johngonole

Amazon's Performance Leaves Wal-Mart in the Dust

Not only is taxaction an issue but Walmart also has an online website. Right now it mostly sells what is in its own stores. But the online retail space is probably a pretty low cost of entry for a lot of retailers. Walmart basically offers free shipping if you pick up the item in their store. The point I'm trying to make is that AMZN can't grow limitless without attracting some competition. I use AMZN to read product reviews and then I comparison shop. Often they do have the best price but sometimes they don't

AMZN has a bright future but their is no reason to think they are going to overtake walmart anytime soon in terms of size.

eBay Offers Something Amazon Cannot

Long term I like Ebay and have invested in its shares. AMZN is too rich as always. When their growth rate drops the shares will stagnate. EBAY has a better moat because it is essentially made up of millions of small nimble independant sellers. EBAY makes money from the recycling of materials which is also good for the economy. I can find things on EBAY that I can't find anywhere else. About 70% of the time I can find the item cheaper on EBAY then AMZN. EBAY does need to allow sellers to rate the buyers like they used to. While fraud used to be on the seller side now I suspect the buyers will be taking advantage now. The power seller system though is solving much of the buyers remorse issues. EBAY recent monopolization of South Korea has to be a good thing for them. There can be only one sucessfull online auction company. Craigslist is probably there biggest threat. However lets face it finding things on Craigslist is much more difficult. EBAY should buy it if the price is low enough

Probably EBAYs biggest problem has been there mis use of cash on their balance sheet. Still they've got a big lead and will be around for a very long time as long as management doesn't wreck the company which would be hard to do.

Why Advertising Is Failing on the Internet

There is a lot of truth in what he is saying. I rarely notice car commercials because most of the time I know I'm going to be buying one. However when I'm in the market for a car I actualy listen to them. When I was a new father all the sudden I started noticing all the commercials involving things like diapers, baby food, kids cloths, etc...

While branding is always important I think advertising will focus more and more on getting the attention of customers in the market. This is where online advertising can excel. The problem with online advertising is that BANNERS simply don't tell you much. I like to read amazon reviews to get an idea on which products are actually good.

Amazon Is Looking Like Starbucks of Yore: Too Expensive

Agreed. Amazon sells for much much higher PE. The market Cap is almost twice that of Ebays. Yet EBAY has almost twice the amount of earnings in absolute terms. Makes no sense. I've wondered for a long time why AMZN gets such a premium. I will admit that their performance last quarter was fantastic especially in this environment. Still price has no where to go from here but down. What would be the catalyst for it to go higher. If earning go up 10% it may yet go up another 10%. If earnings drop 20% it could drop 60-70%. Risk to reward sucks. After all its just a retailer.

Amazon, eBay, Overall eCommerce Suffering from Retail Woes

I have to weight in just to say I bought Ebay not to long ago. I'm under water a bit but its only half position. One that I might be willing to triple. I think the pessimism on EBAY is overdone. When it comes to auctions they have a wide moat indeed. They also have a wide moat when it comes to the sales of aftermarket items....think of a giant flee market.

That said the balance sheet is very strong. They are estimated to basically maintain their current earings and PE is less than 10. Long term they can grow overseas and even here in North and South America. I do think the economic contraction will effect them like anyone else due to falling prices and volume. However long term they are a market place not a vendor. I don't think they have any competitors that are about to grab market share from them.

The biggest problem EBAY is having and seems to have had for a while is figuring out what to do with their free cash flow. Eventually they will get it right.

Basically I think we are probably looking at a slow to medium growth company selling as a value stock. It also has a wide moat. Can't get much better than this. Just wish I could find 7 or 8 more companies like this to invest in.

5 Key Quotes from Netflix on the Movie Distribution Business

This segment like software and hardware will be very unpredictable. I think download streamed movies is going to be a lot like VHS versus Beta. The long term winners will only reveal themselves in time. First the competition will be stiff with many players involved. Your going to have the cable companies, apple, amazon, tivo, blockbuster, other media companies all try to get a share of this market. Second who knows when another disruptive technology might evolve. Satelite beams direct movies....who knows.

One thing is that the deal with XBOX is smart. Microsoft has spent lots of money positioning themselves to be the future home entertainment company of America. They want computers with their software to control homes and access to the internet. You see this with the Xbox and Media versions of their operating systems. They will eventually turn the TV/computer/gamesystem... lighting controls/voice recognition into the same thing in the same box.

So Netflix has chosen a good strong partner here. Likewise Microsoft needs a win soon and they must have found some good reasons to piggyback and use Netflix as part of their platform.

Disclosure: I own shares of microsoft but not netflix. Netflix in my opinion is way over valued considering the uncertainties and the finite nature of their main business.