loudly declare that they pro-actively monitor prices and sell at prices that match or are better than the competition. But in the event they goofed up in their pro-active price-match, will match it none the less when it is brought to their attention. This will be a policy with greater integrity, than the one now where the burden of vigilance is on the customer. I am sure they can work out an arrangement with their vendors where they receive concessions on their costs when they practice price-matching. Anyway, with their volume leverage, I am sure their wholesale costs are just as good as what Amazon enjoys. It is not as if the margins are paper-thin like the often talked about 1-2% of Amazon's. That is their operating margin after factoring in their aggressive investment expenses. Their Gross Margins are something like 28%, which might be slimmer than what these big box B&M’s are accustomed to, buy 1/2 a loaf is better than none.
    Nov 17, 2013. 07:08 PM | Likes Like |Link to Comment
  • Losing Relative Market Share To Wal-Mart And Google [View article]
    There are so many competitive advantages that WMT (and others) had that they have squandered. Even after WMT has shaken off the stupor with the belated focus on ecommerce, it's online execution still seems subpar, even compared to other middling online merchants, leave alone Amazon.

    I speak this from personal experience (just a single one, and perhaps isolated and not systemic), and I don't have any inclination to go through it again. Even though the price was a tad higher than at Amazon, and where I live I pay sales tax at both anyway, I ordered from for the imagined convenience of store pickup and return. It was anything but.

    The item was DOA (I don't fault walmart for that) and the return to store was an excruciating experience. Even while ordering this free shipping over $50 item, I was subjected to bait & switch shipping choices with exaggerated estimates of shipping times for free to home (or to store) to nudge me into paying a little extra for "expedited" shipping. And the email order acknowledgement came without a tracking hyperlink (just the number for me to copy and paste at ) is something I don't even see from even small online outfits.

    There was this Alibaba's Jack Ma keynote from a Credit Suisse investment conference earlier this year ( ) where he offered this insight that B&M retail should instead of thinking of their online venture as something to complement their B&M retail should instead think of their physical B&M presence as the on-ramp to serve their online business. Something I hope the big box execs heed.
    Nov 15, 2013. 04:09 PM | Likes Like |Link to Comment
  • Losing Relative Market Share To Wal-Mart And Google [View article]
    Google, Ebay, WMT, Best Buy, B&N, Target .. and the list can be long, coulda and shoulda prevented Amazon from becoming the juggernaut it has become.

    But for whatever reasons - misunderestimation of Bezos' drive, conflicted priorities, tepid execution etc., as of now, seems the train has left the station for them to catch up. As for Alibaba, the china connection may be an albatross to its perception as a trust worthy site for Americans to shop at.

    Anecdotally I can tell you, Amazon has become synonymous with online shopping at the best prices, whether the later part is in fact refutable with a price comparison shopping which not many I know do as diligently as I do.

    It is not the competition which may put the brakes on Amazon's prospects, but a change or plateauing of consumer taste for online shopping. Several people I know do online shopping as a last resort and even though I have been an early adopter, I now find the task tedious and sometimes much rather schlep to a mall or costco for a curated selection of items rather that the "eyes glazed-over" experience of wading through the overwhelming quantity of choices.
    Nov 15, 2013. 03:23 PM | Likes Like |Link to Comment
  • Losing Relative Market Share To Wal-Mart And Google [View article]
    André -
    Bond offering?
    Why not an AWS IPO?
    With all the deservedly upbeat assessment of its cloud business in the media and by analysts post their new product announcements this week in Vegas, why not IPO a small slice of AWS? Sure, they will have to disclose the gory financials, but they just might be quite decent both revenue and profit-wise.
    Nov 15, 2013. 03:02 PM | Likes Like |Link to Comment