Hey folks,
In the Pacific Northwest it has been weeks without power for awhile. I wanted to update some trades and will have some more tonight.
Close short GOOG 510 call @ $2.20
Close short GOOG 460 put @ 3.20
I will update tonight.
GL
Thursday, January 04, 2007
Sunday, December 10, 2006
We are going into the slow X-mas months
Going into the slow part of December we are going to mostly sit the market. I am going to sell some more GOOG January 460 puts while wrapping my December position. I am also going to play a January 510/ March 540 diagonal spread. I am going to see if I can get the premium of the 510's to pay for part of the 540's. Please note this diagonal spread is a very risky play and one would not normally sell the puts and play the spread because the exposure to loss is amplified.
Sell 500 shares TIE @ $33.50=$16,750.00
Sell 300 shares ATI @ $98.20=$29,460.00
Sell 300 shares BA @$90.13=$27039.00
Buy to close 4 contracts of GOOG Dec 460 puts (GOPXL)@ $70.00=($280.00)
Sell to open 4 contracts of GOOG Jan 460 puts @ $710.00=$2840.00
Buy to open 5 contracts GOOG March 540 call @ $1370.00=($6850.00)
Sell to open 5 contracts of GOOG Jan 510 call @ $830.00=$4150.00
Transactions: $73109.00
Commision: $88.00
Total transactions: $73021.00
Long 300 shares FCX @ $61.81=$18,543.00
Short 4 contracts of GOOG Jan $460.00 puts (GOPXL) @ $830.00=($2840.00)
Short 5 contracts GOOG 510 call @ 830.00=($4150.00)
Long 5 contracts GOOG March 540 call @ $1370.00=$6850.00
Total portfolio: $18,403.00
Total cash:$88,534.80
Total gain to date: $6937.80 (6.94%)
GL investors
Disclosure: I am not currently long or short any of the shares aforementioned.
Note to all readers:
This post and all other posts in this blog are for entertainment purposes only. All of the stocks listed are very highly speculative, and the portfolio is not diversified and could produce severe losses if you were to invest in these stocks. None of these stocks represent a recommendation in any way. As an individual investor, you have to assume your own risk. Prior performance is no guarantee of future returns.
Sell 500 shares TIE @ $33.50=$16,750.00
Sell 300 shares ATI @ $98.20=$29,460.00
Sell 300 shares BA @$90.13=$27039.00
Buy to close 4 contracts of GOOG Dec 460 puts (GOPXL)@ $70.00=($280.00)
Sell to open 4 contracts of GOOG Jan 460 puts @ $710.00=$2840.00
Buy to open 5 contracts GOOG March 540 call @ $1370.00=($6850.00)
Sell to open 5 contracts of GOOG Jan 510 call @ $830.00=$4150.00
Transactions: $73109.00
Commision: $88.00
Total transactions: $73021.00
Long 300 shares FCX @ $61.81=$18,543.00
Short 4 contracts of GOOG Jan $460.00 puts (GOPXL) @ $830.00=($2840.00)
Short 5 contracts GOOG 510 call @ 830.00=($4150.00)
Long 5 contracts GOOG March 540 call @ $1370.00=$6850.00
Total portfolio: $18,403.00
Total cash:$88,534.80
Total gain to date: $6937.80 (6.94%)
GL investors
Disclosure: I am not currently long or short any of the shares aforementioned.
Note to all readers:
This post and all other posts in this blog are for entertainment purposes only. All of the stocks listed are very highly speculative, and the portfolio is not diversified and could produce severe losses if you were to invest in these stocks. None of these stocks represent a recommendation in any way. As an individual investor, you have to assume your own risk. Prior performance is no guarantee of future returns.
Wednesday, November 29, 2006
The market is somewhat back on track
It looks like the market is getting back on track a little. The oil stocks had a very nice couple day run and I am taking profit. Time to go full bore in specialty metals. Following are the trades for the fantasy portfolio.
Buy 500 shares TIE @ $30.42=($15,210.00)
Buy 300 shares ATI @ $88.46=($26,538.00)
Buy 300 shares BA @$88.89=($26,667.00)
Sell 4 contracts of GOOG Dec 460 puts (GOPXL)@ $320.00=$1,280.00
Sell 500 shares long COP @ $66.45=$33,225.00
Sell 300 shares long OIH @ $145.89=$43,767.00
Total transactions: $9,857.00
Commissions: $64.00
Total transactions: $9793.00
Portfolio
Long 300 shares FCX @ $61.64=$18,492.00
Long 500 shares TIE @30.42=15,210.00
Long 300 shares ATI @ 88.46=$26,538.00
Long 300 shares BA @$88.89=$26,667.00
Short 4 contracts of GOOG Dec $460.00 puts (GOPXL) @ $320.00=($1280.00)
Total portfolio: $85,627.00
Total cash:$15,513.80
Total gain to date: $1011.80 (1.14%)
Justifications: The defensive plays in oil worked real well but I think the big runs are over. I took the profit.
BA: It is time to get back in to Boeing with the market correction mostly behind us.
TIE: Time to load up on more metals. Titanium appears to be doing well so I think this will be a nice play.
ATI: This is another specialty metal play.
GOPXL: I am slightly bullish on GOOG but think it might still be in snide for awhile. I wouldn't mind buying GOOG if it hit $460 but most likely I'll just let these contracts expire by December option expiration.
GL investors
Disclosure: I am not currently long or short any of the shares aforementioned.
Note to all readers:This post and all other posts in this blog are for entertainment purposes only. All of the stocks listed are very highly speculative, and the portfolio is not diversified and could produce severe losses if you were to invest in these stocks. None of these stocks represent a recommendation in any way. As an individual investor, you have to assume your own risk. Prior performance is no guarantee of future returns.
Buy 500 shares TIE @ $30.42=($15,210.00)
Buy 300 shares ATI @ $88.46=($26,538.00)
Buy 300 shares BA @$88.89=($26,667.00)
Sell 4 contracts of GOOG Dec 460 puts (GOPXL)@ $320.00=$1,280.00
Sell 500 shares long COP @ $66.45=$33,225.00
Sell 300 shares long OIH @ $145.89=$43,767.00
Total transactions: $9,857.00
Commissions: $64.00
Total transactions: $9793.00
Portfolio
Long 300 shares FCX @ $61.64=$18,492.00
Long 500 shares TIE @30.42=15,210.00
Long 300 shares ATI @ 88.46=$26,538.00
Long 300 shares BA @$88.89=$26,667.00
Short 4 contracts of GOOG Dec $460.00 puts (GOPXL) @ $320.00=($1280.00)
Total portfolio: $85,627.00
Total cash:$15,513.80
Total gain to date: $1011.80 (1.14%)
Justifications: The defensive plays in oil worked real well but I think the big runs are over. I took the profit.
BA: It is time to get back in to Boeing with the market correction mostly behind us.
TIE: Time to load up on more metals. Titanium appears to be doing well so I think this will be a nice play.
ATI: This is another specialty metal play.
GOPXL: I am slightly bullish on GOOG but think it might still be in snide for awhile. I wouldn't mind buying GOOG if it hit $460 but most likely I'll just let these contracts expire by December option expiration.
GL investors
Disclosure: I am not currently long or short any of the shares aforementioned.
Note to all readers:This post and all other posts in this blog are for entertainment purposes only. All of the stocks listed are very highly speculative, and the portfolio is not diversified and could produce severe losses if you were to invest in these stocks. None of these stocks represent a recommendation in any way. As an individual investor, you have to assume your own risk. Prior performance is no guarantee of future returns.
Monday, November 27, 2006
The word for today is capitulation
The market was heading ever higher with seemingly unstoppable speed. Then all of the sudden crash!! The dollar was hitting 22 month lows against the Euro. The market was also seriously overbought. The correction came and there was no where to run and no where to hide. My guess is that this market will be stuck in the mud for at least a few days if not weeks. The Nasdaq closed down $54.34 and the Dow closed down $158.46. The high flyer's were hit the hardest. Following are some stocks:
CSCO: $25.80 down $1.04
BIDU: $106.85 down $7.14
RIMM: $135.30 down $6.26
AMZN: $40.85 down $1.56
AAPL: $89.54 down $2.09
BA: $87.37 down $2.40
JCG: $40.21 down $3.07
NYX: $101.11 down $7.15
CME: $532.77 down $20.47
BOT: $157.12 down $6.83
It was not a good day to be in the market unless a person was short. I don't believe that tomorrow will be a bad day but I also don't believe it will be stellar. Time to do a little risk management with the portfolios.
GL investors
Disclosure: I am not currently long or short any of the positions in this post.
Note to all readers:This post and all other posts in this blog are for entertainment purposes only. All of the stocks described are very highly speculative. Investing in the stocks mentioned could produce severe losses if you were to invest in these stocks. None of these stocks represent a recommendation in any way. As an individual investor, you have to assume your own risk. Prior performance is no guarantee of future returns.
CSCO: $25.80 down $1.04
BIDU: $106.85 down $7.14
RIMM: $135.30 down $6.26
AMZN: $40.85 down $1.56
AAPL: $89.54 down $2.09
BA: $87.37 down $2.40
JCG: $40.21 down $3.07
NYX: $101.11 down $7.15
CME: $532.77 down $20.47
BOT: $157.12 down $6.83
It was not a good day to be in the market unless a person was short. I don't believe that tomorrow will be a bad day but I also don't believe it will be stellar. Time to do a little risk management with the portfolios.
GL investors
Disclosure: I am not currently long or short any of the positions in this post.
Note to all readers:This post and all other posts in this blog are for entertainment purposes only. All of the stocks described are very highly speculative. Investing in the stocks mentioned could produce severe losses if you were to invest in these stocks. None of these stocks represent a recommendation in any way. As an individual investor, you have to assume your own risk. Prior performance is no guarantee of future returns.
Time to go mostly cash.
Today is a bad day for the market and I think I will sit out of all the marquee plays for now. As I had said yesterday, that I would either sell at a $.50 rise or wherever the stock is an hour out of the gate (with the exception of FCX). The trades to buy COP and GG didn't reach their target. Let's account for all the trades last week:
Sold at Earnings
Buy 1000 shares of BRCD @ $8.18 sell at $8.49=$310.00
Buy 200 shares of GME @ $50.70 sell at $53.00=$460.00
Buy 400 shares of DELL @ $24.76 sell at $24.82=$24.00
Bought last week and sold today:
Buy 1000 shares of LCRD @ $12.41 sell today at $12.40=($10.00)
Buy 200 shares EFUT @ $45.00 sell today @ $46.50=$300.00
Buy 500 shares MRVL @ $21.25 sell today @ $20.80=($275.00)
Buy 200 shares SNDK @ $48.95 sell today @ $46.75=($440.00)
Short position covered last week:
Cover 500 shares RIMM @ $138.00 (shorted @$127.50) =($5250.00)
Cover GOOG @ 495.83 (shorted @ $491.93)=($390.00)
Buy to close 1 contract GOPXI @ $520.00 (Sold@ $870.00)=$350.00
Positions previously accounted:
Sell 100 shares BA @ $88.20=$8,820.00
Sell 1000 shares GT @ $17.40=$17,400.00
Positions bought today at close:
500 shares of COP @ $64.19=($32,095.00)
300 shares of OIH @$138.20=($41,460.00)
Net transactions ($58,256.00)
Commission: ($242.00)
Total transactions($58,498.00)
Portfolio:
300 shares long FCX @ $61.45=$18,435.00
500 shares long COP @ $64.19=$32,095.00
300 shares long OIH @ $138.20=$41,460.00
Total portfolio: $91,990.00
Total cash:$5,720.80
Total gain to date: -$2289.20 % (-2.23%)
Today's market action is a normal correction. This is why I am liquidating stocks of a non defensive nature. I will stay long the metals and the oil stocks COP and OIH through this correction. Between the short position in RIMM and today's action, the small loss is not too bad.
GL investors
Disclosure: I am not currently long or short any of the shares aforementioned.
Note to all readers:This post and all other posts in this blog are for entertainment purposes only. All of the stocks listed are very highly speculative, and the portfolio is not diversified and could produce severe losses if you were to invest in these stocks. None of these stocks represent a recommendation in any way. As an individual investor, you have to assume your own risk. Prior performance is no guarantee of future returns.
Sold at Earnings
Buy 1000 shares of BRCD @ $8.18 sell at $8.49=$310.00
Buy 200 shares of GME @ $50.70 sell at $53.00=$460.00
Buy 400 shares of DELL @ $24.76 sell at $24.82=$24.00
Bought last week and sold today:
Buy 1000 shares of LCRD @ $12.41 sell today at $12.40=($10.00)
Buy 200 shares EFUT @ $45.00 sell today @ $46.50=$300.00
Buy 500 shares MRVL @ $21.25 sell today @ $20.80=($275.00)
Buy 200 shares SNDK @ $48.95 sell today @ $46.75=($440.00)
Short position covered last week:
Cover 500 shares RIMM @ $138.00 (shorted @$127.50) =($5250.00)
Cover GOOG @ 495.83 (shorted @ $491.93)=($390.00)
Buy to close 1 contract GOPXI @ $520.00 (Sold@ $870.00)=$350.00
Positions previously accounted:
Sell 100 shares BA @ $88.20=$8,820.00
Sell 1000 shares GT @ $17.40=$17,400.00
Positions bought today at close:
500 shares of COP @ $64.19=($32,095.00)
300 shares of OIH @$138.20=($41,460.00)
Net transactions ($58,256.00)
Commission: ($242.00)
Total transactions($58,498.00)
Portfolio:
300 shares long FCX @ $61.45=$18,435.00
500 shares long COP @ $64.19=$32,095.00
300 shares long OIH @ $138.20=$41,460.00
Total portfolio: $91,990.00
Total cash:$5,720.80
Total gain to date: -$2289.20 % (-2.23%)
Today's market action is a normal correction. This is why I am liquidating stocks of a non defensive nature. I will stay long the metals and the oil stocks COP and OIH through this correction. Between the short position in RIMM and today's action, the small loss is not too bad.
GL investors
Disclosure: I am not currently long or short any of the shares aforementioned.
Note to all readers:This post and all other posts in this blog are for entertainment purposes only. All of the stocks listed are very highly speculative, and the portfolio is not diversified and could produce severe losses if you were to invest in these stocks. None of these stocks represent a recommendation in any way. As an individual investor, you have to assume your own risk. Prior performance is no guarantee of future returns.
Sunday, November 26, 2006
Thanksgiving trades
With Monday looming with the dollar dropping I am going to liquidate all positions for now except FCX.
Following are the trades sell at $.50 up from the morning. Any stocks that are down an hour out of the gate will be sold at the price at that time.
I am going to put in a buy order for 1000 shares of GG at $28.00
I am going to put in a buy order for 500 shares COP at $64.00
I will make some option trades at the end of the day.
I hope everyone had a nice turkey day.
GL investors
Disclosure: I am not currently long or short any of the positions in this post.
Note to all readers:
This post and all other posts in this blog are for entertainment purposes only. All of the stocks described are very highly speculative. Investing in the stocks mentioned could produce severe losses if you were to invest in these stocks. None of these stocks represent a recommendation in any way. As an individual investor, you have to assume your own risk. Prior performance is no guarantee of future returns.
Following are the trades sell at $.50 up from the morning. Any stocks that are down an hour out of the gate will be sold at the price at that time.
I am going to put in a buy order for 1000 shares of GG at $28.00
I am going to put in a buy order for 500 shares COP at $64.00
I will make some option trades at the end of the day.
I hope everyone had a nice turkey day.
GL investors
Disclosure: I am not currently long or short any of the positions in this post.
Note to all readers:
This post and all other posts in this blog are for entertainment purposes only. All of the stocks described are very highly speculative. Investing in the stocks mentioned could produce severe losses if you were to invest in these stocks. None of these stocks represent a recommendation in any way. As an individual investor, you have to assume your own risk. Prior performance is no guarantee of future returns.
FCX and PD plan marriage by almagamation (copper and Gold)
Last Sunday FCX Freeport McMoRan made an offer to buy PD Phelps Dodge for $88.00 a share plus .67 shares of FCX stock. Is this a good deal? Will this create too much dilution?
I think this is pretty darn good deal for FCX. Let's look at the numbers:
PD
Shares outstanding: 203.99
Cash less debt: $3.17 billion
2006 forward EPS: $16.40
2007 forward EPS: $15.95
Total net income for 2007 at consensus: $15.95 x 203.99 million=$3.25 billion
FCX
Shares outstanding: 196.93 million
Cash less debt: -$76 million
2006 forward EPS consensus: $6.99
2007 forward EPS consensus: $5.65
Total net income for 2007 at consensus: $5.65 x 196.93 million $1.11 billion
New shares created: .67 x 196.93 million=131.94 million
Total new shares of the combined company: 196.93 million + 131.94 million=328.87 million
Total debt: ($88.00 x 203.99million)+ $76million -$3.17 billion=$14.86 billion
Total 2007 net income of new company: $1.11 billion+$3.17 billion=$4.28 billion
Current stock price: $61.86
Forward 2007 EPS of combined company: $4.28 billion/328.87 million shares=$13.01
Forward PE of the new company: $61.86/$13.01=4.75
This deal if it happens as advertised would create tremendous share holder value. The forward PE should be somewhere between 8 to 10. This would mean that the shares should be at $104.19 to $130.23. If copper and gold remain at their current levels, the EPS for 2007 could be quite a bit more. This combined stock could be a $180 to $200 stock with high copper prices.
The risks that remain are the deal isn't approved by share holders. We saw what happened when PD tried to aquire Inco and Falconbridge. The other problem would be if metal prices tumble next year. I think that both of these scenarios represent a real possibility.
I have to admire the way that this deal was structured even though there is debt. This debt could be paid off in a short period of time and it doesn't create too much dilution. If this deal goes through, it would be an amalgamation made in heaven.
GL investors
Disclosure: I am not currently long or short FCX or PD.
Note to all readers: This post and all other posts in this blog are for entertainment purposes only. All of the stocks described are very highly speculative. Investing in the stocks mentioned could produce severe losses if you were to invest in these stocks. None of these stocks represent a recommendation in any way. As an individual investor, you have to assume your own risk. Prior performance is no guarantee of future returns.
I think this is pretty darn good deal for FCX. Let's look at the numbers:
PD
Shares outstanding: 203.99
Cash less debt: $3.17 billion
2006 forward EPS: $16.40
2007 forward EPS: $15.95
Total net income for 2007 at consensus: $15.95 x 203.99 million=$3.25 billion
FCX
Shares outstanding: 196.93 million
Cash less debt: -$76 million
2006 forward EPS consensus: $6.99
2007 forward EPS consensus: $5.65
Total net income for 2007 at consensus: $5.65 x 196.93 million $1.11 billion
New shares created: .67 x 196.93 million=131.94 million
Total new shares of the combined company: 196.93 million + 131.94 million=328.87 million
Total debt: ($88.00 x 203.99million)+ $76million -$3.17 billion=$14.86 billion
Total 2007 net income of new company: $1.11 billion+$3.17 billion=$4.28 billion
Current stock price: $61.86
Forward 2007 EPS of combined company: $4.28 billion/328.87 million shares=$13.01
Forward PE of the new company: $61.86/$13.01=4.75
This deal if it happens as advertised would create tremendous share holder value. The forward PE should be somewhere between 8 to 10. This would mean that the shares should be at $104.19 to $130.23. If copper and gold remain at their current levels, the EPS for 2007 could be quite a bit more. This combined stock could be a $180 to $200 stock with high copper prices.
The risks that remain are the deal isn't approved by share holders. We saw what happened when PD tried to aquire Inco and Falconbridge. The other problem would be if metal prices tumble next year. I think that both of these scenarios represent a real possibility.
I have to admire the way that this deal was structured even though there is debt. This debt could be paid off in a short period of time and it doesn't create too much dilution. If this deal goes through, it would be an amalgamation made in heaven.
GL investors
Disclosure: I am not currently long or short FCX or PD.
Note to all readers: This post and all other posts in this blog are for entertainment purposes only. All of the stocks described are very highly speculative. Investing in the stocks mentioned could produce severe losses if you were to invest in these stocks. None of these stocks represent a recommendation in any way. As an individual investor, you have to assume your own risk. Prior performance is no guarantee of future returns.
Saturday, November 25, 2006
GOOG revenue expectations for Q4
In a previous post, I explored Google’s earnings and found that the analysts consensus is a high target. With Google entering the strongest quarter of the year, is their top line or revenue an easy target. In this post, I will explore this.
The consensus for Google’s revenue number is currently running at $2180 million TAC adjusted. Last quarter GOOG produced $1860 billion. That is 17.2% quarter over quarter revenue increase. This would mean that they would earn $3153M gross revenue (revenue not adjusted for TAC).
Last year GOOG had a 21.6% quarter over quarter increase so 17.2% should be a walk in the park…………….. right? After all this is Google’s best quarter.
Actually $2180 million is a very high target. As a careful investor, I would not think that it is a given.
Why is this number not just another number for Google to blow away? From my previous post, following is Google’s revenue starting from when it went public:
GOOG gross revenue with quarter over quarter growth
(04) 3) $806M 4) $1032M (28%)
(05) 1) $1257M (21.8%) 2) $1384M (10.1%) 3) $1578M (14.2%) 4) $1919M (21.6%)
(06) 1) $2254M (17.5%) 2) $2456M (9%) 3) $2690M (9.5%)
Growth metrics
Q3(06)/Q3(05)=1.70
Q2(06)/Q2(05)=1.77
Q1(06)/Q1(05)=1.79
Q4(05)/Q4(04)=1.86
Q3(05)/Q3(04)=1.96
As you can see, the numbers on a percentage basis are decreasing. This is very clear. As Google grows, the numbers on a percentage basis become much harder to achieve. To demonstrate this I will show the dollar amount that would need to produce the growth:
Q4(05) growth over Q3(05); $341 million.
At $3153 million gross, Q4(06) over Q3(06) would be $463 million. That is $122 million more growth than produced in Q4 last year. This is where the large number statement for Google becomes prevalent.
Now I’m not going to predict that Google misses this target. Many things could happen that would make this number higher like addition sources of revenue. Even with products like Youtube ™ and Google Checkout ™, most of Google’s income will be derived from search. Most of Google’s new sources of revenue haven’t been efficiently monetized yet.
With 10 straight quarters of growth in search revenue, what happens if growth slows?
The gross revenue number of $3153 million could be considerbly less.
Now, I am not predicting a miss in revenue for Q4 but am pointing out the risk which is real. There are many people like Jim Cramer who are not even mentioning the risk that is associated with investing in growth stocks like GOOG. Anybody who has perused the message boards and online discussion groups regarding Google will see people predicting insane near term numbers like $1000 and $1500. A new breed of idiots has been born. There may be some people who lose a considerable amount of money due to these recomendation’s by perma-pumpers.
Folks……..Google is a risky investment. Due to the risk, an investor may receive a nice return. These returns are not a guarantee, though, and could be subject to large losses.
The last post in this series will look at costs and taxes. It will become evident that GOOG will most likely have to meat the revenue number to meat EPS consensus for Q4(06). Even if the revenue number is hit, there is a possibility for an EPS miss. Everyone should be risk adverse and it would be a mistake to take on a new investment either long or short through Google’s earnings.
GL investors
Disclosure: I am not currently long or short GOOG.
Note to all readers: This post and all other posts in this blog are for entertainment purposes only. All of the stocks described are very highly speculative. Investing in the stocks mentioned could produce severe losses if you were to invest in these stocks. None of these stocks represent a recommendation in any way. As an individual investor, you have to assume your own risk. Prior performance is no guarantee of future returns.
The consensus for Google’s revenue number is currently running at $2180 million TAC adjusted. Last quarter GOOG produced $1860 billion. That is 17.2% quarter over quarter revenue increase. This would mean that they would earn $3153M gross revenue (revenue not adjusted for TAC).
Last year GOOG had a 21.6% quarter over quarter increase so 17.2% should be a walk in the park…………….. right? After all this is Google’s best quarter.
Actually $2180 million is a very high target. As a careful investor, I would not think that it is a given.
Why is this number not just another number for Google to blow away? From my previous post, following is Google’s revenue starting from when it went public:
GOOG gross revenue with quarter over quarter growth
(04) 3) $806M 4) $1032M (28%)
(05) 1) $1257M (21.8%) 2) $1384M (10.1%) 3) $1578M (14.2%) 4) $1919M (21.6%)
(06) 1) $2254M (17.5%) 2) $2456M (9%) 3) $2690M (9.5%)
Growth metrics
Q3(06)/Q3(05)=1.70
Q2(06)/Q2(05)=1.77
Q1(06)/Q1(05)=1.79
Q4(05)/Q4(04)=1.86
Q3(05)/Q3(04)=1.96
As you can see, the numbers on a percentage basis are decreasing. This is very clear. As Google grows, the numbers on a percentage basis become much harder to achieve. To demonstrate this I will show the dollar amount that would need to produce the growth:
Q4(05) growth over Q3(05); $341 million.
At $3153 million gross, Q4(06) over Q3(06) would be $463 million. That is $122 million more growth than produced in Q4 last year. This is where the large number statement for Google becomes prevalent.
Now I’m not going to predict that Google misses this target. Many things could happen that would make this number higher like addition sources of revenue. Even with products like Youtube ™ and Google Checkout ™, most of Google’s income will be derived from search. Most of Google’s new sources of revenue haven’t been efficiently monetized yet.
With 10 straight quarters of growth in search revenue, what happens if growth slows?
The gross revenue number of $3153 million could be considerbly less.
Now, I am not predicting a miss in revenue for Q4 but am pointing out the risk which is real. There are many people like Jim Cramer who are not even mentioning the risk that is associated with investing in growth stocks like GOOG. Anybody who has perused the message boards and online discussion groups regarding Google will see people predicting insane near term numbers like $1000 and $1500. A new breed of idiots has been born. There may be some people who lose a considerable amount of money due to these recomendation’s by perma-pumpers.
Folks……..Google is a risky investment. Due to the risk, an investor may receive a nice return. These returns are not a guarantee, though, and could be subject to large losses.
The last post in this series will look at costs and taxes. It will become evident that GOOG will most likely have to meat the revenue number to meat EPS consensus for Q4(06). Even if the revenue number is hit, there is a possibility for an EPS miss. Everyone should be risk adverse and it would be a mistake to take on a new investment either long or short through Google’s earnings.
GL investors
Disclosure: I am not currently long or short GOOG.
Note to all readers: This post and all other posts in this blog are for entertainment purposes only. All of the stocks described are very highly speculative. Investing in the stocks mentioned could produce severe losses if you were to invest in these stocks. None of these stocks represent a recommendation in any way. As an individual investor, you have to assume your own risk. Prior performance is no guarantee of future returns.
Tuesday, November 21, 2006
Trades for Nov 21
Since I set some targets for trades today following are today's trades. Unfortunately I had indicated that I would sell all companies that were announcing earnings so following are today's trades:
Buy 1000 shares of BRCD @ $8.18 sell at $8.49
Buy 200 shares of GME @ $50.70 sell at $53.00
Buy 400 shares of DELL @ $24.76 sell at $24.82
Momentum trades:
Buy 1000 shares of LCRD @ $12.41
Buy 300 share FCX @ $55.00
buy 200 shares EFUT @ $45.00
Buy 500 shares MRVL @ $21.25
Buy 200 shares SNDK @ $48.95
Cover RIMM @ $138.00
Cover GOOG @ 495.83
Buy to close GOPXI @ $5.20
Good luck investors and have a happy Thanksgiving
Disclosure: I am not currently long or short any of the shares aforementioned.
Note to all readers:
This post and all other posts in this blog are for entertainment purposes only. All of the stocks listed are very highly speculative, and the portfolio is not diversified and could produce severe losses if you were to invest in these stocks. None of these stocks represent a recommendation in any way. As an individual investor, you have to assume your own risk. Prior performance is no guarantee of future returns.
Buy 1000 shares of BRCD @ $8.18 sell at $8.49
Buy 200 shares of GME @ $50.70 sell at $53.00
Buy 400 shares of DELL @ $24.76 sell at $24.82
Momentum trades:
Buy 1000 shares of LCRD @ $12.41
Buy 300 share FCX @ $55.00
buy 200 shares EFUT @ $45.00
Buy 500 shares MRVL @ $21.25
Buy 200 shares SNDK @ $48.95
Cover RIMM @ $138.00
Cover GOOG @ 495.83
Buy to close GOPXI @ $5.20
Good luck investors and have a happy Thanksgiving
Disclosure: I am not currently long or short any of the shares aforementioned.
Note to all readers:
This post and all other posts in this blog are for entertainment purposes only. All of the stocks listed are very highly speculative, and the portfolio is not diversified and could produce severe losses if you were to invest in these stocks. None of these stocks represent a recommendation in any way. As an individual investor, you have to assume your own risk. Prior performance is no guarantee of future returns.
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