Financial, Real Estate, Stock Markets Trends and Current Affairs

Reggie_Middleton_Facebooks_Valuation

With Facebook slated to start trading in a few days, I feel it is appropriate to brush off some of the BoomBustBlog research and opinion that can help subscribers wade through the sell side waters. To wit, CNBC reports Facebook Faces User Distrust, Advertising Apathy: Poll:

More than half (57 percent) of Facebook users polled said they never click on ads or other sponsored content when they use the site, according to a new AP-CNBC poll. Another 26 percent said they hardly ever engage in such activity. Only 4 percent of users say they often click on ads — results that are only slightly better than the 2-3 percent clickthrough rate some experts consider the benchmark for effective banner ads.

This doesn't sound too good does it. Well, you can't say I didn't warn you last year: 

1. Did Goldman Just Rip Its HNW and Institutional Clients Once Again? Facebook Growth Slows Pre-IPO, Just As We Warned!
2. The World's First Phenomenally Forensic Facebook Analysis - This Is What You Need Before You Invest, Pt 1

Facebook users have consistently cast a wary and suspicious eye on the platform: 59 percent of respondents said that they had little to no trust in Facebook to keep their information private.

That doesn't sound very good either, does it?

Yet despite those ongoing concerns, the number of users (and their engagement) continues to increase. Facebook has grown to 901 million monthly active users worldwide, with personal computer users spending six to seven hours per month on the site (compared to just 3 minutes for Google+ users), according to recent data from ComScore.

Now, this sounds very, very good. Of course, it doesn't sound as good when you look at it in context...

Slower subscriber growth...

As for Mark Zuckerberg, the wunderkind CEO who turned 28 on Monday inspires somewhat tepid confidence as a leader, with only 18 percent of respondents saying they were extremely or very confident in his ability to run a large publicly traded company like Facebook. Yet pinning down a specific reason was difficult for respondents, who neither cited his age, temperament, nor reputation as significantly affecting those abilities.

Now if one were to ask me why I would be tepid in my confidence in Zuckerberg as a leader, I would say that its not his leadership abilities that are the biggest concern, it is the fact that he can single handedly wreck the company and the weak ass board of directors and the shareholders would be powerless to do anything about it. Instead of referring to him as the leader you can refer to him as the 28 year old potential tyrant and dictator. Reference Facebook CEO Running From Investors 'Cause He IS The Only Investor Whose Opinion Actually Counts?

CNBC also included this following chart...

Hmmm. That doesn't sound too promising, does it? Well, despite all of this, Facebook is finding absolutely no shortage of suckers asses for which to place in the Facebook IPO seat.... 

• Facebook increases IPO range to raise $12.1 billion
  3:37pm EDT
• Facebook's Zuckerberg says mobile first priority
  Sat, May 12 2012
• Facebook's IPO already oversubscribed: source
  Fri, May 11 2012

Hey, it gets worse. WSJ.com and Reuters report GM plans to stop advertising on Facebook:

General Motors Co will stop advertising on Facebook, a move that comes during the same week the social networking website is due to go public.

The U.S. automaker confirmed a report by the Wall Street Journal. A source familiar with the automaker's plans said GM's marketing executives decided Facebook's ads had little impact on consumers.

GM said it will still have Facebook pages marketing its vehicles, but it will drop use of paid ads. Anyone can create a Facebook page at no cost. GM pays no fee to Facebook for its pages, which allow the automaker to reach consumers directly.

... "In terms of Facebook specifically, while we currently do not plan to continue with advertising, we remain committed to an aggressive content strategy through all of our products and brands, as it continues to be a very effective tool for engaging with our customers," GM said.

GM spends about $40 million on its Facebook presence, but only about $10 million of that is paid to Facebook for advertising. The rest covers the creation of content and the agencies involved, The Journal said.

GM, the country's third largest advertiser behind Procter & Gamble Co and AT&T Inc, spent $1.11 billion on U.S. ads last year, according to Kantar Media, an ad-tracking firm owned by WPP PLC. About $271 million of GM's total ad spend last year was for online display and search ads excluding Facebook advertising.

Hmmm... It appears as if the MSM has it out for Facebook today, in direct contravention of its historical actions pushing this company. I wonder if its because I wrote How Does Facebook Drum Up So Much Frothy Interest For Its Overpriced Shares? Help From The Media, Goldman, et. al.

I've had a few subscribers who, after reviewing the (subscription only) FaceBook IPO & Valuation Note Update and Facebook Valuation Model, have seriously queried how Facebook is managing to drum up so much froth and interest for its obviously overpriced shares? The apparent answer is the marketing machine known as Goldman, et. al. The less recognized answer is assistance from the MSM, as demonstrted by this CNBC article - Facebook’s Premium Ad Prices Still Rising:

Pricing for Facebook’s premium “social” advertisements continues to rise, two recent studies have found—a positive indicator that could offset concerns about a dip in advertising growth and help sentiment towards the Internet company’s initial public offering.

This is a net positive statement, no?

A report to be released on Monday by Marin Software, a digital marketing platform that processes more than $100 million worth of spending on Facebook, found a 26 percent increase over the last year in the cost per click for “premium” ad formats such as Sponsored Stories, which highlight friends’ “likes”, comments and other endorsements of brands’ activity on the site.

Wow! That's pretty good growth and pricing elasticity, no? Bring on those newly public shares and let 'em rip!!! 

However, Marin’s report also found the cost per click for Facebook’s standard ads, which make up an estimated three-quarters of the social network’s advertising revenues, fell 26 percent over the last year.

Wait a minute, if 75% of the companies product dropped in price, doesn't that easily swamp the 26% of the companies premium ads that rose in price? An even more direct questions is, why isn't this being reported as the net negative that is is? Let's walk though this step by step for the more arithmetically challenged amongst us...

So, according to this MSM article, reporting a net 13% drop in revenue somehow amounts to - and let me quote this so as to be as accurate as possible - "a positive indicator that could offset concerns about a dip in advertising growth and help sentiment towards the Internet company’s initial public offering". Please excuse me as I wipe the splattered bullshit from my computer screen - it's hard to type accurately with those opaque, stinking brown stains in the way. Even worse, it goes to show what portions of the MSM actually think in terms of the intellectual capacity of its readership. 

It would seem that Facebook Finally Faces The Fact Of BoomBustBlog Analsysis. 

Professional and institutional BoomBustBlog subscribers have access to a simplified unlocked version of the valuation model used for this report, available for immediate download - Facebook Valuation Model 08Feb2012.

It is strongly recommended that said subscribers download and input their own assumptions into said model in order for confident preparation before the IPO launch! I just nominally input some very generous numbers and the best case scenario chart (see the chart tab after your own individual inputs) is quite revealing, indeed! The full forensic opinion is available to all subscribers here FaceBook IPO & Valuation Note Update. It is recommended that subscribers (click here to subscribe) also review the original analyses (FB note final 01/11/2011).

 Here's where I broke it down on Capital Account

I also happened to do the same on the Max Kesier show...

I discussed Facebook on the Peter Schiff radio show, the Facebook excerpt is below...

Additional Facebook analysis, valuationa and commentary.

On Max Keiser, go to the 13:55 marker for more on Facebook...

Here are the free blog posts on the topic:

1. Facebook Registers The WHOLE WORLD! Or At Least They Would Have To In Order To Justify Goldman’s Pricing: Here’s What $2 Billion Or So Worth Of Goldman HNW Clients Probably Wish They Read This Time Last Week!
2. Facebook Becomes One Of The Most Highly Valued Media Companies In The World Thanks To Goldman, & Its Still Private!
3. Here’s A Look At What The Goldman FaceBook Fund Will Look Like As It Ignores The SEC & Peddles Private Shares To The Public Without Full Disclosure
4. The Anatomy Of The Record Bonus Pool As The Foregone Conclusion: We Plug The Numbers From Goldman’s Facebook Fund Marketing Brochure Into Our Models
5. Did Goldman Just Rip Its HNW and Institutional Clients Once Again? Facebook Growth Slows Pre-IPO, Just As We Warned!
6. The World's First Phenomenally Forensic Facebook Analysis - This Is What You Need Before You Invest, Pt 1
7. The Final Facebook Forensic IPO Analysis: the Good, the Bad & the Ugly

S&P and Fitch finally downgrade JP Morgan, 3 years after my initial multimedia warnings (see Listen Carefully...  for the details). Unfortunately, despite threats and ruminations, these rating agencies again act in retrospect, failing to do anything but remind stakeholders of the losses they have already taken rather than assisting them in avoiding losses.

So, what are the rating agencies missing?  They're missing the fact that nearly all of the big money center banks are doing exactly what JPM was doing and they have no one to rely upon but themselves when things go awry from a counterparty perspective. Bennie Bernanke has instituted perpetual ZIRP, and as such has basically broken the banking business in his attempt to save it. Through ZIRP, banks simply cannot make money doing things that traditional banks do, ex. profit from lending. As such, they reach for yield, and that's just the conservative ones. The big boys take baseball bats swinging for home runs, either consciously or subconsciously sanguine in the protection of the Bernanke flavored taxpayer put under their respective businesses. With such protection, already historically proven, bank managers are getting progressively more aggressive and increasingly less aware of the term "RISK adjusted reward" as they simply seek rewards. Alas, I'm getting ahead of myself, let me explain...

JPM Public Excerpt of Forensic Analysis Subscription Final 092209 Page 07JPM Public Excerpt of Forensic Analysis Subscription Final 092209 Page 07 copy

The JPM prop desk that held the losses which generated headlines earlier this week was marketed as a hedging operation when we all know it was anything but. What it was was a concerted grasp for yield and profit in a ZIRP environment where JPM (one of the world's largest congregations of interest bearing assets) was bearing effectively no interest.

Banks need to make money too, hence when there's no money to be made in traditional FI yields, the banks start reaching, and they tend to start reaching farther as desperation to make the next quarter mounts in the face of BoomBustBlog reading investors who may be able to see past earnings stuffing stemming from less than prudent reserve releases consistent underprovisioning.

JPM_Underprovisioning

 The BoomBustBlog subscriber document JPM Q1 2011 Review & Analysis illustrates the point of JPM's waning ability to make money by making loans and holding debt with perfect clarity, and did so a year in advance....

 JPM Public Excerpt of Forensic Analysis Subscription Final 092209 Page 09

So, what do you do if you're a bank but you can't make money lending? You gamble, that's what you do! It's not like JPM hasn't gambled before, and it's not like they haven't lost money gambling...

jpm_ficc1

I put out what I consider to be some of the best predictive research available. I also put an inordinate amount of info out for absolutely free, particularly in the case of those big names as in the employer of Voldemort. For those who have not read my seminal piece on Dimon's house of Morgan, JPM Public Excerpt of Forensic Analysis Subscription published nearly three years ago, allow me to take the liberty to excerpt it for you...

Hmmm... Tell me if you get stuff like this from the rating agencies.... This is a good time to bring up that Interesting Documentary on the Power of Rating Agencies, with Reggie Middleton Excerpts

The next post on this topic will outline and illustrate several banks whom the agencies need to downgrade NOW, as in RIGHT NOW. These banks are, of course, JPM counterparties. In the meantime and in between time, follow me:

Here's a subscription dump of our archives for JPM to placate the insatiable thirst of the BoomBustBlog paid subscriber:

JPM Q1 2011 Review & Analysis

JPM 3Q 2010 Forensic Update 

JPM Public Excerpt of Forensic Analysis Subscription

JPM Restricted Stock scheme

JPM 2Q10 review

 JPM 1Q 2010 Valuation Review 

 JPM 4Q09 review

 JPM Report (092209) Final - Professional09/24/2009

JPM Forensic Report (092209) Final- Retail

JPM Option Analysis

Of course, you know I'm going to say "I told you so!" Reference So, When Does 3+5=4? When You Aggregate A Bunch Of Risky Banks & Then Pretend That You Didn't? and then Hunting the Squid, Part2: Since When Is Enough Derivative Exposure To Blow Up The World Something To Be Ignored? You see, in said piece, ZeroHedge dutifully reported that Five Banks Account For 96% Of The $250 Trillion In Outstanding US Derivative Exposure- a very interesting refresh of what I called out two years ago through "The Next Step in the Bank Implosion Cycle???":

The amount of bubbliciousness, overvaluation and risk in the market is outrageous, particularly considering the fact that we haven't even come close to deflating the bubble from earlier this year and last year! Even more alarming is some of the largest banks in the world, and some of the most respected (and disrespected) banks are heavily leveraged into this trade one way or the other. The alleged swap hedges that these guys allegedly have will be put to the test, and put to the test relatively soon. As I have alleged in previous posts (As the markets climb on top of one big, incestuous pool of concentrated risk... ), you cannot truly hedge multi-billion risks in a closed circle of only 4 counterparties, all of whom are in the same businesses taking the same risks.

Click to expand!

bank_ficc_derivative_trading.png 

Again, from ZeroHedge: 

... and just for some clarity on how this occurred. We know the positions that Iksil held were in IG9 (more likely to be tranches) but this $2bn loss comes from a tiny 12bps decompression in the index - which means the DV01 must be huge...(as we already knew given the massive rise in net notional that we warned about)...

This is the Investment Grade credit index series 9 - which is the most active tranche-related index and was the index that Iksil had driven massively rich to its fair-value...

Of course, there's more to this story. After all, there is NEVER just one roach. I will cover that in my next post on the topic, which will entail COUNTERPARTY RISK. That's right, do you really think this will effect just JP Morgan?  In the meantime and in between time, here's a subscription dump of our archives for JPM to placate the insatiable thirst of the BoomBustBlog paid subscriber:

JPM Q1 2011 Review & Analysis

JPM 3Q 2010 Forensic Update 

JPM Public Excerpt of Forensic Analysis Subscription

JPM Restricted Stock scheme

JPM 2Q10 review

 JPM 1Q 2010 Valuation Review 

 JPM 4Q09 review

 JPM Report (092209) Final - Professional09/24/2009

JPM Forensic Report (092209) Final- Retail

JPM Option Analysis

 Falling_Angels

And now that BoomBustBlog foretold reality comes to bite UK ass, as reported by Reuters/CNBC: Inflation-Wary Bank of England to Halt Money-Printing Press

The Bank of England looks set to call a halt to its asset-buying program, despite the economy having slipped into recession and renewed risks rising from the euro zone debt crisis, as UK inflation remains stubbornly high. 

Uh Oh!!! In case the gravity of this situation is not weighing on any of you blokes yet, the UK has to step back into a gun fight but cannot fire any more shots due to the fact that it has already hit too many innocent bystanders...

Ending its program of quantitative easing, or QE, may make life more difficult for Britain's Conservative-led ruling coalition, which was battered in local elections last week and relies on loose monetary policy to soften the pain of austerity measures aimed at cutting the country's huge public borrowing.

Therein lies the problem, no? Did they truly try to stimulate the eonomy or did they attempt to overdose on cheap, irresponsible liquidity to save the extant oligarchy?

But after buying 325 billion pounds of government debt with newly created money, 50 billion pounds of which has been purchased in the last three months, the bank is likely to judge that its policy stance is already supportive enough.

You don't need to be an economist to understand the utter foolishness, the circular logic supported folly of the aforementioned statement - "But after buying 325 billion pounds of government debt with newly created money, 50 billion pounds of which has been purchased in the last three months".  So, an allegedly fiscally responsible regime leading one of the most powerful countries in the world lends money to itself in order to get some money (What the f@ck!!!), but must print fresh new money in order to afford to buy the money that it just lent itself in order to use the money it just let itself to pay some important bills, you know the thing that it needed the money for in the first place.

Well, what the hell are you staring at your screen for?  Don't you get it? Apparently, you must either be a politician or a economist to get it, actually. The UK obviously have the best suited guys for the job leading the way!

Policymakers, most prominently deputy BoE governor Paul Tucker, have also indicated that inflation may not fall as fast as forecast below the bank's 2 percent target after it rose for the first time in six months in March, touching 3.5 percent, the highest rate in the Group of Seven major advanced economies.

Only five of the 58 economists polled by Reuters expect the central bank to announce further asset buying when it publishes its decision at 11:00 a.m. GMT.

The minutes of the Monetary Policy Committee's (MPC) April meeting showed that inflation worries had become more dominant, and that long-standing quantitative easing advocate Adam Posen had dropped his vote for more QE.

Bank of England Governor Mervyn King has also said that the economy looks set to recover slowly and steadily later this year while inflation is too high.

 As clearly stated in the BoomBustBlog susbscriber document:  UK Public Finances March 2010

UK_Public_Finance_Analysis_2.0_Page_01

UK_Public_Finance_Analysis_2.0_Page_02

• UK_Public_Finance_Analysis_2.0_Page_03

Google_apple

I've noticed that many who take issue with my analysis of Google and Apple truly don't understand what kind of company Google is. To call it a search engine, ad company, or even Android vendor is to demonstrate an ignorance as to both its business model, accomplishments and aspirations. Google is not a search engine, ad company or even a mobile OS vendor, it is a data company and the foremost data company in the world.

I took the time to explain this in detail on the Max Keiser show last week. I think it's worth a listen. Click here for the full show, and see below for the excerpt....

For all of those near fanatics who do not subscribe, I suggest you ask a friend who does subscribe to share with you the difference between last month's valuation note target price (page 10 of  Apple Margin & Valuation Note) and the price of Apple today (click here to subscribe). I also urge the same for Google using our latest Google Q1-2012 Valuation Summary. BoomBustBlog's tech research has been on point with these two companies, just as it has been with Research in Motion, referencing Hindsight Is 20/20, And As Luck Has It Our Foresight On Research in Motion Was Right On The Money Two Years Ago.

 tech_stocks

For a more indepth look at these companies, see: 

• A Realistic Look At The Companies In The CNBC Stock Draft 2012 - Part 1
• Analyzing Apple's Q2 Earnings, Google Challenging Amazon & Microsoft on CNBC Stock Draft Picks Today at 2:30
• Watch As 202 Hedge Funds Follow The Bouncing Apple, Till They Don't!!!
• Facebook Finally Faces The Fact Of BoomBustBlog Analsysis
• For Those That Want To Take A Peek Inside the Professional BoomBustBlog Paywall, Here's All of My Groupon Research - MUPPETS!!!

A more indepth collection of our relevant research on Google and Apple, both current and from the archives can be found below.

Industry Leading, Subscription Based Google Research

All paying subscribers should download the Google Q1-2012 Valuation Summary, wherein we have updated the valuation numbers for Google using a variety of metrics. Click here to subscribe or upgrade. 

Google still exhibits the likelihood that they will control mobile computing for the balance of the decade.

Subscription research:

Google Q1-2012 Valuation Summmary 04/20/2012

Google Q1 2011 results 04/18/2011

Google Q3 2010 reveiw 11/08/2010

Google Final Report 10/08/2010

An Analysis and Valuation of Google's Android and AdMob 09/27/2010 

Google Valuation Model 09/21/2010 

 Google's VOIP and Telephony Services 09/16/2010

Google Cloud Based Services

Google TV Analysis

A couple of bits from our archives...

I've had a few subscribers who, after reviewing the (subscription only) FaceBook IPO & Valuation Note Update and Facebook Valuation Model, have seriously queried how Facebook is managing to drum up so much froth and interest for its obviously overpriced shares? The apparent answer is the marketing machine known as Goldman, et. al. The less recognized answer is assistance from the MSM, as demonstrted by this CNBC article - Facebook’s Premium Ad Prices Still Rising:

Pricing for Facebook’s premium “social” advertisements continues to rise, two recent studies have found—a positive indicator that could offset concerns about a dip in advertising growth and help sentiment towards the Internet company’s initial public offering.

This is a net positive statement, no?

A report to be released on Monday by Marin Software, a digital marketing platform that processes more than $100 million worth of spending on Facebook, found a 26 percent increase over the last year in the cost per click for “premium” ad formats such as Sponsored Stories, which highlight friends’ “likes”, comments and other endorsements of brands’ activity on the site.

Wow! That's pretty good growth and pricing elasticity, no? Bring on those newly public shares and let 'em rip!!!

However, Marin’s report also found the cost per click for Facebook’s standard ads, which make up an estimated three-quarters of the social network’s advertising revenues, fell 26 percent over the last year.

Wait a minute, if 75% of the companies product dropped in price, doesn't that easily swamp the 26% of the companies premium ads that rose in price? An even more direct questions is, why isn't this being reported as the net negative that is is? Let's walk though this step by step for the more arithmetically challenged amongst us...

So, according to this MSM article, reporting a net 13% drop iin revenue somehow amounts to - and let me quote this so as to be as accurate as possible - "a positive indicator that could offset concerns about a dip in advertising growth and help sentiment towards the Internet company’s initial public offering". Please excuse me as I wipe the splattered bullshit from my computer screen - it's hard to type accurately with those opaque, stinking brown stains in the way. Even worse, it goes to show what portions of the MSM actually think in terms of the intellectual capacity of its readership.

Facebook will this week begin a roadshow to convince potential investors that its business is worth up to $96 billion in its initial public offering later this month.

So, slower subscriber growth...

Faster cost growth and lower profits - Facebook First-Quarter Profit Drops; Costs Almost Double, and a 13% drop in gross  ad pricing - virtually the sole source or revenue for Facebook, amount to a valuation for this company that at 99 Times Profit Exceeds 99% of S&P 500 Index. Hey, it gets better...

Marin’s report follows data published last month by TBG Digital, a digital advertising firm that buys Facebook ads on behalf of 235 companies in 190 countries, showing a 23 percent increase in cost per click for the first quarter of 2012 compared with the fourth quarter of 2011.

The cost of delivering an ad to 1,000 people increased 41 percent in the first quarter of 2012 compared with the same quarter last year. However, click-through rates on ads—a key measure of effectiveness—fell an average of 6 percent across Facebook’s top five territories.

Advertisers’ desire to grab the attention of the social network’s 900 million users is still running ahead of their ability to measure the returns from that investment, which is seen as a key long-term challenge for the social network.

 Here's where I broke it down on Capital Account

I also happened to do the same on the Max Kesier show...

Subscribers who haven't refreshed their viewing of our Facebook research should do so now - (subscription only) FaceBook IPO & Valuation Note Update. Pro and instititional subscribers are welcome to peruse the downloadable Facebook Valuation Model, allowing you to input your own assumptions in the very unlikely event you may not agree 180% with me :-)

And from the archives...

Reggie_Middleton_Facebooks_Valuation 

Facebook Finally Faces The Fact Of BoomBustBlog Analsysis 

I discussed Facebook on the Peter Schiff radio show, the Facebook excerpt is below...

From my previous Facebook analysis public excerpt:

Yeah, I was on a roll last year, wasn't I? That's not the gist of it either, as we reminisce even more...

Additional Facebook analysis, valuationa and commentary.

On Max Keiser, go to the 13:55 marker for more on Facebook...

Of course Facebook enthusiasm is burning hot. The coals in the "investor" (and I put this lightly) fire are being stoked by none other than the sell side agents doing God's work, among others...

Professional and institutional BoomBustBlog subscribers have access to a simplified unlocked version of the valuation model used for this report, available for immediate download - Facebook Valuation Model 08Feb2012. The full forensic opinion is available to all subscribers here FaceBook IPO & Valuation Note Update. It is recommended that subscribers (click here to subscribe) also review the original analyses (FB note final 01/11/2011) as well as the following free blog posts on the topic:

1. Facebook Registers The WHOLE WORLD! Or At Least They Would Have To In Order To Justify Goldman’s Pricing: Here’s What $2 Billion Or So Worth Of Goldman HNW Clients Probably Wish They Read This Time Last Week!
2. Facebook Becomes One Of The Most Highly Valued Media Companies In The World Thanks To Goldman, & Its Still Private!
3. Here’s A Look At What The Goldman FaceBook Fund Will Look Like As It Ignores The SEC & Peddles Private Shares To The Public Without Full Disclosure
4. The Anatomy Of The Record Bonus Pool As The Foregone Conclusion: We Plug The Numbers From Goldman’s Facebook Fund Marketing Brochure Into Our Models
5. Did Goldman Just Rip Its HNW and Institutional Clients Once Again? Facebook Growth Slows Pre-IPO, Just As We Warned!
6. The World's First Phenomenally Forensic Facebook Analysis - This Is What You Need Before You Invest, Pt 1
7. The Final Facebook Forensic IPO Analysis: the Good, the Bad & the Ugly

Vulture_Fights_Jackle_in_bubbleBelieve it or not, we actually have a mini-bubble within this bubble crash as vulture investors fight for the scraps disgorged by indebted sovereigns and over-leveraged banks. The time is not ripe just yet and I plan to allow the carrion feeders to price destruct amongst themselves as I await the coming interest rate storm which will truly bring about a once in a lifetime wealth creation opportunity.

Arguably, more millionaire money was made during the Great Depression than at any time in history. Well, if that's true then it looks as if history may be poised to repeat itself. The question is, who will be ready? I will discuss this live on RT's Capital Account show today at 4:30. 

Executive Summary

Asset sales by European sovereign nations, central and private banks have made global investors and speculators scour for cheap assets that have the potential to yield higher than average risk adjusted. However, the search process is not that easy, as sellers are adopting a ‘wait and see’ policy assisted by the European Central Bank’s facilitation of (extremely) cheap financing and liquidity measures. The market now witnesses by too many buyers chasing too few distressed assets. Hence the speculation about future returns has actually caused a mini-bubble in distressed asset prices. Professional subscribers should download the full version 

Asset sale by sovereigns is can be seen in the sale of stakes in government owned infrastructure assets and corporations. However, the approach adopted to dispose of these assets is to make partial sales in tranches in order to participate in any benefits of valuation recovery.

Professional and institutional subscribers should download the full version of this document ( The BoomBustBlog Pan-European Distressed Asset Acquisition Initiative) which outlines investment opportunities in the following nation/banks: UK, Portugal, Italy, Cyprus, Greece, Ireland and Spain.  Our initiative runs the gamut from whole companies and equities, to real estate, infrastructure assets, rare earth and hard tangible assets to IP.

Dispositions by Europeans banks have consisted mostly of foreign assets outside of Europe. Most of these assets had the potential for high returns but are being offered at prices reflecting the perception that future investment performance would be robust. This is why there is so much interest in the private equity and asset management space in scanning for strong deals among those assets. However, the competition among these entities to buy quality assets at reasonable valuations has created a micro bubble of sorts, the type that make profitable vulture investing a very difficult proposition.

Sale of Sovereign Assets

Faced with mounting debt burdens, many European nations are under tremendous pressure to cut fiscal deficits

by establishing and expanding austerity measures and reducing interest expenses. These nations include not only those faced with accelerating debt repayment obligations such as Greece, Italy, Spain, etc., but also some of the relatively better positioned countries – namely the United Kingdom and France.

In a bid to reduce accelerating debt burdens, many of these nations are selling their sovereign assets. We will probably see an even greater pool of sovereign asset sales as the futility of serially forced austerity drives the EU into a deep recession.

Even the Greek situation is just getting started, contrary to popular belief and the upcoming distress is not just CRE and RE assets that are available via fire sale, as clearly outlined two years ago in our subscriber (click here to subscribe) report 

 Greece Public Finances Projections see pages 5 and 6 following... (click to enlarge)

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As a matter of fact, I warn those who do not subscribe to the BoomBust, this song is far, far from over... Beware The Overly Optimistic Greek Speculators As Icarus Comes Crashing Down To Earth!

Greece_Primary_balance

Greece is virtually guaranteed to re-default, with a structural imbalance that literally forbids the country from being able to service its debt, thereby chasing investors and bondholders with even remote access to a spreadsheet or calculator into the hills… Ne’er to return before the 720^th fortnight!

It’s not just in the periphery either. The core states have some stress coming their way.

Slide21

Investors seeking safety in Germany, the UK and France may truly be in for a rude awakening!

Slide22

Interest rate volatility, at a bare minimum, is a given – with the potential for stagflation being the base case scenario…

Those who wish to download the full article in PDF format can do so here: Reggie Middleton on Stagflation, Sovereign Debt and the Potential for bank Failure at the ING ACADEMY-v2.

Interestingly, Chinese corporations are increasingly interested in European assets. There have already been a number of indicators to prove that while China is not as attracted to European sovereign bonds, there’s material interest in buying infrastructure assets; and interest in perceived attractively valued corporations has increased over the recent past. Seeing profitable investment opportunities, private equity firms and global leading funds have also joined in. This has created a kind of rush to search for attractively valued assets that could yield attractive returns in the years ahead. The current scenarios, as such, have been of  a kind wherein too many buyers are chasing too few assets up for sale, particularly in view of the fact that countries like Italy, the United Kingdom and to a lesser extent Spain, can bargain with time - unlike Greece, to wait for fair valuation of assets before their disposal. This has created a market of buyers and sellers wherein prices for distressed assets are not being determined by fundamental valuation, but are influenced by speculation and demand-supply gap. In essence, what we have amidst this bursting of the sovereign credit bubble is a mini-distressed asset bubble.

Professional and institutional subscibers should download the full version of this document ( The BoomBustBlog Pan-European Distressed Asset Acquisition Initiative) which outlines investment opportunities in the following nation/banks: UK, Portigal, Italy, Cyprus, Greece, Ireland and Spain.  Our initiative runs the gamut from whole companies and eqiuities, to real estate, infrastructure assets, rare earth and hard tangible assets to IP.

Any who are interested in hearing more about this initiative can reach me via email or phone. All others are urged to follow me through my various social media assets:

All over the MSM today, we here Jobless Claims in U.S. Fall More Than Forecast, presented as good news. Of course, a little digging finds that not only was the jobless rate from last month adjusted upward retroactively (as it nearly always is), but "Too-Sick-to-Work Americans Shrink U.S. Labor Force". In other words “With a rising number of disability beneficiaries, there are both lower unemployment rates and lower participation rates.” As reported by Bloomberg, and to wit:

The number of workers receiving SSDI jumped 22 percent to 8.7 million in April from 7.1 million in December 2007, Social Security data show. That helps explain as much as one quarter of the decline in the U.S. labor-force participation rate during the period, according to economists at JPMorgan Chase & Co. and Morgan Stanley.

Expiring Benefits

The participation rate -- the share of working-age people holding a job or seeking one -- was 63.8 percent in March after falling to a three-decade low of 63.7 percent in January. Disability recipients may account for as much as 0.5 percentage point of the more than 2 point drop since the end of 2007, the economists calculate, and that contribution couldgrow when some extended unemployment benefits expire at the end of this year.

“How we measure and understand what’s going on in the economy can be influenced by the degree to which various public- support programs are available and being used,” said Michael Feroli, chief U.S. economist at JPMorgan in New York. “With a rising number of disability beneficiaries, there are both lower unemployment rates and lower participation rates.”

Bloomberg also reports U.S. Productivity Falls, but I must say non-sequitur... It simply does not follow...

The productivity of U.S. workers fell in the first quarter, indicating businesses are reaching the limit of how much efficiency they can wring from the workforce.

The measure of employee output per hour declined at a 0.5 percent annual rate after a 1.2 percent gain in the prior three months, figures from the Labor Department showed today in Washington. Expenses per worker increased at a 2 percent rate, less than estimated.

Employers had to take on more staff at the start of the year even as growth slowed, signaling they can no longer count on existing staff to meet demand. A government report tomorrow may show payrolls increased again in April, according to the median forecast of economists surveyed by Bloomberg News.

Okay, so growth slowed after 4 years of the deepest, widest, most global fiscal stimulation exercise in the history of... well... The globe! One would assume this slowing growth trend will accelerate as the stimulus is unwound due to a variety of common sense reasons, starting with...

1. It just didn't work, and following up with...
2. the potential to incite the inflationary fires, and ending up with...
3. many countries simply can't afford the Ponzi scheme, trashy asset merry-go-round game thingy anyomore.

Even if stimulus is not lessened, we still can't ignore the plain and simple fact - it ain't working. Growth has slowed any way and quite a few developed nations who shepherded the global stimular cartel are now stating they're back in recession - depsite the fact that I made clear to my subscribers that they never left recession in the first place. Now, as growth continues to slow, what exactly does the astute pontificator think will happen to employment demand???????????????????????????????? Well, it's a positive omen as long as you only live your life a fiscal quarter at a time. Just don't look past 2 or 3 months or so, and you're straight, right????????????????

“This slowdown in productivity is a positive omen for the labor market,” Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc. in New York, said in a research note. He correctly projected the drop in productivity. “It suggests that additional increases in output will necessitate a faster pace of hiring than what has occurred thus far.”

Now reference my comments from exactly this time last year, in "On Employment and Real Estate Recovery":

A regular commentator on BoomBustBlog has been attempting to make the case for a housing recovery based upon rising employment metrics. He has, particularly, pointed out rising hourly earnings. I thought I would take this time to point out that average hourly earnings can rise due to the fact that less people are working. The aggregate employment in the US has literally fell off of a cliff. Since you know that I love pictures, let's do this graphically...

Below you have a chart of total hours worked in the US with the average hourly earnings superimposed on top. As you can see, two and a half years and trillions of dollars of stimulus and QE later, we have barely budged. There was no multiplier effect. In essence, what you had was a divisor effect, and the money would have shown up more on a dollar for dollar basis if it was simply given to the populace! Of course, that wouldn't have kicked the inevitably deflation of the banking system down the road, now would it have?

Notice that despite the severe drop in total hours worked, average hourly earnings have increased. This can easily mislead someone who is not paying attention. Read more on this topic here: Inflation + Deflation = Stagflation ~ Lower Real Estate Values! 

It's all HOPIUM, which is a tad bit stronger than that typical sticky sesimilia many are used to...

Reggie Middleton ON CNBC's Fast Money Discussing Hopium in Real Estate

Now that I have (quite honestly) issued my most sincerest thanks, let's attempt to remedy the shortcoming of the limited amounted of time that I had. You see, after the 3 minute hit ended there was a brief discussion of commercial real estate in which I didn't get to participate, thus I will take the liberty of doing so through this medium.

Yes, commercial real estate has shown some marginal increases in the last quarter, and REITs have been on fire. The issue is, many publicly traded equities have detached from their underlying fundamentals. Let's reference “A Granular Look Into a $6 Billion REIT: Is This the Next GGP?” The following are excerpts from it:

image001.png 

You have to factor in non-market factors that have gone into supporting CRE prices. We have government bubble blowing where you can see where property prices were in a massive bubble, they rose and that bubble popped, and they were artificially supported and that bubble was partially reblown. Yes, the bubble was purposefully reblown, reference Buried Deep Within The Files That The Federal Reserve Released On Thier MBS Purchase Program, We Found TARP 2.0!!! More Taxpayer Money To The Banks!:

We have conducted analysis on all MBS sale and purchase transactions conducted by the Fed whose data was recently released. Of the total 10,058 MBS transactions, 72% were done at a yield of less than 5% (5% below yield of 4.0%, 32% between 4.0%-4.5%, 35% between 4.5-5.0%) with an average yield of 4.75% on all MBS transaction. The table below presents the number of transactions under their respective yield category.

We have also analyzed the yield on MBS purchased and MBS sold, looking for price discrepancies between MBS purchased and MBS sold. The data points out that the average yield on MBS purchased was 4.71%, 29bps lower than average yield for MBS sold, thus implying MBS purchased were at a higher price than MBS sold. You know that old government adage, buy high and sell low!

Yield on sale: 5.00%
Yield on purchase: 4.71%
Difference in bps: 29.1

Now, imagine this artificial suppression, both in the form of MBS purchases (which are supposed to be over) and QE in the form of Treasury Ponzi purchases, are overpowered by the market driven rate storm brewing ahead. You also have the government looking the other way at depreciating asset values, see FASB Appears to Have Bent Over For The Final Time & Accuracy In Financial Reporting Dies An Ignominious Death!!!:

 Yesterday I claimed US Cellular Carriers Are At Risk Of Being Marginalized Into Nothingness Unless They Learn To Think Outside The Box... Yesterday. There are some who allege that the US cellular carrier industry is a government protected triopoly, hence they have no true incentive to innovate. I cry bullshit! The faster, more innovative companies such as Apple are scheming on marginalizing the carriers to the utility status they are role playing as. The self-proclaimed shepherds of global data, Google, are looking to eliminate the need for carriers... Period!

I look at these things from a very analytical, very strategic, and longer term perspective than sell side analysts and many investors. See Analyzing Apple's Q2 Earnings for a recent and fresh look at Apple that you won't see anywhere else, and Cloudy Days Ahead For Google for the same on Google. When others may have rose colored glasses on, I took the lenses out of my glasses out of paranioa for fear of the glass denying my raw access to the visual data:-)

Apple Avoideth

One should be expecting soft sim iPhone coming out in iteration 5 or 6. Why? Because the carriers exercise too much control over Apple's distribution system. Yes, Apple has succeeded in virtually benidng AT&T (among other select carriers) over and sodomizing them for what amounts to the right to sell aan expense sinkhole with the hope of stuffing overpriced data plans down said hole after it was dug, but as the competition heats up with Android carriers are actually starting to push back a little. Gone are the days where Apple can get AT&T to overpay for iPhones then take the risk of reselling them, all the while sharing the data/voice revenue. Now, carriers are actually reading the contracts before signing them. Next thing you know a calculator, then spreadsheet may come into play. uh Oh!!! When carrier start to excersise their muscle as the gatekeepers of the average consumer's limited attention span and easily swayed marketing awareness, they can exert undo control over hardware vendors. Apple is a hardware vendor. So, Apple is apparently actively developing and testing soft SIMs (ex. SIMs that are based in the firmware of the phone versus burned into a physical chip).

What does this mean? It means that you can OTA update your iPhone with a new carriers identifying info on the fly. Layman's terms: You buy your iPhone unlocked from Apple and you can swittch between carriers at  whim. This carrier has a cheaper rate or roaming, simply click icon for carrier A. The same goes next month for carrier B, C or D. No more contracts! No more termination fees! And most importantly, at least to Apple, no more carrier ass kissing and lock in! Search the web for yourself...

1. Apple: Smaller iPhone, Soft SIM Coming, Says Bloomberg - Tech ...

   Feb 10, 2011 – Apple: Smaller iPhone, Soft SIM Coming, Says Bloomberg ... the iPhone 4 — that may help stem the advances of Google's (GOOG) Android, ...

2. Buying your Soft-Sim mobile. Who's taking control? Who should get ...

   Sep 14, 2011 – This post talks Sim-free or soft-SIM solutions and implications. At one time it ... When will we tire of Apple or Google being our gatekeepers?

3. Soft and hard SIMs

   Dec 13, 2010 – So the Apple UICC containing soft SIMs and an SE may not be such a bad ... the NFC interfaces that will be built in by Google, Apple and RIM.

4. Is Apple About to Cut Out the Carriers? — Tech News and Analysis

   Oct 27, 2010 – It's rumored that Apple and Gemalto have created a SIM card, which is ...by putting its own SIM inside the iPhone, it could do what Google with its ..... IC radio chips and radio software stacks – in *addition* to the SIM card.

5. Apple And The 'Soft Sim': Not On The iPhone, But Maybe On the ...

    Nov 22, 2010 – ... reportedly up in arms over Apple's plans to integrate a "soft Sim" into it… ... Hey, Google, you took advantage of that whole Android/iOS war ...

6. Light Reading Mobile - Jonestown - Apple's 'Soft-SIM': Not Too ...

   Oct 28, 2010 – Apple's 'Soft-SIM': Not Too Useful in US ... definitely save money over time by paying more upfront for the Samsung Galaxy Nexus from Google...

TECHSEMIGURU: Apple: Smaller iPhone, Soft SIM Coming, Says ...

Like you, I thought Google was a search company. Why do they want to build an experimental network and sell me broadband services?[tweetmeme source="googleavl" only_single=false]

That's right! Google is looking to directly commoditize the broadband carriers, just as they did the news organizations, the online ad agencies, currently doing the smart phone industry... No, Google is not a search engine company, as I have said so often in the The mobile computing wars series. Google is a data company, and as such, anything that has to do with the movement, storage, organization, manipulation, control and intelligence of said data, Google either has their hand prints on it or are reaching for it. May the ignorant, and the slower moving competiion, beware!!! Again, excerpted directly from the Google AVL blog, which is the blog that is detailing Google's buildout of the high speed fiber network to the doorstep in the city of Asheville as well as Kansas City, both of whom competed against many other cities for this privilege. That's right! This is not a pie in the sky initiative, this is something that is being built right now by a company that is not know for taking its time... I  stronly suggest interested parties visit this site after persuing my thoughts on Google, in order to get a clearer view of the BIG PICTURE...

Google_Ashville_blog

1. Google needs lots of data so they can organize it.

Google doesn’t want to be a broadband provider (my opinion), but they do want to manage and organize the world’s data.

That business mandate puts them in direct conflict with anyone who limits the flow of information that Google seeks to manage. Google needs you to take full advantage of your digital connections to the world so that they have a profitable job – with room to grow – making up clever ways to organize your data. The most basic way they do this now is with search. Another is with maps. And so on.

But what if we stopped making so much data? That is exactly what is happening in the U.S. – only we didn’t stop creating data. We just stopped adding the capacity to transmit it, which, from Google’s point of view is the same thing.

2. Our slow-ish broadband network means there is less for Google to organize, potentially capping Google’s growth.

US Broadband: Slow as a turtleIn the U.S, during the last 10 years, broadband companies have been relatively content with their profits, consumers have had only one choice or two choices for service (cable vs dsl), and no outside software has been desirable enough to make everyone want anything different (in the way that the iPod made everyone ditch CDs).

How slow are we?  In 2007, the average advertised bandwidth speed in Japan was 96 Mbps. My Charter connection at home right now is supposed to be 5 Mbps but rarely exceed 3 Mbps. You can see for yourself by comparing broadband costs and bandwidth among countries or examining this article.

Or better yet, test your current connection and see what your bandwidth number really is.

It looks to me like we are somewhere between 15th and 23rd in the world (and falling) in terms of broadband.

This problem is most acute at the so-called “last mile,” which includes the connection from the pole to your house.  Also during the last 10 years the speed and capacity of the backbone, aka the bigger cables between cities, has increased in speed pretty dramatically.  When you read about “dark fiber,” you are often reading about the unused capacity that lies just beyond your yard, past the pole as you head upstream from your cable or phone jack. Not only has your current broadband provider refused to consider alternate technologies like fiber optics, they’ve gone ahead and planned some upgrades that use their existing cable technology in order to appease a part of their customer base.  Those upgrades are detailed in the just released National Broadband plan.  One of the problems with that plan is that it ignores the best technology – fiber optics – which the rest of the world is increasingly using.

3. Google enters the market with a better plan in order to spur competition among existing broadband companies.

Google fiber: fast and competitiveGoogle  wants to shake things up by building something better than what you are used to.  And not just a little bit, either – they want to build an open network with 1) much better speed and service than you have now AND 2) they want to do it using better technology (that’s the fiber part of the project) AND 3) they want to use a different business model than your current provider.  It is a lot to get your head around, I know.  Those three things, taken together, are what make Google’s fiber project so exciting.

"they want to use a different business model than your current provider..." Put plainly in layman's terms, Google will cost shift, and basically provide the high speed broadband for no out of pocket expense in exchange for access to your behavioral data, advertising consumption activity or subsidize the broadband as your corportate and high use neighbors take advantage of cloud services. To make a long story short (if it ain't too late), you'll get cutting edge broadband access for what you would consider free - much like how you get YouTube HD video for free. Where does this leave the big Telcos???? 

The open network is the hardest of the three ideas to grasp, since most people in the U.S. have never had one.  Normally, it would work like the street in front of your house – tax payers pay for it, anyone can use it, and some of those uses allow us to do profitable things.  The open network model is in use in other parts of the world and open networks are quite successful*.  They are usually built, like roads, with at least partial taxpayer funding. In this case, Google is proposing that they pay for the road on Asheville’s behalf.

4. If they wait, they could lose a lot of money.

If they wait, they have less data to manage. This is because the U.S. just released the national Broadband plan, and the plan is not good enough.  The plan settledand accommodated existing industry at the expense of innovation and competition**.  Our new broadband plan does not require or even suggest open networks, it advocates speed increases that are small in relation to what technology allows, and, generally speaking, it keeps the old way of doing business alive and well for the current broadband companies. Google, who had input into the national Broadband plan, no doubt saw this coming and intends for this experiment to help create an alternate path to a better network.

And that’s why, right now, they are running a competition to build a fiber optic network (speed and reliability fixed), to your door (last mile problem fixed), with an open network (competition problem fixed, control shifted back to the customers).  And they will build it with their own money.

-Clark Mackey

• • * Asheville is already one of the few places in the country with a functioning open fiber network – ERC Broadband. Open networks are opposed by your current broadband provider, but strongly supported by some very smart people. One is Vint Cerf who is widely known as father of the Internet
  • ** In the National Broadband Plan, we settled for slower speeds 10 years in the future than some countries have now. Ch 1 page 2. The plan has a goal of 100 Mbps, much slower than Google’s proposed speed of 1000 Mbps.  We accommodated by obfuscating the decision to go away from open networks, allowing current companies to justify exclusive control of the wires because of the high cost of installing them (Ch 4 page 36 and 37).  Roads are expensive too, but I note that we have found ways to build them without requiring tolls at the end of our driveways.

---

Industry Leading, Subscription Based Google Research

All paying subscribers should download the Google Q1-2012 Valuation Summary, wherein we have updated the valuation numbers for Google using a variety of metrics. Click here to subscribe or upgrade. 

Google still exhibits the likelihood that they will control mobile computing for the balance of the decade.

Subscription research:

Google Q1-2012 Valuation Summmary 04/20/2012

Google Q1 2011 results 04/18/2011

Google Q3 2010 reveiw 11/08/2010

Google Final Report 10/08/2010

An Analysis and Valuation of Google's Android and AdMob 09/27/2010 

Google Valuation Model 09/21/2010 

 Google's VOIP and Telephony Services 09/16/2010

Google Cloud Based Services

Google TV Analysis

A couple of bits from our archives...

1. Looking at the Results of Google's "Negative Cost" Business Model Employed Through Android  
2. Did A Blog Best Wall Street's Best of the Best In Guaging The True Value of Google? We Have To Think More Like An Entrepreneur & Less Like A Wall Street Analyst

There are currently 7 Google reports available. Select the "Google Final Report" and click the "Download" button. You will receive a 63 page analysis that looks like this on the cover...

The table of contents outlines how we have broken Google down into distinct businesses and identified both the individual business models and the potential revenue streams, as well as  valuation for each business line.

Page 57 of the analysis shows a sensitivity table which outlines the various scenarios that can come into play and how it will change our outlook and valuation opinion.

Professional/institutional subscribers can actually access a subset of the model that we used to create the sensitivity analysis above to plug in their own assumptions in case they somehow disagree with our assumptions or view points. Click here for the model: Google Valuation Model (pro and institutional). Click here to subscribe or upgrade.

Fresh and Very Accurate Apple Research

For all of those near fanatics who do not subscribe, I suggest you ask a friend who does subscribe to share with you the difference between last month's valuation note target price (page 10 of  Apple Margin & Valuation Note) and the price of Apple today, the day after earnings (click here to subscribe).

As excerpted: 

It is worth noting that the key assumptions that underline the above valuations – (1) iPhone continuing to witness stupendous growth *******  in 2012 and ****** 2013 over a larger base and (2) iPhone margins continue to remain healthy off stable prices and despite increase in material cost – should be keenly watched over the next couple of quarters. 

Then ask them bout the logical argument behind the concern with Apple and the extremely volatile price action of the last few weeks. As stated many times in the past, The BoomBustBlog argument and analysis is solid.

What else is there to the earnings announcement? Well we were absolutely correct in terms of the oncoming margin compression of the the product lines, something that was actually easy to see coming but many refused to admit. Of course, there will be those select few that say, "But wait, the company reported an INCREASE in margins while you said there will be a decrease!". Yes, that's true and both can exist simultaneously.

Apple_2Q2012_results_analysis_Final_Page_2Apple_2Q2012_results_analysis_Final_Page_2

Apple_2Q2012_results_analysis_Final_Page_3Apple_2Q2012_results_analysis_Final_Page_3

Apple_2Q2012_results_analysis_Final_Page_4Apple_2Q2012_results_analysis_Final_Page_4

 I will discuss nearly all of the stocks in the CNBC stockpicking list above in the next few posts on my way to studios via BoomBustBlog and ZeroHedge. Comments are always welcome. Follow me:

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Let's face it: Traditional Cell Phone Usage Is So Old School!!!Observations on AT&T and US cellular business in general, per the CNBC stock picking exercise...

• The company has been making slow but steady growth in its revenues and profits
• The US market is nearing saturation, resulting in increased competition with Verizon Wireless and Sprint Nextel Corp. This cannot be over-emphasized, since mobile computing growth is THE place to focus energies and resourced for at least the next 5 years. Google's Android has allowed companies to tranform dead industries by making use of Google's negative margin tech and business model to jumpstart failing business models. A perfect example of this is Barnes & Noble. @paidContent: At $1.7B, Nook's worth more than Barnes & Noble itself - as per GigaOm:

Microsoft and Barnes & Noble have buried the patent hatchet and teamed up to compete against Apple and Amazon in the eBooks business. The new partnership sees Microsoft investing $300 million in a new Barnes & Noble subsidiary. (My colleague Laura Owen has the complete breakdown of the deal over on PaidContent.)

The $300 million investment in the  Nook subsidiary of Barnes & Noble gives Microsoft about 17.6 percent ownership of this  business unit. That values, this business at about about $1.7 billion. Before the markets open this morning, the Nook business was valued about $900 million more than Barnes & Noble itself.

Update: Barnes & Noble stock zoomed at the opening bell – and is now trading at about $9 a share, giving Barnes and Noble a total market cap of $1.3 billion — which is still less than the Nook subsidiary itself.

• Net attributable income rose to $3.6 billion, or 60 cents per share, from $3.4 billion, or 57 cents per share in the year-ago quarter.
• Consolidated revenue rose nearly 2 percent to $31.8 billion
• The company has been witnessing growth in its ARPU and subscribers numbers, although moderate.

1. 1.  The U.S. mobile provider added 187,000 subscribers in the quarter
   2. Average monthly revenue per AT&T contract subscriber, or ARPU, increased 1.7 percent to $64.46

Stock performance (YTD:  +3%, 6M: 12%)

US carriers need to reinvent themselves, and they need to do it yesterday. Webiste Mobithing.com share with us...

1) There are now 1.2 billion mobile Web users worldwide, based on the latest stats for active mobile-broadband subscriptions worldwide; Asia is top region.

This means there will soon by more business on handset communictions then there will be in the desktop business.

2) South Korea and Japan lead in mobile broadband penetration with 91 and 88 percent respectively.

This means there's plenty of room for the US to grow. The only question is how?

3) Mobile devices account for 8.49 percent of global Website hits.

Here's an opportunity right here, but will the staid management of cellular carriers see it to capitalize on it.

4) Many mobile Web users are mobile-only, i.e. they do not, or very rarely use a desktop, laptop or tablet to access the Web. Even in the US 25 percent of mobile Web users are mobile-only.

BINGO!!! Carriers should not be looking to be the traffic tolls or gatekeepers of mobile content (which is there current mindset). They should be aiming to be THE content, as well as the end to end enablers of such: apps, media, intelligence and all.

5) The drivers of mobile Web and mobile media are:
(i) Web-enabled handsets - by 2011, over 85 percent of new handsets will be able to access the mobile Web. In US and W. Europe, it is already surpassed that. Lots of new handsets support 3G (fast Internet).
• N.B. smartphones are only a fraction of Web-enabled phones.
(ii) High-speed mobile networks - almost one in five global mobile subscribers have access to fast mobile Internet (3G or better).
(iii) Unlimited data plans - Widespread availability of unlimited data plans drove mobile media in Japan, now it’s driving the US; but in W. Europe, lack of availability is holding up progress.

Re: (i) Carriers DO not think outside the box. One of the CNBC stock draft contestants recommended RIMM his top pick. While I don't agree with him, per se, the value in RIMM and Nokia is certainly there for those players who need a massive strategic boost in this mobile computing game, translated as EVERYONE besides Google and Apple. The only one who seemed to have gotten the message was Microsoft when they purchased (synthetically) Nokia, and recently part of the Nook Franchise. Deutsche Telekom should look into TMobile buying the assets out of RIMM and specializing in end to end enterprise solutions as well as consumer prodcuts right outside of the feature phone level. That's where the growth will spurt, as the rest of the world graduates from feature phones to full fledged smartphones.

Re (ii) and (iii) Instead of creating ingenious ways to force people to pay for things they already have been trained against paying for (and therefore may ever pay for), the telcos should look into adopting Google's methodology of cross subsidizing  high demand services with revenue from SMBs and institutions. Basically, Google cost shifts. They take revenue from adSense and use it to fund gmail, etc.

Telcos should create real, attractive, functional and useful apps/cloud systems and bundle them tightly into their services. As the front end, they have an advantage and if they do a good job, not only will most not bother to avoicd said service, but will actually opt for said service while recommending the same to their friends. Why in world didn't AT&T or Verizon create Dropbox before there was a Dropbox? Even if they didn't have the creativity, they could have simply bought Dropbox.

Yes, the business would have driven high bandwidth usage, but isn't that would they would have wanted???? Don't they sell bandwidth? A viral campaign and cost shift strategy of offereing free storage AND a free week of cell service/data plan for every Dropbox referral customer successfully signed up would have made Sprint a number carrier and data service provider.

A web-based office front end would have rounded out the deal, ex. buying web-based company like Think-Free office, you know... Just like Google did. They same viral offers could have applied. Selling a packaged cloud-based voice mail system could have had Sprint profiting from Verizon and AT&T accounts they don't even have to pay the infrastrcuture for. A good example would have been Grand Central, which Google bought and turned into Google Voice. Spint could have done this and sold it not only to its customers but to Verizon, AT&T and T-mobile customers as well. Making money from all angles, again with that viral marketing slant.

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