Stocks and Blogs

Android’s Impact on Google’s future

2009-10-28T01:33:05Z

In a short period of time, Google’s mobile operating platform, Android, which competes with Windows Mobile, Apple’s iPhone OS, Symbian and Palm OS has garnered plenty of attention and accolades. As was the case when Apple’s App Store was launched some 15 months ago now, Android’s Market, which is Google’s version of Apple’s App store, has generated a lot of attention. According to mobile analytics and advertising providers Flurry and AdMob, developers are devoting significant resources to the mobile platform, which will result in a boom in Android apps. Flurry, a San Francisco-based mobile metrics company, reported a 94 percent increase in the number of projects started by Android developers between September and October.

According to recent reports, over 3 million Android handsets have been sold so far, and the share of requests AdMob gets for advertising from Android smartphones sits at 17 percent of all smartphone traffic as of September. Currently 12 Android phones are available in the market with more than 75 million Android handsets slated to ship in 2012, according to Gartner Research. Moreover, T-Mobile and Verizon have stepped up their efforts to market a competitor phone to iPhone, which is still exclusively available through AT&T.

Predicted Smartphone Market Share in 2012

The increasing marketshare and presence of Android has created a unique opportunity for Google. It now has the potential to be front and center in the hands of everyone who carries a mobile phone. According to ZD Net, 60% of the world’s population now owns a mobile phone. This equates to over 4 billion active mobile subscriptions worldwide. The US mobile adoption rate is 91.4% according to eMarketer, which amounts to 281 million subscribers.

To put broader context around Google’s opportunity in mobile, consider this – Nielsen reported that in Q1 of 2009, the average mobile user exchanged 486 text messages, while making only 182 phone calls. In other words, voice calls are taking a back seat on mobile phones when compared to SMS and other internet-based features such as E-Mail and browsing. To further underline this point, consider that Smartphones currently make up 20% of all mobile phones in use. By 2013, this number is expected to grow to 77% (239 million smartphones) of mobile phones (based on Parks Associates Industry Research). If Google’s Android OS has 20% of this market share in 2013, it gives Google, which is already the largest online advertising medium, immediate and direct access to 48 million users in the US alone. This does NOT include those users who don’t own an Android phone, but will still use Google services on competing systems. Additionally, Google has plans to release a Google branded phone which will not be specific to a carrier, rather it will be sold like a computer, with the user having the choice of carrier much like an internet provider.

While overall mobile advertising is less than a $500 million market in 2009, it is expected to grow to over $1.5 billion by 2012, a small drop in Google’s bucket, but other opportunities lie in mobile applications, which Google may or may not choose to monetize in some form or the other.

Another question that arises here is how far Google will go with their Chrome netbooks? Chrome will be an OS that will compete with Microsoft Windows for PC market share. I would imagine this is something we will see rolling out over the next 6-12 months. Frustrated Windows users would like nothing more than a competing OS which they can have for free.

Then there is the question of Google Voice. Without cell towers and expensive infrastructure, Google has managed to give people free phone service, albeit you still need a carrier to actually use Google Voices, but the idea is neat and it allows Google to have yet another way to reach audiences.

Earlier this month, Google released their quarterly earnings, which were nothing short of stellar. The company reported earnings of $1.64 billion, or $5.13 a share, up from $1.29 billion, or $4.06 a share, in the same period last year, a gain of 27%. Net revenue rose to $4.38 billion from $4.04 billion.

Needless to say, Google presents a threat to Apple, Blackberry and Microsoft with it’s focus on operating systems, mobile phones and applications. As such, Google as a stock remains one of my favorites. Earlier this year, when the stock was at multi-year lows, I recommended Google as part of my Top Stocks to Buy for 2009 series. Since then, Google stock is up 35%. I recommend buying Google on a pull back.

– Faisal Laljee

Full Disclosure: I do not own GOOG, but my position can change anytime without notice.

ComScore Claims to have a Larger Panel

2009-08-05T00:26:53Z

ComScore (SCOR) and Nielsen are both market research and audience measurement businesses. They have a “panel” of independent internet users whose activities they monitor (with permission of course) and based on the internet usage of this panel, they publish broader internet measures like unique visitors, visits, page views, time spent etc. for most of the highly trafficked web sites on the internet. They also work with top internet companies to sell their portfolio of digital media measurement services that allows their clients to determine how their site is doing, where they get their traffic from, who they lose their traffic to, how their competitors are doing in terms of online traffic and so on.

Nielsen, in a recent press release titled “Nielsen Launches Largest, Most Representative Online Audience Measurement Panel in U.S.” stated that their panel of Internet users numbered more than 230,000, bigger than any rival’s panel. This sparked a quick reaction from ComScore whose Chief Research Officer Josh Chasin responded that his company’s panel was bigger with 300,000 users. “Our panel is larger!”, he claimed. Well, not exactly, but you get my point right?

As for the stocks, SCOR has been an interesting stock, but I am not a buyer. In fact, I am skeptical of these two companies using a sample size of just 300,000 or so to project the behaviour of 100 million internet users. To me, their sample size is not statistically significant, but unless someone else can measure a broader audience, ComScore remains the official word on internet usage statistics.

Also, companies like Hitwise and Compete are nipping at the heals of ComScore with their own rival panels and technology, which proves that this business is not a very unique one and has little to no barriers to entry.

– Faisal Laljee

Full Disclosure: I do not own SCOR but my position can change anytime without notice.

$1.2 billion Inflows to US Funds

2009-06-19T16:02:07Z

This was yesterday. Ofcourse, this is not what caused the rally yesterday but considering equity supply shortage, this money shows increased demand that is good for the US markets.

Invest in Emerging Markets using these new ETF’s

2009-06-19T16:02:06Z

Lately, it seem like new ETF’s sprout almost every week. ETF’s are a very popular and cheap way to invest in a group of stocks that share common traits. KOL for coal related stocks, MOO for agriculture related names, EEB for BRIC countries, and a plethora of others for shorting or investing in global markets as well as commodities and currencies.

Following are some new ETF’s to diversify across some new emerging markets that could be the BRICs of tomorrow. Please do keep in mind that some of these ETF’s are extremely risky and volatile, and have little to no information available online. However, for investors who would like to put some money to work in riskier, but potentially explosive markets, the following list is a great start.

GULF – As the ticker symbol suggests, this ETF invests in companies from the Gulf countries, including UAE, Bahrain, Jorda, Kuwait, Oman, Qatar and Egypt among others. In fact, this ETF only invests in dividend paying stocks from these countries.

AFK – This is one of the riskiest ETF’s, yet it is also the most promising one. Africa has been on fire, except that we don’t hear about Africa outside the context of Nigerian corruption, famine and disease. However, countries like Mozambique, Angola, Zambia and Kenya are fast developing. I know a few people working in these countries and there is some noticable shift of talent from parts of Europe to Africa. A bit of warning though, a big part of this ETF invests in Nigeria, which is considered one of the most politically unstable regions in the world. But hey, at some point, so was Russia. This is my pick of the bunch!

MES – Another new ETF covering the Gulf states. According to Roger Nusbaum of theStreet.com and Random Roger, this ETF consists of investments in Kuwait (52%), U.A.E. (25%), Qatar (15%), and some Oman and Bahrain.

PMNA – Covers countries like Egypt, Kuwait, Qatar and Morocco across parts of the Middle East and North Africa. For some, this is a little too much concentration in a select region Egypt (21%), Kuwait (16%), Jordan (14%), Morocco (14%), and Qatar (13%) make up the bulk of this investment.

GAF – S&P’s Emerging Market fund covers Africa and the Middle East, including Arab Bank, Sasol (SSL), and Israeli Chemicals. This is a more established fund and more information is available online.

FRN – Another more experienced ETF, this one is heavily weighted towards Poland (24%), Chile (21%), and Egypt (17%) with little to no exposure to Middle-east or Africa, except of course Egypt. And if you are a fan of Borat, if you are a fan of Borat. this ETF also gives you access to Kazakhstan, along with Latvia, Georgia, Estonia and other Eastern European countries.

One big surprise is the lack of a Vietnam fund. I wrote a post on the prospects of Vietnam a few years back under the title “Check out Vietnam“, and despite some positive feedback on the market even after 2 years, I can’t give readers a relatively safe way to play Vietnam. There is a Vietnam Opportunity Fund (VOF.L) that trades on the London Stock Exchange For more on investment opportunities in Vietnam, check out http://vnmoney.wordpress.com/

Despite the sometimes less obvious nuances between these ETF’s, they tend to trade relative to each other, with no one ETF having outclassed the others. Owning one or two of these in your portfolio is a better long-term prospect than any of the BRICs at this stage.

– Faisal Laljee
Full Disclosure: I do not own any of the ETF’s or stocks mentioned here but my position can change anytime without notice.

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Hydrate your portfolio with Veolia

2009-06-19T16:02:05Z

According to Yahoo Finance, Veolia Environnement SA 9VE) and its subsidiaries provide environmental management services to public authorities, individuals, and industrial and commercial customers worldwide. It operates in four segments: Water, Environmental Services, Energy Services, and Transportation.

Basically Veolia is a French multi-national company that provides infrastructure development and support in developing countries. Its largest segment, concerns water and the company helps provide clean water to more than 67 million people. Veolia has an advantage over its competitors in that its average contracts last for 10-15 years with an annual renewal rate of 90%. Places like Russia, China, India, Africa and eastern Europe has a sever shortage of clean water, as well as a lack of transportation and energy infrastructure, which is the grass roots for long-term sustainable development and growth. Emerging markets require these necessities to flourish and step up to the “emerged” category.

With over 70% of their sales outside the US, Veolia is not subjected to a US recession, although an economic slowdown in Europe would impact its earnings. The strong Euro though, has also helped the company with its earnings. Last month, Veolia disappointed investors by missing revenue and earnings expectations, however, the precipitous drop following the earnings is a great opportunity to own this name. Goldman Sach’s upgraded the stock last month, but overall, the stock is still down 25% from its high of $96 in Dec. With a dividend close to 4%, and the water/infrastructure arena poised for long-term growth, Veolia is a bargain at current levels.

– Faisal Laljee
Full Disclosure: I do not own VE but my position can change anytime without notice.

The 4 Most Important Earnings Announcements This Afternoon

2009-06-19T16:02:04Z

4 earnings that are really impacting the respective stock prices after hours:

1) Apple (AAPL) – Earnings were rock solid. Everything up. Stock is headed to $150. If not this year, then next. Watch them take market share from the likes of Dell and HP. Heck, I am a Mac hater and I even I am toying with the idea of buying a Macbook. If only they made it in lime green.. Just kidding.

2) Akamai (AKAM) – What a bummer. I thought they would have great earnings considering how huge internet content is becoming. With so much downloadable content, including video, I can’t imagine how they could have screwed up the quarter and not raised guidance. There has to be more here. Very disappointing.

3) F5 Networks (FFIV) – The best of the bunch, yet not as widely followed. Up huuuuuge after hours. Semis are really on the move. Nasdaq is finally going to start leading again if this keeps playing out. Love this one.

4) Nutisystem (NTRI) – Great earnings yet again. Aside from the hiccup a couple of quarters ago that saw the stock drop from the high 60’s to the mid 40’s, the company has done really well. Up big after hours.

Any other earnings worth mentioning?

Yesterday, Travelzoo (TZOO) was a big disappointment. Based on a recent attempted breakout and Priceline’s earnings from 2 weeks ago, I was expecting Travelzoo to have great numbers. Clearly, I was wrong.

Choicepoint (CPS) also came out with earnings earlier this week. I have received quite a response from a lot of people about the call I made on Choicepoint. While the stock did well in light of their earnings, I think Choicepoint remains a risky bet. The sub-prime and mortgage shakeout will show up in their earnings this quarter or next as lenders finish paying out their contracts. Meanwhile, there is a case pending against Choicepoint, which remains a threat to their third quarter numbers.

If you include RIMM, then I am 4 out of 6 on earning related moves, with one that needs to play out longer.

– Faisal Laljee

Zumiez Up on High Same Store Sales

2009-06-19T16:02:03Z

I have been a bull on this but I am thinking it might be time to take profits. Not sure which way to call this. Story is still young. Anyone analyze their fundamentals recently?

Nasdaq buys a stake in the London Stock Exchange

2009-06-19T16:02:02Z

Nasdaq purchased shares of LSE worth $780 million, a 15% ownership, creating the second largest global stock exchange behind only the NYSE and ahead of the Tokyo Stock Exchange. The purchase gives Nasdaq potential access to the European markets. I reiterate my buy on Nasdaq at around the $40 mark.

- Faisal Laljee

Redefining Search and Search Engines

2009-06-19T16:02:01Z

As internet consumers, we are used to the terms “Google it”, “I will Facebook you” or “Tweet”. But when it comes to Search, one immediately thinks of Yahoo, Microsoft, Google and in some rare cases, Ask.com. Indeed when reports of search market share are released each month, Google seems to be gaining the ground with market-share of around 70%, with Yahoo a distant second and Microsoft, an even further third. Together, these 4 engines make up 100% of the internet search market.

But with internet users increasingly spending their time on Flickr, Facebook, MySpace, Amazon, iTunes, Netflix and other popular news, media, social networking sites, a search can no longer just be considered a search on one of the 4 engines. In fact, when you search for a person or event on Facebook, a product on Amazon, a song on iTunes or a picture on Flickr, it is more of a “long-tailed” version of the same search that may have been conducted purely on the big 4 just a couple of years ago.

Search has evolved into a more fragmented form, with people ditching the big 4 and adopting a more vertical approach. So when we hear of Google’s 70% market share, are the Amazon’s and the Facebook’s of the world, with hundreds of millions of searches of their own, being included? What is the true market share of the big 4 if you include all the long-tailed, verticalized search engines?

I tracked my own internet usage yesterday, and each time I searched for something, I noted the search term, and the site. When the day was over, I had logged 6 hours of internet usage (yes I know its pathetic), but here are the results:

Google – 6 searches
Facebook – 2 searches
Amazon – 1 search
iTunes – 2 searches
Gmail – 1 search
Twitter – 1 search
Fandango – 1 search

Only 6 of my 14 searches were on a “Search Engine”. Granted that the Gmail search was technically part of Google, nevertheless, my personal usage demonstrates the fragmented nature of search. Now I know I am a different demographic than most, but I’d like to see the total number of searches across the internet, and I would like to see vertical searches included in the overall search numbers across the internet.

– Faisal Laljee

Kiplinger’s Top 5 Stocks for Dad

2009-06-19T16:02:00Z

This post was submitted by Laura Stevens of the Rosen Group.

Dads, you’re probably expecting a tie or a set of power tools this Father’s Day. If you have enough of those already (or even if you don’t), Kiplinger.com has a gift you’ll really appreciate: stock picks in companies that cater to your tastes. Kiplinger’s Top 5 Stocks for Dad are:

Diageo (DEO) This seller of such brands as Johnnie Walker, Smirnoff, Guinness and José Cuervo has held up better than most during the recession—thanks to a balanced portfolio of products, with higher exposure to mid-price, mainstream brands and less exposure to ultra-premium brands. The shares look reasonably priced. At $56.01, Diageo trades at 15 times estimated June 2009 earnings of $3.82 a share. The stock yields 2.8%.

Eli Lilly (LLY) Men can appreciate this stock for its erectile-dysfunction drug Cialis (which accounts for 7% of total sales). But the case for investing in Lilly’s stock rests on a robust pipeline of new drugs. Among the drugs currently awaiting regulatory approval are Effient, a blood thinner that will compete directly with Plavix, as well as drugs for treating Alzheimer’s, cancer and neurological disorders are in various stages of development. The stock, which closed at $32.98, has fallen 18% in 2009. Still, analysts expect Lilly to earn $4.22 a share this year, up from $4.02 in 2008.

CarMax (KMX) “No-Haggle Pricing” is the signature CarMax practice that endears customers. But even that’s not enough to get potential buyers to open their wallets during these tough times. Sales were off 15% for the fiscal year that ended February 28, and earnings plunged 67%. But because earnings are depressed, analysts look for 27 cents a share in the year that ends February 2010. The stock sells for a lofty price-earnings ratio of 47.

JoS. A. Bank Clothiers (JOSB) The purveyor of men’s suit and dress accessories has reacted to the recession strategy by marking down its wares severely. To conserve cash, the clothier has trimmed the number of new-store openings to just ten to 15 this year. In the first fiscal quarter, the retailer posted an 11% gain in revenues and a 17% jump in earnings. Same-store sales (sales at stores open for at least one year) rose 4.3%.

Home Depot (HD) Even the biggest home-improvement retailer is struggling through the housing slump. Compared with the same period a year ago, sales fell 9.7% during the company’s first quarter. But, looking ahead to next year, HD earnings could climb by 10%. At its June 16 close of $23.20, Home Depot sells for 16 times estimated fiscal 2009 earnings. The stock is 67% below its record high of $70, reached in 1999.

“5 Stocks Dad Will Love” is available in its entirety at http://kiplinger.com/columns/picks/archive/2009/pick0616.htm

– Faisal Laljee

Full Disclosure: I do not own any of the stocks mentioned here but my position can change anytime without notice.

Stocks and Blogs

Android’s Impact on Google’s future

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$1.2 billion Inflows to US Funds

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Invest in Emerging Markets using these new ETF’s

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Hydrate your portfolio with Veolia

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The 4 Most Important Earnings Announcements This Afternoon

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Zumiez Up on High Same Store Sales

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Nasdaq buys a stake in the London Stock Exchange

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Redefining Search and Search Engines

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Kiplinger’s Top 5 Stocks for Dad

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