Archive for the 'All Things Tech' Category
June 20, 2008 9:58AM
By Cody Willard
I’ve been a bit of a Steve Ballmer apologist since I first turned bullish on Softee back in May of 2006. I mean, I’ve called the guy out for the Zune disaster from the start and what not…but I figure anybody who’s built the most powerful and valuable company on the planet probably knows what the hell he’s doing at the end of the day.
But then today I see the quote from Mr. Ballmer in the FT, and I think I now have to officially join the chorus calling for Ballmer to step down from the reigns. The quote:
“We don’t have to dominate, but we’d better have a darn good chunk of the search market over time, and we’re working away at it.”
Uh, Mr. Ballmer, that’s not exactly the “Only the Paranoid” survive kind of attitude that Intel and Microsoft (MSFT) were truly built upon.
As Hal Varian details in that great business tech book, Information Rules, that’s one of the books I use to teach Revolutionomics at Seton Hall, you often do have to dominate if you want to survive at all in technology.
Stick with MSFT the stock regardless…but let’s get someone who actually wants to win in place at the top of Microsoft please.
PS. Click here to receive the latest edition of our monthly stock market newsletter, The Cody Report, and get exclusive access to this month’s four stock picks.
June 16, 2008 10:52AM
By Cody Willard
Sitting in an English garden waiting for the sun.
If the sun don’t come, you get a tan from
Standing in the English rain.
I am the eggman, they are the eggmen, I am the walrus,
Coo coo kachoo ka coo coo kachoo. — The Beatles
The biggest winner of the Micro-hoo-goo fall out? The evil empire itself!
It’s almost self-fulfilling analysis, since such a conclusion begs the question of “which evil empire, Microsoft of Google?”
In other words, I’m saying Microsoft is the big winner here. (Google is a big winner regardless of this deal with Yahoo, since they remain the only trustworthy content-source agnostic company…this deal changes nothing significantly for GOOG, so you can go back and read any and all of my years of owning and bullish analysis on GOOG for more on that line of thought.)
See, the single biggest issue that Microsoft has been dealing with for the last decade has been the scrutiny of the US Justice Department and The EU regulators and other bureaucrats who won’t let Softee give consumers everything the company wishes it could. The regulators of course, are interested in helping their crony companies who Softee had been destroying for years with smart business strategies, so they pretend that Microsoft’s push to include as much technology, software and services for free with their operating system is somehow bad for consumers.
I mean, I’ve seriously never understood the idea that getting more for free is a bad thing for consumers. If the regulators had their way, you’d have to pay for your browser — something like “Netscape on sale for $99 per user at Amazon.com right now!”
At any rate, suddenly Microsoft is a “victim”. They’re the ones who are on the wrong side of a market dominated by an evil empire that uses its position to destroy its competitors. And now, finally, Softee might actually get back to driving technology markets forward with their $7 billion they spend on R&D every year. That’s $20 million a day, btw, that this company spends on researching new software and hardware.
I’ve maintained that Softee’s been a good investment down here around $28 and the trading’s been pretty good too. I’d stick with Softee for the foreseeable future. I could even see it getting back to $35 a share before the it gets back to $25 a share.
PS. Click here to sign up for he latest edition of our monthly stock market newsletter, The Cody Report, and get exclusive access to this month’s four stock picks.
June 12, 2008 7:04PM
By Cody Willard
Here is what I was sweating about when I wasn’t sweating about the heat or killer tomatoes today.
1. Anti Permabear, but pro Tempbear.
2. Illuminati unite to decieve you.
3. iPhone winners: (AAPL) and (GOOG)
1. I used to poke fun, all the time at the perma bears for not being able to recognize the boom times for what they were from 2003 to 2007. Oil, real estate, the dollar, unemployment, inflation, geo politics, were always their reasons for promising pending armageddon. I have to say, though, that in 2008 oil, real estate, the dollar, unemployment, inflation, geo politics, guys, look at charts on those things (although there is no chart for geo politics), but they are all going crazy. They do seem to be bad as those perma bears were wishing they used to be. Call me a Temp-Bear and stay cautious.
2. Bumbling bureaucrats Ben and Paul say that the worst of the credit crisis and economic bad times are behind us. These guys are the same guys who of course who have been colluding with the other Illuminati members, like Lehman, who last week told us the that credit crisis and economic hard times are behind us and that they don’t need anymore capital. Think about it, this week they raised more than six billion dollars in capital.
3. The biggest long term winners of the second generation iPhone: the same winners as the last generation of the iPhone, Apple, don’t overthink it guys, and Google, because they get all that extra traffic on Google and YouTube from all those iPhone users and that stuff is staight margin for Google.
Check it out on YouTube
June 9, 2008 3:48PM
By Cody Willard
Like I said, I hate betting against good companies and I consider Apple (AAPL) a great company. Hell, I owned that stock longer than any other stock I had in my hedge fund…riding it from $7 on my initial purchase which I wrote about in real time on TheStreet.com to when I sold all of the last of it somewhere between $150 and $200 — I truly think this is a great company even if I continue to think that Steve Jobs is someday gonna pay for his misleading backdating options practices.
Point is…the stock’s down about 5% on the day now. I’d expected there was 10% downside in the name over the next couple weeks when I wrote my bearish trading Apple piece last night. 5% in a few hours on the downside in a great company’s stock…time to declare victory and take the trade.
The fact that the 3G iPhone is going to be simultaneously rolled out to the entire developed world by like a dozen carriers on July 11 has some rather huge ramifications for analyst’s numbers. Watch for estimate bumps from the sellsiders starting tomorrow.
And sell those Apple puts to open back up that exposure to the long side with your Apple long again.
June 8, 2008 6:50PM
By Cody Willard
I’m sitting here doing research and looking over some Wall Street analyst notes…lots of flow about Apple this past week. I mean, I’ve got dozens of notes from analysts and brokers and newsletter writers full of breakdowns, extrapolations and supply chain analysis for the 3G iPhone. And they’re all PUMPED about it!
And then I remember that on Friday a very bright, but young trader told me that he’s thinking he’s gotta be long Apple Inc. (AAPL) into Monday since he’s seen pictures of trademark filings for the new 3G iPhone…and he’s heard from people at Apple that they really are gonna have a new release on Monday. For sure! Ah hem. Like I told him at the time, I owned Apple straight through since the dawn of the first iPod and every few months I’d get a flurry of emails from bight young traders with links to “trademark filings” for the new iPod…or the new iTablet…or the new iToilet. iWhatever.
And didn’t my landlady, a sweet artist’s widow ask me about the new 3G iPhone and even about Apple the stock the other day too? So then I Google (GOOG) “3G iPhone” without the parenthesis and when I see 2,980,000 hits come up, my trading spider senses start to tingle…ooh, man, this might be a good trading short set up. 4,304 news hits on Google. 247,947 blog hits for 3G iPhone on Google. Think there’s might be just a wee bit of hype into tomorrow’s Apple’s WorldWide Developer’s Conference? You guys do realize that Apple holds or attends some sort of a conference, product release and media blitz like just about every month too, right?
I’m never a big fan of shorting or betting against good companies, and given my very long time and very public ownership and defense of AAPL, I think it’s rather clear that I think this is a great company. But I’d sure be hedged on my long positions in this name heading into the hype of tomorrow’s call. I might even get a little extra juice on some near term puts just in case this headline (from my friend and long-time colleague Aaron Task, no less) really is as great a contrarian indicator as I think it just might be:
- Aaron Task
Finally, let’s say Apple does roll out the new 3G iPhone tomorrow…you got an edge on that? You and the other 247,947 bloggers and 4,304 media and dozens of analysts trying to get you to believe the hype got a real edge on this trade this week? Think about it.
AAPL remains a great long term stock and will someday hit $500 and as I wrote for the first time many years ago, will someday be worth more than even Microsoft. But be cautious with the AAPL at $185 into the dog days of summer.
May 14, 2008 11:52PM
By Cody Willard
I just couldn’t get a post written today, as I brought Lobo into meet the team at Fox Business today. (I do think he was quite a hit, though I admit I am far less than objective about this new best friend of mine…)
After realizing we had a promo shoot before the show and then I agreed to do American Nightly Scoreboard (I stormed off the set in mock protest when the viewership voted 61% to sell my man Neil Diamond..David Asman does such an amazing job on all the shows he does, and, man, he does a lot of shows), I decided I couldn’t keep Lobo around all night while I was on set so I had to run him back home to Soho.
Back from an hour back Lobo-sprint, Cody-bikeride, a little bit of training, and I’m finally crashing from this day. But you guys seen this? You can keep track of the Big 3 here on The Cody Word in print now, on Happy Hour every day at 5 and 11pm on cable and also on YouTube. Here’s today’s Big 3, for example (don’t ask me why I can’t embed it here…I don’t have that ability despite all the advantages of now having this blog hosted by Fox). Like we’ve been talking about, the addressable audience for content is exploding as the costs of distributing that content collapse. Content is king indeed.
Here’s what I was doing when i was not being voted off Happy Hour Idol today:
1. They Can’t Stop the Downside
2. Bearish Signal: My Gut’s Bullish
3. Life Cycles Matter Too
1. Corporate spreads are at multi year highs meaning that capital remains and is getting ever more expensive out there. The government and Wall Street can try all the games they want but they can’t actually change the fact that the cycle has turned, and by the way, that cycle turning is okay, it’s called a cycle ’cause it turns. For crying out loud, you idiot bankers, politicians, and bureaucrats who keep trying to stop what you cannot. Let it be.
2. I don’t trade anymore, but looking at the blinking green lights on my quote screens today as stocks like Sandisk, Vm Ware, Akamai, danced 30, 40, or 50% above their recent highs, sure did make me miss it. My gut was turning. I’ve often noted how hard it is to measure sentiment, but I can guarantee you could measure that bullish sentiment in my own gut right now and that by the way makes me even more bearish. You gotta flip your own sentiment. Think about it, guys.
3. My dear friend, Steve MaKowski, the father of my high school sweet heart and dear friend Cecily and Candace Makowski, was laid to rest this week. I spent many a night for years with Steve and he was an important and positive influence on my life, which we all need. My prayers are with you and everyone in your family. I love you all.
Check it out on YouTube
May 13, 2008 12:29PM
By Cody Willard
I still remember the first time I got published. I wrote an article for TheStreet.com about how the sudden constriction of capital in the telecom industry was likely to spell doom for most of the industry. I was wrong about a lot in that article (I’m pretty sure I’ve been wrong about a lot in EVERY article I’ve ever written though — that’s because I make a lot of predictions and offer a lot of analysis and opinion…and you’re always wrong even when you’re right depending on who’s reading you…so anyway, yeah, I’m wrong about a lot of stuff I write, okay? Oh, my, quite a digression about wrongness here, huh…), but one thing that I was very right about was that the credit shortage in telecom that hit at the end of a period of a glut of capital in the industry during which as I used to write, “anybody with the word ‘communications’ in their business plan could raised billions” was indeed a doomsday scenario for most of the industry.
As I’ve noted forever, one of my Jedi Masters taught me the simple principle that “all gluts are followed by shortages are followed by gluts”…and you can invest on that principle over and over again.
At the top of the glut of capital in the industry, Level 3 Communications was worth more than McDonald’s and Disney combined. Haven’t heard of Level 3? Exactly. How about 360 Networks, once headed up by billionaire former Microsoft CFO, Greg Maffei? Winstar? Enron was even in the telecom fiber route, not to mention “telecom services trading”, which was actually just mostly an accounting scam between those scumbags and their scumbaggin’ counterparts at WorldCom.
Oh yeah, WorldCom was once worth hundreds of billions. More than Bear Stearns, that’s for sure. (As an aside on that note, what’s the difference between Jimmy Cayne’s trashing of Bear with questionable accounting and bookkeeping and disclosures and Bernie Ebbers’ own trashing of his billion-dollar enterprise? I guess if you get the Federal Reserve and Capitol Hill convinced that the economy “might” collapse if you don’t bail out Jimmy and his cronies then you get free money and no jail time. Make a note for next time, Bernie.)
But all these companies are gone now. Well, LVLT’s still around, even if it’s still down 99% plus from its highs in 2000. So too is its suppliers, like Nortel and Lucent — down 99% or so from their highs of yesteryears.
And speaking of Nortel and Lucent and their 99% declines from the highs…you wanna know when the highs were hit? When they tried to keep their bubbled balls up in the air by extending cheap and easy financing to all those telecom companies that had excess capital but little prospects for near-term growth and business. That was 2000 and 2001 when they could tell that demand had collapsed by Nortel, Lucent, Cisco, et al started offering “vendor financing”.
Remember when Ford and GM got wild with their “vendor financing” back in 2003, 2004? At the top, right before they ran out of access to capital themselves and collapsed?
Why do I bring all this up today? Two parallels to watch:
1. How many times in the last year have I said, “Wall Street’s gone from a glut of capital to a shortage”? That cycle’s just turned, and it’ll take a few years at least to play out, just as telecom, the dot com bubbles did and the car bubble from 2002-2004 is still. Stay away from the financials. (And pray that the government lets those reckless scumbag investment bankers who kept their billions of gains during the glut lose their shirts and eat their own losses now that the shortage is here…socializing losses after privatized gains is evil.)
2. See this article in the USA Today about tech companies offering “vendor financing” to their ever-more-capital-constricted customer base? Careful with the tech cycle too, guys.
May 9, 2008 12:21PM
By Cody Willard
Okay, so we got lucky again and Nvidia’s up pretty nicely after its report last night. The company did indeed deliver an update that said business is fine. And that’s pretty much all Wall Street needed to see and hear.
The company talked a lot about how we’re becoming an ever-more graphics central computing world — something I mentioned here and especially on Happy Hour when I was previewing this stock as a trade into earnings this week.
I also like how the company’s got such a huge critical mass of an established base to build off of out there. Graphics chips have a whole lot more proprietary technology than say, oil or DRAM or Flash, and developers have to choose a platform to build their graphics on. AMD’s floundering with ATI’s graphics technologies has really given Nvidia a huge lead and established base now, and that’s really important for future growth. Not to mention it’s important simply for future recurring revenue.
And here’s how I’d play this Nvidia trade now - I’d sell half my calls right now for a pretty decent gain off today’s pop. I’d keep the other half for the foreseeable future and look to sell them if the stock runs past, say, about $25 a share of so. And the little bit of common I’d hold here for an investment for the next couple years (which means you have to stay ON TOP OF THIS STOCK until you sell the common too, btw).
May 6, 2008 1:01PM
By Cody Willard
Cisco’s out after the bell today and it’ll get all kinds of focus from the media and a lot of mainstream money managers. Rightly so, I suppose, given the company’s worth five Yahoos, two and half Disneys, or about one Apple. In other words, it’s a big company. Cisco calls are a good source of insight about the current spending trends in the telecom and technology industries, although CEO Chambers never saw the bubble pop coming in 2000 or the bottom coming in late 2002, so as always you gotta take anything out of a CEOs mouth with a shovelful of salt.
At any rate, I think a much better earnings report to focus on this week from a trading standpoint is Nvidia which reports Thursday, even though if you just look at it’s market cap it’s only worth 1/12 as much as Cisco. But NVDA’s growing faster and has a cleaner road map to future growth as graphics chips are far from hitting penetration rates that they someday will when your TV, toilet and door knob all project holographs in your home.
NVDA is trading at about 8x enterprise value to cash flows. That means, if you subtract the nearly $2 billion in net cash that the company has on the balance sheet (since it’s just free cash sitting there in the company’s checking account and they don’t have any debt) from the $12 billion market cap that the stock market values the company’s shares at here when you look at the $22 print and multiply that with the 550 million shares outstanding, you get a company that’s worth about $10 billion. And they’re cranking out somewhere over a billion dollars in cash per year right now.
IBM, Microsoft and Intel all recently gave strong earnings reports and they all give us some idea that NVDA’s likely to do the same. The stock’s down from $40 and up a bit from the recent lows. I’d use some slightly out of the money calls dated three or four months out and also a little common stock on this trade.
But remember, any trade into an earnings report is VERY HIGH RISK, especially when you use options. So don’t use more capital than you can afford to lose.
Don’t risk more than you can afford to lose. Good advice for trading and for dating. Wish I’d listen to that advice the next time I get in a bad relationship too.
May 5, 2008 2:47PM
By Cody Willard
Yahoo should just break itself up instead. This is a company that’s had no direction since Semel stupidly decided it wasn’t a tech company but should copy media company business models from last century.
And today Softee walks away from the Yahoo deal. I’d expected this deal to get done, as I figured Softee would raise its bid. Which they did. But Yang et al, the same geniuses who can’t seem to figure out what business they’re in want to keep the company going in its present direction. Uh, what direction again?. Media content ownership company? Search company? Ad network company? Whatever you say, Jerry.
I mean, remember when Yahoo, after missing like 72 quarters in a row or something a couple years ago promised a revolution with their Panama upgrade? What a joke that turned out that to be.
Now we read in the papers that Yang felt “emboldened” because some ad-serving technology tests with Google didn’t suck?
Throughout 2005 and 2006, as I held a large Google position in my fund, I often wrote about Yahoo as a short and sometimes paired that position with a Yahoo short position. It was usually a good trade as Yahoo fell consistently and Google rose consistently. I wouldn’t short Yahoo any more, as I do think there’s enough value in that brand and traffic and content that the stock can work higher from here.
Which brings us back to the idea of just breaking this company up. How about one split off is a media content company, with all the writers and video programs and other content ventures the company has stupidly hurt its credibility as a search engine with for all these years. See, if Yahoo Content sold out to News Corp (full disclosure: NWS owns my career and soul and all that), they could combine Yahoo Finance and tech and so much more under Dow Jones/WSJ and the music/social networking content could go to Myspace, etc.
Yahoo could spin off its ad-serving company, which about 20 different companies, from Microsoft to some old-school ad company might go after.
And then Yahoo could go back to being a search engine. One that doesn’t try to control your actions by keeping you surfing on their own property and reading their own content as much as they possibly can. One that respects the idea that its users want to find the most relevant, germane information/content/video/story etc when they type something into a search box. Not a search company that strives to get me to watch one of my old friend, Aaron Task’s, videos — much as he’s still my boy and I’ll always have his back as he had mine in a pick up game of hoops a few years ago when I got tackled on a breakaway dunk — simply because they own the rights to his content and they’ll get paid if I do watch him.
Conflicts of interest don’t work in the search world, as I’ve long argued as a reason to stick with Google since they do “get” this logic. (YouTube’s an issue and I think a strategic mistake for Google because they now have a vested interest in making me go to YouTube rather than some other video-site…)
At any rate, let’s summarize the trading ideas here. The MSFT calls I wrote about last week have mostly about doubled in price or more as the stock has run from $28 to nearly $30. I’d sell half which means you’re now playing with the house’s money (don’t let the term fool you, the house’s money matters every bit your P&L as any other money does, so don’t think it’s “free” money). I’d let the other half of the calls ride for now.
And I’d still stick with Google, but would want to have trimmed that position recently. And Yahoo? Eh, just stay away from those idiots.
Question: Do You Yahoo?
Answer: No.
3G iPhone: Will It Be Better Than Sex?
