Saturday, February 20, 2010

Catch the next Shooting Star? Investing in who will deliver your next movie

Dow Jones 10,402.35 (Up) week ending 2/19

Wall street is littered with companies that have burst on to the scene providing movies and video content and game cartridges. There is probably an imprinted chart pattern out there somewhere that they all repeat. A growth pattern spurt and sudden rise in the price in the stock; then a rise up to a stock price with too much expectation built in which is unsustainable. Later, a sudden precipitous fall from grace and a never ending downdraft in the stock price. Look familiar Blockbuster??

The next up & coming "American Idol" star in this area is CoinStar(Symbol CSTR) with their REDBOX DVD and game cartridge rental machine. As of 8/13/09 they had rented their half Billionth DVD. On New Years Eve they rented 2 Million DVDs. So much for Dick Clark and Ryan Seacrest. I should do my blog on Tuesday, because I would have saved you some money, the stock was up 6% this week. I would say for the one year investor you are still ok to buy it here. 5 years sales growth has been 27.95%. As noted in the shooting star title these are trading stocks. You need to know when to exit ahead of time.

The reigning superstar of this area is of course Netflix (Symbol NFLX). It is pegged right now at a PE of 26, curiously a number very close to that Coinstar 28% growth rate.

The 12 month Total Return on the stock is 83.9%. Return on Equity (ROE) of 42.10%. Things look generally good. But 5 analysts have strong sell recommendations on the stock. "Chicken Little, the sky is falling"! Maybe they have already studied the aforementioned shooting star pattern. Or they have an overwhelming fear of Comcast,Time Warner,Amazon & Tivo, Apple I-Tunes, Game-Stop and a million other ways to deliver this content to you, including free DVDs being lent at your local library.

All I'm saying is, you can do a little trading here. There seems to be a big enough pie in this video and game content area to divide up with everyone.

I will also make a prediction here that the hockey team of the Russian Federation will win the Winter Olympic Gold. Sorry, Canada, Sweden & USA, I need to call them like I see them.

So where you gettin' your movie today?


1 comment:

  1. Should have looked at TIVO closer too!! Freewilly

    TiVo Gets Favorable Ruling In Patent Case; Stock Soars

    (RTTNews) - Thursday, TiVo Inc., (TIVO) said the United States Court of Appeals for the Federal Circuit ruled in its favor, affirming the district court's finding of contempt against EchoStar Corp. (SATS) and Dish Network Corp. (DISH) including both the disablement and infringement provisions. TiVo shares soared more than 56% on the Nasdaq following the news.

    TiVo had initially sued Dish in 2004 for infringement of its digital video recorder Time Warp technology patent, which lets viewers pause, rewind and fast-forward live shows.

    The ruing paves way for Alviso, California-based TiVo to receive approximately $300 million in damages and contempt sanctions for EchoStar's continued infringement through July 1, 2009. The court's ruing is only a partial victory for TiVo which had sought $1 billion. The company said that it will seek further damages and contempt sanctions for the period of continued infringement thereafter.

    Dish Network L.L.C., a subsidiary of DISH Network Corp., and EchoStar Technologies L.L.C., a subsidiary of EchoStar Corp. in a statement expressed disappointment at the Federal Circuit Court decision, but indicated it would seek en banc review by the full Federal Circuit. The companies added that they will also be proposing a new design-around to the district court for approval. They said that at this time, their DVR customers are not impacted.

    The U.S. District Court of the Eastern District of Texas decided that Dish is in contempt of a permanent injunction on TiVo's DVR patent, and ordered Dish to pay $103 million plus interest in damages to TiVo.

    In his final judgment, Judge David Folsom gave EchoStar and DISH 30 days to disable all but about 192,000 DVRs distributed among its 13.6 million customers.

    However, the Appeals Court today stayed the injunction, pending an appeal by Dish and Echo.

    In October 2008, TiVo received $104.6 million from EchoStar, which includes the initial $74 million in damages awarded by the United States District Court for EchoStar's willful patent infringement as well as supplemental damages covering the period through September 8, 2006 and interest.

    In the first week of October 2008, TiVo said that the US Supreme Court denied EchoStar Corp.'s petition to review verdict of the Federal Circuit Court for appeals on a DVR patent infringement case.

    The company said that, earlier the US Court of Appeals for the Federal Circuit had unanimously upheld the District Court judgment of willful patent infringement, full award of damages, and a permanent injunction against EchoStar's infringing DVR products.

    In 2006, a jury found Dish and EchoStar liable for infringing the company's DVR patent. U.S. District Court Judge David Folsom in Texas then issued a permanent injunction that barred EchoStar and Dish from continuing to infringe on the company's invention.

    Dish and EchoStar said they developed a technological work-around that allowed them to offer DVR service without infringing TiVo's patent, but the judge later ruled that the work-around violated the injunction because it still infringed TiVo's intellectual property.

    DVR technology allows viewers to pause, rewind and fast-forward television programs, recorded on a set-top hard drive.

    TIVO is currently trading at $15.89, up $5.64 or 56%, on a volume of 49 million shares on the Nasdaq.

    DISH is currently trading at $20.41 down $1.30 or 5.99%, on a volume of 9.57 million shares on the Nasdaq.