The Harlem Meer

I am getting old, and tired. But that’s no excuse…

I was wandering around Spanish Harlem today, from East to West, and I ended up by the Harlem Meer. It was a beautiful day in New York, so it was packed. Packed with families, kids yelling, running into the bathroom to refill their super-soakers, filling water balloons and running out to attack their friends… it was beautiful.

I took picutres of a plot of orange tulips. I can’t recall ever having seen orange tulips before, but these I’ll never forget. The sun shone through the petals, making the edges appear yellowish. There was a tree full of pale pink flowers, bending down by the meer under its own weight, and there was a husband and a wife goose, standing together several yards from the tree. The late afternoon sunlight relaxed, and all was right, there and then.

Finally, Snow In Old Town

It finally snowed in Alexandria, steadily from the middle of last night through about 1:15 this afternoon. Nice to see it and get out in it once in awhile.

Inauguration Historics

This is a belated post on the Obama Inauguration, which I attended. I just want to make an entry here linking to a friend’s account of the day’s events, and leave it as a sort of placeholder, so I can come back later and add other links to different people’s stories and pictures from that day, as well as adding a link to the video I took of the speech.

The section written by a fellow parishioner at my church in Alexandria is under the heading “Fidel” on the blog post linked to below (the blog is called WalkerReport.blogspot.com, and is mainly about Bexar County (Texas) politics). I found it interesting that Fidel was able to cycle to the event, I’d heard the bridges were closed even to bicycles.

Fidel’s Inauguration Post

A couple of recollections:
- the lady who thought she’d seen a woman run over by the metro train at Gallery Place/Chinatown, when I later found out that woman had rolled under the platform and came out unharmed after the train passed.
- guy standing behind me who, when his friend guessed aloud that Obama probably didn’t get much sleep the night before, said “Obama doesn’t sleep. He just refuels.”
- black lady who, when George W. Bush was shown on the video screen yelled out, “Take ya ASS back ta TEXAS!!”
- flags I remember seeing, other than American flags (though there must have been hundreds of others): Kenyan and Italian.
- then of course, just the energy and electricity of the day, and how friendly everyone was with each other. it was truly a remarkable day.
- the walk – I think we walked all the way over from Chinatown to 19th street, and then made our way to the mall and ended up standing right next to the shadow cast by the monument. from the aerial photos, there are two big groups of people next to the monument, and we were right in the middle of the one on the North side of it.
- I thought both the invocation and the speech were very good; and that both started out strong, and lost steam in the 2nd half, before finishing fairly strongly. at the end of the invocation, the rev led the Lord’s Prayer, and it was cool praying aloud with thousands of people. not everyone prayed, but most did out loud, and it was moving, a powerful and memorable moment.
- there were moments in Obama’s speech that sent a shiver up the spine, in a good way; like when he talked about something along the lines of a renewed world citizenship, and once again being a place that the world could look to as an example. not to betray too much of my politics, I consider myself an independent, but I really did enjoy the speech.
- lastly, it was absolutely freezing (well below freezing, actually), and it really hit you once you got out of the huddled crowd that was there during the speech. walking back, it was a God-send to find a Baja Fresh on our route back, far enough from the mall to not be OVER-crowded, but close enough to be in reach before we froze. an older man moved from a table he had to himself to share a table with another lone diner so we could have his table. we talked with a nice “couple” at the next table while eating. it was just a special atmosphere, where everyone felt hopeful, and felt open to communicating with and helping others out, even strangers.

Stimulus Package; Partial-birth Abortion

Kind of fitting to see Caterpillar announcing 20k layoffs at the same time that the Fed govt is detailing its +$800B stimulus package.
The WSJ’s editorial page describes today how of the $355B in new spending in House stimulus bill, only $26B would be spent in the current fiscal year.

WHEN IS THE CRISIS? NEXT YEAR?? TWO YEARS FROM NOW??? Miserable.

Speaking of which, there’s pro-abortion legislation pending in committee somewhere, trying to make its way to the House floor for vote – apparently it’s a piece of legislation that rears its ugly head at some point in every administration, as liberal Democrats try, try again to push their extreme pro-choice agenda.

I think both the stimulus package in its current form and the “FOCA” bill should be given a partial-birth abortion and be killed/reconstituted.

The stimulus package needs more immediate spending and less promises of far-off riches for the industries that have lobbied the government the most actively. It also needs to have transparency measures built into the funding – such as a publicly-available web site, where every planned — AND SPENT — dollar of stimulus spending is accounted for.

Regarding FOCA:
1) it would remove the ban on partial-birth abrtions
2) it would force tax payers to fund abortions, by allocating government funds for them
3) it would remove the current provision where doctors who work in hospitals that receive federal funding (most all hospitals, as I understand, due to Medicare and Medicaid programs) are allowed to be “conscientious objectors” and refuse to perform abortions as part of their jobs.

Here are some articles, and resources — PLEASE CONTACT YOUR CONGRESSPERSON AND SENATOR TO LET THEM KNOW THAT/IF YOU DO NOT SUPPORT THIS BILL:

Links:
Catholic News: Catholic News Agency article
Liberal Group:
Pro-choice website article

I will try and add more detail here later, as I believe it’s an important issue and I admittedly don’t know everything about it. My understanding is that partial birth abortion is something that rarely occurred even when it was legal, but my view is that it should not EVER be allowed, except possibly in cases where the mother’s life is at risk. More on this later.

Google Growth Continues to Slow – Two Sides to the Story

google revenue growth slowing foreign exchange loss roughly cancels doubleclick revenue ebitda margins down slightly cost cutting measures being implemented

(disclosure: I own google stock)

THE POST I SHOULD HAVE WRITTEN – BULL CASE:

Google’s growth is slowing, BUT. It’s still going to grow at 18-20% in 2009. It trades at 15x my $20 2009 EPS estimate (Street is $21). Give it an 18x multiple for a PEG of 1, it should be at $360. It trades below $350 now for the same reasons the rest of the market is hanging low – poor sentiment – and the truth is, most investors still don’t understand the business model.

BOTTOM LINE:
A year from now, investors will be looking at $24 EPS in 2010, rev growth will have stabilized in the 20% range, with EBITDA growth 20-25%, and investors will apply at least an 18x multiple to $24 in 2010 earnings, yielding a fair value 1 year from now of $432, which represents 41% upside from yesterday’s close of $306.50 (now it’s DOWN after hours, so I’m not doing myself any favors by taking yesterday’s close). Even if the stock only reaches $400 in the next year (17x P/E, more than reasonable for a company that will keep growing at 20%), that represents 31% upside. And if it takes two years to reach the $432 I think it will hit within the next 12-18 months, that’s still an 18% annualized return.

At some point in the next year, investors are going to realize that (repeat after me…) JUST BECAUSE FINANCIALS LED US INTO THE RECESSION, THAT DOESN’T MEAN THAT THAT THEY HAVE TO LEAD US OUT. Google is the IBM of the Internet, and when big money decides to start adding balanced exposure to technology (more likely than financials to lead us out), they will put money in Google stock. It’s a play on both software sales and the beaten-down advertising sector. At the current valuation, and with a +12 month time horizon, you can’t lose with Google.

caveat – their new CFO sounds like a prick.

THE POST I DID WRITE – BEAR CASE:

Google reported 4Q earnings this afternoon. Immediately after the release the stock was up $10 or 3%; later in the evening it’s trading up ~$5, +1.5%.

Not terribly surprising. Growth was shit (for Google), the first time they’ve ever had Y/Y revenue growth below 20% in a quarter, though international revenues were hit by FX impact, so they probably grew right around 20% constant currency (they announced, but I missed that; they also hedge, so it wasn’t a huge impact).

THE BAD: in the chart I’ve taken from their slide deck, annotated and included in this post, you can see that the average Y/Y rev growth over the past 2 quarters was 25%. That’s less than half the same figure a year earlier, in 2H07 when GOOG was still growing revs at better than 50% annually. A lot has changed since then.
I didn’t run the numbers, but it sounded like the EBITDA margins were down slightly too, not surprising considering the macro environment.

THE GOOD: Adjusted for FX, international revenues were +35% Y/Y. That’s still pretty good, considering that the ROW has been hit about as hard as we have by the meltdown in credit/financial market.

THE STRANGE: What doesn’t make sense is that Google keeps whistling Dixie about how their revenue model is/should be impervious to the macro environment because, in contrast to traditional media advertising, the ROI on paid search and AdSense advertising is “always positive” (I paraphrase, but they may have said exactly that). One analyst called it the “broken slot machine” characteristic of Google’s model, as the company said that they’re not seeing their clients’ budgets constrained, and that’s driven by the fact that as the number of searches grows, and Google’s share also continues to grow, the return on incremental investments in search advertising is always positive for advertisers, so why would they stop?? Good question, WHY THE HELL IS REVENUE ONLY GROWING AT, 18%, ESPEIALLY SINCE DOUBLECLICK SHOULD BE KICKING IN AT LEAST 3 PCT PTS OF GROWTH? So, 1) ex DoubleClick, you grew revenue at 15%, 2) Licensing and Other kicked in another 3%, but we’ll say that was cancelled out by your FX loss, and 3) a year ago, you were growing revenue at +50%, and YOU’RE TELLING ME THAT CUSTOMER SPENDING IN THE CORE BUSINESS ISN’T SUCKING WIND?? please.

Looking at the chart, it’s clear that an inflection point was hit in 4Q07, and we can conced that the macro environment has exacerbated the sharpness of that inflection. Whereas rev growth used to be +50%, it would normally have stabilized at 30-35%, instead it’s going to be 20-25%. DOWNSIDE risk is that you have a couple more quarters of sub-20% growth, in which case you will see more people dumping the stock. UPSIDE is the chance that they get back to a 25-30% growth run rate by the end of 2009, but I don’t now what’s going to drive that. The overall ad market is in the shitter, and Google is obviously not immune to that, despite their broken slot machine theory. IBM surprised with upside earlier in the week, and Google partners with IBM on cloud computing. Maybe they’ll be partnering with IBM selling Google apps to IBM Global Services clients, working with Big Blue to replace Microsoft Office for the vast swaths of information workers who don’t use 10% of its bloated functionality. But like I said, “Other” drove 3% pts of growth in 4Q, and the first bigger quarter for apps/other anniversaries next quarter, so you’re not going to see upside from 3% Y/Y growth; if anything, more like 2 pct points to overall rev growth.

I hate to admit it, but this is probably a good time to start dumping Google.

WHEN TO BUY AGAIN? At some point, mobile search is going to start kicking in meaningful growth for Google, and that compounds the effect you’re seeing where a lot of the growth now is coming from Europe and BRIC countries, because people in BRIC countries are accessing the Internet more from phones than they are from the desktop. 1, 2, 3 years from now the growth of revenue fro Mobile will be growing exponentially more each year, but I’d say a year from now is the soonest you want to take another look. I hate to say it, b/c I own GOOG myself, and will be selling at a loss if I sell where it’s trading now. It’s will be hard to let go, but daddy’s got to pay the bills, and I’ve got an Internet startup of my own to think about. More on that later.

Time to start looking at Tangible Common Equity

We have to quickly post an excerpt from today’s Heard on the Street column, talking about tangible common equity to tangible assets and how this measure is becoming more prevalently looked at than Tier 1 capital.

from WSJ:

…President Obama’s policy makers might step up the Fed’s commitments to buy bonds. And to avoid selloffs in bonds excluded from Fed purchase commitments, the central bank could buy broad baskets of fixed-income securities.

(So the Fed is basically going to just keep printing $$s to bail out the fixed income market?? I understand that this may not be as immediately inflationary as just handing $1,000 or $10,000 to every American, but doesn’t the massive expansion of the Fed’s balance sheet have some negative implications?? Don’t other countries start to lose confidence in our system/currency as a long-term store of their capital reserves, and start selling dollars, contributing to inflation of import costs? If the Fed can just print money and put a floor on bond prices, why don’t all countries do that when there are problems in fixed income markets? Would this basically mean that most fixed income instruments are virtually riskless (at least much less risky than was previously believed, at present) because the Fed is going to put a floor on the price?

Such an initiative wouldn’t come out of the blue. In a November speech, Richard Fisher, president of the Dallas Fed, said he wouldn’t be surprised to see the Fed’s balance sheet swell to $3 trillion by the end of 2009 as it bought assets and lent against them.

But State Street’s slide [yesterday] also concerns capital – the other big problem. Indeed, State Street’s capital numbers underscore the need for the government to introduce capital measures investors can trust.

For instance, State Street’s Tier 1 capital ratio is an industry-beating 20.5%. But investors are looking past this and calculating tangible common equity as a percentage of tangible assets, factoring in State Street’s off-balance-sheet vehicles. Done that way, capital is a wafer-thin 1.05% of assets.

PS – Not to gloss over the inauguration, we went yesterday, it was spectacular. Have posted a video I took of the speech online elsewhere and when we have time we plan to add that here.

Bankrupt on Selling (cars)

Back from the Dead – I think this is the last post I will copy over from the old blog. Everything going forward should be fresh material. I’m sure that’s a relief to my non-existent readership.

post:

For the only time I can recall, today I found myself agreeing with Maria Bartiromo on CNBC when she asked Joel Kaplan some under-press secretary for Bush, in response to his statement that the bailout is the only option now other than chapter 11 bankruptcy, “Why not chapter 11 now??”

I am wondering, if there are special considerations such as 1) having a domestic auto industry is some sort of national defense issue or 2) it would just cause too many job losses to let them go broke, couldn’t the federal government just play an active role in the bankruptcy proceedings, and place certain restrictions around what outcomes are allowable and what outcomes are not?
In this case, I guess the government would essentially be dealing with 1) bondholders who want to get paid, 2) management who wants to the company in business [and needs to be replaced even if the companies do stay in business] and 3) its own interest, which should be strictly to spend the least possible taxpayer money while avoiding the total and instant demise of Ford and GM.

Curious to hear your thoughts.

When/if I get more ambitious on understanding this issue, I’ll go check out various law blogs and see if they’re weighing in on the subject. meanwhile I’m checking in with my main man (bankruptcy attorney extraordinaire) at Houston-based Porter & Hedges. my man hasn’t been sleeping much in this economy, as you might imagine.

Though, I might not follow up with any further research on my end; thinking about the fate/current state of the US auto industry mostly makes me want to go sit in a Detroit special, engine on (not a hybrid), in the garage, with the door down…

LINKS:

Found on the Porter & Hedges web site, an article about Facebook “scrambling” Scrabulous: http://porterhedges.com/PublicDocs/Charles%20Baker-Facebook%20Scrambles%20Scrabulous.pdf

Ford, GM – 2009 Models Being Promoted:

GM – GM 2009 Models

Ford – Ford 2009 Models

More Interestingly, the Ford “Get an Internet Price” page

Copy and Paste

Hi, I’m AB – a former equities analyst with industry background in software and database design, and in working with Internet startups. My current/nascent venture is a customized/customizable product search utility, which I’ll announce on this blog when it goes into a public beta, which you’ll all be invited to join. I currently live in the DC area, but am considering moving back to NYC sometime in 2009.

I hope to make most posts brief, and may make some from my iPhone. I’m not one of those douchebag iPhone/Apple devotees, I just really like my iPhone and want to try and find as many practical uses for it as possible, and as I often find myself pressed for time, the ability to do useful things while on a train or airplane, etc. is a real value-add for me. Of course, the “usefullness” of this blog is debatable.

Please note that this is my personal blog, and the topics are basically whatever I feel like talking about at any given point in time. There are two other blogs that I will gradually be building over time that are intended to be a bit more focused in subject matter:

www.alwayslooking.com/blog – on web sites/apps that save you time or allow you to do things you couldn’t possibly do without them/without the Web

…and…

www.widgetocracycom/blog – on “cutting edge” Web apps and hardware devices, mobile apps, etc. this site will be a bit more geared towards “early adopters,” wheras the AlwaysLooking blog is meant to point out services that can add value for almost anyone.

I actually toyed with the idea of titling the initial version of this blog (which was/is called “mobilemash”) “crapperjohnMD.blogspot.com” and making all posts from, well, you know… to illustrate the awesome power of mobile/handheld computing. Female readers will probably fail to see the humor in this concept.

I’ve just started using the HTC Tilt (this was initially posted in mid-2008, just before the iPhone 3G came out, and before I bought one and then soon after broke its screen), and I’m planning on swapping it out (w/in the 30d test period) for the 3G iPhone on 7/11 when that’s released.

Update: I did get the 3G iPhone. despite the fact that it’s failed to work occasionally since I loaded it w/ 1000+ songs, I’ve been mostly pleased with it (this ended up not being a persistent problem). The HTC Tilt felt like a toaster in my pocket. The 3G iPhone is a bit thinner (at least shaped in a smoother fashion) than the 2G iPhone, and fits in the pocket nicely. My iPhone wears protection (a big black rubber that surrounds all but the touch screen), which makes it a bit bulkier and stickier in the pocket, but it’s an acceptable tradeoff as I would have lost the phone many times over by now had I not rubberized it. I think HHI (available here) was the brand of phone rubber I got, and it has worked great.

Something I’ve found useful is the fact that you can create RSS feeds for CraigsList searches. This has been available for some time now, but it’s still a pretty rough/new feature that I think shows a lot of potential, so I’ll make a separate post on this at some point.
I suppose links are part of what’s good about blogs, so I’ll mention a couple of sites that I’ve only recently become aware of. Two are biz/finance sites, and the other is pure comedy. www.IcahnReport.com went live this past week (this post was initially made earlier in 2008) and has some semi-interesting stuff… It’s just interesting in and of itself that Carl Icahn is now officially a blogger. I guess I’m in good company hanging out my blogger shingle this week as well.
www.Portfolio.com is the CondeNaste property that goes along with their relatively new business magazine by the same name, I’ve found this site somewhat interesting; it’s at least fresh and new. It reminds me of a slightly more literate version of the www.NewYorkPost.com business pages.

Oh, also the “howto wiki” on wired.com – http://howto.wired.com.

Anyway, I must admit that part of my motivation in writing this blog is to learn about how WordPress works, as I plan on eventually embedding a hosted WordPress blog (will probably move this content over & will post an alert when that happens) on the startup product search utility’s site: www.AlwaysLooking.com.

That later blog will be focused more on Web 2.0 technologies, cloud computing, mobile web and mobile E-commerce, and tech/Internet finance.
Internet stocks, Internet stocks, Internet stocks. There, I said it. I spend a lot of time looking at Internet stocks and Internet firms moreover, so while that’s not meant to be one of the main emphases here, I’m sure I will discuss them here occasionally. Thank you for reading. Namaste. (btw, apart from its use in yogi culture, “Namaste” is a direct ripoff of the satirical blog at www.fakesteve.blogspot.com – I love that blog)

may as well add some more links:

tech-specific:

http://blogs.barrons.com/techtraderdaily/ – great, ongoing daily/intra-day tech/market commentary
www.siliconalleyinsider.com
http://bits.blogs.nytimes.com/
http://allthingsd.com/
http://blogs.wsj.com/biztech/
http://finance.yahoo.com/tech-ticker (even though I can’t freaking stand Sarah Lacey)
www.techcrunch.com

non-specific:

www.cnnfn.com – where you can get pre-market futures quotes & international index quotes
http://dealbook.blogs.nytimes.com/ – Andrew Ross Sorkin’s online Deal blog has turned into much more
http://www.nytimes.com/pages/technology/index.html
www.bloomberg.com – best source for general financial headlines/breaking news. excepting…
www.wsj.com – which I have not used for the most part to date, because they charge $$, which I am against in principle (ironic, no??)
www.reuters.com
www.ft.com
www.seekingalpha.com
www.dealbreaker.com (& esp the “Recent Comments” tab/feature)
www.247wallst.com
www.my.live.com
www.finance.yahoo.com (& esp the economic calendar and earnings calendar)
www.breakingviews.com
www.minyanville.com
www.fool.com
www.wallstrip.com (more of an ADD investing magazine w/ cute/entertaining, bite-sized finance video segments)

For good measure: http://kara.allthingsd.com/files/2008/12/ballmer-yang-high-five.jpg

fun:

http://fakesteve.blogspot.com/
http://realdanlyons.com/blog/

COMPLETELY random bullshit:

http://gretawire.foxnews.com/ – I clicked on this b/c I thought it said “greatwire” & thought it was e-commerce related. I’m just a little surprised that WordPress links to a Fox blog, but whatever. actually some odd interesting stuff on there, though it looks like it’s done by a middle-schooler.

Thank you for reading!