nflx

While the broader markets have gone nowhere since reaching their peak in April, Netflix stock has doubled! Of course, the company has been going gangbusters while the competition lays by the wayside. Reasons attributed to the meteoric rise are expansion into Canadian markets, savings from postage costs as more subscribers shift to watch content online and the potential to add more subscribers attracted to its increasing arsenal of entertainment programming.

In spite of these reasons, valuing such a company at almost 60 times earnings is insane! This is purely a momentum stock. While it may do really well as a company in the long run, the stock will most likely not give good returns for anyone buying at such lofty levels. I just shorted some, ready to get my fingers burnt a little but will bail if it continues to go stratospheric.

Junk

The junk bond rally through this year has been an absolute blessing for many companies. This means that companies with low credit ratings are able to issue bonds at favorable interest rates. Also, there is a lot of debt that needs to be refinanced in the next few years. Remember that the unavailability of short term financing was one of the big problems of the prior crisis. Although I don't have a sanguine view of the economy, it looks like the fiscal strain on many companies is being eased. Still, the household sector is in shambles and until that is restored, there will be no rapid growth in GDP.

Solving a pain point leads to opportunity

This is a strong belief..that a truly successful idea needs to come with a solid value proposition. On that note, I am almost ready to opt in for a 2 year contract in lieu of an upfront discount for the purchase of my next Android phone. However, what phone do I buy? Can I test drive a phone to check out whether I like it or not?

The open-source nature of Android and the already available emulation platform lead me to believe that it is in the benefit of the phone manufacturer to write a s/w program (or web interface program) that allows potential customers to take their product for a test drive. The main concern here would be a dilution of the experience the user has when physically handling the device. Any clever ideas to resolve this pain point?

Why is INTC getting hammered?

Intel recently reported results that looked very impressive, blowing past estimates on top and bottom line for the prior quarter and proving great guidance for the current one. However, even since the pop in stock from that report, there's been a slow slide in the price, taking it below the 20 and 50 day moving averages. My question is why?

The one reason I can surmise is that investors think we are at the peak for this cycle. Intel's results were heavily bolstered by their server sales with the consumer lagging. But aren't companies supposed to be in a new refresh cycle?

Or is it because Intel intends to buy Infineon's wireless baseband division? It is a much lower margin business than processors but does bolster Intel's ability to provide the entire suite of chips to sell phone manufacturers.

Any more thoughts from my adoring readers? :)

Why Chrome + ARM could dethrone Microsoft + Intel

Just the main points
- Cost: No need to pay for windows if you use linux. ARM licensing costs per chip are really small!
- Power consumption: ARM's focus till now has been low power. Intel will fight with Atom, but it's still such a small business for them
- Software over the web: This means there is no real need to get an x86 processor for all that legacy s/w. New companies will work on a cloud only model. Older ones will retrofit for this.
- Tablets looking more like smartphones with bigger screens: So how about deeply integrating the two? The iPad looks like a big iphone. So what about your phone being the on-go version of your tablet such that you can seamlessly move between the two?
And finally
Big backers: Apple, Google - the bread and butter for these companies is based on ARM and the browser. So even if the oldies don't want to change, their hand will be forced.

Truly exciting times in the mobile device market.

Market direction

It's really difficult to predict, and anyone who thinks they can time the market...watch out! So with that, here's what I see. Today. the S&P500 is just above the 20DMA of 1087. If and when it breaks past the 200DMA at 1107, there's going to be a mad rush in. My thinking is that the market goes down a little to maybe test 1070, then goes up like a rocket past 1107 up to 1130 (maybe even 1150!) and then begins a terrible downhill acceleration that takes it below 1040. As far as timeframes, given that we are seeing such crazy volatility, I wouldn't be surprised to see 1130 by month end (June) and then a waterfall decline for the next 2 months or so. I am currently not investing for the long term, trying to just get into some swing trades.

Google to start making processors?

Google's recent purchase of Agnilux, a company started by former PaSemi (and then Apple) folks, seems at first to be to improve the power/performance for the data centers. This would be the natural direction, since Agnilux was purported to be working with Cisco on more efficient chips. However, I think it's more likely that Google wants to seriously think about making chips that go into end consumer products such as mobiles, tablets and TV set-top and/or the TV's themselves.

Google has been a big proponent of improving the power efficiency of data centers. However, designing a chip that delivers the kind of performace for such heavy compute tasks is not easy. ARM architecture also doesn't seem to lend itself directly to use in server chips. On  that other hand, ARM is an ideal candidate for low-power consumer product chips as established by Apple designing its own processors based on such technology. Why would Google want to develop its own chips instead of buying them off-shelf from vendors. I think it's primarily motivated by the desire to own the entire ecosystem from design of the hardware and the software and eventually, design (or atleast create reference designs) for products they wish to see in the market. If Google controls the product, they control the display where they can show the advertising that will make them good money. This ties in well with their desire to encourage consumer access to high-speed broadband at home and wireless on the go.

I will post more info on this as and when I learn more. I'll leave you with a recent news I hear about Google reportedly preparing to intro TV software next month