Morning folks, I spent the first half of last night taking care of Amaris, she’s started giggling when I sing and swing her arms and nuzzle her nose with the chorus “I shake my booty cuz that’s what I do.” You can’t help but smile and laugh when a baby smiles and laughs, huh? Bigger sister is all about tents and cats and iPad movies in the rare times she slows down. At 22 months, it’s amazing to see how she’s a total expert on the iPad — swiping it to the left to unlock, opening and playing with kiddie apps she likes and surfing her growing library of kiddie movies in the Videos section, including opening the one she wants to watch and/or backtracking and finding a different movie. She doesn’t have the patience to wait the six to ten seconds it takes for the Netflix app to load up, or we’d really be in trouble.
Speaking of the Netflix app, here are some thoughts on how Netflix has gotten to be so dominant and why we stick with it even as we did trim 1/5th of our position last week.
From Ubergizmo: “You can access Netflix using a wide variety of platforms, including but not limited to streaming TV hardware, but it turns out that Netflix wanted to build its own set-top box. Apparently work had come so far along back in 2007 that the company had even started to shoot promotional videos that were destined to appear on the website, but it shelved the project at the last moment and has kept it a secret ever since. All this according to Barry Enderwick, ex-director of global marketing at Netflix. He explains that Netflix decided to shelve the project that it had sunk a lot of time and money into developing because the company’s vision had become greater.”
That “greater vision” was Netflix truly catching onto the concept of the App Revolution setting itself up to become a de facto standard way of watching TV and movies now — on any platform. I was watching Jessica Jones the new Marvel-based TV series from Netflix on a Roku TV we put in the room where Amaris sleeps. We didn’t even bother hooking up a cable box to the TV set, as each of us has a favorite show or two on Netflix we watch in there instead, since we’re only in there late at night and aren’t missing any live sports TV shows.
There are dozens of competing streaming TV platforms on the Roku TV, but Netflix is the only one we use and the only one most people use. That’s what it means to become a de facto standard. I can’t even bear to use the on demand function that my Dish subscription comes with. I don’t want to mess with another platform and the difficulty of finding what I’m looking for. Netflix continues to evolve in how it lays out its apps too, but remaining very easy to use.
If and when Netflix finally gets into streaming live sports, it would be game over for every cable company on the planet. But on that note,take a look at this fascinating and sometimes brilliant commentary from $NFLX Chief Content Officer including the fact that Netflix hints at interest in sports during conference presentation.
And here’s more from Ted Sarandos that same presentation as a reminder of the main reason we own $SNE: “At the start of 2015, Netflix was set to shell out $9.4 billion for original and acquired content. There are more bidders than ever these days. In addition to Netflix, streaming services Amazon Prime and Hulu are hungry for content. Hulu, in particular, has ramped up its spending on content, both original (family dramedy ‘Casual’) and syndicated (this summer’s high-profile purchase of ‘Seinfeld’). But Sarandos said Netflix’s two main streaming competitors are mostly driving up prices for themselves by being more indiscriminate in their spending.”
Meanwhile, as we’ve been finding Revolutions to invest in, stop me if you’ve seen me write this before: The energy sector is getting crushed yet again.
Are there some great bargains in any of these energy stocks getting crushed again today? I did some of my trademark fundamental and balance sheet analysis on a stock I’ve been seeing mentioned everywhere and was asked about just this morning in the Trading With Cody Chat Room – Kinder Morgan, KMI.
There’s no doubt that Kinder Morgan KMI has a heck of a yield right now at nearly 12%, but there’s a lot not to like about the company here too. The whole energy supply side sector is subject to having customers going bankrupt and not being able to pay their bills and that process is likely still just getting started especially if oil/energy prices continue to hit new lows as oil hits $38/barrel today at fresh new seven year lows.
When I first looked at KMI myself the other day, I couldn’t hardly believe my eyes when I saw that the company is carrying $40 billion in long-term debt on the balance sheet. $40 billion! The company’s got $7 billion in cash and that could/should provide some cushion. But there’s a lot of debt and potential losses to cover in the new few quarters ahead and that can eat through $7 billion in a hurry.
I was managing the Wholesale Division of a start-up telecom company in 2001, and I vividly remember seeing the devastating domino effect of rolling sector bankruptcies as dozens of publicly-traded and privately funded telecom companies collapsed in value under the strain of overbuilt facilities.
On the other hand (or foot so to speak) — Feet to fire, I’d bet that KMI and a bunch of other hard hit energy stocks like ETP are actually about to put in a short-term bottom here around, if only a relief rally back to where they were late last week, which would be a 20% pop or more from these levels and where investors can finally catch their breath. But why risk my time and money and reputation on cyclical commodity companies? Let’s stick with secular growth in revolutionary technologies.