In the past i have always compared relative valuations of GOOG, YHOO on this blog. I haven't posted much after i sold GOOG @300, regarding this. These last 5 months have been quite a bit of roller coaster for both these stocks. I thought it made sense to compare the current value being assigned to both companies.

Aah, it seems to me that YHOO is trading at a significant discount to GOOG. What does it mean? Does market really believe that GOOG prospects for 2006/2007 are that much better than that of yahoo? Are they not factoring in the value of yahoo japan ? If the market is worried that search industry is slowing down, YHOO is much better insured for that than GOOG. Am i missing something here?

I tried to look up estimates for GOOG/YHOO for 2006 and 2007 on Yahoo finance. These numbers seem to be stuck in 2005. I am guessing that they are showing 2005 estimates for 2006 and 2006 estimates for 2007.

Is YHOO better value or is it that GOOG is a better growth engine? I guess all the future numbers are estimates and in case of GOOG, estimates with no guidance from the company. But, it would have been good to have some good earnings estimates for both YHOO, GOOG to do a bit more comparision.

I spent a little time researching all the ADRs from india on the US markets. Here's a list of them

Symbol Name
WIT WIPRO LTD.
INFY INFOSYS TECHN ADS
SAY SATYAM COMPUTER S
SIFY SIFY LIMITED ADR
IIF MS INDIA INV FD
MTE MAHANAGAR TEL ADS
REDF REDIFF.COM INDIA
TTM TATA MOTORS INC
VSL VIDESH SANCHAR NE
RDY DR. REDDY'S LAB L

I tried to cut&paste the html from yahoo! finance site and let's see if it worked well. Anyway, here are the companies i found as indian ADRs listed. Some of them look quite interesting even after the run up

For some reason, starting yesterday i felt like the market was not going the right way. There are a lot of bad signals - rising interest rates, inflated real estate market, rising energy costs and slowing economic activity.
This is an impulse decision, but i decided to get into all cash. I exited all my positions in stocks (except yhoo). I don't foresee me getting into any US stock unless something changes. I am looking at india, china, and europe for any good ADRs for possible investment.

Jeffrey friedl, suggested that i take a look at NAT, when i was talking to him about stock picks. NAT is a oil tanker leasing company. Apparently they have been paying great dividends - ~30% - for the past few years. Given the oil market, the stock overall has been strong as well, compounding returns. This looks very interesting.

Of course, as i was mentioning this pick to Bala - my friend from oracle - he followed it up with a another recommmendation - FRO - who do very similar things. FRO is about 3.2B market cap versus NAT which has about 650M market cap.

I'd have to look at both of these in more detail. Great place to put cash for 3-6 months..

Well, GOOG is up to 316 today. I definitely had to stop and rethink a bit. Did I sell too soon? A quick look at multiples shows that GOOG @ 316 means:

• Forward PE of 56.3 based on 2005 earnings of $5.61/share
  
• Forward PE of 43.3 based on 2006 earnings of $7.33/share

You really don't know if those are good are bad until you start comparing to some competition. For YHOO @32:

• Forward PE of 56.1 based on 2005 earnings of $0.57/share
• Forward PE of 43.8 based on 2006 earnings of $0.73/share

For EBAY @ 37.25:

• Forward PE of 44.87 based on 2005 earnings of $0.83/share
• Forward PE of 36.16 based on 2005 earnings of $1.03/share

* NOTE: All these are based on info from Yahoo! Finance analyst estimates & stock quotes

I feel much better about selling GOOG after i review these numbers. These numbers show ebay to be a comparitively better value than YHOO or GOOG. Overall, I feel better about selling my GOOG stock. Even if GOOG doesn't seem grossly overvalued compared to competition, it definitely is not a good value. There is limited upside from this price. Even if GOOG outperforms these numbers, a lot of buyers are pricing that in and i doubt if we'd see a move up.

On the other hand, ebay seems a better value. If indeed ebay surprises stree with good news again, there's room for it to move up.

Netflix announced recently that they expect to reach 5M subscribers in 2006, a year earlier than anticipated. In addition, they expect to have 3.85M to 4.05M subscribers by the end of this year (2005). This stock had a solid run-up in the last 2-3 months, jumping up t0 25$. I started wondering if i should exit. Market cap reached 1.34B. At a year end customer number of 3.85M, the market is paying about 350$/customer up from 250$ in dec 04 (refer this). The valuation is creeping up, but that's a reflection of the acknowledgement that netflix is indeed winning the battle.
The question to be asked though, what is a netflix customer worth to it's investor. Should we be ok with paying 500$/customer? 500$/customer and 5M customers = marketcap of 2.5B. That's a healthy 40% jump from here. On the other hand, 5M customers at 250$/customer is only 1.25B, a downside of ~8%

I have been looking down at the wi-fi stocks for the past few days. There are a lot of different kinds of players in this space. People who sell building blocks, people who pioneer new kinds of devices, people who manufacture and sell devices, and people who sell services. It would be wise to take a look at each section and identify dominant players. Since Wi-fi is still fairly early, it is unlikely that we have THE leader in the segment of "people who sell services". I am looking into other segments to see who'd be a good investment. While looking at "people who sell building blocks" two names stand out. Broadcom (BRCM) and Marvell communications (MRVL). While the background info looks a little different for each of this company, it might make sense to just buy both of them. Should I get both? Am I missing any other companies in this space that are a better value?

Chuckakung mused about wifi with me over google talk the other day. I guess after he pointed it out, this seems so obvious. Wi-Fi is going to be a norm across the nation in a matter of years. We will expect (already do) to have wifi in hotels when we travel, in convention centers, in coffe shops, possibly in movie theatres, malls etc. What companies stand to benifit from this boom? I started following on his comments and here's an interesting article from forbes. They list about 15 companies some big, some small. Most of them are usual suspects, cisco, lucent, texas instruments, netgear etc. One new name LCCI. This is a good list to start with, but, i'd have to dig in a lot more

UPDATE: ahem.. I guess that forbes article is more than a year old!! So much for the last 12 months being the year of wifi

I cannot post my stock opinions about yahoo! because i work for yahoo. Suffice to say that a large portion of my networth is in yahoo stock currently and I am comfortable about it.

As for amazon, I treat it like a retailer and look at the margins. I like the company, because it has tremendous lead in the online ecommerce channel. However, this company deserves to be compared to walmart and not google at this time. They have interesting forays with amazon maps, a9 and open search. However, When investing in stock, i would like to see revenue. If you cannot show me immediate revenue growth and multiples (like google) atleast show me marketshare and explain to me why that market is big. I can try to guess some multiples. With A9, so far they have been a good lab. They don't have significant marketshare or revenue.

I wanted to quickly review recent decisons and see how things are going with each

• SOLD GOOG @ 300. Seems like a decent decison. Market is still betting that there is more upside (or atleast limited downside to stock). GOOG is hovering between 280-290.
• Continuing to Hold NFLX. As expected, NFLX moved to $22+ range. Given the additional news about blockbuster's 2Q loss and lowered debt rating, things seem rosy for NFLX. Good business, weakened competition, continued expansion. Continue to hold.
  
• Bought AQNT. Aquantive had a good quarter, but not great. The stock is down a tiny bit from where i bought it. May be i should get out of this one..
  

My faith in netflix is getting rewarded. In my post of dec 04, I talked about why i liked netflix and my entry price. After market today, netflix is at $18.69. Topline grew healthily at 7% qoq. Looking forward to 20$ stock price again

I got a question from a friend about juniper. Do I still like juniper and if so why? What's my take on high P/E stocks in general ?

• First off, I like juniper for a lot of reasons. This is a company that went through the downturn, re-organized itself and came back strong. Juniper deserves a lot of respect for the way the company bounced back. They figured out their key strengths and are #1 player in those spaces - including the acquisition of netscreen. Inherently, both those spaces are going to grow. Network security market is still nascent, and their high end router business will get a boost with the increased interest in the VOIP market in the next year. Vonage has more than 600K users and this is just the beginining. If you look at this space, you have to ask yourself a question, why do you have to pay a broadband fee and a telephone fee and a cable fee? Integration will play out, and juniper has a strong chance to supply the key infrastructure to the competitors (MCI?)
• High P/E stocks. The usual justification for high P/E is high growth. It's ok to pay a high Price to earnings multiple, if the company is growing fast. The PEG ratio is applied here. I subscribe to this view as well. What PEG ratio am I comfortable with? Using Yahoo! finance's juniper analyst estimate page, I see that while juniper has a trailing PE of 86, it's future (expected) p/e is 20 for the fiscal year 2006. For fiscal 05 we are looking at a P/E of 27. Given a 5 year expected earnings growth of 20%, we are looking at a PEG of 1 to 1.5 Looks like a good deal.
  

The caveat is that all the future stuff is estimate. To the extent that juniper earns 70 cents instead of 76 for 2005 and only 90c in 2006 instead of 1.05, all bets are off. So with all the tech stocks when people trade on future multiples, you have to be confident of the future. So far, Juniper has delivered the numbers while it hasn't blown them away. I'll keep watching Juniper and move out if they are not delivering on potential.

Did bambi read my blog? It seems so. Atleast, someone pushed her to do more research. After my post here, she seems to have adopted a sneaky way to "correct" herself. She changed the story my post points to. All the quotes that i refer to were taken out of the article. She now has sensible analysis of symbiotic relationship between rental and housing markets, quotes from someone from the industry and she changed tag line to add "at the begining of rental boom"

Well this is the first time, my blog seemed to have an influence on correcting a "journalist". I feel good. If only she/cbs marketwatch acknowledged it, it would have been professional and nice..

Thanks a lot to davi bennett for posting a comment and letting me know

IACI announced that they are going to spin off expedia into a seperate company. I love this :) They were a bit late, but nonetheless they are being smart. Travel industry - while competitive - still has a lot of efficiency to be extracted out and lot of revenue for a player like expedia.
Kinda weird though - buy a high growth company, fold it in, then spin it off. Good news is that the new Expedia has
a) Expedia
b) Hotels.com
c) Hotwire


I want a piece of Expedia. Now the challenge is to figure out which position i have to get out, to get into IACI. So I am getting out of PRZ (@2.91) and i might have to get out of other stocks.
Any opinions on prospects of OSTK? I might get out of that too

Over the weekend i read the article that mentioned reed hasting's analysis of his competition. I concur with his analysis. Infact last week i was mentioning very similar things in my discussions with chuckakung. Desperate blockbuster is going to spend more money and loose more money.

In anycase, I thought more about reed hastings and NFLX. Now, i feel that the management has the right view of the world in place and the multiples are excellent. At 653M $ we are paying about 250$/customer (assuming 2.6 million customers). Not too bad.

So i am buying NFLX again at $12.50

To make room for NFLX in my portfolio, I am exiting RHAT (not too excited about recent moves) and SEAC (not intricately familiar with their business)

Aah that wasn't the best of days for tech stocks. Actually, my portfolio is up since dec 1. I am just spoiled and want stocks to go up every day.

On a side note, my post about bambi francisco's article got picked up search engines. I get few people a day coming to this site from google. Never knew bambi was popular enough to get searched on every day

Got to love leaps during a bull run. Got into AMD 06 leaps less than 2 weeks back and they are already up by 75%. The underlying stock moved only by 20%.
One key thing i have recognized with LEAP buying is timing. Timing is lot more important when buying leaps than the underlying stock. I have in the past bought leaps for stocks which i thought would do good. The stock actually performed with in my expectations, however the benifits out of the leap strategy were not as stellar.
The key thing i learned from those experiences is about the decreasing time value. Here are few things i look at before buying a call/put leap

1. Look at the time value being paid by in-the-money or at-the-money options versus out of the money options. Frequently, i found that at-the-money options have slightly higher time value but better performance as the stock moves.
2. I prefer not to get into to really short term options. With LEAPs i prefer to time it somewhat in terms of the stock momentum. Watching the attrition in time value because of a flat stock price is not fun.
3. Tend to buy leaps ending in january. Mainly because of the tax flexibility. i have a choice to take the loss/profit in either year and timing coincides.

Intel raised it's 4Q projections. Great news for the whole sector. INTC is up $1.50 after hours and AMD is up 0.80$ after hours as well. My AMD options are looking excellent. They closed the day at $5.00 and i am sure they will be up to $6 tomorrow. Excellent returns for 2 weeks :)

I am now seriously look at AMAT leaps and INTC leaps for the Jan 06

Talking to chuck, I am convinced about the opportunity AMD has in the market. The stock looks like it has appreciated significantly in the last 4 months, as the entire world woke up to the market opportunities. AMD has been up close to 100% in the last 3 months.

Is there any more upside to this ? How do we play this stock?

I see that market position is going to take a while to change. Intel is not going to get their 64bit act together and they are not going to get their multi-core strategy in place. AMD is positioned well here over the next year or 2, as the adoption of AMD for small servers increases.
There is easily an upside of 50% in the stock, over the next year.

I looked up AMD LEAPS and they look attractive. I got into Jan 06 22.5 calls @ $3.70. The upside should result in ~100-200% returns on investment. However, i am risking the whole investment and downside is bigger as well..

Let's see. This one seems easy to me - right now.

NTAP came out with earnings report yesterday. Overall the earnings were strong, but not blow out numbers. The earnings release yesterday had very positive outlook for growth (7-9% sequential) for next quarter. Compare that to last quarter where sequential growth was 5%. They are talking about 50-100% acceleration. Is the enterprise market back?
Glad i held on NTAP and didn't get rid of it like DELL. By the way, HPQ also had solid numbers yesterday and that adds to NTAP outlook statement as well, in pushing the stock up by nearly 20%.

Within 6 months of IPO, several lock-ups will be lifted on GOOG insiders, so they can sell shares freely. Yesterday was one such date where 39.7M shares became "unlocked"
GOOG shares are trading down ~12$ today. I took a look at the volume of shares traded. The volume is not unusual for google stock - ~13M shares traded by 1pm PST.
I wonder how much of the downward movement is selling pressure from insiders selling "all" their 39.7M shares and how much of it is profit taking and other market pressures. The news articles are quick to put up a headline that lock up expiration (which means insiders selling their stock) is the primary reason for the stock to be down. Well, why isn't the volume higher than normal?

In any case, my personal belief is that the float is going to change on paper. However, given the market cap of the company and the interest in this stock by several funds, demand is going to far outpace the supply coming on to the market.
As i said in another post, it is extremely hard to find companies growing at a reasonable clip in this market. Search space is unique to be have secular growth to support two strong high growth companies.

Here's another stock like DELL that i bought early on, hoping that the turn around in job market will pay off. It's been 8-9 months since i bought MNST and i am still break even.

So, I sold my position in MNST today. Given what happened with DELL, folks might be wise to be buy some MNST

Leave it to me for timing this impeccably. After holding DELL for one full year, 2 weeks back i decided that dell was going no where. I sold the stock for a modest profit/loss, probably break even.
Dell came out with a decent earnings report, but a strong outlook for 3q (dell's 3q - i never got why companies don't align their quarters to calendar quarters... but that's another rant). This pulled up dell stock to $39.94. I sold my dell stock for $35.01 :(

Not just dell is up.. looks like Dell is pulling up AMD strongly as well. chuckakung told me a lot about AMD and he bought it at a good price. Good pick Chuck!

The presidential election was definitely decisive. The markets reacted favorably, but i wouldn't call it a rally. It had me wondering what is the reason for market being relatively flat. Don't get me wrong, overall the market is very strong, BUT, there was a small rally.

I was thinking if we should blame the upcoming fed meeting. But i think a 0.25% rate increase is baked into the market for a while and that shouldn't be what's holding the broader indices back.

Is it profit taking? Or do people still did not hear any compelling growth stories to invest in?