Some Summaries from week of 4/19/15 – $TSLA, $MSFT, $AMZN, $QCOM

Tesla Price Targets Pull Away From Profits: a classic example that momentum stocks really trade on fictional earnings reports. They’re irrelevant, til they’re not.  $TSLA (218)

Wall Street Journal graph of TSLA earnings projections

 

Amazon Reveals Just How Profitable the Cloud Can Be: by Tiernan Ray.  Ultimate conclusion is that Microsoft’s Azure is doing well too.  Which would you rather invest in, $MSFT (47) or $AMZN (445) a cloud provider in a hugely profitable if diminishing cash cow or one “trapped in a retailer.”  Unresolved: is Azure a function of that dying business of companies running on Windows?  Microsoft got other loving mentions in Barron’s as well from the usual spreadsheet watching crowd.

A Recharge for Qualcomm.  Can Jana partners get $QCOM (68) to split off the licensing from the chip business?  This is an article very related to the above MSFT & AMZN discussion so far as shareholders are concerned.

Let’s Take a Short Ride, a Heard on the Street Column from April 18-19 suggested the desirability of a strategy as follows:

bet against the 10% of stocks with the highest days-to-cover ratios, and bought the 10% with the lowest…it would have fared from the start of 1988 to the end of 2012.  The results: a return of 2,917%–almost double the total return of the [DJIA].

 

Shorting high-day-to-cover ratio WSJ chart

 

Fi Fiber Fo Fum, I Smell the Blood of a Telcoman

Long anticipated Google Fi is here. Specifically uncovered in regulatory filings last fall, providing a (good) network was a natural extension for a firm whose growth comes from increased internet usage.  It turns out to have been considered since at least 2007.  On Fi you’re on a, you guessed it, Wi-Fi network first.  If none is available you get Sprint and T-Mobile’s Network, whatever is working best at the time. No doubt Google’s wireless network to come to help replace, ahem, compliment them.

This comes on top of — and ultimately related to — Google Fiber.  One report a year ago had Google Fiber winning 75% market share…and 30% of low income households where after all the service at 5 megs is free.  Who cares if Time Warner and Comcast had merged or not?

Free – or less than free – is tough to beat, and the writing is on the wall.  Verzion and AT&T have higher quality networks…for now.  As Bill Gurley says in the link regarding the GPS market:

Despite these challenges, it would be a dangerous strategy for any of the many threatened players in these markets to hang on to this “quality” rationalization for very long.

It’s hard to see how the cable and telco stock prices haven’t tanked in anticipation of the forthcoming price war against Google that only Google (or Facebook, or Amazon, or Apple) can win.

End of 4/24/2015 prices of giants that could fall:

T: $34.01 (5.7% dividend yield)

VZ: $50.03 (4.5%)

S: $5.27 (0)

CMCSA: $59.64 (1.7%)

GOOG: $565.06 (0)

 

 

 

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