Why I like LGF

Lionsgate is a company I like for the following reasons:
1. It is a content provider. In the age of live streaming, the content providers have lots of leverages. Its library has accumulated thousands of titles and is going to make stable cash flow.
2. The Huger Game's box office is flying. The serial will make at least 1.2 billion dollar for LGF in next four years. The last Twillight coming out in Nov. will bring another 300 million dollar.
3. The sale of TV guilder network will reduce the debt load by about 150 million. Given the cashflow from HG, I expect by the end of this year, the debt level will be around 600 million which is more comfortable for investors.
My target for LGF is 19-20 dollar in 6 months.

The future of TV

Currently, most people watch TV through either Cable or Satellite. It gives these distribution companies lots of power and stable cash flow. But the time has arrived for a big change. The future TV will most likely through streaming, either directly from the content provider (such as sports franchise) or a content distributor (such as netflix). You can choose your own news and sports provider through its own streaming. If you are a New York sports fan, you can sing up with MSG and get live streaming directly from MSG. If you like CNN, you should be able to get streaming from CNN. For movies and shows, most likely they will go through a distributor. The power will shift to content provider, that's no question about it.

Disney, MSG, Lionsgate and etc will benefit from the trend. The margin for distributor like netflix will be thin because of the competition and very low barrier for entry. Currently, my favorite picks are MSG and Lionsgate (LGF). I will write about LGF in another blog.

unrealistic number for Apple

I read a report today and the analyst is predicting that Apple is going to sell close to 150 million Ipad in 2012 and 2013 and will continue to grow 20% afterwards. It is just unrealistic. The world population is about 6 billion. There are over 4 billion live under $5/day and they are not going to buy an Ipad. It is basically one Ipad for every 10 people if the prediction is correct. （After 20 years growth, the total PC shipments in 2011 is 85 million units). Even if it is achievable, then in 2014, another 110 million units have to be sold to maintain 20% growth. That's a 70% replacement rate (assuming a new Ipad come out). in 2015, it will be 135 million units. This is just impossible. The best reference is ipod. During its best year, it sold 55 million units but it only last for one year. It went back to 40 million units. The total ipod sold in 10 years is about 300 million. And the growth is negative right now. The only way for Apple to maintain its growth rate is have new break though products. Over the last 10 years, it is ipod, iphone and ipad.

The failure of electronic car bodes well for crude oil

The recent spike in oil price is probably more to do with the situation in Iran. However, over long term, the failure of e-car to catch fire is a more serious issue. If we can not curtail demand, the supply will not meet demand over long term. The world is consuming 80-90 million barrel a day right now. The new supplies come on lines are all unconventional fields, such as oil sand, deep sea drilling and fraction. All these have serious environment consequences. Even if all these methods are safe, they may give us another 30 years supply. Unless we are serious about e-car, oil price will continue to be high.