txlaw

If you do think things may implode (including banking stability), where exactly do you store your cash? Are you safer holding shares of a strong company with no debt? Does deflation (or mild deflation) and another systemic banking crisis necessarily go hand in hand? Of course, Vish_ram was specifically asking about sectors, industries or stocks that do well during deflation, so I'm guessing the "cash" response was a bit tongue in cheek!

Agreed.

Perhaps they realize how wrong they and their firms have been, and are now trying to save some face by arguing that more time is needed to definitively show that a "turnaround" is occurring.

Many of the ones discussed on this board. ;)

Two articles to read for people interested in the "post-PC" era: http://arstechnica.com/business/news/2011/05/intel-defends-pc-goes-all-in-on-ulv-and-speeds-up-moores-law.ars http://arstechnica.com/gadgets/news/2011/05/the-post-pc-era-is-happening-but-not-yet-at-the-expense-of-pcs.ars It would also be worthwhile taking a look at INTC's presentation, which was filed with the SEC yesterday, and Brian Gladden's interview on the DellShares blog and on CNBC today.

Me too. And thanks to you for referencing that Geithner interview on Charlie Rose. Just finished watching it.

http://www.docstoc.com/docs/79822320/NMA_Koo_May17_2011

Amazon following in the steps of Overstock . . . http://techcrunch.com/2011/05/17/amazon-buys-the-a-co-z-co-k-co-and-cloud-co-domains/

Yeah, this is what I keep talking about. These strategic decisions that tech companies have to make are never understood by the Street, or most value investors even. They only look at numbers in front of their eyes and then criticize ad nauseam. DELL/HPQ/3Par/Compellent INTC/McAffee MSFT/Skype All examples of the Street not understanding that there is a difference between being a business man and being an investor.

Congrats on DELL it is a big position for me too. I actually read your posts with lots of interest a while ago. So thanks for your precious input! I am accumulating some HPQ now as the price gets crushed. In a while it could look ridiculously undervalued too... Yeah, the crushing of HPQ has gotten me interested in it as well. I may have to do some more in-depth research on it.

That is a good way of putting it. Now you guys see why I own all Dell and no HP.

Wow, that video was pretty awesome. Too bad the company that makes the machines, Plasser & Theurer, is private. I'd like to take a look under the hood of that biz.

Actually, does anybody know off the top of their head how much debt was assumed in the transaction?

Or less than that, actually since he paid less than $100 for the fist 22.5%

For some reason, I was under the impression that the $34 billion figure included the assumption of $10 billion in debt, but I think you might be right. So he basically paid out $34 billion minus the float from the derivatives in equity, some of which was made up of BRK stock. Still not bad.

And let's not forget that he only put in $24 billion of equity, some of which can be considered float. From the annual letter, discussing the equity puts that he's going to make an underwriting profit on: What is sure is that we will have the use of our remaining “float” of $4.2 billion for an average of about 10 more years. (Neither this float nor that arising from the high-yield contracts is included in the insurance float figure of $66 billion.) Since money is fungible, think of a portion of these funds as contributing to the purchase of BNSF. Assuming earnings approximate FCF over the next 50 to 100 years, he's getting a pretty darn good ROE.

My wife has a hotmail account linked to her YouTube account. Today she got an email from [email protected] requiring her to link her YouTube account to a Google account (she doesn't yet have one). "Don't be Evil" How is requiring Youtube account members to shift over to a Google account evil? If you're going to criticize GOOG for being evil, you should go after them on the privacy front. txlaw, I think this is the privacy front. Google wants to be able to collect all the data they can on you and associate with a single user account. Wait for Google ads to show up on random web pages related to the types of videos you watch. They want to be able to compete with facebook's rich database of user information. If you dislike targeted marketing as much as I do, then you might call it evil! That's what I was getting at. It's not the forcing of the YouTube account holder to sign up for a Google account, per se, that should be criticized as evil. Sure, Google is trying to steal business away from Hotmail and cross sell its other services to the newly minted Google account holder, but that's the norm in a competitive market. It's really the ability to create a more comprehensive digital dossier of the individual (by tracking the videos the user watches and cross referencing with other info gleaned from the user's use of Google services) that can arguably be criticized as evil. It wasn't clear to me that that's what Eric was criticizing.

HPQ and DELL at this price I agree. GOOG: it is cheap and has a lot going for it, but I think most under-estimate the competitive pressures they may be facing in the next decade... They have been spending tons and tons of money in non-directly accretive projects but since they are not MSFT but GOOG nobody asks questions... That money is being well spent, IMO, and we just saw a sell off in GOOG directly related to the increased spending. GOOG is one of the most misunderstood companies out there. "GOOG is a one-trick pony." "GOOG is really an advertising company." "GOOG loves to burn cash." "GOOG doesn't care about shareholders." Nobody asks questions about GOOG? Yeah, right.

My wife has a hotmail account linked to her YouTube account. Today she got an email from [email protected] requiring her to link her YouTube account to a Google account (she doesn't yet have one). "Don't be Evil" How is requiring Youtube account members to shift over to a Google account evil? If you're going to criticize GOOG for being evil, you should go after them on the privacy front.

Myth, my thinking on the Skype acquisition is that Ballmer is on the defensive, trying to prevent a situation where the MSFT platform/ecosystem gets almost completely displaced by Google and Apple platforms/ecosystems -- and maybe others, as well -- in both the consumer and business space. So, in this case, we have to think of the counterfactual, which is difficult for most people to do. That is, if MSFT's ecosystem did not have an over-the-top audio/video conferencing system that was popular with consumers and that could be integrated into its business software, what would be the present value of the profits lost due to not having that feature? And could they build such a feature in-house in time to prevent catastrophe? It's a tough question, but I guarantee you that MSFT insiders have been asking themselves that. Remember these purported words from Buffett about MSFT: "In effect [MSFT] has a royalty on a communication stream that can do nothing but grow." One of the fundamental questions we should ask ourselves about MSFT is this: what would happen to MSFT profits if its ecosystem market share were to collapse? ------------- I found some interesting additional info on the MSFT-Skype deal. Skype recently bought a company called Qik that allows users to record videos on their phone and instantaneously share and sync them with various accounts. See http://qik.com/info/overview ; http://qik.com/qik_features And Skype also has an investment in a company called Rdio, which could be folded into/replace the Zune streaming music service. See http://mediamemo.allthingsd.com/20110510/skype-microsoft-and-the-fate-of-music-start-up-rdio/ Finally, a former director of product development and "father of the Estonian Internet" had some interesting things to say about the deal. See http://www.dw-world.de/dw/article/0,,15070167,00.html ------- Having said all of the above, you should know that I'm long GOOG! :D

In my view, it is best to view this deal as a "maintenance acquisition." It is simply something MSFT had to do in order to ensure that it doesn't get destroyed or substantially weakened by GOOG, AAPL, and others going forward. Investors who simply back out the entire net cash + investments position in order to calculate earnings yield are being imprudent.

This was not an unexpected deal. MSFT knows that in order to compete with Apple and Google to be the platform layer for our Internet-connected devices, it must integrate over-the-top audio/video conferencing into its offerings. It already has such software, but this will give MSFT increased traction. For those of you who insist that MSFT has an enterprise moat (I believe that they will/are facing strong attacks on both the business software and business OS moats from GOOG and AAPL, which at the very least is decreasing margins), this acquisition likely bolsters that assertion. Skype will be incorporated into Microsoft Lync and will be included in all MSFT OS's (including Win Phone). I wouldn't be surprised if MSFT communications services are consolidated into the Skype brand. As to the high price, that simply reflects the fact that MSFT is a slow moving, bureaucratic behemoth that often must buy great ideas/technologies/people at high prices. Facetime and Google Voice, meet your new competitor: MSFT Skype!

I think there is some confusion here. The iMac line has been using Intel chips for some time now. But there was a product line refresh today that includes newer Intel processors as well as Intel's LightPeak technology. On top of that, the rumor is that Intel is trying to get Apple's fab business for the various iDevices. See http://arstechnica.com/business/news/2011/05/intel-to-fab-arm-chips-for-apple-its-possible.ars Finally, there is the upcoming announcement that Intel talked about on the CC, which could be a doozy for Intel's share of the mobile market if you believe Otellini.

I thought it was hilarious too. Apparently, the guy who plays Hayek is an Austrian economist that has weekly podcasts, which explains why Keynes goes down in Round Two. Very funny, though.

This Fleckenstein fellow may be right about the market misunderstanding MSFT, but he shows a poor understanding of what AAPL does, which indicates that his thesis is based not on sound analysis, but on some vague notion of contrarian investing. He will be right on MSFT for the wrong reasons, in other words.