Technology

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Rohit — Thu, 14 Oct 2004 04:02:00 GMT

This wins the Team Command award, for best comment ever. 'nuff said.

# re: There are worse things than being an asshole. Just ask Kobe Bryant. 10/12/2004 12:13 AM Reality

This bitch is scum of the earth. If Kobe did rape her then she is just letting him get away with it. If he did it and does it again then it is all her fault, because she choes to get paid. If the trial was too stressful her lawsuit is going to make her want to kill herself again. Everything that wouldn't not have been admitted in original court is now fair game. Everybody she slept with, the other DNA in her undies, the bragging about the sex, and more will all come out in the lawsuit.
If he didnt do it then she is still scum of the earth, for doing her part to destroy race relations in America. Also for trying to destroy a man and his family.
To Hell Katie Faber that horrible horrible slut bitch cunt whore.
God Bless Americe

Always trust your instincts.

Rohit — Wed, 11 Feb 2004 19:33:00 GMT

This is a painful post for me. On Monday and on Tuesday I was prepared to buy a whole bunch of Disney stock (DIS). Of course I never got around to it, finally my internet crapped out yesterday at 1 pm, and I didn't even manage to buy any after-hours. And of course today Comcast(CMCSA) launches a hostile bid for Disney today sending the stock soaring. Now that the easy money has been made in this trade (the easy money that I stupidly passed up) its time to take a look at what a combined Disney/Comcast would look like. On the face of it, this deal would combine the country's largest cable operator, one of the Big Three networks, the country's most popular cable channel, ESPN, and the Disney studio all under one roof. I am going to assume that all of this would never, ever, ever, pass regulatory muster and that if nothing else, ABC would have to be spun off or divested somehow.

The last time something this ambitious was tried we ended up with the train wreck that is now AOL/Time Warner. Supposedly they would combine the distribution might and the content power of both companies and take over the information superhighway. The Comcast/Disney deal looks similar to me. A vast distribution network of cable and ABC would be available to distribute ESPN, Disney movies, Miramax movies, and the large cable channels that Comcast has interests in through its stake in Liberty Media (Starz, Discovery Channel, etc.). This deal would create the type of cable and programming behemoth that John Malone (former Chairman of TCI, current Chairman of Liberty Media and called by Al Gore the “Darth Vader” of media) only dreamt of.

The power of the combined entity in the media space would be incredible and this is why I dont think they will be able to keep all of the assets if the deal goes through. Disney and ESPN are already in a huge spat with various cable operators, notably Cox Cable, over the price of distributing the most popular cable channel on earth. With this deal, guaranteed distribution through Comcast would give ESPN even more leverage to stick price increases on smaller cable operators who lack their own content. Current FCC chair Michael Powell has been heavily pro-consolidation in the media space, but I think that the FTC would end up being involved in something like this, and of course the more regulatory lawyers that get involved...

Corporate strategic mergers are all about synergy, and like I've been saying this one has the potential to create some potent synergies. But there is also a strong drawback to combining distribution with content production. Its very similar to the problem faced by Sony. As Japan's leading company Sony had a great business making Walkmen, Boomboxes, TVs and all other kinds of consumer gear. Then they decided that as long as they were making the media devices, they may as well produce the media that people watch on them and Sony proceeded to buy up entertainment assets in the US. Now as a company they have a huge problem as the hardware and content (or “software”) sides of the business collide. Sony Music, home of Destiny's Child, Celine Dion, Pearl Jam, and tons of other artists, obviously doesnt want Sony to make MP3 players, boomboxes, and other equipment that can play burned CD's, file-shared MP3's or anything else like that-but Sony Electronics knows that those products won't sell as well as ones that can play pirated music. So in effect, you have the various divisions of Sony cannibalizing sales from each other. Definitely not synergistic.

Comcast/Disney could have the same problem. As the biggest cable operator in the country, Comcast is also one of the bigger ISPs-they provide cable internet on those really expensive fiber optic cables that got laid down during the bubble. Comcast's cable customers (and I am one so I should know) are demanding the best service, with the fastest speeds and they don't want what they are downloading on those ultra-fast broadband connections to be monitored; especially if they are downloading something that happens to be a Disney studios film product! So this aligns the content side of Comcast/Disney against the cable and distribution side. Furthermore, this is not a monopoly market for a company that is used to having a monopoly-in most parts of the country there is plenty of competition for broadband internet service- the Regional Bell Operating Companies (Baby Bells or RBOC's) like SBC and Verizon (companies that also know a little about monopolies) are in the DSL business and they are spending more and more of their gigantic cash flows on upgrading their broadband capabilities (just look at the earnings numbers of companies like Nortel, Juniper, and JDS Uniphase to find where some of that massive capital spending is going to). And these guys don't have content studios that their customer's are stealing from.

Despite the bursting of the 90's “convergence” bubble we really are close to having just one wire (or radio signal) that transmits information into and out of our homes. And Comcast was well on its way to being the guys who owned that wire. The Behemoth Media and Cable Company playbook is pretty simple, just look at what Malone and TCI tried to do in the 90's, before the Gore and Clinton team came to power (Malone made the wrong bet on which politicians to buy). 1. Control the wire. 2. Own what comes over the wire. 3. Raise prices on both advertisers and cable customers. As Malone's financial backers and allies in those days, the Roberts family that controls Comcast saw this playbook as it was being written, and now it looks like they are trying their own hand at it. The Disney play looks like step two- but I don't know how they will deal with the conflicts between the interests of the content and distribution businesses in the face of competition from DSL operators and (soon I hope) Wi-Fi data networks.

So how can you make money from this? I would say hold on to your Disney stock-I think Comcast is going higher from here- I might even buy some Comcast at these levels. I haven't yet decided if this bodes well for Liberty Media (L) or the rest of the cable industry (especially the perennial takeover candidate Charter Communications, and the soon to be out of bankruptcy Adelphia) but this deal if it goes through will certainly do something there.

As far as the details of the deal, Comcast is offering 0.78 shares of their common, non-voting, stock for each share of Disney that is outstanding. This is a hostile deal-I assume Mike Eisner and the whole Disney Board will be fired if it goes through. Recently fired Disney Board member and largest individual shareholder Roy Disney has been leading a shareholder rebellion against the board and although he hasn't said anything about it yet on his website; I bet Comcast contacted him before this announcement and I am sure he will throw his support behind the deal. So it will be interesting to see what types of takeover defenses Eisner and the Board will look for-I dont really see a “white knight” acquirer out there. Hopefully they don't have any dirty shareholder unfriendly poison pills available to them (like the out-of-control board and CEO of PeopleSoft). the 10% premium that Comcast is looking to pay is pretty cheap-but Disney has been mismanaged by Eisner and I dont see too many competitors out there for a $68 Billion dollar deal. It all boils to down whether Eisner was able to put some obscene poison pills in at Disney-and all of that hasn't shaken out yet.

A market for all

Rohit — Tue, 10 Feb 2004 10:19:00 GMT

Two tech takeovers in 2 days! On Monday, Juniper Networks (JNPR) paid a 50% premium to buy up NetScreen (NSCN); and now the New York Times is reporting that semiconductor testing and packaging company ChipPAC (CHPC) is being purchased at a similar 50% premium. What this tells me is that either the entire tech sector is undervalued, or we have some really overvalued companies that are using their stock as currency to take advantage of the overvaluation. Either way, look for tech stock prices to climb over the next couple of days as the market realizes how undervalued the whole darn thing is. If you are looking for a quick way to take advantage of this you can buy up some of the Nasdaq 100 tracking stock(QQQ) or a basket of semiconductor stocks (SMH) both exchange traded funds trade just like stocks. Against a background of increasing enterprise spending, low interest rates, and a global boom in semiconductor sales it looks like a long dormant buyer has entered the tech market, the strategic buyer. For a while all we saw were a few financial deals here and there-formerly high flying companies being taken private as their public market prices collapsed. Now as strategic buyers enter the market for companies valuations should rise, this is because strategic buyers are able to take greater advantage of cost synergies and market position than financial buyers (that's you, me, and big buyout firms like Kohlberg, Kravis, Roberts, or The Carlyle Group) and are therefore willing to pay more for companies.

Right now, I am looking at a couple stocks that will benefit from this ChipPAC deal if it goes through. The whole packaging and testing sector should get a nice boost- the dominant player is Amkor (AMKR), a company with a lot of debt, though not as much as ChipPAC, and a lot of earnings power as the chip industry heats up. The stock should have a nice move over the next couple of days. Also Siliconware Precision Industries (SPIL), a stock that I have owned for a while now, should have a pop coming.

Another semiconductor company I am looking at is Atheron (ATHR) which will IPO on Thursday 2/12. They are a customer of the packaging companies and they are heavily involved with chipsets for wireless devices like computers, cell phones, and PDAs. This is a rare IPO for the post-bubble market because this company isnt profitable yet; but with global sales of semiconductors surging-especially in the wireless space-this will be a hot sector over the next couple of months. Ericsson (ERICY), a big wireless equipment maker, reported a fantastic quarter last week and that is a good sign for the wireless business over the next couple of months. One note on all of these companies, the valuation seems ridiculously high at first glance, but this whole group is cyclical-earnings have varied wildly in the past as capacity expands and shrinks. Right now, we are in the up phase of the cycle, even though the sector has rallied arond 60% for the past year, we still have tons of upside left because these companies have tremendous operating leverage, as their sales rise beyond a certain point that covers fixed costs, their earnings begin to accelerate. With my stake in SPIL already in the hand, I will probably not take any action tomorrow, but if you are not along for this tech ride I suggest you hop aboard because after 3 down weeks, the market has pretty consolidated at a new, higher, level and is poised to move higher still.

Exploiting Outsourcing...

Rohit — Tue, 10 Feb 2004 04:18:00 GMT

Most of official Washington is in an uproar over the phenomenon of “offshoring,” particularly to India. It has been blamed for everything from massive job losses to lingering deflation to the threat of inflation. In short, the whole thing has become a scapegoat for every problem with the US economy. In earlier times, the government blamed high tech firms for sponsoring talented Indian engineers for H-1 visas, and the government promptly cut down on the number of visas given out each year. Surprise! instead of hiring undereducated, overly demanding white americans, companies just started employing people overseas. Score another one for the failure of social democracy to hold back market forces.

Anyway, my point is that there is a way to benefit from this whole thing, even if you are a laid-off network administrator or call center operator. Buy the stocks of the companies that have made “offshore outsourcing” their business. There are several players in this field, and most of them trade on US exchanges as ADR's (loyal readers of this site will remember this post): the list includes Wipro, Infosys, Satyam Computer, Cognizant Technologies, and some others. Right now, I think the best pick in this area (and just a good overall pick) is Satyam Computer which trades on the NYSE as SAY. The company sports a valuation around half that of its competitors and is experiencing the same rate of explosive growth (upwards of 25% annual earnings growth). The market presents us with rare opportunities to buy stocks after good news comes out and we have one right now with SAY. I originally purchased a block of shares a couple weeks ago when the company reported that it had a fantastic quarter, the stock jumped 4 points in the following days. Since then, due to 3 straight down weeks for the tech sector and the Fed's monetary scare, the stock is back to where it was right after it announced its great quarter. I am going to buy more shares tomorrow when the market opens and I think this is a great opportunity to start investing in this great growth area.

Its always in the details...

Rohit — Sat, 07 Feb 2004 08:47:00 GMT

General Wesley Clark, a guy who once had a shot at being the Democratic nominee for President is apparently ready for the 21st century. At least his campaign is, they have a profile of the candidate on Orkut.com, Google's beta entry into the Friendster-esque social networking space. The profile wasn't made by the former SACEUR himself but ostensibly by one of his campaign gnomes.

“Note: This profile is being managed for Wes Clark by Cameron Barrett, an employee of his campaign. It is official.”

So in the “professional” area of the profile it lists some curious things about the candidate.

college/university:	West Point
major:	Economics
degree:	MA
year:	1971
occupation:	Investment Banker
industry:	Corporate Services

His industry is listed as “Corporate Services“? Not a good sign from a guy who has been running as the people's candidate, or the electable version of Howard Dean (who, despite his “internet candidacy”, doesn't have an Orkut profile yet, presumably no one from the Clark camp invited him on).