My appreciation for Andy Kessler’s way of thinking began with Wall Street Meat and Running Money. A few years ago I had the opportunity to hear him speak at a Cato 200 gathering in Laguna Beach, CA. I continue to keep up with him through his commentary at the WSJ where, in this piece, he shares some thoughts from another great mind, futurist George Gilder: My friend the futurist George Gilder outlines a theory in “Life After Google,” his forthcoming book. He suggests that while advertising prices might be correct, the free-service model cannot deliver sustainable growth. Mr. Gilder explains … [Read more...]
Netflix “Biggest Disappointment in Two Years”
Shares of Netflix are down today because reported subscriber numbers didn't increase fast enough for the Wall Street analysts covering the streaming video company. It's hard to imagine how Wall Street could have been so surprised at a slowdown in Netflix growth, given the number of competitors coming into the market. Tim Bradshaw reports: Until the abrupt reversal in fortunes, Netflix stock had more than doubled in value so far this year including having added more than $40bn in market capitalisation since April’s forecast-busting results. The latest miss on subscribers is its biggest … [Read more...]
A Facebook Killer?
Facebook is now the fifth largest business in America as measured by market capitalization. The bulls are of the opinion that Facebook’s network effect is simply too powerful for any competitor to overcome. The bears would point out that Facebook’s most promising segment today is Instagram, a startup that Facebook acquired only six years ago. Is Facebook’s moat really as impenetrable as many investors assume? We may soon find out. Openbook, a project backed by cyber security and privacy pioneers is launching a crowdfunding campaign to build an alternative to Facebook. The new platform, … [Read more...]
Amazon’s Amazing Business
Amazon has an amazing business, but the retail operation that so many Americans are familiar with isn’t it. There is of course no denying Amazon is one of the most dominant forces the retail world has seen in decades. But from a profitability perspective, Amazon’s retail operation is marginal. Over the last twelve months Amazon retail has made only a single cent in operating income for every $1,000 in sales. That translates to $188 million in operating income on $174 billion in sales. Contrast that with Amazon Web Services, Amazon’s cloud business. Web services made $4.8 billion in … [Read more...]
Is Netflix a Bubble?
Great piece by Tara Lachapelle at Bloomberg on Netflix vs. Disney. Netflix market value has now surpassed Disney’s market value. Yup, as Lachapelle puts it, An 11-year-old app that charges $11 a month is worth more to investors than the legacy conglomerates that earn billions more from TV advertising, box-office hits and cable and internet packages. The Bloomberg article goes on to point out the conundrum in today’s market. This is a broader trend that isn’t just limited to Netflix. You see it with Amazon and its competitors. Firms that try to engage in the profit sucking, market-share … [Read more...]
The Cool Kids are Not on Facebook
Not so long ago many 12 year-olds anticipated their thirteenth birthday not only for the celebration, but for their new ability to join the world's largest social network, Facebook. It was a rite of passage. Now it seems, kids aren't as interested in joining Facebook. Instead they prefer Instagram, Snapchat and most of all YouTube. A Pew Research poll found that the share of teens who say they use Facebook has fallen to 51%, with only 10% saying they use the platform regularly. In contrast, 85% use YouTube, with 72% and 69% using Instagram and Snapchat respectively. The report is more … [Read more...]
If You Had to Choose, Cell Phone or Car?
Apparently U.S. consumers would rather keep their cell phones than their automobiles. Consumers who are struggling financially are prioritizing payments on their latest iPhone instead of their automobiles. Bloomberg has more below and the full story here. U.S. consumers are more devoted to their mobile phones than their automobiles. The sea change has taken place over the last few years as mobile devices become an integral tool not just for communication with loved ones or employers, but also everything from banking to dating to watching TV and listening to music. As cars grow … [Read more...]
Old Industries Reinvented with Ad-Tech
At their fundamental level, Google and Facebook are engines for serving ads to users. The technology they develop is being used by older companies as a gateway to marketing in the 21st century. Ford discussed its use of Facebook and Google tools for advertising with John Stoll of The Wall Street Journal. In a Q&A with Stoll, here's how Ford's president of global markets, Jim Farley, explained the automaker's use of the new advertising tools. WSJ: How do you change the way you sell in a business that is more than 100 years old? MR. FARLEY: Digital advertising. And talking to people. We … [Read more...]
The Big Implications of Blockchain
“We’re quite confident that (blockchain) has big, big implications in supply chain, transportation and logistics. In the area where FedEx makes its living, this could be a big deal.” That's what FedEx CEO Fred Smith told the Consensus 2018 conference in early May. The blockchain technology Smith is excited about was touted by many at the Consensus conference, and could be applied in a range of industries. Steven Norton reports for The Wall Street Journal: Speaking at the Consensus 2018 conference, panelists described how distributed ledger technology could create an immutable data source … [Read more...]
HBO Declares War on Netflix
After quickly expanding to become the world's largest subscription based video streaming service, (excluding China) Netflix has faced little in the way of competition. Amazon's Prime video offering has come closest so far, but the company doesn't generate the large volumes of new content Netflix does. But now, HBO, a premium content company has declared war on Netflix's global prowess. To increase its audience around the world, HBO is creating more homegrown series in its foreign markets. These shows, at times, surpass even its flagship properties Game of Thrones and Westworld for … [Read more...]
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