Facebook IPO

It opened at 42.90 AND NOW TRADES at 40. I think the price is ok if you want to buy. My expectation is facebook will grow to today's google size in about 5 years. Which means in 5 year the stock can trade around 72.

Apple's price is getting interesting. I will buy if it trades below 515.

The european turmoil is good for U.S. Consumers and bad for business profits

The Greek is in the process of going bankrupt and leaving euro, which will have a huge implication for Europe. It will be difficult to large global companies, such as IBM, JPM, SAP and resources companies to generate profits in Europe. The strong U.S dollar will also make oversea profits smaller in U.S dollar term. On the other hand, the lower prices for oil, base metal, agriculture products will be good for U.S consumers. Over the last few years, the real inflation experienced by consumers is much higher than the official number (2%).

msg

MSG reported earnings and it well ahead estimates. Just as I told you three months ago when Lin first emerged, I predited his impact will be way higher than analysts estemates. Now the stock has risen to fully valued, I will take profit and move the money to LGF.

MSG, LGFand Apple

MSG is around $35, which is my target. I will take profit. But over long run, it has some unique assets and should perform well. I will buy back around 33.

Lionsgate has dropped 15% since I wrote the blog. The negatives are 1. insider are selling. 2. Ender's Game has been pushed back 6 months. 3. Ross did not renew contract for Hunger Game. But the fundamental of the business did not change. Hunger Game is better than expected. The sale of non-core assets will start soon. The debt will be reduced. The earnings for next few years will be over $1.5/share. It bodes well for the company. I still believe it should trade at 17-20 range.

Apple is everyone's favorite. I have questions about its long term perspective. I will not be surpriced it Apple is trade lower 5 years from now. Both the smartphone market and Ipad market are maturing fast.

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.