ItsAValueTrap

They could be doing any of the following: A- Proprietary trading. Making an outright bet on silver prices going down. B- Commercial hedging. With the commercial hedging you might have to guess what JPM has on its books. Nowadays banking is competitive so you usually can't make nice profits unless you are doing some (mildly) risky type of hedging. Investment banks will act as counterparties to their clients and help their clients to "hedge" their risks. The bank might have some risk that isn't easy to hedge. For example, maybe they sell a forward contract for the next 1-10 years. To hedge that, the bank could go to the futures exchanges and sell silver there. On the exchange, there isn't volume for long-dated silver contracts. So the bank would have to continually roll over its silver short position. On rolling these contracts over, there will be profit/loss based on contango/forwardation in the futures. There is minor risk there. The exchanges require its participants to put up margin. There is margin risk. Probably not a big deal for big investment banks. (But there were silver mining companies that had huge financial difficulties when the Hunt brothers squeezed the price of silver.) Sometimes the exchanges do BS where they screw over one set of market participants unfairly. Some might argue that the margin changes screwed over the longs (and benefited prop traders who had speculative short positions). But personally I think that there is a lot less BS going on with the futures exchanges than the stock exchanges. The exchange could theoretically go under. The exchange's clients would have to walk away from losing buy/sell trades. Then the parties clearing the trades have to cover the losses. If that fails, then the exchange could go under. (This is extremely unlikely to happen, though could happen for a CDS exchange.) There is minor risk in the delivery location for the commodity. Since silver doesn't cost much to ship, this is not a big deal. The investment bank's counterparties can go bankrupt. A silver producer can have some catastrophe that causes their production to go to 0. This happens while silver prices go up. The bank is no longer buying silver at a low price from the producer and has to cover losses on its hedge. It has to eat the losses on its hedge. This is probably the risk that the investment bank is MOST concerned about.

Here is a clip of Nicole Buffett interviewed on Oprah with an excerpt from The One Percent: I can see why Warren Buffett wrote an angry letter to her!!

I found that interesting! Thanks.

1a- Hmm I guess I'd be curious as to how high short interest backtests. (And obviously there are problems with backtesting and data mining.) But the short sellers out there seem to be surprisingly smart. They were short selling First Solar when it had a PE of 15 because they knew that the polysilicon guys would soon have the low-cost advantage in the selling commodity solar panels (previously First Solar's unique technology gave it a cost advantage). It's very sophisticated of them to be so forward-looking and shorting a company with a strong competitive moat. 1b- With the short sellers, I think that you are dealing with a more sophisticated set of players. -Retail generally does not short sell. -Insider information guys like Jim Cramer will short sell. (Read the book by his ex-employee. They did not trade off of blatant insider information, but they did trade off knowledge gained from face-to-face interviews based on their read of the CEO's/CFO's body language and domain knowledge.) -Sophisticated hedge fund types will short sell. 1c- The short sellers are generally all over rancid areas of the stock market. - Chinese reverse mergers - Hot IPOs - Pump and dump penny stocks - Promotional secondary offerings - Companies about to die (Kodak, Radio shack, SHLD, etc.) and are overpriced - Leveraged ETFs; the borrow is in the mid single digits to reflect the excessive trading costs of these ETFs (they can lose 20% of NAV to trading costs) - Likely frauds - Broadly speaking, the best short ideas out there are heavily shorted 2- Buying magic formula stocks, stocks with good P/B, P/E, FCF, have large drops in share price, etc. are probably strategies that tend to do well in the future. For whatever reason, people have a hard time implementing these strategies.

I'm not sure how much of his performance is due to skill and how much is due to luck. When you have massive sector concentration... it's hard to say whether or not your results are statistically significant. Certainly there is massive short interest in SHLD and JOE. I think that the shorts are usually right... even if they don't make money. That is what has happened historically. Or you can compare his holdings to Berkshire.

Schulich also made some nice money on Canadian Oil Sands trust, which was into unconventional oil. ;) It was a leveraged bet on oil prices going up.

I feel like that is often a sucker move. You want to sell volatility when it is crazy 2008/2009 expensive. And you want to buy volatility when it's cheap. Also, I'm not a fan of trades with little upside and a lot of downside. Those trades are dangerous if you don't know what you're doing. (I guess you can draw some kind of analogy to reinsurance. You better damn well be getting a lot of premium with a good margin of safety.)

Which TARP warrants do you find attractive? I don't see the BAC warrants as a great deal in terms of the implied volatility you're paying on them. I might be inclined to buy shorter-term options and roll them over when they expire. Volatility will likely be lower and you might pay less. Of course you might pay more... but you don't have to put on the subsequent trades. ------------- I guess what I really want to get at is this: 1a- You can view options like any other financial instrument that might be mispriced by Mr. Market. 1b- If you look at Buffett's purchase of Genre, derivatives are a special case as there are some perverse incentives that cause certain parties to lose a lot of money in derivatives. Genre lost a lot of money on derivatives. Buffett learned things the hard way, which led him to try to rip off other people with derivatives with the equity put contracts. 2- In what situations might options be wildly mispriced? a- Mergers/takeovers for cash. IV usually drops as the market tends to be forward-looking. The options are a play on superior offers and/or the merger failing. b- Pre-spinoff. Discussed in Greenblatt's book. c- Companies that are about to make announcements. e.g. Contango will likely announce 2 wildcat drill results in November (read their press releases). Resolution of lawsuits, auction results might be other events. d- Overall market volatility is low and therefore options are cheap. e- Earnings. The market tends to be forward-looking... IV rises before earnings, drops afterwards. f- Heavily-shorted stocks with high borrow costs tend to have cheap calls and expensive puts (due to the cost of the borrow). I don't know how to profit from this. If the borrow is not yet expensive and you anticipate it to be expensive, then you may want to buy puts instead of shorting the common. g- If your commission costs are really low and you can get great execution, then you can try to execute Taleb's option strategy and bet on the mispricing of far out of the money options. The appropriate volatility smile is highly uncertain. h- I have no idea if this is a great strategy, but I think that growth stocks (as in... stocks with huge earnings growth) usually trend upwards with a small chance of a big crash in the stock. Growth stocks usually also tend to rise more than the index and fall more than the index. e.g. Apple. Sometimes I don't think that the IV on options is high enough to take these factors into account.

Well if you're using a retail broker other than IB then the commissions get sketchy and the order execution may be sketchy.

I use Interactive Brokers so the commissions and trading costs are reasonable.

If you look at Warren Buffett, sometimes he has tried new investment strategies such as: a- Hoarding physical silver. b- Trading copper futures c- Selling puts on Burlington Northern d- Selling very long-dated put option contracts on stock indices. Do you think that there is any merit in buying options that seem underpriced? (e.g. the volatility is too cheap) There are some cheap-ish growth stocks out there where the options aren't expensive at all. AAPL, DTV, AZO, GOOG are some names with huge amounts of growth and cheap options. These growth stocks often trend in one direction (sometimes down) and the options on these stocks may not be priced correctly. On the put option side, JOE puts seem a little mispriced to me considering the short interest and past borrow costs (14%+ or something; can't remember). JOE is a massively shorted stock... these stocks usually go down and the options tend to get really expensive due to the borrow costs throwing a wrench into put/call parity.

Do you count how many sheets of toilet paper come on each roll too?!?! ;)

1- Maybe this is getting a little off topic, but I don't understand why the regulators allow companies to issue press releases for a technical report before filing the technical report. In the case of Barkerville, the stock popped up when it issued the PR and some retail investors are probably going to get hurt. Would it not make more sense that these companies can only issue a PR after the technical report has been released? 2- Some of the flaws with 43-101 reports are very difficult to spot. With Canada Lithium I read the technical report. I didn't catch on that the resource estimate was inflated. Actually now I think it's a scam because if you look at Talison Lithium's mine, Talison has over twice the grade and the scale of Talison's operations is far greater than what Canada Lithium proposes. Yet CL claims that its cash costs will be slightly lower than Talison's. That doesn't strike me as likely. And their technical report doesn't show the assay results of their metallurgical testwork... this seems to me to be a HUGE omission. The purity of the final product will affect its price. 2b- I'm not sure how to spot title issues that aren't disclosed. ---------------------- Ok instead of ranting about juniors let's try to be more constructive. So far, this is what I know to look for in technical reports (and in mining in general): a- Some authors I just don't trust. Peter George, Michelle Stone, and Behre Dolbear. Companies like BBA are better, but I know that BBA's technical reports can be way off (e.g. look at Cliffs operating costs for Bloom Lake versus the BBA reports for Consolidated Thompson/Bloom Lake). b- Check the commodity price assumption. Is it reasonable? Some technical reports cherry pick between the spot price and 3-yr average. Some reports assume inflation (!!!). If they use something other than the 3-yr trailing average (which is the standard), then pay attention. *If it's gold or iron ore, many technical reports will actually use something more conservative than the 3-yr trailing average. I believe this is because they are pandering to the banking analysts, who have incredibly bearish outlooks on future gold and iron ore prices. So what you do is to deflate your opex/cash costs (aggressive) and deflate your commodity price assumption (conservative). NPV will stay about the same. But the analysts will be "happy" because they blindly plug numbers into their models and they see reasonable NPVs even with their bearish commodity price outlooks. c- For many commodities, the purity of the shipping product affects its price. Hopefully they provide assay results for the shipping product and for the ore. You can be pretty sure that they assay for everything that matters because assays are cheap. If they do not release assay results for deleterious elements, this may be an intentional omission. d- Read the section on QA/QC. Do the assay results match exactly? If not... do more research. e- Look carefully at the search radius that they are using. An extremely high search radius is a method for inflating indicated/inferred resources. f- Geological Interpretation / use of wireframes. If you are dealing with complex geometries such as gold veins (or veins of anything), then you often aren't sure which intersections in one drill hole correspond to which intersections in another drill hole (sometimes they do not connect). There is room here to make aggressive assumptions in this regard. Companies will perform infill drilling to figure this out. g- Metallurgical risk. Some ores are really expensive to process, e.g. anything labelled as refractory, sulfide gold, etc. You just have to know something about the commonly-used recovery processes (e.g. where heap leaching works well and doesn't). h- Metallurgical risk. If the company proposes some new technique that is not tried and proven, you need to be very very careful. You don't know how much it will actually cost until you build the thing as full commercial/production scale. Our scientific models aren't perfect. Before they go build the processing plant, you want to see them build a pilot plant that is at least 1/10th-1/100th of the scale of the production plant. And even then, **** can happen. The Goro nickel project for example has had many delays and accidents. Baja Mining and Starfield Resources proposed novel recovery techniques and will likely never make it to production. i- In general, anything novel such as placer deposits and underwater mining should probably be avoided. These things usually have a terrible history. j- Cost of infrastructure. You have to know something about infrastructure as costs can vary wildly. If it is close to existing infrastructure (e.g. close to a highway, site of an old mine) then this usually isn't a big risk. k- Cost of mining. You have to know something about mining as costs vary wildly depending on a number of factors. Veins that are thin (e.g. 1 meter wide) are really expensive to mine. Deposits with phenomenal grades but thin veins are probably a trap. Deposits with thin(-ish) veins don't benefit from the cost savings of mechanization... so the economics also depend on labour costs in a particular country. l- The problem with the stock market is adverse selection. Private investors are much savvier than the public markets and do much more research than institutional and retail investors. Freeport Mcmoran didn't get completely burned by the Bre-X fraud while many institutional investors did because Freeport actually did their due diligence. Freeport would have assayed splits from the drill core if Bre-X didn't destroy their drill core (maybe this is a red flag that institutional investors should have picked up on... it was known at the time that Bre-X wasn't saving any drill core). So Freeport did their own drilling and drilling is not cheap. m- Mines shut down because they aren't economic. If a public company wants to restart a mine that was shut down in the past few years... this is a red flag. e.g. Yukon Nevada Gold did a mine restart and lost a lot of money. (Um... public markets are stupid. There are also a lot of bullish writeups on YNG on valueinvestorsclub.com and on value investing blogs.) n- Areas with commercial mining a long time ago are good places to look for ore. So are areas close to existing deposits and existing operating mines. I'm not telling you to stay away from mine closures... I'm telling you to be careful with mine restart projects. o- Political risk. You have to know something about political risks in that particular country. Things are simpler if you stick to only US/Canada/Australia, though there are First Nations issues, NIMBY, and environmental NGOs to watch out for. Many major projects have been delayed due to these issues. p- Some deposits may be the "tip of the iceberg". This mainly applies to high-margin deposits only. The existing deposit may extend further with follow-up drilling. The surrounding area may also host similar deposits. High-margin discoveries often lead to mines that operate well beyond their original mine life and to other mines in the surrounding area because they keep finding more economic ore. If the deposit is low-grade, then it's no use if the deposit extends deeper since mining deeper usually costs more money and therefore this ore may not be economic. q- Interpolation method. One way to inflate resources slightly is to cherry pick between nearest neighbor, ID2 (inverse distance squared), ID3, ID5, ordinary kriging (OK), etc. If the technical report lists the results with many of these methods, then usually it is a good sign because it shows that the author isn't trying to cherry pick. r- Read insider trading reports on canadianinsider.com (*don't use your real email for financial sites because you may get pump and dump spam) and sedi.ca. s- Many juniors don't spend that much money on actual exploration and mine development. A lot of them spend money on stock promotion... they advertise on websites, pay for spammers, pay for shills, etc. If you Google the name of the company plus the word "sponsor" you may be able to find these activities. Insider salaries for the (part-time) CEO is usually high... this is disclosed in the information circulars filed on SEDAR. You can look at the company's historic G&A spending versus their exploration spending. t- Check if the management team has experience in bringing mines into production. (Because often they don't...) u- Some investors like Rick Rule will avoid most of the stocks out there and only stick with the superstar management teams with good track records. Many geologists will never find a mine in their entire professional careers. A few of them consistently find mines... the skilled geologists will be lucky more often than their peers. A few mine developers (promoters) are much better at promotion than their peers. Robert Friedland for example is a very good salesman. I'm not sure about these guys' ability to create value. But because they are successful, they attract those who are able to create value. Guys like Lassonde, Schulich, Dalton are very smart because they bought land when it was really cheap. v- According to Rick Rule: Junior exploration is a huge destroyer of capital. Senior gold miners are usually overvalued and they made far less money than they should have. Be a contrarian or be a victim- buy the dips, sell the rallies. Clearly right now is the time to buy. see http://sprott.com/news-centre/why-i%27m-excited-about-this-market/

The Canadian junior mining stocks strike me as an incredible trap. I see a lot of value investors not realizing that NI 43-101 reports can be manipulated and that they are all almost overly optimistic. I agree with Parsad that there is too much scum on the TSX Venture (and TSE). Examples: - Barkerville gold. They came out with a press release claiming that Barkerville had a Bre-X sized deposit. The stock is currently halted. The author of the report, Peter George, is a disgrace to his profession. - Canada Lithium. Before they were named Canada Lithium, they hired Peter George to write a technical report on their gold deposit. Black Pearl announced a deposit of around a million ounces of gold. Then they raised capital. In the next quarter, they wrote down their gold property to almost 0 (the property was pretty much worthless). - Canada Lithium. Currently, they are being sued because they had to restate their resource estimate. And it's not the first time Michelle Stone wrote an aggressive technical report. - Bear Lake Gold. The geologist decided to commit outright fraud and enter in some assay results higher than what they actually were. An independent technical report did not catch this, though the author of the technical report didn't seem to be bothered by the fact that all his QC checks came in 20% too low. -Many juniors do not disclose title issues with their properties (Bre-X, East Asia Minerals, etc.). Is there some way of investing in these companies without getting burned? It seems to me that the odds are heavily, heavily stacked against the retail investor. Other investors kind of have access to inside information. Analyst/site visits and face-to-face talks can be an unfair advantage over retail investors. And it's almost always the case that juniors fail to release critical information (e.g. title issues, full assay results for deleterious elements, etc.). Parsad has a great post on similar issues: *Disclosure: I own juniors. Maybe I shouldn't. Northfield Capital, Altius Minerals (they own Alderon), Noront, KWG Resources are my big positions. EDIT: Queenston Mining too.

My prediction: SolarCity will have very high short interest when it goes public. (Probably 20%+?)

This reuters article throws some numbers around: http://www.reuters.com/article/2012/09/10/us-generalmotors-autos-volt-idUSBRE88904J20120910 It looks like volume is really low and manufacturing costs are really high for the other cheaper electric cars out there. ... *This is not a high conviction trade for me and I don't consider cars to be in my circle of competence. The short interest on Tesla is absolutely, absolutely ridiculous (which makes it not a great short).

Yes. I guess it comes down to predicting what will happen in the future. For tech companies, I think that this is incredibly difficult most of the time. 2- I think that the whole wimpy core way of thinking came about because processors have been trending towards higher power consumption. I think that everybody will simply adapt. Intel will have a mix of products. Some of them will target various niches in the server market. So will AMD and various startups and ARM and RISC chip manufacturers. I don't see an inflection point where ARM kills off Intel and AMD in the server market. If anything, it might be the other way around. The historical trend has been commodity hardware killing off lower-volume specialized hardware. Server chips by these companies aren't entirely commodity consumer products (they have server features like ECC, hardware virtualization support, etc.). But you might expect "mass-market" server chips (e.g. Intel Centerton) to kill off low-volume specialized chips (e.g. Tilera, Calxeda). So that's my prediction. Of course it is possible that some startup has some radical new approach that totally changes the industry... e.g. radically different transistor technology, quantum computing, etc. One of the hotter programming languages would be Ruby on Rails. Its appeal is mainly that it lowers development time... whereas something like C++ would enable really high levels of performance and efficient use of hardware. The programmers only want to do really easy parallelization (e.g. each user of a cloud service is handled by a thread) and to stay away from hard parallelization. The historical trend has been for programming to go higher level... less development time, less efficient use of hardware (because hardware just gets faster and faster). Even in photo editing where performance can be better, many applications aren't written for parallel processing (yet) even though it is ideal for parallel processing and easy to do. The programmers were too busy adding new features. ----------------------- In general, the history of computers is that they keep getting more powerful and we keep finding new uses for them. So Dell should benefit a little bit from that. As far as disruptive changes or inflection points go, I don't see Dell being hurt by ARM-based servers or Google-style cloud computing. Google is a special case where their hardware and data centers are highly specialized. Most companies out there don't have the scale where that would make sense. Dell could be hurt by companies which wholesale (essentially) a fraction of a data center. Normally you could buy a Dell server and go to a colocation company such as Peer1 or Rackspace. Instead, you can go to Amazon and use their cloud services. Wikipedia lists some of Amazon's cloud customers (e.g. Dropbox; I highly recommend this free/paid product). -Part of Dell's business is in designing hardware (e.g. PCs, servers). Historically this is not a great business because high returns of equity don't last. -Part of Dell's business is in retailing/distribution. This used to be a great business, but competition is eroding margins. -Dell is getting into software where margins can be higher. The margins are higher because these businesses are very difficult to duplicate. And of course these businesses are vulnerable to disruptive changes... your software might be killed by somebody else's superior software. -Dell is also getting into services. I don't understand that business well.

I was not impressed by Chipotle Mexican Grill here in Toronto. There are local joints with comparable food (e.g. Quesada) or better food (Burrito Boyz / Burrito Bandidos) at same or lower prices. But, you may not need to be the best. Look at MTY Food Group (MTY.TO), which owns many second/third-rate restaurant franchises: Tiki Ming, Sukiyaki, La Cremiere, Au Vieux Duluth Express, Carrefour Oriental, Panini Pizza Pasta, Chick ‘N’ Chick, Franx Supreme, Croissant Plus, Villa Madina, Cultures, Thai Express, Mrs. Vanelli's, Kim Chi, TCBY, Yogen Fruz, Sushi Shop, Koya Japan, Vie & Nam, Tandori, O’Burger, Tutti Frutti, Taco Time, Country Style, Bunsmaster, Valentine, Jugo Juice, Mr. Sub and Koryo Korean BBQ. That stock has gone up like crazy. Taco Time is so pathetic compared to Taco Bell. But apparently this company makes a lot of money. Go figure. 2- To be fair, Canada is sometimes an awful proxy for the US. Restaurant food in the US is much cheaper ($1 chicken mcnuggets... I long for thee...). Many US companies fail here in Canada (e.g. Sam's Club)... I don't know why that is.

As I understand it, virtualization's main advantage is that it lowers IT labour costs. The Google paper covers the pros and cons of wimpy cores versus brawny cores. Wimpy cores only have the advantage of power / lower cost. Wimpy core hardware should actually cost more. In terms of the silicon, you are using a much larger area of silicon that is designed to be more power efficient. Regardless... the point is that not all software can easily be optimized to run on wimpy cores. Each task has to be completed in a reasonable amount of time (otherwise you have to go parallel and that can get really nasty; parallelization can also be inefficient), can't take up too much memory, etc. As I understand it: 1- The RISC chips were faster. Eventually it got to the point where the x86 overhead didn't matter anymore. You can't just use cheaper hardware. For supercomputing, performance does not scale linearly with more CPUs. You want to start off with the fastest CPU in the first place. 2- For the mainframe market, the RISC chips had high availability / high reliability features (e.g. ECC RAM) that commodity Intel chips didn't. Eventually, Intel started integrating high availability features into the Xeon. In the long run, this will cannibalize sales of Itanium. As I understand it, the existing solutions like Itanium, Power, SPARC will only slowly die off since customers can't be bothered with switching costs when they have systems that work. ---------------------------------------- It should be noted that Google is a very, very special case. Their products are the largest applications of cloud technology out there (e.g. search, Youtube). They have huge amounts of in-house cloud infrastructure technology that is suited for cloud applications on a ridiculous scale. They made their own in-house file system... which they didn't even try to monetize or to make it open source (Hadoop is an open source project inspired by Google File System). Now they are working on their next generation file system.

thesis please :D Alright I'll bite. I can't be sure why other people are shorting Tesla. Here are some of the reasons to short it: #1- They are losing a lot of money. GAAP profits, free cash flow, cash flow from operations... all are negative. Whichever way you cut it, the company is unprofitable. #2- Even if it was profitable, the valuation is a little ridiculous. The market cap is $3B versus less than $300M of equity. #3- Some people like to short ridiculously overhyped IPOs. #4- You could argue that the car industry isn't a great industry to be in (for mass market vehicles; Tesla is very niche so this may not apply). Other countries like Japan massively subsidize their auto industries. #5- Just keep going back to #1. They are massively, massively unprofitable. In YE2011 GAAP losses were $253,922M versus revenues of $204,242M. This is disturbingly unprofitable. I may lose money on this position even if Tesla goes to 0. This could take a while because Tesla has been able to use its stock to raise capital. There is cash flowing in from the capital raises (and a little bit from stock-based compensation) that keeps this company alive. I don't think that Tesla being in danger of breaching its loan covenants on the DOE loan is that deadly because (A) the government is stupid for making the loan in the first place and isn't savvy enough to push this company into bankruptcy and become the bully that owns the whole company and (B) capital raises can keep Tesla afloat.

Hmm I am shorting Tesla. The short interest is massive and the borrow is crazy expensive (90%+ at one point) so this is not the greatest short in the world. The stock is probably in big, big trouble.

But the thing is that the software and hardware are related. If you want your software to run fast... then you HAVE to pay attention to the underlying hardware and write for particular hardware. Google has a good paper on wimpy cores versus brawny cores. If you use wimpy cores, you may need to write your software a certain way. Usually it is better to throw more hardware rather than more programmers at the problem. Programmers are usually more expensive. http://static.googleusercontent.com/external_content/untrusted_dlcp/research.google.com/fr//pubs/archive/36448.pdf ARM-based products such as Tilera and Calxeda, to my understanding, are wimpy cores taken to the extreme. Wimpy cores aren't optimal for most uses. Tilera and Calxeda may or may not fill a niche. Intel (Centerton/Moonshot) and AMD (Seamicro) are also going to attack that niche. I don't know what the proper forum etiquette for this is.

Junior explorers and miners have been whacked lately. The TSX Venture index is down 40% (this is like the 2008 crash). I recommend that you do NOT buy juniors... the whole sector is flawed and destroys a lot of capital. However, the best companies in the sector such as Altius Minerals (see the idea board) and Northfield Capital may be good buys. Pinetree and Aberdeen sell below liquidation value (Aberdeen is trickier if they are mismarking their private companies)... I would rather own Northfield than those companies though.

Vancouver, Australia, and China have real estate bubbles that are far more ridiculous?

Maybe I am crazy here, but his opinions do not seem grounded in practicality. For example, he talks about Project Denver here: http://perspectives.mvdirona.com/2011/01/16/NVIDIAProjectDenverARMPoweredServers.aspx "This is interesting for a variety of reasons, first they are entering the server CPU market." Project denver is a combination of CPU and GPU on the same chip. That combination has very little use in the server market. There are some niches that take advantage of GPGPU / GPU co-processing. But we're definitely not talking about a mainstream server market here. Semiaccurate has some good coverage on various technical issues: http://semiaccurate.com/2011/08/05/what-is-project-denver-based-on/ Project Denver explained http://semiaccurate.com/2012/03/01/why-purchasing-seamicro-was-important-for-amd/ Seamicro explained (Dell is now a reseller of Seamicro btw) Currently, ARM has made very few inroads in servers. Project Moonshot ditched ARM. Facebook didn't choose ARM/calxeda. Servers are about performance over total cost of ownership, whereas ARM products have typically targeted low power consumption (i.e. how much performance you can get within a certain level of very low power consumption). Among Intel, AMD, ARM, and RISC (e.g. power, sparc)... I think Intel has the advantage (its process technology lead makes its chips more power efficient) and will dominate servers.