Tesla stock worth more than Big 3 combined?

If you’re in search of the ultimate Tesla (TSLA) bull, look no further than Trip Chowdhry of Global Equities Research. He has a $385 Tesla price target. That number’s not based on current car sales; it’s based on the notion that the world’s entire transportation ecosystem is on the cusp of a revolution. And Trip Chowdhry believes Tesla’s leading the charge.

Continue reading “Tesla stock worth more than Big 3 combined?”

Is Apple really going to manufacture an Apple Car?

Speculation’s running rampant that Apple’s angling to get into the automotive industry. There are two theories here:

  1. Apple wants to make its own car.
  2. Apple’s working on software for autonomous or semi-autonomous vehicles.

On the face of it, the idea of software for self-driving or partially self-driving cars seems more likely. But it’s unclear if Apple’s content to stop there. Let’s look at the facts we do have.

Continue reading “Is Apple really going to manufacture an Apple Car?”

50 ways Microsoft’s (MSFT) new CEO can revolutionize the company and take down Apple (AAPL)

Here are 50 paths Microsoft could take to build revenue, delight customers and begin telling itself (and the world) a fresher, more fascinating story.

The best corporations tell themselves stories that are persistent and unyielding. They’re filled with twists and turns, but they move inexorably ahead toward a faraway goal.

I believe that Microsoft’s (MSFT) story has morphed into a tale of incremental improvements. Yes, the giant still marches the face of the earth slaying foes, but his steps have gotten heavy. His shoulders are sore and his eyes have drooped.

We must hoist up to him a 5-Hour Energy the size of an oil drum. We must drink with him to some spectacular new future where Microsoft takes a moonshot and succeeds; one where the company is rechristened as the greatest technology company on the face of the planet.

Here are 50 paths I’d love to see the company explore; 50 ways Microsoft might build revenue, delight customers and begin telling itself (and the world) a fresher, more fascinating story. Particularly radical ideas are in bold:

  1. Invest in lip-reading technology that could rival Siri and be used to compose emails and other text in a corporate setting.
  2. Build a spherical (omni-screen) gaming system; a ball-shaped 360-degree, ceiling-mounted pull-down screen that works in conjunction with two projectors and immerses the player in his or her gaming environment.
  3. Build the world’s first high-powered mobile IDE for developers with a cloud-based subscription model running on virtual machines.
  4. Build a flying Bluetooth-controlled camera that can take photos of it’s owner based on the location of his or her phone. The device could constantly record (similar to a head-mounted camera), and it would follow or travel in front of the owner in the air.
  5. Buy spotify to take on Apple (AAPL) as the king in mobile music. Partner with radio news apps (i.e. Stitcher) to cut into Apple’s stranglehold on the podcast market.
  6. Develop smart glasses, or, at the very least be aggressively developing apps for Google’s hardware.
  7. Develop apps for the iWatch with an emphasis on integration with Outlook.
  8. Make Outlook web-based, and expand its social networking, content delivery and calendar functionality.
  9. Integrate voice commands into all desktop applications. There’s the potential to use a freemium model for this service (10 free minutes a month, for example).
  10. Explore how to integrate gaming with live television. For example, Jeopardy viewers could be competing directly with the contestants on TV. Or Madden fans could be competing nationwide as they attempt to call plays in live games before they’re run. The most accurate play-callers would win.
  11. Embed Kinect in laptops and monitors to integrate gestures with core Microsoft software.
  12. Aggressively pursue Bloomberg’s audience in the financial data space. It’s time that world-class financial data get pumped out over the web — not on proprietary terminals. Investors have deep pockets (just check out Michael Bloomberg’s net worth).
  13. Push all of Microsoft’s flagship applications onto the cloud. If you don’t catch up with Google Docs and Google Spreadsheets, you’re going to lose serious revenue.
  14. Consider buying Adobe to deepen your stranglehold on development software. Adobe also has a nice cloud-based software-delivery system (though, eventually, programs like Photoshop will be running in the cloud, not on local machines).
  15. Re-imagine Excel as a web tool that can publish beautiful embeddable reports on the web with the click of a button. Currently you can make nice charts, but users should be able to make online, interactive data tables and charts just as easily. Excel’s data should be beautiful and highly interactive, even if you’re not a programmer.
  16. Buy Basecamp, Trello or another up-and-coming software collaboration site, then port that usability into TFS. Or at least give TFS a serious re-design that makes it faster to roll-out and test software.
  17. Expand virtual box services for software testing. Testing is extremely difficult now that developers have to support so many devices (tablets, desktops, phones, TVs, watches, glasses, etc.). The only – ONLY – way this is going to be doable is with virtual test environments. Developers will pay serious cash for serious emulators.
  18. Build a “business marketplace” where corporations can easily outsource things like testing, and integrate it with TFS (or the next iteration of TFS).
  19. Integrate Kinect and voice-to-text with smart glasses to destroy the smartphone.
  20. Build a Roku competitor that ships free with Microsoft computers. Make a deal to deliver premium sports content over the network. Any Roku competitor should be extremely easy to control with a laptop, tablet or phone, and it should allow users to run apps on the screen (especially social apps) while also watching TV.
  21. Make Word, PowerPoint and SharePoint themes much easier to install, and then create an online marketplace for buying/selling them.
  22. Build a theme marketplace for Microsoft’s OS, phones, tablets and Xbox.
  23. Buy Fitbit and integrate it into Microsoft’s cross-platform operating systems.
  24. Invest more in help documentation and tutorials to make coding on Microsoft’s platforms easier. Common functionality in Surface apps, for instance, should have drag-and-drop interfaces and very extensive code libraries.
  25. Stop being afraid to make a true Surface/laptop combo that ingrates touch screen with standard inputs.
  26. Create a simple interface for controlling drones. Allow consumers and small businesses to purchase and schedule drone usage time through a national network of Microsoft-branded drones.
  27. Capture and store user data across devices (phone, mobile and tablet), then feed that data back to users so they can see their activities over time and look for ways to increase their productivity.
  28. Release free, ad-supported mobile phones.
  29. Rollout Stackoverflow-style forums that are integrated with Microsoft’s core apps.
  30. Rollout an aggressive venture capital program to fund start-ups (and grab an equity stake in the process).
  31. Create a marketplace for resume templates in Word.
  32. Create a marketplace for code plugins.
  33. Develop easy-to-install circuits for home electrical appliances, and release apps to control them.
  34. Build a social network into windows 9, something that provides optionally shareable data on a user’s computer activity. This would be great for social and professional purposes (i.e. Microsoft-certified “Time in Application”). There’s so much activity that we do on our computers that’s never quantified or analyzed.
  35. Build a freemium-model API for voice-to-text services so programmers can integrate Siri-style services into Surface and xBox apps (and maybe some of them will even pursue programming conversational robots).
  36. Develop a holographic TV that works using Pepper’s Ghost. Theoretically, this could be done if video broadcasts shot two layers of film: background and foreground. For example, if a station were broadcasting a football game, the field would be sent as one layer (the background for Pepper’s Ghost), and the foreground layer would contain the 3D players.
  37. Improve Windows Phones so they can guess what you’re doing all day. It would work by asking you what you’re doing when it’s not sure. Each activity would leave a signature based on time of day, geo-location and movements. Then, this information could be sent back to users for analysis.
  38. Award grants for app development. The apps would then be exclusively developed for Windows for a predetermined amount of time.
  39. Build the worlds first mainstream 3D printer.
  40. Integrate face-time messages/recordings in Outlook.
  41. Create a premium newsletter feature (ala ConstantContact) that’s integrated in Outlook and allows users to broadcast messages to thousands.
  42. Rethink email. Static text emails should be a thing of the past. We need embedded polls, to-do lists, videos, text-to-voice readers that let you listen to emails on the go, etc. The messages would automatically downgrade for text devices (similar to responsive web design).
  43. Buy Dropbox to take SkyDrive mainstream.
  44. Integrate second screens in laptops or Surface keyboards that show metadata on open apps, alerts and/or give you the ability to quickly switch between open applications.
  45. Use SkyDrive to make publishing to the web easy for anyone. A Word doc that’s on SkyDrive should be elegant on any device (think of Amazon’s Reader, which can be used across platforms).
  46. Make an easy way for users to do repetitive tasks on a computer. In essence, the OS should have a “record button” I could use to teach my computer how to do a task or series of tasks.
  47. Build “Application Analytics” that run on the OS level and allow corporations to identify where employees are spending their time and how they can improve efficiency.
  48. Develop a smart-screen or smart-glass augmented reality gaming system that attaches to the wearer’s head and can integrate with the real world by overlaying opponents in your actual environment.
  49. Add NFC to future Microsoft phones.
  50. Create a secure payment-processing platform for Bitcoin.

Got any additional ideas for Microsoft?

Please add them to the comment section below, and I’ll repost them.

Why Research in Motion (RIM) shares collapsed and where they’re heading next

A niche player can still make money, but it’s not going to give investors outsize gains. That’s why RIM’s shares are down more than 58 percent YTD.

It’s been bad news on top of bad news for the fabled maker of the Blackberry, Research In Motion Limited (NASDAQ:RIMM). After the market close yesterday, the company reporting earnings per share of $0.80. Analysts were expected $0.89 per share – a difference of about $47 million.

Investors have punished the stock in trading today pushing shares down 20 percent.

“I think RIM is very much at a tipping point here,” Jennifer Fritzsche, a former analyst at First Union Corp., told Bloomberg in a television interview. “(This) is the first year-over-year decline in shipments we’ve ever seen from this company. For a growth industry, that’s very atypical.”

Interviewers at Bloomberg asked Fritzsche bluntly if they thought RIM would be in business two years from now. “I think there’s a place for RIM,” she said. “But the biggest issue I have is how they’re going to be able to support essentially two operating systems: Blackberry 7 and the new system that they continue to allude to (QNX) coming possibly early next year.”

Two competing operating systems could alienate outside developers, which are essential for offering consumers a wide range of third-party apps. From games to productivity software, the availability of apps can influence consumer decisions when they’re picking out a phone. That’s part of what has made Apple’s (AAPL) iPhone so successful, and it’s becoming harder and harder for new operating systems to compete with thriving app marketplace for the iOS and Google’s (GOOG) Android.

Revenue plummeted 10 percent at RIM on sluggish sales of smartphones and tablets. Indeed, the company shipped just 10.6 million phones and 200,000 tablets. Analysts had expected the company to ship 11.8 million phones and more than half a million tablets.

Of course, much of the problem with RIM’s tablet – the PlayBook – stems from the fact that it just didn’t feel complete when it was launched. The tablet doesn’t have built-in email, calendar or contacts software, and it doesn’t run outside apps like Netflix.

Co-CEO Mike Lazaridis says that will all change next month when RIM pushes out a software update. Users will then be able to install Android apps on their PlayBooks, and that might be enough to give sales a big bump.

Still, some worry that the company’s losing relevance in a world increasingly dominated by Apple and Google. “RIM is on a path to becoming a niche player,” Ted Schadler, an analyst for Forrester Research Inc., told Bloomberg. “It has to focus on what about its products make them different or better than Apple or Google products.”

A niche player can still make money, but it’s not going to give investors outsize gains. That’s why RIM’s shares are down more than 58 percent YTD. If the company can stop shedding marketshare in the months to come, it could very well start looking like a value play. In fact, shares are currently trading at a P/E of just 3.8! Compare that to Google’s 19.6 and Apple’s 15.8. RIM just needs a product that looks ahead, not one that’s hastily thrown to market like the PlayBook.

The company has an air of panic about it right now, and that’s got investors panicking, too. If we all take a deep breath, though, it’s clear the RIM story isn’t over yet. The company still has the third most popular smartphone in the country, and it’s generating sales of more than $4 billion a quarter. They need a Hail Mary to stay afloat, but they’ve done it in the past, and I wouldn’t count them down and out quite yet.


3 reasons NOT to invest in the MobiTV IPO

A successful IPO could give MobiTV the boost it needs, but its going to have to play its hand brilliantly to succeed. Sharks with names like Amazon, Apple and Netflix are circling.

First let’s talk about the good things. MobiTV hopes to raise $75 million from an IPO. That’s a decent chunk of change it can use to land new partnerships, acquire competitors, pay down debt and license new content. The company’s been in business since 1999 (which makes it ancient in the tech world), so its already proven its got some measure of staying power. If it can forge the right partnerships or develop a standalone product that’s less dependent on smartphone operators, it might be able to stay afloat.

MobiTV’s in one of the tech-world’s fastest-growing sectors. Just 10 percent of mobile users in the U.S. stream video, according to Nielsen. As more and more subscribers opt for smartphones, MobiTV doesn’t have to grab them all to make money. A decent slice of the fast-growing market should make it profitable in the years to come.

And now the not-so-good: 3 reasons NOT to invest in the MobiTV IPO

1) Heavyweight competition. MobiTV has an impressive client list – from Verizon Communications (NYSE:VZ) to AT&T (NYSE:T) and Sprint (NYSE:S) – but it also counts the likes of Apple (NASDAQ:AAPL), Netflix (NASDAQ:NFLX) and Amazon.com (NASDAQ:AMZN) among its competitors. That means they’d better have some deep pockets or a distinct competitive advantage. And I’m not convinced MobiTV’s offerings are unique enough for the company to emerge as the leading player in the mobile video market.

Rather than offering video itself, MobiTV serves more as a plug-and-play platform that smartphone data providers can use to offer value-added video services. Who really needs additional video services, though, when you can buy exactly what you want when you want it? On my own iPhone, I tap into my existing Netflix account or purchase video directly from iTunes. During March Madness last year, I shelled out $20 and bought streaming rights for an NCAA app that allowed me to watch all 65 tournament games. I access content when I want it, and – in the process – sidestep the compulsory additional monthly charges MobiTV users are subject to.

2) Slow growth. Investors give the benefit of the doubt to tech IPOs that are losing money so long as a company’s growth rate is impressive. Between 2009 and 2010, revenue at MobiTV grew by a mediocre 6.8 percent. On top of that, losses actually climbed from $14.6 million to $14.7 million. That bumped up the company’s total debt obligations to $116.3 million.

3) Diversification wanted. That fact that MobiTV relies on three companies (Sprint, AT&T and T-Mobile) for the bulk of its revenue should give investors pause. Sprint alone accounted for 54 percent of the company’s revenues in 2010. And that partnership isn’t set in stone. A year from now, MobiTV’s deal with Sprint converts from an annual to a month-by-month contract. With an AT&T and T-Mobile merger on the horizon, they could be down to two primary revenue sources.

“If we are unable to renew our agreements with these customers on favorable terms, or at all, or if any of these customers were to terminate our agreement for any reason, our revenue would decline and our operating results and financial condition would be harmed,” MobiTV states in its S-1 filing.

MobiTV seem to see the writing on the wall: they’d best diversify their client base if they hope to keep the electricity flowing to their servers. That’s exactly where this IPO comes in. It’ll give them a fighting chance at forging new partnerships abroad, but it’s yet to be seen if that will be enough to give the company long-term viability.



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LinkedIn IPO date and stock price set: Is it a buy?

No one’s quite sure how investors will react to the debut of an U.S.-based social networking site, and that might be what scares me the most.

LinkedIn is set to IPO on the NYSE on Thursday, May 19, 2011, under ticker symbol “LNKD.” It will be the second social networking site to start trading on the Big Board this month after the so-called “Facebook of China,” RenRen.com (NYSE:RENN), went public on May 5.

It appears LinkedIn has piqued investor interest. The company raised its offer price $10 yesterday from a range of $32-$35 per share to $42-$45 per share. LinkedIn, which targets white-collar professionals, has displayed some impressive growth. Revenue doubled last year to $243 million and membership ballooned around the world to more than 90 million.

Nonetheless, some investors are worried we’re in the midst of Tech Bubble 2.0, and I’m inclined to agree. Here are three reasons to consider holding out before you buy shares in LinkedIn:

1) LinkedIn’s peers. There aren’t many social networking sites that are public, so we don’t have much to go on. In fact, there’s really just one other social networking Web site that trades on U.S. stock exchanges, and that’s China’s RenRen.com. RenRen IPO’d on May 5, and shot up 29 percent in its first day of trading. Not even two weeks later, investors have pushed the stock down 30 percent to $12.73 – a figure that’s below RenRen’s IPO price. If we’re looking for track records in the social networking space, here’s one that says “stay the hell away” (in the short-term, anyway).

2) Steep valuation. Consider this: LinkedIn’s latest valuation puts it at 17 times last year’s revenue. That’s a rather staggering figure when we compare it against other more established tech titans:

  • AOL, Inc. (NYSE:AOL): 1x 2010 revenue
  • Apple Inc. (NASDAQ:AAPL): 12.5x 2010 revenue
  • Google, Inc. (NASDAQ:GOOG): 6x 2010 revenue
  • Microsoft Corporation (NASDAQ:MSFT): 3.5x 2010 revenue
  • Netflix, Inc. (NASDAQ:NFLX): 6x 2010 revenue
  • Yahoo! Inc. (NASDAQ:YHOO): 17x 2010 revenue

Yahoo’s rich valuation is thanks in no small part to it’s rather cunning investments in Chinese tech companies (see my post Three reasons to buy Yahoo! Inc. (YHOO) in 2011).

3) Bad timing? Earlier this week I penned a piece titled Stock market crash looming on horizon? The gist? Darkening clouds seem to be gathering on the horizon for the broader stock market. Commodities have crumbled in recent weeks, defensive stocks including healthcare and blue chips are on the rise and inflation’s starting to cut into the pocketbooks of consumers. Shares in speculative companies like LinkedIn could get hit the hardest in the event of a major downturn in the markets.

Not buying my arguments? Convinced LinkedIn stock is going to start strong and shoot for the moon? Check out my post 3 reasons to buy LinkedIn shares during IPO, which outlines the bullish case for the company. If you’re looking for more reasons to stay away, I can indulge you there as well with my post: 3 reasons NOT to invest in LinkedIn IPO.

The fact of the matter is, we’re in uncharted waters. No one’s quite sure how investors will react to the debut of an U.S.-based social networking site. That might be what scares me the most. Investing isn’t about having a “hunch” a stock will do well; it’s about picking companies with strong profits and even better prospects for the future. LinkedIn’s got great prospects, but it’s clear we won’t be seeing profits anytime soon. That makes buying shares a gamble – particularly on LinkedIn’s first day of trading.



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Amazon stock analysis: 5 reasons to buy and hold in 2011 (AMZN)

Since the start of 2011, shares in Amazon.com, Inc. (NASDAQ:AMZN) have fallen nearly 3 percent, but the company’s prospects still look strong thanks to a growing product pipeline. Here are five reasons to consider adding Amazon stock to your portfolio today:

1) Welcome to the Cloud Drive. Amazon has a history of forging into new tech niches long before they’re popular. The best example of this is Amazon Web Services (AWS): Amazon’s paid cloud computing service wherein other companies pay Amazon for server space and computing infrastructure. AWS has attracted some impressive clients since it launched in 2006 including Nasdaq (NASDAQ:NDAQ) and The New York Times Co. (NYSE:NYT). Now, Amazon’s looking to take its cloud services to the common man. This week the company launched Amazon Cloud Drive. With Cloud Drive, anyone who wants it can get 5 GB of online storage for free. They can then use that server space to store music, videos and files online and access them from Web-enabled devices anywhere. If users end up needing more than 5 GB of storage, they’ll have to open up their wallets to Amazon.

2) It’s “Appstore” not “App Store”. Much to the chagrin of Google Inc. (NASDAQ:GOOG), Amazon launched its Android Appstore last week. Now, consumers can un-tether themselves from Google’s official Android Market, and download free and paid apps directly from an online retailer they’re already familiar with. Amazon stands to get a 30 percent cut of every paid app they sell. For the record, Google’s not the only one upset about the launch of Amazon’s Appstore. Apple Inc. (NASDAQ:AAPL), which has the name “App Store” trademarked, sued Amazon over its use of the word “Appstore.” Apparently, there are times when branding trumps the threat of litigation.

3) One nation under Kindle. The success of Amazon’s e-reader, the Kindle, has been remarkable. Amazon hasn’t released exact sales figures on the device, but it already sells more e-books than it does traditional paperbacks. “Since the start of the year, Amazon has sold 115 Kindle books for every 100 paperbacks,” PCWorld reported in January. The good times are rolling. In February, AT&T Inc. (NYSE:ATT) announced it would start carrying Kindles, and now there’s speculation that a new Kindle in the works will run on Google’s open-source Android operating system. That would have the power to transform the Kindle from an e-reader into a full-blown tablet computer that just might compete with Apple’s iPad.

4) For your fulfillment. Amazon’s shares took a tumble after the company reported weak revenue growth in its Q4 earnings report on Jan. 28. The numbers weren’t all that surprising to analysts, though, as the quarter’s traditionally weak for the online retailer, and Amazon’s in the process of expanding its fulfillment centers. “1Q margins are likely to disappoint but reflect the higher spend on fulfillment centers/IT needed to extend AMZN’s above-industry growth well into the future,” Youssef H. Squali, an analyst at Jefferies & Co., wrote in a note to clients. “We recommend purchase of AMZN especially on any dip.” Bigger fulfillment centers means better margins moving ahead, and – after the costs are absorbed – that should boost the company’s bottom line.

5) Growth in the People’s Republic. Amazon’s quietly been building its brand in China since acquiring the Chinese online bookseller Joyo.com in 2004. In 2007, Amazon changed the site’s name to Amazon.cn, and it’s now the 74th most-visited site in China, according to Alexa.com. That puts it just one slot behind one of its main competitors: the online bookseller and retailer E-Commerce China Dangdang Inc. (NYSE:DANG), which recently IPO’d in the U.S. and operates Dangdang.com. Even if Amazon doesn’t ultimately overtake DangDang.com, there’s more than enough e-commerce growth in China to grow Amazon’s coffers for years to come.



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3 reasons to buy Baidu stock (BIDU) even at record levels

Baidu’s (BIDU) hard at work redefining itself not just as a search engine company, but as a full-fledged Internet conglomerate. That could lead to brand new revenue streams that might justify the company’s valuation.

Late last week, Chinese search engine company Baidu.com Inc. (NASDAQ:BIDU) overtook Web conglomerate Tencent Holdings Ltd. (HKG:0700) as China’s largest Internet company. Baidu’s market value surged to $46.06 billion compared to Tencent’s $44.6 billion, according to Business China. A lot of investors may be questioning just how big Baidu can get, but there are still compelling reasons to consider adding the stock to your portfolio. Here are three of them:

1) A monopoly on search. After Google Inc. (NASDAQ:GOOG) pulled out of China last March, Baidu’s share of the Chinese search market has steadily risen to 83.6 percent (per ResonanceChina). That’s led to a big bulge in Baidu’s wallet. During Q4 of 2010, Baidu’s revenue was up 94 percent year-on-year to RMB 2.45 billion with most of that cash coming from online advertising services.

2) A new way to browse. Baidu looks to be aggressively expanding its offerings. Now that it dominates search in China, the company’s announced that it’s hard at work on a Web browser that will compete head-to-head with Google Chrome and Microsoft Corporation’s (NASDAQ:MSFT) Internet Explorer. Baidu should be able to leverage its high-visibility search results pages as a platform to advertise the browser and encourage surfers to download it; much like Google did with its Chrome browser. A browser that’s optimized for the Chinese language and surfing habits could make consumers more comfortable (or even dependent) on Baidu’s services.

3) Mobile OS. Rumors surfaced last week that Baidu’s also working on its own “light operating system” for mobile devices to be launched in three to five years. It’ll be interesting to see if Baidu opts for an open-source OS that would compete directly with Google’s Android OS, or if they elect for a closed OS along the lines of Apple’s (NASDAQ:AAPL) iOS, which runs the iPhone and iPod Touch. Either approach could open up valuable revenue streams for Baidu in the mobile app realm.



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Netflix stock performance predictions for 2011 (NFLX)

Twelve months ago, you could have bought a share of Netflix, Inc. (NASDAQ:NFLX) for $72. A single share will now set you back $221. Still, we still see lots of reasons why Netflix stock can go even higher in 2011.

Twelve months ago, you could have bought a share of Netflix, Inc. (NASDAQ:NFLX) for $72. Let’s call those the good old days. Since then, Netflix has screamed up more than 200 percent with 26 percent of those gains coming since the start of 2011. A single share will now set you back $221.

My finance and I have an ongoing argument about shares in Netflix. She feels like the company has started exiting the growth phase with a one-way ticket to Value Stock Valley. Yes, she’s got some valid arguments: the company DOES face more realistic competition (ala Facebook, Amazon, Hulu, etc.) than it did a year ago, and I’ll readily admit they could use a better selection and more new releases (which will only come at the expense of margins). Still, I’m optimistic about Netflix’s stock performance in 2011. Here are three reasons why:

1) Global domination. A Credit Suisse note out yesterday titled “Don’t Stop Believing,” gave Netflix two very enthusiastic thumbs up with an analyst there upgrading the stock from Neutral to Outperform. The reason? International growth. Credit Suisse predicts Netflix’s subscriber base will triple to 69 million subscribers by 2016 on the strength of growth abroad.

Apparently, The Canada Experiment has been a good one so far. When Netflix opened its doors to subscribers in the north late last year, Credit Suisse predicted they’d reel in 300,000 subscribers by the end of 2011. That was a pitifully low estimate. After just six months, Netflix has 900,000 subscribers in Canada. Online streaming is the future, and there’s no one better positioned to capitalize on that future than Netflix – no matter what country you’re in. (FYI: Credit Suisse raised its price target on Netflix’s stock from $180 to $280).

2) One ring does not rule them all. Fears over Netflix’s competition feel overblown to me. It’s as if we believe people only want to stream video from a single source. Riiiiggght. I’ve got a Netflix account, but I still occasionally rent movies via Amazon’s online rental service. I still check videos out from the Blockbuster kiosk at my local Speedway, and very occasionally I log onto Hulu (even though the site’s ads make me want to vomit). Just because I can watch The Dark Knight on Facebook for a one-time fee, I’m not going to run out and cancel my Netflix account. We’re used to seeking out entertainment from multiple services. That’s not going to change because Facebook starts offering a small, boutique-y selection of movies.

3) Shoot the networks. In a move that could shift power away from networks and studios like HBO and Showtime, news broke last week that Netflix is wading into the content production pool. The company struck a deal with the film studio Media Rights Capital to produce an original series that will stream exclusively on Netflix servers starting late next year. Kevin Spacey will star in a political drama dubbed “House of Cards.” The series, which is being billed as “a satirical tale of power, corruption and lies,” will be directed by the rather brilliant David Fincher (whose portfolio includes The Social Network, Seven, Fight Club and The Curious Case of Benjamin Button). It’s a big roll of the dice for Netflix – and it’s one that I fully expect to pay off.



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3 reasons why Amazon’s Android Appstore makes the stock a buy (AMZN)

Already stocked with 3,800 apps, Amazon’s (NASDAQ:AMZN) launch of the Android Appstore is planting the seeds for a lot of new revenue at the online retailer. Here are three reasons why the move will likely give Amazon’s stock a jolt.

Already stocked with 3,800 apps, Amazon’s (NASDAQ:AMZN) launch of the Android Appstore is planting the seeds for a lot of new revenue at the online retailer. Here are three reasons why the move will likely be successful and – in the process – give Amazon’s stock a jolt:

1) Developers do the work, Amazon reaps the profits. Amazon will get at least a 30 percent cut of the cost of every paid app they sell. That’s part of what’s driving record profits at Apple Inc. (NASDAQ:AAPL). Developers make the apps, and Apple provides the ecommerce platform where users go to buy those apps. Apple, of course, has to administer and approve hundreds of thousands of apps, but once they’re online, sales – for the most part – take care of themselves.

2) Brilliant recommendations. One of my favorite ways to discover new musicians is by going to Amazon and typing in an artist I like. Amazon’s recommendation engine then shows me similar albums that other customers bought, and the site makes it easy to listen to songs by those artists before I click the buy button. Those built-in recommendations will be a key part of Amazon’s Android Appstore, too. By showing you real-world reviews, and apps that other customers downloaded, potential buyers could end up buying more apps than they otherwise would have. Amazon’s recommendation system has more than 15 years of trial-and-error testing behind it. That could give it a big leg up over Google Inc.’s (NASDAQ:GOOG) own Android Marketplace.

3) Positioning for the future. Despite Amazon’s silence on the issue, rumors are swirling that the company could be working on a Kindle that runs on the Android operating system. That would make the device good for more than just reading books: it would transform it into a tablet computer. The Amazon Appstore would integrate seamlessly with the device, no doubt, and Amazon could then use the Kindle as a distribution point for its online movie sales and movie rental services.

Every time I start to worry that Amazon’s losing relevancy with shoppers, the company does something that makes me feel daft. We should have all seen the Appstore coming. Now that it’s here, though, I’m convinced it’s just the beginning of bigger and better things.



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