Friday, February 29, 2008

Dell Sales to Retail Outlets to Blame?

This makes a lot of sense to explain why Dell did so badly this past quarter while HP actually grew revenue by 38%. The total PC market's contraction might be greatly exaggerated and be more company specific.
Computer maker Dell (Nasdaq:DELL)
disappointed the market with lower-than-expected earnings in its fourth
quarter on Thursday. The company, which has implemented a new retail-based sales strategy focusing on low cost computers, is being pinched as consumers
are walking less and less into retail shops.

Dell was once known as the quality PC brand that had value added written all over it. They were kind of like how IPods are viewed now. They sold a so-called "value-added" product.

Dell once created custom PCs made to your specifications and then shipped them right to your house. "Dude Your Getting a Dell" was an actual compliment at one time. Now there are Dell Laptops piled up like so many towels at Wal-Mart. The exclusivity and "specialness" has worn off when you see its price slashed next to massive piles of Lenovo's and Acers.

I'm not sure how successful they would be but I think the idea of Dell stores may be something to think about. Dell needs to first stop selling their PCs to retail big box stores. Then they need to redesign them so that they can be seen as cool again. They could poach some Apple talent or pay Mark Ecko or Takashi Murakami a big pile of money to design certain custom their machines.

Innovation shouldn't mean making the wires inside bend a certain way to shave off $0.10 per completed machine but actually making a laptop into a "aspiration purchase" again. Apple has done it for years.

They need to put the idea into consumers heads that buying a Dell means they would be buying an experience or a lifestyle like you would do with Macs. They would then be able to expand their margin that way.

In any case they must stop trying to compete with the dirt cheap components and Chinese labor that Lenovo or Acer has at their fingertips. Get out of the so-called Oscar Meyer part of the store and get into the so-called $7.00 Organic Dry Salami part of the store.

SearchIgnite Says Paid Clicks Actually Up at Google

Hmm no wonder ComScore was backpedaling on its blog earlier. It seems that SearchIgnite who tracks the largest advertisers clicks is telling a vastly different story then ComScore on what Googles clicks are like.
SearchIgnite, a search management technology company employed by agencies
and marketers, reports that in the first month-and-a-half of this year, paid
clicks on Google are up 45.7 percent compared to the year-ago period. Advertiser
spending climbed 40 percent. What's more, ad impressions rose 60 percent.

So spending seems to be climbing by 40% and people are rolling out 60% more ads then this time last year? There doesn't seem to be any ad slowdown by Google's 500 biggest customers according to SearchIgnite.

ComScore Defends Themselves on Google

It seems that ComScore is coming out to say that 8% drop in paid clicks from Dec. to February by Google was in fact due to clean-up efforts associated with their quality initiatives. They wanted to get rid of the bad listings to order to enhance their good listings. ComScore also debunk the softening economy rationale for the paid click drop.
There is no obvious reason why the economy would negatively impact Google’s
users and not those of Yahoo!, MSN, AOL, Ask and others. Furthermore, we don’t
need a weak economy rationale to explain the recent decline -- since a similar
decline occurred earlier in 2007 when a weak economy wasn’t an issue.

This makes a lot of sense because why would an advertiser only cut online ad budgets at the site that provides the most eyeballs? You would figure they would first cut their ad spending in the smaller marketshare 2nd tier search area and then work upwards as conditions at their company worsened. Looking at this info I think that anyone who was able to get long Google below $460 got a pretty nice entry point.

Thursday, February 28, 2008

Gap goes for Margin Improvement

Building margin seems like a pretty fair plan while also controlling their inventory at the same time so they don't have to do so many markdowns.
Operating margins, which rose to 8.3 percent in fiscal 2007 from 7.4 percent
a year earlier, are expected to range from 8.5 percent to 9.5 percent for fiscal
2008, Gap said. Gap said it expects to reduce capital spending to about $500
million in fiscal 2008 from $682 million in fiscal 2007.

They are also closing about 85 poorer performing mostly Gap brand stores in 2008 as well. It looks like the company may be trying to slide further toward the Banana Republic side of the business and the higher margins that you normally see there. It seems like a good idea once consumer spending starts to pick up in the 2nd half of the year.

Dell Dissapoints Again

It seems that Dell is feeling the effects of "conservative spending" and also some added expenses that came about from their turn around efforts. The only positive thing is that their total computer sales were up 19% with about half of them coming from outside of the US. I guess Europe and the BRIC just want Dells more then we do.
Dell reported profit for the fiscal fourth quarter of $679 million, or
31¢ a share, far below the 36¢ analysts had expected. The results compared with
$726 million or 32¢ a share a year earlier. Sales for the quarter were $16
billion, short of the $16.27 billion analysts forecast, but up from $14.5
billion a year earlier. Dell shares dropped about 4% in extended trading. The
stock had risen 10¢, to 20.87, during regular trading.

8 Reasons There Won't be a Recession

There is some compelling stuff here. I agree with this point the most:
3. Interest rates are historically low worldwide, and after Ben's testimony
yesterday, it is obvious that U.S. rates are going lower. The Fed has been
pumping massive amounts of money into the system, as shown by the rapid growth in M2. My bet is the European Central Bank will also capitulate and lower rates before long. The fed funds rate equivalent in the eurozone is 4%, and while I
think it needs to be reduced to spur growth, 4% isn't a killer. There is a lot
of noise about a stagflation environment developing. The last bout of
stagflation in the 1970s saw interest rates/inflation at almost 14% and near
double-digit unemployment, so I think the hysteria is a touch premature.

I think alot of the recession talk has been pumped up by the media as an election year ploy. We are not even close to double digit inflation, interest rates, and unemployment. In any case Obama has already try to use it as a club to try to beat Bush and McCain with. I'm sorry but "tax cuts for the wealthy" did not cause the problems. It was incredibly low interest rates and rampant housing speculation that did it. It was a case of too many Flippers and Greenspan keeping the punch bowl out too long.

Wednesday, February 27, 2008

Analysts Rush to Googles Aid

It seems that Google has some quick footed backers trying to keep its price from breaking through 11 month lows.
Steve Weinstein of Pacific Crest told clients Wednesday that the
comScore data is likely an "inaccurate predictor" of Google's results. He said
he spoke to search-engine optimization firms and ad agencies "who indicated that
they are seeing much stronger growth trends in lead volume and spending than
what was implied by comScore" for the month of January.

I'm still not sure why firms would cut back on paid search unless the economy truly starts to implode. You would figure that a company would have even more onus to move to a medium that is cheaper and easier to track like paid search rather than sticking with traditional TV and print. Firms may cut their advertising in local newspapers and Yellow Pages in exchange for ramping up their Net presence. These companies can easily control their clickthroughs and fine-tune their message in order to keep a tighter control of their spending.

I mean companies do slash their Ad budgets when the economy slows but it would probably end up hurting their brand when the economy picks up again. This article has a great breakdown of what the Ad spending market will be like for 2008. I agree that Google will probably not feel the effects of a possible recession as much as a truly retail sensitive business like Amazon will. In any case it looks like a good time to load up on some Google in the mid to high 400s.

Tech Illiteracy no Longer a Bonus for Candidates

I agree with this article when they say that a tech illiterate President is not as big a bonus for candidate as it once was.
Thankfully, those days are fading; the blinking-VCR trope is becoming as
rare as a floppy disk. Americans today are more likely to see someone who boasts
about his or her nonfamiliarity with technology as a sign of incompetence or
just plain stupidity, as opposed to a character trait that signifies
groundedness in what's real. The vast majority of Americans perform
sophisticated digital tasks on a daily basis. Grandmas and grandpas e-mail
digital photos of their cruise trip, and IM their kids in school.

I think a tech illiterate President would be a huge liability when it comes to competing with the emerging tech powers we will be facing in 4-8 years. Already Korea and Japan have faster and deeper broadband that has been transforming their societies for years now. If not for head start given to us by Silicon Valley we would already be delegated to lesser power in Tech-Race. Of course Obama looks like a cool customer when it comes to tech:
Obama even charmed the geeks at Google during an appearance there when
CEO Eric Schmidt jokingly asked him the kind of question posed to prospective
employees: "How do you determine good ways of sorting 1 million 32-bit integers
in two megabytes of RAM?" A poker-faced Obama showed a high comfort level with programmer talk when he replied, "I think the 'bubble sort' would be the wrong way to go."

William F. Buckley Dead at 82

It is too bad that the conservative movement doesn't have these kind of erudite intellectuals as their public face anymore. Now they have Bill O'Reilly, Rush Limbaugh, and Ann Coulter who are all very smart and accomplished but they are not intellectuals like Buckley.

It would be so nice to see someone like Buckley debating someone far-left liberal like Sean Penn. It would be like watching a Kodiak Bear fighting a baby. If it was the current faces of the Conservative movement debating Penn then it would probably decend into a shouting match in 5 minutes. I think this quote sums him up in a nutshell:
"Mr. Buckley," one non-fan wrote in 1967, "you are the mouthpiece of
that evil rabble that depends on fraud, perjury, dirty tricks, anything at all
that suits their purposes. I would trust a snake before I would trust you or
anybody you support."

Responded Buckley: "What would you do if I supported the

Tuesday, February 26, 2008

Sun Leaks Intel Slides for Dunnington and Nehalem

It looks like Sun is going to get sued and someone is going to get fired.
Late last month in Austria, Intel presented Sun with roadmaps discussing
details of its upcoming server platforms, including the fairly secret Xeon
Dunnington and Nehalem architectures. Unfortunately for some, this presentation
ended up on Sun's public web server over the weekend.

I'm sure AMD is making some copies and hoping that they can match these beasts when they come out. In any case judging from what these people are saying I think Intel will hold the CPU innovation crown for years (or perhaps decades) to come.

FCC is Pro Net-Neutrality

It is good to hear a top official is on the side of the internet users for once. The idea that bandwidth constraints making the IPs block file sharing or whatever is just asinine IMO.
"I think it's important to understand that the commission is ready,
willing and able to step in if necessary to correct any (unreasonable) practices
that are ongoing today," FCC Chairman Kevin Martin said at a hearing on Internet practices.

John Friedman and I of the same mind on "Obama Robe Gate"

Friedman agrees that this "Obama Robe Gate" might be dirty tricks to deflect attention from other Obama-catches-Hillary stories like I do.
Perhaps it will turn out to be something less than a coincidence that
the Obama provocation surfaced just as The New York Times published a story
headlined: "Obama's Support Grows Broader, New Poll Finds."

My money is now on a made up "Obama-Bimbo-Eruption" cooked up by the Clintonistas coming out this weekend. I would be willing to bet that it will be in form of a New York Times article citing "unnamed sources" that state that Obama may or may not have engaged in "romantic liaison like contact" with a "woman, women, or persons unknown" in Chicago while a community organizer. Or some other made-up charge replete with a photo of Obama hugging a female staffer while wearing a Kenyan robe.

Visa IPO is going to be 'Uge

To borrow a line from Trump it is going to be 'Uge. It should be the biggest IPO in US history netting about $18.8 billion. I just like the fact that their smaller rival Master Card is up 5x since its IPO and Visa has a bigger market share slice.
Visa holds about 44% of the U.S. credit card market and has a 48% share of
the debit card market, according to data form Nilson.

I love any company that can charge a fee anytime one of their cards are used and they get to pass the risk on to the issuers. Also the use of Debit Cards are really starting to take off as well. Once we get a pay by cell phone service like they have in Japan you might be able to kiss the need to carry cash goodbye.

I have a feeling that the IPO will probably go into the low $80s on the first day but that is just a gut feeling. In any case I will be generating cash to be this stock as near to the IPO as possible and I will be buying on dips. A 5 bagger in just 2 years like Master Card would be sweet.

McCain Keeps things Civil after Talk Radio Host Rants

I am really looking forward to some debates between McCain and Obama after hearing about his reaction to this. I think we may actually have some discussion on the issues for once.
"I apologize for it," McCain told reporters, addressing the issue
before they had a chance to ask the Arizona senator about Cunningham's

"I did not know about these remarks, but I take responsibility for
them. I repudiate them," he said. "My entire campaign I have treated Senator
Obama and Senator (Hillary Rodham) Clinton with respect. I will continue to do
that throughout this campaign."

McCain called both Democrats "honorable Americans" and said, "I
want to dissociate myself with any disparaging remarks that may have been said
about them."

Monday, February 25, 2008

Obama Photo is Just More Clinton Dirty Tricks

Here we go again, the Clintonistas are going into the mud pit again. This one is especially bad too because they are taking a picture out of context and then implying that Obama may in fact be a Muslim because he wore some Kenyan elder robes at a function in Kenya. This is a low blow even for the "dirt squad" at the Clinton HQ. I love their comeback too:
"Enough," Williams said in a statement. "If Barack Obama's campaign
wants to suggest that a photo of him wearing traditional Somali clothing is
divisive, they should be ashamed. Hillary Clinton has worn the traditional
clothing of countries she has visited and had those photos published

Um, I think it is people like Ms. Williams that is trying to make this thing divisive. You don't see Obama staffers digging up pics of Hillary in headscarf and saying she is a Muslim. Also notice how Ms. Williams immediately went into an attack-the-Obama-campaign mode. I think that is all these Clintonistas know how to do. Here is the pic from the Drudge Report who first broke the story.

It is just sad that the Clintonistas are trying to float this mess right before they must win all costs a state like Texas with its 27% Baptist and its 30% Catholic contingent. They probably did this because Obama just passed her in the latest AP poll in that state after being neck and neck with just her a few weeks ago.
I guess the Clintonistas just think that Christians in Texas are so gullible that they would immediately say "Obama in a turban? He must be one of them there Moslems. Ah mean his middle name is Hussein I tell you what." (said in a Hank Hill drawl.) It is just the same old dismiss the "fly-over" states policy time and time again.

Friday, February 22, 2008

Economy Slows but Server Sales still Good

Hmm I guess this slowdown in tech spending might be less than some people think.
Worldwide server shipments climbed 11% in the fourth quarter of last year
and revenue was up nearly 3%, despite fears of an economic slowdown, a market
research firm said Thursday. There was no change in the rankings of the top

This was supposed to be a "spending slowdown" quarter but people are still springing for new servers. You would figure that the meltdown in financial services would cut the amount of server purchases but I guess not. Maybe those Mortgage Lenders and Real Estate firms weren't growing fast enough to need more server firepower before they died off.

It would be interesting to find out what server shipments are like this quarter though since this is supposed to be the so-called recession quarter. Also I think Dells numbers on Feb 28 will be a very important tell on tech spending. In any case Hewlett-Packard likes what it is seeing going forward. .
HP's recent results support the view that overseas markets might prop
up U.S. tech firms. HP said revenue from the Asia-Pacific region rose 22% last
quarter vs. the year-earlier quarter, compared with 15% for Europe and 8% for
the Americas. Nearly 70% of HP's sales come from outside the U.S.

MSFT Integrating YHOO but the Deal Is Not Done

Hmm, it looks like MSFT is already planning a Yahoo integration and the deal hasn't even closed yet.
Johnson took the opportunity to make the case for the merger. After speaking
with executives from big media, "I know there is a desire for more competition
in search and online advertising," he wrote. Without the strength derived from
combining the two companies, "there's less innovation, less competition and less
value being generated for consumers, advertisers, and publishers."

A Yahoo and MSFT team-up may be one of the few things that could compete with Google's domenance of of search and online advertising. I still think MSFT stock got clobbered because of percieved weakness in YHOO and wether MSFT is overpaying for the company. Also I would be willing to bet that quite a bit of the engineeing talent at YHOO would jump ship if they were taken over. I guess it comes down to the integration process. If MSFT can pull it off with little to no loss of headcount and competitive ad-rate increases then the stock is a steal trading at a 15.75 P/E with a 25% growth rate.

Iran May Face Third Round of Sanctions

It seems that Iran is jacking up some 2nd generation centrifuges and the world is finally taking notice.
"They're increasing their capabilities," U.S. Ambassador Zalmay Khalilzad
said. "Not only have the number of centrifuges increased, but they're working on
a second-generation, if you like, a more capable centrifuge.
"Things are getting worse in terms of the enrichment part."
Britain and France introduced a council resolution on Thursday — with support from the United States, Russia, China and Germany — to expand and toughen travel bans and the freezing of assets
for more Iranian officials linked to the nuclear effort.

If I was Iran I would shut down their enrichment program for retooling or something until October and see if they can play Obama or not. If it looks like McCain is going to win then try to provoke a response out of a lame-duck Bush by starting the thing up again in earnest. If the US rattles the saber then there might be a nice anti-war backlash that could slide Obama into the presidency. I think it comes down to who Iran can play better Obama or McCain.

Thursday, February 21, 2008

Hillary is Starting to Sound Shrill

I think Hillary may be entering the last throws of her campaign.
Clinton also raised Obama's use in his campaign speeches of words first
uttered by his friend, Massachusetts Gov. Deval Patrick.

"If your candidacy is going to be about words then they should be your
own words," she said. "...Lifting whole passages from someone else's speeches is
not change you can believe in, it's change you can Xerox."

The debate audience booed.

Obama said the entire controversy was evidence of a "silly season"
that the public finds dispiriting.

Yes the public does find this sort of thing dispiriting. The politics of slash-and-burn should be a thing of the past but Hillary keeps going back to it again and again and it is costing her. She always tries to play the bulldog roll but it just doesn't work anymore. I think the heady ideas that Obama is peddling trumps the so-called "politics of personal destruction" that the Clintons seem to engage in. It just seems that she is putting on the Wicked Witch of the West hat now that everything else didn't seem to work. Maybe she and the New York Times can cook up a fake sex scandal to hit Obama with.

Wednesday, February 20, 2008

The Obama Economic Plan: Case by Case

I was checking out Obama's economic plan since that is what will probably affect my October decision-making process whether to actually vote for the guy or not. Some of the stuff looks very interesting and could be great for certain stocks going forward:

1. Provide Middle Class Americans Tax Relief: Obama will create a new "Making Work Pay" tax credit of up to $500 per person, or $1,000 per working family.
This seems like a pretty good deal depending on where he will draw the "middle class" line. If it is people making less then 100k a year or something then sign me up. If it is for people making like 20K or less then I am 100% against it.

2. Simplify Tax Filings for Middle Class Americans: Obama will dramatically simplify tax filings so that millions of Americans will be able to do their taxes in less than five minutes.
I'm not sure how he is going to do this but if I don't have to fill out that damn list of gains and losses on investments then I am all for it. Also the idea that the government will fill out a tax form for you is fraught with possible errors and omissions. I can see the government short changing you on a refund and you not contesting it because after all you did get a refund. In any case the current 1099EZ is a massive joke and it seems is only good for college students or part time workers so that does need some reform.

3. Fight for Fair Trade: Obama will fight for a trade policy that opens up foreign markets to support good American jobs.
These suggestions seem to be to get rid of NAFTA and try to force open foreign markets for our goods. He also wants to pressure the WTO to stop unfair tariffs and other things. As long as he isn't a trade protectionist then this stuff doesn't seem too bad on the surface.

4. Technology, Innovation and Creating Jobs: Obama will encourage the deployment of the most modern communications infrastructure to reduce the costs of health care, help solve our energy crisis, create new jobs, and fuel our economic growth.
This is the red meat of Obama's economic message in my mind. He wants to double federal funding for basic research, push green manufacturing, create green technology jobs (green-collar jobs?,) and make 25% of electricity generation come from renewable sources by 2025. This would be a massive boost to the solar industry and should push clean coal initiatives as well. So an Obama presidency would mean that First Solar and Sun Power and other solar stocks would go through the roof. However some of these renewable sources better be nuclear though. If Obama is anti-nuclear energy then I am against him. We can't reach these goals with solar energy alone.

He also wants to create more next generation broadband, enforce net neutrality, and push more broadband to rural areas. If Obama creates broadband penetration rates nearly as high and a network that is as fast as it is in South Korea then his potential presidency would be a great success. It is a disgrace that a technology that we pretty much invented is such a joke compared to what they have in other countries. If he does creates a "Broadband for Everyone" initiative then that will actually sway my vote.

5. Labor: Obama will strengthen the ability of workers to organize unions. He will fight for passage of the Employee Free Choice Act. Obama will ensure that his labor appointees support workers' rights and will work to ban the permanent replacement of striking workers. Obama will also increase the minimum wage and index it to inflation to ensure it rises every year.
I don't like this one at all. Increased labor strife is something this nation does not need. This would be bad for all sorts of industries from fast food to garbage men. Let's say the US is hit by a nationwide dock worker strike. Billions of dollars would be wasted and our country will grind to a halt just so that one small slice of workers would get a 5% pay raise or cheaper health benefits. Plus, Obama would probably not send out the National Guard to break the strike so something like this would strait-up paralyze the country. The last thing we want to do is to follow the French strike mania system.

Also tying the minimum wage to inflation would seem like a good idea but it would make companies like McDonalds and Wal-Mart raise their prices to compensate. So Americans might get hit by both regular inflation and wage inflation at the same time. Or these companies might just reduce headcount every year by 3% just to keep costs in line.

6. Protect Homeownership and Crack Down on Mortgage Fraud
Obama will crack down on fraudulent brokers and lenders. He will also make sure homebuyers have honest and complete information about their mortgage options, and he will give a tax credit to all middle-class homeowners.

Most of this stuff deals with subprime mortgages and would probably be a moot point in a few years. I have a feeling that no bank will issue a subprime mortgage that is not heavily regulated in the next 4 years. Also variable rate subprime mortgages are now synonymous for pain and foreclosures so most consumers wouldn't sign up for them again under any circumstances.

7. Address Predatory Credit Card Practices: Obama will establish a five-star rating system so that every consumer knows the risk involved in every credit card. He also will establish a Credit Card Bill of Rights to stop credit card companies from exploiting consumers with unfair practices.
This seems like a very good idea to me. I think many consumers are still mystified by credit and don't know that it usually takes decades to pay off their credit card bills if they pay the minimum every month. It would be nice to just sign up for a so-called 5 star credit card and now that the spending limit would always be set to $10K and the interest is always 18% or something like that. This would be bad of MasterCard and some banking stocks though since some revenue and most fee growth will go out the window.

8.Reform Bankruptcy Laws: Obama will reform our bankruptcy laws to protect working people, ban executive bonuses for bankrupt companies, and require disclosure of all pension investments.
The bankruptcy law reform would allow a person to file for a "medical bankruptcy" and it might be problematic. Let's say your family is facing a medical crisis and depending on the criteria you could could max out all of your credit cards and buy a bunch of crap and then declare for bankruptcy and get everything for free. Also if you can forgive all of your medical expenses when you file this "medical bankruptcy" then that would have ramifications on the entire medical field. I guess the tax payers will have to pay for all of the drugs and the procedures that that person essentially got for free.

The executive bonus part makes some sense since those execs shouldn't get paid to run a company into the ground Also the pension investment part may be interesting to see what those various multi-billion dollar pension funds actually hold from quarter to quarter.

9.Work/Family Balance: Obama will double funding for after-school programs, expand the Family Medical Leave Act, provide low-income families with a refundable tax credit to help with their child-care expenses, and encourage flexible work schedules.
This seems like a bunch of pro-family stuff that doesn't apply to me. The single person has to foot the bill again so that married people with children can get even more breaks. Also expanding that Family Medical Leave Act so it hits every employer with 25 or more employees would magically make many more businesses carry only 24 employees to compensate.

Iran Still Hiding the Nuke Plans

It seems that group that wants to overthrow the Iranian government has information that Iran still still going for a nuke.
It was not possible to independently verify the NCRI claims. Mohaddessin
said his group got the information from "hundreds" of reports and sources from
within the Iranian regime, whom he did not name. He said some of the sources are
within the nuclear project itself.

I like how the AP puts hundreds in quotes and then casts immediate doubt on their findings. He did not name the sources because they would probably be tortured and murdered if they are found out. Of course the AP leaves that little fact out of the picture.

Investing in the Food Chain

This is a great article on each of the different stocks involved in the food chain. It goes from agricultural equipment manufacturers to seeds and fertilizers to farm products and biofuels to fresh produce companies. This article covers the front end (or growing end) of the product.
The three categories of the food investment chain described so far
represent the front end of the the chain, which happens to be the fastest
growing segment of the chain. Fast growth often brings opportunities for
outsized gains, but can also carry the possibility for tremendous risk, if the
"wrong" stock within a sector is selected.

Tuesday, February 19, 2008

AMD Hybrid Crossfire: I don't get it

I wanted to check out some competition to NVIDIAs new stable of top of the line chips and came across this article on the ATI Hybrid Crossfire. From what I can gather it is a two chip system that allows a video card plugged into a PCI-express slot and the GPU built into an AMD motherboard act as one more powerful package.
Crysis truly is the “benchmark” of any current 3D video acceleration
technology. With the RV620 video card alone, there simply was not going to be
any Crysis gaming at any reasonable settings, but with Hybrid CrossFire enabled
we were able to actually tweak out a Crysis configuration that would let you
play the game at 1024x768 with most of the visual settings on “Medium.”

It does seem that people with legacy video cards can now play state-of-the-art games on Medium visual settings. That seems like a good idea if you upgraded your motherboard so it works with the technology. I'm still not sure why you just wouldn't spring for a medium of the line video card and just play the game on lower settings without having to upgrade your motherboard. However, this part had me scratching my head:
So a Hybrid CrossFire sub-$500 computer could show up on your Uncle
Bob’s doorstep with Hybrid CrossFire enabled actually allowing him the
ability to play some real 3D games and plug in two monitors without ever
having to switch the Hybrid CrossFire mode on or off.

I'm not sure if Uncle Bob who is buying a sub $500 computer would actually try to play top of the line games on it. If he really wanted to play games you would think he would spring for a $360 Xbox360 or a $249 Wii. Also the 2 monitor-thing doesn't seem like something Uncle Bob would drop another $300 dollars on a new monitor in order to achieve.

I'm not sure what niche this Hybrid Crossfire is supposed to fill. I guess it is there for people who want to use a dirt-cheap graphics card to play games that could probably look a lot better if they just paid a few more bucks for a better card. It makes a junk card go from unplayable on the current games to barely passable for about $500 and a motherboard replacement.

Friday, February 15, 2008

Nvidia's Drop Seems Strange

I was researching Nvidia and after they brought out numbers the stock promptly recieved an 18% haircut in 2 days. I was trying to figure out the reason why and came across this article. It states that there will be a jump in expenses for Q1 of 2008. Okay, so I took a look at transcript of their earnings call to see why their expenses rose and here is what they said:
We expect operating expenses to increase quarter to quarter because of
the normal Q1 issues of less vacation in Q1 than Q4, higher FICA expense in Q1
and Q4. In addition, we expect to have approximately $7 million of incremental
expenses in Q1 that will come from acquisitions we’ve recently made.
The result is that we expect operating expenses to increase 8% to 10%.
So due to seasonality, aquisition charges of $7 million, and FICA expenses (possibly from adding 376 new people, 2/3 of which are in R&D) they will be paying 8% to 10% more in expenses. All three of these things should be 1-time deals and NVDA should be able to control them for the most part.

Also this article sites operating margin shrinkage from 46.2% to 45.7%. So I was thinking maybe they were having trouble with pricing power or something along those lines. Instead I looked at the transcript again and found this.
Gross margin for the quarter was 45.7% GAAP and 45.9% non-GAAP. This
was the first time in 13 quarters that we haven’t had a non-GAAP gross margin
increase quarter to quarter. During the quarter, we experienced some cost issues
with regard to the 8800GT, which we hope to resolve in the next two quarters.

So they had some problems with the 8800GT costs and this dropped the margin slightly. I guess saying that the problems won't be ironed out for 2 quarters is what dropped the stock so quickly. The Bear Stearns guy, Gurinder Kalra, asked what those cost issues were and this is what they said:
You know, 8800 GT was ramped probably faster than any high-end GPU in
our history. As I mentioned in my comments earlier, in just four months of
production we shipped over 2 million 8800 GTs, and this is a high-end GPU. The
die size and the number of transistors of the 8800 GT is far more than any
microprocessor you currently have -- core-two dual and otherwise. And so this is
a very complex processor and yet we ramped it incredibly hard.
We had some manufacturing challenges in the beginning and we caught it, we fixed it, and now we are going to see far better yields going forward. But it affected our cost in Q4.

So they went with banging out the high end (and probably high margin) product as fast as they could while shipping almost 2 million units and costs seemed to suffer. They said that the problem was fixed for the most part and margins should be going back to normal pretty soon. I think the "two quarters of cost issues" part above didn't jive with the "manufacturing problems fixed" part and the stock nose dived because of it.

It just seems strange that increasing headcount for R&D purposes, M&A costs (from a company that allows them to bring their physics engine in-house,) people being off less (and thus working more,) and having a manufacturing problem that was supposedly "fixed" could drop the stock 18% after they said Q1 revenue would be "better then seasonal" ie better then the normal 5% drop from Q4 to Q1. In any case the stock seems pretty cheap right here at a forward P/E of only 12 and a PEG of less then 1.

Thursday, February 14, 2008

Visium Asset Management and Morgan Stanley long Dendreon

And according to this article it is not a small stake.

Latta pointed out what is news is that Visium Asset Management in a
Securities and Exchange Commission filing that showed up today at, has taken a 10 percent stake in Dendreon. That filing from the New York hedge fund is dated February 12th, but it only appeared online today. The delay isn't unusual. And then, coincidentally, just as I was checking out the filing and reaching out to Visium for comment another filing showed up. This one's from Morgan Stanley which reports that as of Dec. 31, 2007 it took a 6.5 percent stake in DNDN.

So these two firms scooped up 16.5% of the outstanding Dendreon shares while everyone else seems to be shorting the crap out of it? Visium seems to be a biotech hedge fund according to their holdings. Also looking at their holdings it seems that a 10% stake in DNDN might be one of their top 5 largest positions as well. That is a big bet on a stock that pretty much is in limbo until they either get an FDA approval or they partner up with a larger firm.

Wednesday, February 13, 2008

Obama May Push GOP to the right

It sure seems that way to me and this article confirms it.
Obama is drawing so many moderates and independents to the Democratic race
from what would normally be the ranks of the Republican electorate that 1) he's
rolling up large margins and stitching together a broader coalition, and 2) he's
making the Republican electorate comparatively smaller, and more

I think Obama broadly appeals to anyone that isn't far right who wants a change in the country. He seems to be above the partisan fray and could be the kind of guy that won't be as devisive as Hillary. I think a choice between McCain and Obama will come down to experience versus a hope for change.

Do you want an experienced hand that has been in the fight for years but differs from Bush in several key ways or a fresh face that hasn't really been battle tested yet? We might even be able to afford some-on-the-job training as long as Obama would be willing to admit he is wrong and right the ship.

A battle between Hillary (who might be on her last legs) and McCain would be the same old partisan fist fight we have seen before. I think McCain would win comfortably if that would happen since people underestimate how much Hillay is hated by the right.

Perma Bear Says "Great Depression" might be near

It seems that we are really at a true bottom when this guy is saying that the banking and housing sector might cause another Great Depression.
"Avoiding a depression is, unfortunately, going to have to involve
either a large, quasi-permanent increase in the budget deficit -- preferably tax
cuts -- or restoring overvaluation of equity prices," Connolly said on

"If conventional monetary policy is not enough to produce that result,
the government may have to buy equities, financed by the Fed," Connolly

The problem is that the P/E ratio of the DJIA in 1929 was 32.6 while the P/E ratio of the DJIA today is only 15.22. So you could make a case that equities were overvalued in 1929 while they are only slightly overvalued today since the 100 year historical average PE is 14. So I'm not sure where he comes up with stocks are so overvalued that the US government needs to prop them up by deficit spending in order to buy equities? I guess this Connolly guy is short the market or long gold or something or is just generally all-around bearish.

Lucas goes back to the Star Wars Money Pot

Now they may create an Attack of the Clones animated feature film and maybe a live action TV show as well.
Though creator George Lucas once said that Revenge of the Sith would be his final Star Wars film, he has apparently since reconsidered.
"I felt there were a lot more Star Wars stories left to tell," Lucas said in a statement. "I was eager to start telling some of them through animation and at the same time push the art of animation forward."

Actually he means "I need a brand new 787 to tool around in and the only way to make that happen is to tell more crappy Star Wars stories."

Tuesday, February 12, 2008

Modu Mobile Might Kill Cell Carriers

This article makes it out to be a potential IPhone killer.
The product looks revolutionary. The Modu Mobile is a tiny cellphone,
1.5-ounce, 2.8-inch-long, that can be inserted into multiple jackets that
enhance its functionality. In other words, the modu has the basic functionality
of a cell phone: antenna, cellular radio, contact list, text messaging
capabilities and a battery. It is packed with a large memory stick (1 G), that
carries over your personal data (contacts, photos, music and etc), onto other
devices, using low priced “jackets” or “sleeves” such as car stereos, photo
frames, car navigation systems, clocks, toasters, laptops, cameras and

This sounds like an interesting idea and we may finally get Uhura's earpiece invented. However I'm not sure that anyone would buy a Garmin or a car stereo with a built in cell phone. The portability of this thing might in-fact spawn a new class of cell phone and might be a game changer in the telecom space.

This device could be made into a cell phone with a USB slot that you can plug into your PC so it would be easier to share files and load the phone up with music. The real game changer comes when a company offers a service like Vonage which allows you to connect cell calls over the internet. This Vonage branded phone would then fit into a handset "jacket" made by Nokia that when connected wirelessly to the internet allows you to make free long distance and local calls. You would even have unlimited text messaging for free with a Yahoo Messenger type of interface built into the site.

This company could then offer dirt cheap monthly fees (or even be fee with ad sponsorship) to compete with the current cell carriers and could even offer online data hosting for your cell phone media at a reduced price. The only thing you would really need is wireless always on broadband and you would be all set. In fact you might even think that the idea of minutes or calling off-peak as a thing of the past. I can see Google getting into this space in a heartbeat.

Buffett Offers to Pick the Carcass of Bond Insurers

It seems that Buffett is up to his old tricks again.
Billionaire investor Warren Buffett said on Tuesday he has made an
offer to the three top bond insurers to reinsure $800 billion (409.8 billion
pounds) in municipal bonds, but one of the struggling companies has rebuffed the
plan while the other two have yet to respond.

Of course those bond insurers know that their muni insurance is pretty solid and the risk of defaults on munis are at 1% or so. They also know that insuring munis are about the only thing left at these companies that is still profitable. If you strip that away all they would have left are a bundle of worthless CDOs. And without the fees generated by the munis, and left with the downgraded AAA ratings that they would get from losing their low risk/high reward business, these companies could quietly fail. That is not such a bad idea for Buffett since he is opening his own bond insurer.

There is nothing better then cutting away the most profitable part of a business then perhaps getting a near monopoly in muni underwriting all while looking like the savior of Wall Street. No wonder this guy is a billionaire.

Hannah Montana Chastized for not Wearing Seatbelt

It is good to finally see a young celeb get scolded for something other then getting pregnant, getting a DUI, underage drinking, or taking a bunch of nude photos of themselves. Miley Cyrus is so wholesome that they have to dig down deep to get anything on her. She can really be a power player that helps kids as she grows older.
In a blog item posted Monday, Consumer Reports magazine says
15-year-old superstar Miley Cyrus, who plays Hannah Montana on television, is
seen in her new movie riding without a seat belt in the back seat of a Range

Monday, February 11, 2008

Is the Bottom in on the Market for 2008?

Hmm sometimes all the gloom and doom of the recession talk results in a glimmer of opportunity according to Raymond James Chief Investment Strategist Jeff Saut.
So where does all this leave us? Well, it seems to me as though the
equity markets put in a bottom of at least near-term significance on January
23rd when the DJIA recorded its second largest daily point swing in history from
down more than 300 points in the morning to up nearly 300 points on the closing
bell (the largest daily point swing since July of 2002). Indeed, I think
the envisioned “selling stampede” ended on that date in session 18 of the
typical 17- to 25-session “selling stampede” and are treating those late-January
“lows” as the internal lows until proven wrong.

Hmm, there really are some real bargains in the market and just about all of them are going up off of that January drop off point. If the charts retest or break through that point then we should look out below. But until that happens we might be able to get in on some really great stocks for cheap.

Yahoo spurns Microsoft

I pretty much figured that this would happen so that Yahoo can drive up their asking price.
As expected, Yahoo's board unanimously decided to spurn Microsoft after
concluding the offer -- originally worth $44.6 billion or $31 per share --
"substantially undervalues" one of the Internet's prized franchises. The
cash-and stock deal is now valued at about $40 billion, or $28.91 per share,
because of a drop in Microsoft's market value.

The fear now is if MSFT decides to walk away without a proxy fight. I think Yahoo's shares would tank and MSFT will probably go back to pre-merger prices. Could be an interesing trade there depending on how you think things will go.

Friday, February 08, 2008

Hillary Administration could be Co-Presidency

These are some words that really gets me on the Obama bandwagon when it comes to the Democratic primary.

If his wife is elected president, Clinton said he will not interfere with
her work or her advisers.
"I will do what I'm asked to do," Clinton said. "I
will not be in the Cabinet. I will not be on the staff full-time. I will not in
any way interfere with the work of a strong vice president, strong secretary of
State, strong secretary of Treasury. "I will do what we've always done for
each other," he said. "I will let her bounce ideas off me. I will tell her what
I think."

He will not be on the staff full time? So does it mean that he will be on it half of the time? I guess you can't prevent him from being in the White House giving advice or whatever. I just don't like the fact that you will be getting a package deal with a Clinton Presidency. I would have liked Hillary to distance herself from him because he has had his 8 years at the helm. Now it is now time for someone else to take the stage.

Thursday, February 07, 2008

Thanks Congress, I am $600 Richer

It is always a good bipartisan measure to put an extra $600 in my pocket.
The Senate's 81-16 vote capped more than a week of political maneuvering.
The logjam broke when majority Democrats dropped their demand that rescue
proposal offer jobless benefits, heating aid for the poor and tax breaks for the
home building and energy industries.GOP senators blocked those ideas, but
agreed to add $300 rebates for older people and disabled veterans to a $161
billion measure the House passed last week.

I think I'll use mine to either buy a Blue Ray DVD player or maybe defray the cost of a new laptop. Or maybe I'll simply mess up the system and save it.

Wednesday, February 06, 2008

Scandal Rocks Oxford Debating Team

Upon reading this article you would think there would be some election violence with the overturning cars, and burning offices in the near future.
But its most recent election has degenerated into farce. It started
with the November victory of Krishna Omkar, and a prompt challenge from
runner-up Charlotte Fischer, who, with the help of a lawyer, managed to convince
investigators that Omkar should be disqualified for violating election

"Its a tragedy that this has happened," said Jason Keen, a history
student who backed Omkar. "One person wins, one person loses, and the person who
loses steps aside. But Charlotte didn't want to step aside."

Cramer Cites Disney as a Buy

It seems that Cramer agrees with me that Disney is a pretty good buy according to this article.
Cramer praised CEO Bob Iger's assessment of the entertainment company's
strong theme-park revenues. "Iger said something fabulous on that call. ... It's
perfect right now. The economy's weak, so they don't have enough money to go
overseas." Cramer also noted that thanks to a weak dollar, people are coming to
the U.S. to vacation.

So people would rather go to Disney World instead of Europe so that they can keep their family vacations cheaper to save money. You still have to go on a vacation but driving to Orlando is much, much cheaper then flying to Paris. I wonder if those new stiff passport restrictions are keeping Americans away from the Caribbean and headed to Disneyland instead?

Now that, coupled with Europeans taking advantage of the weak dollar, is pumping up their theme park revenue even when the economy is slowing. Hmm, Disney may be a pretty decent recession hedge the more you look at it.

Obama Says he has better chance against GOP

I agree with him as well.
"I have no doubt that I can get the people who vote for Senator Clinton. ...
It's not clear that Senator Clinton can get all the people I'm getting," he
I think many Democratic leaders underestimate how hated Hillary is by many on the Right. The GOP would pull out all the stops to try to "Swiftboat" her. The bad part is that she has had lots of involvement in various scandals over the past 30 years. It would be easy to derail her whole campaign with some Rose Law Firm crap from the 70s or more Vince Foster details.

Obama on the other hand seems to have admitted all of his youthful wrongdoing and would be would hard to hit with a scandal. The GOP would have to run against his inexperience in comparison to McCain and maybe even on the actual issues.

I can see a Hillary v. McCain election being a political cage match with both sides carpet bombing each other. I can just see a young Clintonista trying to dig up stuff about McCain's Vietnam years and blowing her campaign up with it. They can barely stop the people on their own side from saying whatever they want against Obama. Just wait until a GOPer gets in their crosshairs. So you can just imagine a Far Left operative (that of course holds all Vets in contempt) trying to go after his POW status or saying the Vietcong gave him special treatment or some other strait-up lie and killing her campaign with it.

Perhaps an Obama v. McCain election will come down to the issues and experience v. inexperience, age v. youth, and instead of about made up charges and dirty tricks. Perhaps the election would be a germane and respectful dialogue instead of everyone shouting at each other Fox News style. It seems Obama has already started down this road by actually campaigning in the Red states which have been forsaken by the Dems. Could Obama be the Great Uniter? Could he be the Dems version of Ronald Reagan? It would be interesting to see that after 4 years a pro-security, pro-renewable energy, pro-amnesty voter would be known as an Obama Republican.

Tuesday, February 05, 2008

Disney Smashes Numbers; Parks Do Well

I guess the House of Mouse hasn't yet felt any of the ill effects of the economic slowdown.
Net profit dropped to $1.25 billion, or 63 cents per share, from $1.7
billion, or 79 cents per share, in the year-earlier quarter, when results had
been boosted by the sale of interests in Us Weekly and E! Entertainment. Revenue
rose 9 percent to $10.5 billion.

The 63 cents per share earnings topped Wall Street's average target
of 52 cents, according to Reuters Estimates.

The best news from this earnings report is this I think:
“People have not stopped or slowed down when it comes to taking family
vacations,” Iger said at a September conference, Bloomberg
reports. “Some people will keep the family vacation and not replace a faulty refrigerator. That’s an
interesting phenomenon.” And, for Disney, a profitable one.

This is something that is totally opposite to what you would expect from a slowing economy. Why would people go to Disneyland for a one time trip instead of buying white goods that they will use everyday?

I guess it the difference is between having a genuine experience that you can't get anywhere else versus buying something mundane that they you can simply put off until some time in the future.

I mean a person's kids are only in that sweet spot for loving Disneyland for a short period of time before the real world slams them down. They have that moment of "Disney Magic" for a few years before they have to worry about getting into a good college, school shooters, drugs, sexual pressure, depression and all of that other stuff that teens have to worry about.

Vitamin B-9 Reduces Dementia by 3x

It seems that folate which is in leafy vegetables such as spinach, turnip greens, lettuces, dried beans and peas and in certain fruits reduces the risk of dementia by 3 to 1.
An study published last year in The Lancet showed an improvement in
short-term memory, mental agility and verbal fluency among persons over 50 who took a daily dose of 800 micrograms (mcg) of folic acid. The US recommended daily dose is 400 mcg.

This vitamin seems to make new cells so I guess it stops the brain from not creating new cells to replace the ones that are lost to aging.

Monday, February 04, 2008

Hillary Exausted and Teary-eyed by Nomination Push

It is so hard to feel bad for someone as cool and calculated as Hillary but this article sure makes her sound like a wounded warrior stumbling down the last mile, with tear-streaked eyes, into an uncertain future.
Clinton, voice almost gone, worn down by sleepless nights and days on
the campaign trail, wiped a tear from her eye as she visited Yale University,
where her political journey started as an earnest 1970s student in bell-bottom

"Well I said I would not tear up, already we are not exactly on the
path," said Clinton, 60, in an emotional moment, as she battled Obama for votes
in northeastern Connecticut and Massachusetts.

I would normally feel sorry for someone in this situation but the Clintons make it so hard to separate genuine emotion from cold, hard election calculus. You always have a sense that one of her operatives is whispering in her ear that she needs to cry again just so that she can carry the womens vote. That same grubby-handed pollster waves a printout that says women 25-55 are 61.625% are likely or very likely to vote for a woman who wears her emotions on her sleeve then not. She then cries on command like a battle-hardened election robot in order to win Connecticut and Massachusetts.

That is why I want the Dems to elect Obama so that there is a general decrease in cynicism in America. I would genuinely feel compassion for a guy like Obama if he was teary eyed at his return to Punahou or inner city Chicago or wherever his dream of being President started. It sure will be nice to finally put those devisive Clinton (and Bush) years behind us.

J. Michels Video Game Index 2/4/08

-$873.78 -2.18%

J. Michels Uranium Index 2/4/08

-$970.01 -1.63%

Insiders Go Long E*Trade

It seems like a nice bottom has been put in at E*Trade now that 10 insiders are buying in at $4.06 or so a share.
"And for them to be buying after a one-month triple digit move speaks
volumes on confidence, which may explain the latest surge in option volume.
Sure, the stock took a major dive in 2007, but that's because it got itself
involved in a business it shouldn't have been in -- subprime.

They seem to have exited that flawed business to the tune of $2.2 billion and are instead focusing on their core business. IMO they need better research but other then that I really have no complaints with the company. What I think they should do is to buy out an independent research firm and start offering recommendations based on that research. It should be something like an E*Trade Recommended List that investors can check out for themselves and buy as a basket of stocks.

Social Networking on the Downslope?

It sure seems that way from reading this article.

The average length of time users spend on all of the top three sites is on the slide. Bebo, MySpace and Facebook all took double-digit percentage hits in the last months of 2007. December could perhaps be forgiven as a seasonal blip when people see their real friends and family, but the trend was already south.The story year-on-year is even uglier for social networking advocates. Bebo and MySpace were both well down on the same period in 2006 - Murdoch's site by 24 per cent. Facebook meanwhile chalked up a rise, although way off its mid-2007 hype peak when you couldn't move for zeitgeist-chasing "where's the
Facebook angle?" stories in the press and on TV.

So does this mean that these social networks are starting to falter and the $15 billion price tag for Facebook seems overvalued? It sure seems that way from reading these numbers. I think Mark Zuckerberg should have went public in 2007 and reaped the big money buyout when it was right there in front of him.

I think you may need to chalk this all up to the fact that people might have thousands of semi-friends/strangers in their Friends List on MySpace but maybe only a handfull of real friends. They can easily keep in touch of those real friends without having to resort to MySpace to round them all up. There is just not enough things to do on MySpace or Facebook to keep people interested once they have their profile how they want it.

You also couple this with the fact that everyone from presidential candidates to C-list celebs have a Facebook and MySpace profile. These profiles were once something that a teen could feel special about since only they knew about it, could create it, or have even heard about it. It was "their thing." Now that MySpace is hosting debates, selling adspace, and generally getting into the mainstream it isn't new or special anymore. And judging by Facebook's really scary fundamentals they may even have more in common with Peapod and then in Google or Ebay.

Friday, February 01, 2008

What Will Come from Microsoft's Buyout of Yahoo

This announcement was many months in the making but it looks like Microsoft will be buying out Yahoo to the tune of $45 billion. The article above gives us some color on what might happen when the two companies merge. The first thing that will probably happen is that MSN will probably get folded into the Yahoo site so MSFT will stop losing money there. This change would be very intriguing though.
Eventually, a teamed-up Yahoo and Microsoft might be able to rethink the PC
desktop — where Windows still runs 90 percent of the world's PCs — so that
Internet data such as stock prices, sports scores and weather are automatically
baked in.
"We all have our home page because we have a concept of a home page," Campbell said. Before long, "we may not have a home page — it might just be the background of my desktop. There's no reason why Microsoft can't push this
another level."
So Yahoo might provide the userbase and content for a web and non-web collaboration type of software. So it will be kind of like those Vista Gadgets but for the entire PC and not just the Sidebar. It would be a kind of internet dashboard built into a web enabled PC.

Maybe the next Office or Windows will be an all-online version where there will be an option to store your documents, bookmarks, settings, etc. in a Yahoo Data Center (a MSFT one would not be trusted) and sped up using virtualization software. The icons on your PC will simply connect to software running somewhere "in the cloud" that doesn't have to be upgraded or patched at the PC level since that will all be done on the server. It would be kind of like World of Warcraft servers but for Corporate IT and your avatar is yourself. You could even have complicated Database software or e-mail where both the software and the data files are both stored at the Yahoo data center. You could also have everything searchable with Yahoo's software. It would be a for productivity suites.

Then you add connectivity from any device be it cell phone, smart phone, laptop, set-top box, etc. then you will have "One Homepage to Rule Them All" accessible 24-7 from any broadband connection in the world. So this Yahoo/MSFT OS combo will not be some POS software that slows down your PC like Vista but instead it will be an always-on Web 2.0 productivity device.

J. Michels Video Game Index 2/1/08

+$278.78 +0.70%

J. Michels Uranium Index 2/1/08

+$4,120.00 +7.42%