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It was a very interesting week in the tech space for me. Before getting started, I’ll simply confirm that this morning, I’ll be closing out the trade where I am long eBay (EBAY) and short IAC Interactive (IACI), eBay has been doing incredibly well and the trade currently stands at +26,14%.
On Monday, Apple (AAPL) announced the mini iPad, a 4th generation standard iPad and a new mini MacBook. The most anticipated product was the mini iPad. It’s a product that excites a lot of consumers but not me personally. I do understand that there is some demand for it, so it makes a lot of sense to sell it. But it’s not something that changes how I value Apple.
Also Monday, Yahoo reported earnings for the first time since Marissa Mayer took over. The earnings were nice and the stock did well but the most impressive by far was how Mayer presented her vision. It was very strong, very focused, she seems to know exactly where she’s going, has already made significant changes in products focus, and in the entire senior leadership. All of those are costly but those are steps Yahoo needed to take. Frankly, if Mayer had said that small changes were required, I would have been negative. But she’s taking drastic action and I’m a believer. Look for me to go long Yahoo at some point in the future.
Then on Tuesday, both Netflix (NFLX) and Facebook (FB) announced results. Clearly, the most anticipated one for me was Facebook. As a Facebook shareholder, I was anxious to see what the numbers would look like and what the earnings call would reserve. I was very happy with the results and even happier with the earnings call. I don’t think i was as surprised as the street seems to be but then again, it’s fair to say that I’m much more optimistic about Facebook’s future than the average investor. Yes, the P/E ratio remains very high, but Facebook is just getting started in terms of generating revenues from its data and traffic. I will continue to look into all of the quarterly data and will certainly share more in the next few weeks. I’m glad people started believing that having tons of mobile users is a good thing..seems kind of obvious, even though the traditional “display advertising” doesn’t apply as well.
Netflix on the other hand announced decent revenues but had very disappointing guidance as the company now expects to add between 4.7 and 5.4 million subscribers this year to its streaming service, well south of the 7 million it had been looking for in the past. The fact is that Netflix faces incredible competition from companies such as Microsoft (MSFT), Google (GOOG), Apple (AAPL), cable companies, etc. It’s just not an easy business these days.
What are your thoughts on these companies? I’d love to hear:)