Thursday, September 22, 2011

The Apple of my eye & Netflix - Huh?

Caveat, I'm a big Apple fan. They just announced a press event for October 4.

The assumption is this is the new iPhone (oh please oh please oh please let it run on Sprint!). I digress.
I doubled down, buying more around the time that Steve Jobs announced he was retiring as
CEO, at around $380/share.  Today it's $419.  That's over 10%. In a month. Why, because even
without him, the company is very well run.  And I still think it's a good deal, Some things to consider:  It's the largest publicly held company in the world by market capitalization, and it doesn't have a monopoly in any segments. Including iPads as computers, it's only got about 12% of the market. But it has the vast bulk of the profits. Let me repeat that. Apple is making all the money. This year
Apple captured two thirds of available mobile phone profits in Q2.The analysts are putting prices like $500-$520/share on the stock. As I've said before, I don't believe in analysts for a few reasons, primarily, they are not inside the company, and don't have a real clue as to how the day to day operations are going, nor do they know what products might or might not be in the pipeline.  Morgan Stanley feels Apple should buy back some of it's shares, because it has too much money on hand. With all due respect to the probably very intelligent analysts at Morgan
Stanley, that's the stupidest thing I ever heard.  We're going through a recession/depression/giant suck of an economy and they're saying someone has too much cash on hand?  Really?  Hm, I bet Circuit City, Blockbuster or Borders wished they had too much cash on hand. Sometimes people talk to keep the quiet from enveloping them. I've been a shareholder for over a decade. I've never gotten a dividend, and I'm cool with it. When I originally bought the stock around $4 I didn't expect one, nor do I now. I don't want one. I want them to keep that money in the bank, keep making great stuff and keep getting more valuable. My point is, this train ain't stopping no time soon....

Netflix - Huh?

On July 23, 2011 Netflix stock hit $298/share.Today it's at $130. The stock had tripled since 2010. Well, scratch that. What happened? A couple things... They had already vanquished Blockbuster, who was too stubborn to see streaming as a viable alternative to physical stores.  So they were BMOC in video.  From everyone I talk to, the biggest problem with their streaming service is lack of popular/current titles. That isn't totally their fault, the content creators don't want movies streaming too fast, it undercuts the DVD market.  So, in the middle of all this, they are in ugly negotiations with STARZ, one of their MAJOR content providers. They double down: raising the price on streaming to current customers, even though never raising their content from suck to less suck. There's a backlash, they pretty much ignore it. Then they triple down: separating the streaming and DVDs by mail into 2 separate business units, calling the DVDs by mail Quickster. Wow. Bet that took a long meeting to come up with. The price will be the same for the combined service (the new, higher price), but now you will have 2 debits on your monthly credit card bill versus one.  Anyway, the STARZ negotiations imploded, so the library will be going from suck to more suck. And as I understand it, that's the streaming and the DVD libraries.  So more suck 2012 costs more than suck 2011. Good move. The sad thing is, there's no one to take advantage of the missteps. Blockbuster, a shell of it's former self, isn't set up to do streaming or large volume DVDs by mail. But Coinstar and Amazon, not to mention that other company, Apple's iTunes are all out there

Bottom line, I don't think Netflix is going away, but they really need to get off their act together. The stock is probably a buying opportunity right now because at $298 it was probably over rated, and at $130 it's probably under rated.

Monday, September 19, 2011

Inside Info On Why Walmart Will Eventually Fail

Before you call the authorities because I have "insider" info, I got mine the old fashioned way: I went inside a Walmart.  Let me back up. The first time I went into a Walmart was maybe 10 years ago. I was blown away.  It started with the "greeter" as you walked in, and went uphill from there.  In the last decade, I've seen the place decline.  The greeters and stores aren't as inviting, they seem to be employing some screwed up version of Just In Time Staffing, maybe based on dollars per hour wrung up or some such. Whatever they're using, it's an epic fail in my book. We have an unemployment rate around 8%, Walmart's making money, yet 99% of the time I'm at my local Walmart. no more than 4-6 of the 24 cash registers are open.  And the lines are crazy sometimes.  If it's after 11 PM or in the wee hours of the morning,  then we're talking 1 register is open.  If you go to Walmart after 11, be prepared to stand in line for 30-45 minutes.  They close the self serve lines whenever the person watching them has to go home.  My point is, and this is not just my opinion, people tolerate Walmart because they usually have the best prices. But there is going to come a point when we are going to stop tolerating it for the sake of saving a few dollars.  And yes, it is a bad omen when your customers "tolerate" you.

To be fair, I looked at Walmart's stock performance.  It hit $69/share in December 1999, and is now finally getting back to that point.  Walmart is famous for squeezing  pushing their supplies to cut costs so they can pass the savings on, but if you make enemies, you should also make friends. Walmart has annoyed it's suppliers and its customers. I'm going to keep my eye on it. If I do buy some, I'm not planning to hold it forever. I still feel like it's going to go down eventually.