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"Due Diligence"

The title isn't really accurate. This Soapbox isn't thorough, painful, yet informative due diligence on companies. Eventually I get to my thoughts on certain stocks, but let this be a caveat emptor: do your own research.

The content of you page certainly has shifted since I last read it. Very focused on stocks these days. Well, not really my thing, but interesting nonetheless.

I received that in an e-mail today. The writer was someone I haven't heard from in ages. But I enjoy his style a lot.

The truth is that yeah, I know fully well that my interests have changed considerably. I decided over the Christmas break that things would have to improve for the Soapbox. I thought back to the old days when the things I wrote were what people seemed to respond most to. I remembered when I was encouraged to do what I did. It seemed more innocent, more honest then. Eventually as I grew up, all sorts of different things started happening and the writing became burdened. What I wrote about was no longer innocent and kind of felt like a criminal admitting his guilt. It has a dreadful impact on a writer.

I thought about the aim of the Soapbox. It was pretty much to let loose whatever emotions I had inside me. At the time, I was just really pissed off at the stupidity of peoples' actions. I still am, of course, but it's not as consuming as it used to be. High school angst, you might say. Although when I look back now, I have no real emotion towards high school. I think it had more to do with me opening my eyes.

So here I am now. And I'm sorry, but one of the main things that gets me fired up these days is seeing companies succeed and fail, and seeing it translate into a stock price. I will always maintain the money is secondary. I love tons of things, in many different areas of study, and will always try to die with the words "Renaissance Man" on the lips of those who knew me, but as far as my most regular and dynamic content goes these days, I choose to write about companies I love and hate. So sue me. Jim Cramer of thestreet.com writes passionately about the highs and lows of trading, and I was inspired by that. You gotta write about what gets your blood boiling.

I fully understand that many who read me in the past are completely bored by what I write about now. I fully understand that people are tired of hearing about this stupid market boom. I know that I'm just another person getting all mixed up in the market without having a rich economics (coughcoughbullshit) background to save my ass. But this IS what I want to write about, so fucking deal with it.

Deal with it. The web design community in itself is passé. It died not of its own weight but because of stagnation in technology and backwards compatibility. Now designers are getting burned out left and right and they spend more of their creative energies designing non-commercial sites because those are more important to them. How sad. I have felt that feeling they are having for a long time now.

The old communities I used to frequent are havens of death and rotting flesh now. There are new, vibrant communities which have sprung up, and I take part in those now. The Internet isn't dead -- far from it -- but gone are the days when I could write about what I used to and still be writing about what was actually affecting me. In short, it is dumb to write about the same crap year after year. How other personal web sites manage to scrounge up enough slop day after day detailing the endless, pointless, trivial details of their lives boggles me, when there's so much happening out there to talk about. It smacks of tired people with tired sites who write tired essays about tired communities.

In these days when everyone and their mother is joining some sort of new Internet startup, watching their little NDX component stocks oscillate daily with thirty-point trading ranges, I sit here thinking about why none of that shit has translated into interesting writing. You see none of these Internet kids growing up. What the fuck are they doing with their lives? Why have they not progressed further than where they were a few years ago? They should be further along, if all these people say they're so talented and full of potential. I want descriptions of what it's like to get that first job, how it feels to be part of a new company that has a bright idea, the reflections on the loss of childhood to the world of stock options and 1080's and marriage and kids and so on. What I see instead is a series of essays that could be arranged in any order and not show any discernable chronological order. How sad.

Anyway.

When I first opened my trading account, Apple (AAPL) was at $30 or so. I thought about buying it, knowing the iMac, G4, OS X, and Jobs' presence would bring good times back to Apple. I didn't pull the trigger though. Now it's trading above $100. Close to a breakout of its trading range. Ouch. But I recently became neutral on the stock after almost all the original reasons I liked it hit the public. iMacs are out, and so are iBooks, and they produce great income for Apple. OS X will be released soon, and it will modernize the Apple OS ensuring many more years of the Mac presence. The G4, developed by Motorola (MOT), creams the Intel (INTC) in integer benchmarks. But these have all come out already, save for OS X. I do not know where the next 100 points of AAPL will come from. Mac gaming still suffers, even though it has Quake 3 Arena and Unreal Tournament. OS X is still receiving great reviews, but there are negative rumblings about some parts of it. The G4 was supposedly having production problems out of Motorola. In short, AAPL got this far, but can it go further? Not from the cards in the public's hand right now. I'd rather sit on this one than play it for growth and possible surprises.

Amazon.com. (AMZN) Still too much of a chicken shit to actually put money in it. Goldman Sachs sure pushes it a lot. I love the site, love doing business through them. But they have so much debt. They keep releasing more bonds. Eventually they have to defer some investment and just start putting up profits. At least they are investing money into other companies which might just pay off very well for them. They know how to conduct business online to their customers. And that's much much harder than you might think. I would be very sad if Amazon.com went away.

AMD (AMD) is my baby right now. I missed AAPL, I will not miss AMD. It's beautiful. After getting slapped around like a bitch by Intel, AMD quietly persevered vicious price cuts on Intel Celerons, failed attempts to release faster processors, and a whole slew of other bad events, so that eventually it could release its Athlon, which turned the tides. As it stands, AMD now has the fastest chips in the consumer market, while selling at a discount to Intel's chips. Intel could hurt AMD by cutting prices in its low-end biz, the only market AMD could challenge in. But now we're talking AMDs at 1.1GHz with on-die L2 cache (one very successful feature of the overclocked Celeron) and with copper connectors. In the second quarter 2000! AMD crushed earnings estimates last quarter and returned to profitability. All aspects of the company were improving, as AMD also works on things like RAM. This while Intel was faltering. AMD should continue to see growth through expanded sales of the Athlon (Gateway (GTW) will apparently double its order for Athlons!) and through releases of faster, more advanced processors until the next generation chip comes out. AMD I want to go to $100. I think it should get there. Eventually. And not stop. Its Dresden fab hasn't even begun to kick Intel ass. If I had the trading capital to hold AMD when it was $17, I would have. But then it got halted on news of a profitable quarter and it gapped up to $28. Doh! I knew good news was coming. As it is, I've been trading it from 30 to 41 a few times. I had no idea AMD was involved in so many things until I read up on it. I'm impressed. 2000 is going to be horrific for Intel. Its veil of complacency will be pulled away. This article absolutely reams Intel. Required reading. Beware, it's heavily biased, but the facts make themselves visible easily.

AOL (AOL) had a great run in the fall and has been retracing ever since. It bought Time Warner (TWX) and has sold off even more. I can tell it's near a bottom because AOL continues to collect more subscribers and continues to be a dominant player, yet people are beginning to say that AOL will be dead money until Time Warner is absorbed, and AOL will now have a lot of debt, and has problems now that it is a media company, when media was never its strong point in the first place. Only newbies use AOL, and they graduate from using its content in favor of other sources. Blah blah blah. You'd think this would be the most bearish stock in the world yet somehow it's still putting up record subscriber numbers. I believe in AOL, and while all these things will hinder it for a while, I think the negativity means that it is a buying opportunity. You didn't see negative talk when AOL was trading higher and higher into its latest stock split. People are always on the wrong side at the wrong time. Hell, today AOL was even downgraded. Umm, ohhhhkay. AOL is an ATM machine. We're talking the biggest subscriber base in the world, deals with serving up access to other countries, and now high bandwidth via Time Warner. Perhaps they'll get involved with DSL and other varieties of bandwidth too? What if they bought a company like Media Fusion? They take on the exposure and problems associated with Time Warner, but they also become the first major Internet to get involved with the world offline. Yahoo-Disney next? Fun fun.

E*Trade (EGRP) has a float so large that trying to move it is like trying to use a toothpick to move a gorilla. But it's rapidly taking over the planet, with E*Trade branches in Korea, Canada, Sweden, the U.K., Japan, and France. It is an online broker, but it offers most everything that you want to get your hands on besides a personal broker. (c'mon, if you listen to a broker, you deserve what they give you) E*Trade will be one of the biggest brokers in the world. It will have the most clients. It already has the most exposure in the U.S. Problems though: eventual commission-less trades to be the norm? Settlements with Softbank about a purchase it wants? That big float? Financials and other traditional sectors getting their clocks cleaned? Spending $2 million on a Superbowl commercial with a chimp dancing between two old guys? Those will hold it down such that it won't have an amazing run like it did last year. I think EGRP was one of the first stocks I made money on. :p It's kind of like the AOL of brokerages.

IBM (IBM) has its hands on everything. It saved its ass after the whole Microsoft/Intel thing, and changed its strategy. Any company that does this successfully gains higher status in my book. That is a long-term move. IBM produces networks and servers for companies that want internal networks or high-powered web sites (I love the technology IBM has on its Grand Slam tennis tourney web sites, like real-time web scoreboard, netcam, etc.). It supports its clients well. It has those cool wearable computers that it's dealing with XYBR for. It has quietly been working on CPUs, like, in the past, the G3 (along with MOT) and is working on a 4.5GHz chip the last I heard. IBM had earnings problems, but I think that is a short-term thing, beyond perhaps a lack of trust from the investors because of IBM's fidgeting.

Internet Initiative Japan (IIJI) is going to be a monster. It's probably my favorite behind AMD. IIJI is essentially an Internet provider in Japan. By itself, that doesn't say much, as there are bigger fish in Japan. However, IIJI also does consulting and other services for its clients, and more importantly, it is working to build a vast network in Asia as well as across the Pacific. It owns a large stake in Crosswave, a high-speed bandwidth ISP trying to get its feet on the ground. So what we have here is an ultra er33t provider of services, bandwidth, and backbone. The financial statements of the company don't look so hot right now, perhaps understandable given the scale of their investments. But I think this stock has been basing long enough and will move when the Internets get to moving again. (AOL, AMZN, etc.) It is very close to beginning a fresh uptrend. I feel it.

Motorola (MOT) has been around for ages. I studied it in management class. They were fucking making things back in the early twentieth century. Now is that staying power or what? Now MOT has simply AMAZING quality control records and rarely releases a defective product. Some of the best yields in the biz. And they produce new products VERY quickly. They're making one of the best CPUs around in the G4 (and successors) and they're working on cellphone stuff. They're a monster. Their stock shows it. The Apple news in which AAPL said MOT wasn't giving them chips fast enough rubs me the wrong way, but MOT partnered up with AMD to share the Dresden fab. Things should be okay soon. But as it stands now, MOT is still having trouble producing good yields on the faster G4s. IBM, MOT, AMD, INTC, Transmeta, all will be competing to make the best chips.

Palm Computing (PALM) makes those dark grey handhelds you see everywhere these days. Their OS, the PalmOS, owns the most marketshare of all the handhelds, even more than Windows CE. Windows CE sports things like color and video/audio playback, but the devices that use CE are kind of silly for doing those sorts of tasks on right now. Palm in my opinion is scaling the OS with the hardware available for it. Palm goes public soon and I think it will be huge. It already makes its parent, 3com (COMS), look silly in its growth and earnings. 3com is a troubled company, but Palm is just taking off like a rocket. Palm will soon allow for unlimited wireless connections to the Internet, and will offer color Palms at the end of February. The future is bright and the community is strong. New programs can be added via your computer or via wireless, and the technology will only get more miniaturized and powerful.

Sony (SNE) is every gadgeteer's dream. They make the cool stuff. Too bad their monitors suck. And their other appliances are really flaky. I will never buy a Sony monitor again. Had to return the fucking thing three times before they finally gave me...a refurbished one. Gee. Anyway, Sony is going to release the Playstation 2, and this time they're actually throwing money at the project, unlike the first Playstation, where they were unsure if it would succeed or not. Sony also has that Aibo thing, the talking dog. And the cigar-shaped MP3 player. Plus, as I said, lots of appliances and successful monitor sales. Gonna be huge off the Playstation 2 alone. Those Japanese sure do buy up Playstation stuff.

WalMart (WMT) bulldozes all other retailers. Its strategy was to target small areas with no other big retailers and then come in and dominate. And dominate it did. Has great relations with its employees and continues to grow. One of the few Dow stocks that actually goes up every once in a while! But it needs to go online, and judging by its current site, it doesn't have the skillz to compete with Amazon.com, which, in my opinion, is the easiest-to-use site on the Web. I bet people order stuff through Amazon.com simply because it's so fun and easy to do so.

Xerox (XRX), the company so well-known it lost its trademark to everyday use. It got beaten up on earnings and didn't respond very well to investors (do companies ever report losses well?) and fell even further. It has come back from the doldrums once before and has adapted to the state of the market. XRX has patents on electronic paper, which could be the new tech that helps bring the magic back. However, I found out about a non-public company named eInk that seems to do the same thing. Hmm. It will take time for XRX to get all the negative sentiment out, but it is a proven survivor and it's trading at 5-10 year lows.

Those are my main picks. For the most part they're well-established plays. Maybe not the most growth. I'm still not sure about a lot of smaller, growing players. I like Proxicom (PXCM has made me some serious money) and Razorfish (RAZF) a lot, but there's a lot of competition in web presence stuff. Nokia (NOK) and Ericsson (ERICY) will be big because wireless is the huge thing of the early part of this decade. Ariba (ARBA) beats the pants off its B2B competitors in helping businesses with supply chains and the like. JDS Uniphase (JDSU) is the leader in fiber optics. Just Don't Sell Us. Cisco (CSCO) makes routers for the Internet. The damn stock never sells off for very long. Amazing. They are the Internet. CMG Interactive (CMGI) incubates small Internet companies. And unlike ICGE, it invests in GOOD companies. Companies that will survive for the most part. CMGI is involved in companies like Geocities, Alta Vista, and so on. Awesome. Qualcomm (QCOM) is obviously the most visible company in wireless. Alta Vista (ALTA) has always been my favorite search engine. Plus it doesn't do as much funny shit with searches as other engines do. And it has a Babelfish translating engine. It will be a hot stock on IPO day, but can it perform? Global Crossing (GBLX) has a network of backbones. This is important. I believe Exodus (EXDS) has it too. Bea Systems (BEAS) has an intriguing list of clients for its B2B services.

Bored shitless? Me? I'm having a great time.

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