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2018-01-19 09:21 by Karl Denninger
in Company Specific , 159 references
[Comments enabled]  

30% price increase for a "month-by-month" Prime "subscription"?

Yeah, ok..... we'll see how that works out.

The intent is clear; to try to force people onto annual payments to make them "sticky", as if the 20% upcharge wasn't enough.  So instead we'll make it a 55% increase if you want to go "month-by-month."

Here's the problem -- those who were doing monthly were those that are squeezed economically to start with.

The market loves the move, of course, since 30% price increases -- if you can make them stick -- look great.

What does it say about the profitability and cross-subsidization of the business, however, if that's what you wind up believing is "justified" by market conditions?

Pssst..... go back and read my article on cloud cross-subsidization being threatened for the real reason behind this price increase.  Of course there's been not one word on the likely arithmetic behind this move coming from the squeeze in that space, because, well, you'd have a wee problem trying to justify a P/E north of 200 if you did.

PS: They're pissing off all the Whole Paycheck customers too.... you know, those folks who overpay on purpose for groceries because it has some sort of "vibe" to it.  How's that going to work out when the quality goes to Hell -- oh wait, it already has.

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Where are the damned handcuffs?

(Reuters) - Alphabet Inc’s (GOOGL.O) Google said on Friday it took down 60 gaming applications after security firm Check Point said it had discovered new malicious software in the apps available to both children and adults at Google Play Store.

So let's decipher this.

  • Google removed the programs that were already on their "Play Store".

  • Google approved the publishers of said apps, and approved the apps.

  • Google was not the party that discovered the embedded malware.  Checkpoint was.

Therefore, Google does not effectively vet publishers, does not effectively vet apps, and did not do anything other than remove the material (and disable the publisher's accounts) after the fact.

Oh, and as for how many people likely got hosed?

Dubbed “AdultSwine”, the malware hides inside game apps that Google Play data says have been downloaded 3 to 7 million times, Check Point said in blog post on Friday.

3-7 million times.  Of course Google hasn't said jack about how many people got screwed but they know to the individual device because every person that downloads a thing on their "Play Store" leaves an indelible record that they did so.

Check Point said it expected AdultSwine and similar malware to be repeated and imitated by hackers, warning users to be extra vigilant when installing apps, especially those intended for use by children.

Why aren't we "extra vigilant" with holding the for profit companies that earn money from running said stores responsible for their lack of vetting of both the apps they put forward and the publishers they approve?

Yeah, I know, Google is a big company.  That just means they have more resources to use to interdict stuff like this before it gets out into the public.

If they gave a damn.

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2018-01-12 09:56 by Karl Denninger
in Company Specific , 211 references
[Comments enabled]  

No, it's not a bubble.

Not at all.

The FORWARD P/E on this piece of dogsqueeze is 162 and that assumes a doubling of EPS over the next 12 months.

The stock is up nearly 60% over the last 12 months which radically outstrips both earnings and revenue expansion.

May I note that this is a company that makes 1.2% in profit?  And by the way, that's not an aberration; the firm has basically never turned an operating profit better than a grocery store.

Ever, at any time in its history, which I remind you dates to the .COM start in the 1990s.

This is a company with more than $600 billion in market cap that generates only $16 billion a year in operating cash flow and just $10 billion in levered free cash flow (due to debt service, mostly.)  Said company has never, in its entire corporate history, managed to turn its insane sales rate into actual profits.


An aggressively growing company with a reasonable forward profit prospect may justify a P/E/G of 2ish.  Maybe 3.

17 is more than five times any other firm with real tenure in the market in history.

If you're in this stock now I hope you're prepared to lose far more than half from the current price.  I don't know how high it will go before that happens, but I'm damn sure it will.

You heard it here first: A collapse to somewhere around a reasonable P/E/G ratio would cut the price of the stock to about $250.

And that's assuming they're not forced to collect sales tax on all their so-called "third party" sales (they will be, one way or another, and probably this year), in which case that nice operating margin business (a 15% commission for what amounts to handling credit card charges at under a 2% discount rate) will contract materially and bury the company in a permanent flood of red ink.

Back in the 1990s Amazon went from about $2/share (in today's split-adjusted figures) to over $100 in the space of a couple of years.  I gave an interview shortly after selling MCSNet in which I was asked about whether I thought it should be bought.  My reply was that from the firm's history of inability to generate anything appreciable in actual profit margin, despite having a very impressive sales growth rate, I believed it was indeed a $2/share company and would be again.

It bottomed at roughly $4 in the .COM crash, which sounds like a horrid miss -- unless you bought it at $100, in which case being wrong by 50% still meant you lost damn near everything.  Of course if you held on you now have 12x your money, which some will point to in defense of doing so. 

However, if you had sold at $100 and bought at $4, well, well instead of having 12x your money you have something like 300 times as much, and you got to buy 20 times as many shares as well which means on a compounded basis you now have 6,000 times your money.

So please, do buy today at $1,300/share.  Trump relies on you eating 95% of that plus the entire opportunity cost from being in during the next crash for his daily proclamation on the "record stock market."  Oh, and do it on margin too.

Why not?  You can't lose with MAGA and Trump, right?

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2018-01-03 17:03 by Karl Denninger
in Company Specific , 565 references
[Comments enabled]  

Intel's "big dude" was just on CNBC with a dog and pony show and a host asking questions who obviously doesn't know what the hell he's talking about.

CNBC's people should all be fired.  Not bringing someone in to ask questions who actually understands what is going on here is criminally stupid -- but this is exactly what you'd expect from a channel that has as it's highest calling protecting the stock price of various firms.

Including Intel, I might add.

Let me make this clear:

Anyone who believes that a processor is "operating exactly as designed" when through any combination of unprivileged operations it allows access to data in a higher-privileged ring or one of equivalent privilege but not under the same guest instance, no matter how it happens, is a flat-out liar and in the context of a public company should be indicted NOW for making knowingly-false statements in relationship to their firm and its value.

To claim that this is not a "bug" or "flaw" is equally outrageous; this certainly was not documented or expected behavior by anyone.  That is the very definition of a bug.

The entire premise of privilege "rings" on a CPU is to allow the partitioning of said CPU so that certain data can only be accessed or modified through a series of known, documented and permitted operations.  Said operations then can implement whatever gating functions are appropriate and thus prohibit someone from extracting or changing privileged data without permission -- whether that extraction be from the supervisory code running with said privilege or from another "guest" running at a similar privilege to the item doing the extracting.

If you can get access to any such data via any other means then the entire premise on which the CPU's security model rests is void As just one example of how ugly this can get if I can steal arbitrary data from the running ("ring 0") hypervisor that means I can steal a password hash used to access same or the allegedly-secure private key.  Having done so I can then take all the time in the world to crack that hash offline or simply use said private key and now I'm able to sign into the hypervisor and steal all of the data and software from all of the guest instances on that physical piece of hardware, including any encryption keys that are in use and there is exactly no way for the victim guest(s) to know that it happened.

If you sell someone a product that represents it has such a security model and it can be breached in this fashion, and such person(s) bought that product believing that the security model actually works when it does not it is my contention you have committed fraud and are liable not only for the price of the CPU but also all the consequential damages that, in this case, include the cost of replacement motherboards and system RAM since newer-generation chips without said flaw will not work in the older boards and with older memory designs.

That there are "workarounds" that come with outrageously high performance penalties -- in this case it's being discussed that they may be as much as 50% or more does not change any of this.  You didn't sell said processors disclosing that said "workarounds" were necessary and if you did you might not have sold any of said processors because at the degraded performance level they are likely worthless in the market when compared against others made by competitors.

Intel should be forced to buy back all of the impacted CPUs and the boards and RAM they run with at their original invoiced price, or to replace impacted system boards including the CPU, board itself and RAM with non-defective units of at least equivalent performance since newer CPUs will not socket into the existing boards -- and that assumes the chip is not soldered in place as is the case with some newer laptops, in which case the entire machine needs to be replaced.

Intel knows all of this and they also know that any such obligation imposed upon them going this far back into their product line (hint: we're talking the 1990s here!) would bankrupt the company so now what we have is a dance taking place with media figures that are too ****ing stupid to know what questions to ask and where and when to push back when the game of "dodge" takes place instead of taking that executive and skewering him on live television.

Oh, and if you think this is a "new" discovery by Google as claimed, and "nobody else has or has used it" -- you're nuts.  That I may not be able to prove but there is utterly no reason to believe that state-level actors have had no knowledge of this until the last couple of weeks.

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Oh if true this is nastiness .....

So, Poole used Geekbench's benchmarking testing to find out. He conducted single-core tests on iPhone 6s and iPhone 7 units running different versions of iOS. His findings suggest that Apple has made a tweak in iOS 10.2.1 to 11.2.0 that appears to throttle the iPhone's performance when the smartphone's "battery condition decreases past a certain point," Poole said.

The change was likely made after iPhone 6s users reported that their smartphones would spontaneously shut down even when there was seemingly more than enough life left on their batteries. Apple acknowledged the shutdown problem and offered a battery replacement program. The company also released an update to address it.

I'll tell you what's going on here with the batteries.

As lithium batteries age they are unable to sink as much current as they used to be able to -- either charging or discharging.  At a certain point this becomes noticeable; you seem to have plenty of power, you turn on the GPS in the phone (which has a high drain) and whammo -- the phone shuts down.

"What?!  I had 40% left!"

Uh, no you didn't.  The battery was severely compromised; it had voltage but no current delivery capability and when you hit it with a heavy load the voltage collapsed.

If you've ever gotten into your car, the lights come on, you turn the key and click! -- that's the same thing.  Voltage looks ok at first blush (your lights are working inside the cabin) but as soon as you try to put a heavy load on the battery (for the starter) the voltage goes to an effective zero because the battery cannot deliver the required current.

The correct answer to this problem is to replace the battery -- it's worn out.

Of course that's hard and expensive if the unit is out of warranty because all the iPhones have sealed the battery inside the case, which prevents you from changing it quickly and easily.  So have most other manufacturers these days.

But what if the phone is not out of warranty?

Then Apple would eat the repair.

So if they throttle the CPU when the battery is a bit low and they detect an older device then Apple might get away with not replacing as many batteries under warranty on those devices.  If the user gets another month or two before he gets pissed the company avoids warranty repairs.  There's enough incentive to do it right there; we need go no further.

Note that iPhones frequently do not go a full day on a charge.  Most lithium cells are good for about 500 cycles.  If you have to charge twice in a day this means that before one year is up you have a good crack at having a dead battery.

Which Apple eats, unless......


No, but a pretty darn good hypothesis.  And if they can get you to buy a new phone instead by thinking your "old phone" is "too slow" then it's so much the better -- for them, of course, even though the only real fault is that the battery has worn out.

There's no proof that's what is going on of course, but this is a scenario that fits what's being reported.....

Oh wait... there is proof.

Our goal is to deliver the best experience for customers, which includes overall performance and prolonging the life of their devices. Lithium-ion batteries become less capable of supplying peak current demands when in cold conditions, have a low battery charge or as they age over time, which can result in the device unexpectedly shutting down to protect its electronic components.

Last year we released a feature for iPhone 6, iPhone 6s and iPhone SE to smooth out the instantaneous peaks only when needed to prevent the device from unexpectedly shutting down during these conditions. We’ve now extended that feature to iPhone 7 with iOS 11.2, and plan to add support for other products in the future.

In other words rather than replace the batteries which are old and failing they'll "mask" it -- until it's on you and then hope you buy a new phone.

Oh, and cripple your device's performance at the same time which they also hope will cause you to buy a new phone.

Thanks for the admission, *******s.

Why didn't they pop up a message and warn you that the battery is compromised?


When does this firm have a zero stock price as a result of this sort of outrageous and intentional crippling of something you own for the explicit purpose of trying to con you into buying a replacement when they deliberately caused the condition you're complaining about?

When you stop behaving like children and demand that this sort of crap be met with a prison term.

Which will be never, right?

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