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Onelessgod

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  • Under Armour FCFF Analysis [View article]
    Seeking alpha needs more quality articles like this. I am currently short UA for many of the same reasons. Rising top and bottom line growth with declining Cash Flow from Operations is a big red flag.
    Sep 16, 2012. 01:10 PM | Likes Like |Link to Comment
  • Earnings Preview: Netflix Reports Q4 Results Wednesday [View article]
    The common mistake that people seem to be making with NFLX is that they focus on revenue that is unsustainable because they can no longer to afford the same level of streaming content and accrual based EPS numbers.

    This company doesn't actually make money on a cash basis and the cash problems are only going to get worse.

    Cash from operations and accounts payable tell the real story.
    Jan 24, 2012. 12:07 PM | 1 Like Like |Link to Comment
  • Win Investing-Related Stuff (No Purchase Necessary!) [View instapost]
    $77.51 41M Vol
    Jan 24, 2012. 06:36 AM | 1 Like Like |Link to Comment
  • 5 Stocks That Could Move The Markets This Month [View article]
    Couldn't agree about crunching the numbers on NFLX. It has been frustrating to watch this stock get pumped back up to absurd levels. Between fabricated buy-out rumors, a classic Netflix press release, and Whitney Tilson’s, ethically challenged, comments like “This thing could go crazy to the upside” we have once again reached a point where this stock has divorced itself from reality.

    Netflix has said explicitly in the Q3 conference call and shareholder letter that content costs will double in 2012. I encourage everyone (especially the longs) to take out a spreadsheet and see what happens to the income statement when the majority of the approximately 1.8B “Subscription” line on the income statement doubles against revenue that is projected to increase just 12.5% to 3.6B. Oh and that is just the expensed content costs, actual cash cost of content was much higher 1.8B.

    I modeled a conservative 60% YoY increase in content costs (which has been the trend) and I think they will lose about $5 per share in 2012 and maybe $10/share on a cash basis-forcing them to raise capital again in the next 4-6 months. Netflix can see this just as easily as I can and it is no surprise that they guided for “net consolidated losses” for all of 2012. The street consensus is for a loss of just .02.

    If revenue falls short of that 3.6B (it will be very difficult to hit given declining ARPU and domestic saturation) and Reed insists on betting the house on streaming content, then bankruptcy is a real possibility.
    Jan 22, 2012. 05:42 PM | Likes Like |Link to Comment
  • Can Netflix Avoid Going Under In 2012? [View article]
    It has been frustrating to watch this stock get pumped back up to absurd levels. Between fabricated buy-out rumors, a classic Netflix press release, and Whitney Tilson’s, ethically challenged, comments like “This thing could go crazy to the upside” we have once again reached a point where this stock has divorced itself from reality.

    Netflix has said explicitly in the Q3 conference call and shareholder letter that content costs will double in 2012. I encourage everyone (especially the longs) to take out a spreadsheet and see what happens to the income statement when the majority of the approximately 1.8B “Subscription” line on the income statement doubles against revenue that is projected to increase just 12.5% to 3.6B. Oh and that is just the expensed content costs, actual cash cost of content was much higher than 1.8B.

    I modeled a conservative 60% YoY increase in content costs (which has been the trend) and I think they will lose about $5 per share in 2012 and maybe $10/share on a cash basis-forcing them to raise capital again in the next 4-6 months. Netflix can see this just as easily as I can and it is no surprise that they guided for “net consolidated losses” for 2012. The street consensus is for a loss of just .02.

    If revenue falls short of that 3.6B (it will be very difficult to hit given declining ARPU and domestic saturation) and Reed insists on betting the house on streaming content, then bankruptcy is a real possibility.
    Jan 22, 2012. 03:04 PM | 4 Likes Like |Link to Comment
  • 2 Media Stocks To Avoid, 3 To Consider [View article]
    Spot on Rocco

    The PR announcement is a yellow flag at best.


    A few quick thoughts.

    1. Have people forgotten that they needed to raise $400MM in cash during the quarter. One thing I know about Reed-he wants to pump the stock at any cost and he wouldn't sell equity if he wasn't desperate.

    2. Guidance for Q1 will be worse than the street thinks. Based on previous comments about 2012 and cash flow trends that have no reason to reverse. Remember they now hope "international markets can become profitable in 2 years". I wouldn't be surprised on a pre-earnings guidance announcement coming soon.

    3. ARPU will decline relentlessly in 2012 as they are "pulling apart" their Venn diagram and the automatic increase for those who did nothing fads away. The high margin, cash generating segment is declining rapidly.

    4. I believe they are putting the entire series of "Lilyhammer" out at once. So streaming consumers will do what they always have done. Burn through the content cancel for a few months and repeat.
    Jan 4, 2012. 03:33 PM | 1 Like Like |Link to Comment
  • $10,000 Portfolio Update: RIM CEOs A Decade Late And A Dollar Short [View article]
    Liqddynamite

    I can't wait for NFLX earnings to come out because I agree that they will be bad on every level. Subs, ARPU, cash flow and EPS. Most people think the crash already happened, but I think time only works against NFLX and the worst is yet to come. Data from http://bit.ly/u8xVGi and the equity issue only confirm my suspicions.

    I was short at an avg of 280 but I stand to make more money from the next leg down because I have so much more conviction.
    Dec 17, 2011. 09:08 PM | Likes Like |Link to Comment
  • Netflix: The Method Behind Reed Hastings' Madness [View article]
    Short interest does not change the fundamental value of a company. The value of a stock is nothing more than discounted value of its future cash flows. Understanding that will make you a much better investor.
    Dec 11, 2011. 07:21 PM | Likes Like |Link to Comment
  • Netflix: The Method Behind Reed Hastings' Madness [View article]
    My favorite lines by Reed were "Canada is growing very well for us" and "I was convinced it was going to 1000."

    Is he delusional or do you think he actually believes that?

    George Costanza said "It's not a lie, if you believe it."
    Dec 11, 2011. 07:15 PM | 2 Likes Like |Link to Comment
  • Netflix Admits Huge Problems With Desperate Cash Grab [View article]

    "The only thing that does change is the conviction, which increases every time there is news like this. I liked this short at $280, I loved it at $125, and I love it even more at $70."

    This describes me completely. Added to my short yesterday.
    Nov 23, 2011. 06:22 AM | 1 Like Like |Link to Comment
  • Why Netflix Will Implode Once Again Come 2012 [View article]
    Rocco

    I think you made some excellent points that needed to be highlighted. The shareholder letter language regarding cash is very telling. Cash flow is already very weak even with increasing revenues and a $1.16 in eps. I can only imagine how much cash they are going to burn as revenue starts to fall, eps goes negative and the cash generating DVD segment shrinks.

    My guess-Reed will double down on content spending in a futile effort to re-start the “virtuous cycle” and get back to the good ole days of 2010. If Qwikster told us anything it’s that this company has zero ability to stop Reed from making incredibly wealth destroying moves. As Founder, Chairman and CEO he must be feeling tremendous pressure.

    I added to my short position again and bought some deep otm March puts as I now feel the risk reward ratio is incredibility favorable going into 2012.
    Nov 2, 2011. 08:06 PM | 1 Like Like |Link to Comment
  • How A Real Value Investor Evaluates Netflix [View article]
    Excellent Analysis. Well done.
    Oct 31, 2011. 08:20 PM | 1 Like Like |Link to Comment
  • Netflix Crisis Abates, Future Is Promising [View article]
    I am glad you are looking at cash flow because I think that is the biggest red flag that investors should look at. The cash flow from operations (CFO) has always been extremely poor even on an unadjusted basis and, at the very least, points to aggressive amortization assumptions and poor earnings quality. Let’s look at why.

    Red Flag 1. They shift “Acquisitions of DVD content library” from CFO to CFI when this is clearly an operating expense and not the industry standard as outlined in the 10-Q.

    Red Flag 2. They have a very aggressive stock-based compensation plan which is in effect payroll-another normal operating expense. At least part of this should be allocated to CFO. They off set the dilutive effects of this by buying back stock which will now be ending. By the way, the DCF model above has a very low ball estimate for outstanding shares.

    Red Flag 3. From Q1 to Q3 they increased Revenue by 100MM yet CFO has been rapidly declining. Unadjusted CFO has actually dropped below net income in the latest quarter.

    The story of shenanigans fits well with a company that fights for less transparency, insiders selling and zero corporate governance.
    Let’s set aside the now sky-high 2012 valuation and fundamental risks outlined by Rocco and Liqddyamite and assume the very rosy DCF model. Buying at $84 to get to $101 seems like a very poor return on a risk-adjusted basis. Also, I would not sight revenue metrics for a valuation case because the subs are artificially inflated on content they can no longer afford.

    I have been short from the upper $200’s and have been adding all the way down as new information only supports my short thesis.
    Oct 30, 2011. 12:02 PM | 2 Likes Like |Link to Comment
  • Looking For The Next Netflix Or RIM? Be Wary [View article]
    The next Netflix is Netflix.
    Oct 29, 2011. 11:02 AM | 2 Likes Like |Link to Comment
  • A Response To Whitney Tilson's Netflix Flip-Flop [View article]
    Anyone else notice that "Provision for income taxes" made a very unusual drop of 500 + bps? 33% vs normal 38%. Looks like it gave a nice boost to reported eps 1.07 vs. 1.16. Another sign that accounting is getting more desperate and quality of earnings is low.
    Oct 28, 2011. 03:24 PM | 1 Like Like |Link to Comment
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