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February 13, 2014

Amazon, The Emperor

by robert hashemian @ 4:20 pm
Filed under: business — Tags:

amazonTake the usual quarterly loss, the upcoming Prime price-hike, and the UBS downgrade and you have the catalyst for a drop in amazon.com's shares in the past couple of days.

Today however the stock is up over 2% and chances are it'll be back where it started and then some. Amazon is just one of those stocks. Much like bitcoin, it has little intrinsic value but it's kept front and center so everyone's too afraid not to buy in, lest they miss the party.

What exactly does amazon do again? Sells discounted stuff online like a thousand other websites, takes its excess network capacity, repackages it as dozens of different services under the cloud umbrella and leases them to users (like thousands of other hosting companies), and oh yes, they are working on the drone express.

When you have a winning formula why mess with it? For two decades Amazon has been pushing the investing-for-future angle. Meanwhile there are no earnings, no dividends, and no share buybacks. Just a bunch of vapor and promises. The good thing about the future is that it's always in the future. We may wait until there's a red giant where the Sun used to be, but the future will still be in the offing.

The amazon emperor has no clothes on, but no worries, he'll get his clothes in the future.

June 18, 2013

AdSense, 10 Years Old and My 72-Hour Warning

by robert hashemian @ 3:04 pm
Filed under: business,google,web — Tags:

AdSense, Google's affiliate advertising product for publishers is 10 years old and I just received a warning from them that one of my sites, padfly.com, does not conform to their policies and I have 3 "working" days to clean it up or else they would block their ads on that site forever. Should I cheer or jeer?

For some time AdSense has stated that web pages on sex, violence, gambling, racial matters and other such topics are off limits for their product. padfly.com is not inherently notorious, but because people can create public pages and save any text data to them, some of the pages will inevitably have objectionable content. Policing that site is just not practical.

I have been with Adsense almost since its inception and would certainly not want to raise the ire of Google. It pays enough to cover the cost of running this site. I can also understand why Google would not want to taint its product with pages and sites that are not family friendly. At least they gave a warning instead of abruptly killing my account.

So dear AdSense folks, happy 10th and to comply with your rules I pulled Adsense from padfly.com completely. Fair enough?

April 29, 2013

Amazon's Miss, Does it Matter?

by robert hashemian @ 1:03 pm
Filed under: business,financial,web — Tags:

Last week Amazon reported an $0.18/share earnings on a lower than expected revenues for its past quarter. The shares seesawed after hours and finally ended down some $20 on Friday. The earnings were almost twice what the street had expected, but think about this, The street was expecting this company to earn a measly $40 million. This is a 17 year-old established company with a market capitalization of $130 billion, it should be expected to do much better.

The thing with Amazon is that investors seem to be so emotionally entangled with company that they have no logic when it comes to its share price. Since its inception, Amazon has played the "long-term" card and it continues today, as in the earnings don't matter because the company is investing in the future.

When this glorified future will materialize for Amazon is anyone's guess. Perhaps in another 17 years or more? Whatever the case, for those who may believe that the latest pullback may signal a return to sanity for this stock, don't believe it. Going by history, it won't be long before Amazon's shares will wipe out all losses and march on to set new 52-week records. It's just that kind of a company.

April 17, 2013

Apple Hitting Lows

by robert hashemian @ 12:36 pm
Filed under: business,computers,technology — Tags:

Apple shares hit a 52-week nearing $400/share today, even below some of the price points from when Steve Jobs was alive. The news surrounding Apple isn't very rosy. iPhone continues to lose market share to Google's Android, iTunes is losing market share to Amazon, and the PC/laptop markets are shrinking in general dragging Apple down along the way. Analysts aren't predicting a good quarterly report next week.

Now I admit to not being an Apple fan but the one force that was keeping the company firing on all cylinders was Steve Jobs and that is undeniable. When he was there the first time, the company was doing exceptionally well, when he was forced out Apple became a dud, then he returned and Apple came roaring back.

Now Jobs is gone once again and Apple continues on the momentum that he brought with him but that momentum is naturally wearing off. Jobs was a genius and a visionary and it is because of him that Apple has continued to do well much longer than I had anticipated. But eventually the vacuum of vision and innovation must show its effects.

I do wish the company well, but companies don't thrive on well wishes. Jobs was the secret sauce behind the resurgence of Apple and without him the inevitable must now happen. Apple will no doubt survive, but thriving doesn't seem to be the cards.

April 14, 2013

Amazon Paying for Positive Coverage on Business Insider?

by robert hashemian @ 2:53 pm
Filed under: business,web — Tags:

It was barely 10 days ago when the news broke of Amazon's Bezos investing $5 million is Blodget's web site, Business Insider. Most saw it as Bezos' genius investing in the up and coming web site. I just saw it as one pal taking care of another, as Blodget has been a vociferous support for Amazon almost from its inception.

Now Blodget has returned the favor by publishing an article lauding Amazon effusively as an example for other companies to follow.

Is this what has happened to journalism? It has become so contaminated by conflict of interest that people no longer even hide their incestuous relationships. Can anyone honestly read this so-called article and believe it's even close to being impartial?

Bezos is indeed a genius by the way he has pumped up Amazon's shares and by fooling a flock of sheep to believe his company is special and deserves its outrageous valuation. As for the rest of us, there's no need to read the Business Insider article. Surely it is filled with much praise and positivity for a company whose greatest asset is its gullible investors.

January 25, 2013

Amazon's Gross Margin

by robert hashemian @ 4:05 pm
Filed under: business,financial,web — Tags: , ,

Much has been said about how Amazon's high stock price is unjustified. This morning my boss sent me a link that reminded me again how ridiculous Amazon's share price has gotten as of late. The article summed it up well by noting that if Apple were to have the same PE ratio as Amazon, its share price would be $145,000.

I suppose another way to even better demonstrate this insanity is to use the same equation on Berkshire Hathaway class A shares, which would send them to an astronomical $31 million/share.

My boss tried to justify Amazon's stock price by mentioning their high profit margins. So I decided to take a look at what Amazon's gross margins are and how they compare with some other companies. Here's a short list:

  • Amazon: 25%
  • Apple: 39%
  • Google: 57%
  • eBay: 69%
  • Microsoft: 74%
  • Intel: 63%
  • Priceline: 82%
  • Wal-Mart: 25%
  • Ford: 18%
  • Oracle: 80%
  • GE: 26%

As you can see Amazon's gross margin is way below its peers, but in line with that of Wal-Mart's. Proof that Amazon is nothing more than a glorified, high-tech super store.

As to why its stock continues to rise despite any rational justification, another person said it well. Traders play Amazon as a momentum stock and it has become a self-fulfilling prophecy. Logic indicates that it should come down crashing hard, but this stock escaped logic long ago and it'll be foolhardy to bet against it now.

January 17, 2013

Man outsources coding to China

by robert hashemian @ 5:16 pm
Filed under: business,computers — Tags: , ,

Love this story. Software developers are certainly infamous for being lazy. Most of us are, and that drives us to write code to automate things or write utilities to give to others to perform certain tasks. It's all about finding clever ways to make things easier for us and our employers.

But one guy took it one step further and secretly outsourced his coding responsibilities to a Chinese firm paying them a fraction of his salary and spending his own days having fun. His employer was oblivious to this for years until they ran an audit and discovered the scheme.

The blog post below is really about this coder's exploits and a cautionary tale for others to keep tabs on their networks. Still a part of me wants to high-five him for his cleverness right up to the point he was caught.

Verizon Business Security Blog » Blog Archive » Case Study: Pro-active Log Review Might Be A Good Idea.

October 16, 2012

Citigroup CEO Resigns

by robert hashemian @ 2:41 pm
Filed under: business,web — Tags:

Can't say I'm shocked to get the news of Citibank's Vikram Pandit quitting (Citigroup CEO Vikram Pandit resigns | Reuters.) Evidently Citibank's online banking has been an absolute disaster recently. There have been numerous outages, slow response, and unscheduled downtimes.

Telephone customer service and tech support have also been horrendous during these outages. Customers are told that the site would be online shortly only to have no access for entire days. Understandably the service reps are frustrated having to deal with irate customers and they have, in turn, become rude and abusive to the callers.

The CEO's abrupt resignation may not have been directly related to Citibank's online problems, but such prolonged issues are manifestations that the bank is in the state of chaos and disarray and no one is minding the store. That's just a shame as Citibank was a decent bank to do business with at one time.

October 8, 2012

Too Small to Succeed

by robert hashemian @ 6:06 pm
Filed under: business,internet,web

I used to think that the Internet was the great equalizer in the business world. A small guy with programming skills and a big drive sets up a new site and offers a novel service. The service goes viral and the small guy becomes a small company and builds and expands his way to success. The small guy pulls off an IPO or gets acquired and retires to the tropics. It's a happy ending that some have indeed experienced.

But what I have learned is that without some early connections and some cash infusion the small guy can quickly and quietly wither away, no matter how much effort he puts into his novel idea and no matter how many users he attracts. He's destined for a quick failure unless he gets some serious support behind him and fast.

How do I know this? Having operated this very site for some 12 years has given me plenty of lessons to that end. I operate this site as a hobby from the corner of my condo and while the free utilities offered here have a decent number of users, which I assume find them useful, and while I never looked to this site as a means of financial success, this site is in fact too small to succeed. Take these cases:

  • For a number of years this site was hosted on various web hosting services such as 1&1 and every few months there was a warning to kick me off the service because the site was exceeding usage quotas. So, like a gypsy, I kept moving the site from one hosting company to another. A financially secure company would have had no issues paying for more resources.
  • A couple of years ago Amazon Associates (an Affiliate Network) I was using for this site accused me of cheating and shut down my account, depriving the site from a small stream of revenue. According to Amazon, I had published URL's with my associate account to other sites, violating their terms of service. URL's had in fact been copied to other sites but not by me. Page-scraping and content-stealing robots had done that. A large site most likely would have never been suspended. In my case my appeals of innocence fell on deaf ears in Amazon.
  • A few years ago I operated a URL shortening service much like tinyurl and bitly. One day a spammer used the links in a widespread spamming operation and suddenly the domain registrar, GoDaddy, cut off the domain registration claiming that is was spamvertized. It took over two months to convince GoDaddy of my innocence and get the domain back. I shut off the service promptly. This would have never happen to bit.ly or goo.gl.
  • Recently a service on this site fell victim to a Nigerian phishing operation to collect bank information from unsuspecting victims. For days my ISP hounded me about this, nearly cutting off my services. That would have never happened to a customer with deep pockets, but I ended up discontinuing the service to guard against possible service termination or potential legal consequences.
  • The latest headache came in the form of a DDoS, paralyzing this site. An outside site using one of the widget services from this site came under attack and the attack spilled over to this site causing capacity issues. I had to resort to all sorts of traffic blocking filters to partially mitigate the effects. This would have been a non-event for a larger site, but for this site it meant lengthy periods of slow performance and outages.

The Internet, a great equalizer? Hardly, great ideas can only go so far and without serious financial backing, they are destined for failure and eventual oblivion. I can't imagine how many great innovations have died premature deaths without that all important cash infusion.

June 11, 2012

Oracle's Java Bet

by robert hashemian @ 6:40 pm
Filed under: business,google,technology — Tags: , , ,

A couple of weeks ago a judge finally ruled that Google hadn't violated any patents when it used the Java programming language in its Android OS. Good, finally someone wasn't intimidated by Larry Ellison and ruled based on logic rather than emotion. Word has it that the judge actually took some time to learn Java to have a better grasp of the dispute, impressive.

Now comes the news that Android has hit 900k activations per day and is well on its way to reach 1m per days. That may be in part due to some confidence that Android is now a safe bet, free from oracle's licensing threats.

In retrospect, it’s easy to see why Oracle acquired Sun and its assets. Even if some of those assets, like Java or MySQL, were under GPL (essentially free to use), that's counter to how Oracle operates. Oracle had hoped, and still does, to start capitalizing on the large market shares of these products. To that end it hasn't been successful, yet.

The latest Java lawsuit outcome is a great boon to developers and users, but one shouldn't bank on Oracle's defeat in Android's case as being the end of such tactics. Undoubtedly Oracle will be back for more. Given its past business history, Oracle is nothing if not undaunted and persistent.

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