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In this article, the columnist gets into a discussion of the Mac mini as "the Netflix killer," writing, "Apple has eliminated the most costly part of the NetFlix model while maintaining all of the good pieces."

First of all, this is factually wrong. I just pulled up the Netflix 8-K annual report, which clearly shows annual DVD costs of either $103 million or $80 million (depending on whether amortized) and annual "fulfillment" (postage and packing) cost of $56 million.

Second, while I agree the mini Mac is a promising digital video dellivery device, it is not a NetFlix killer. The smartest thing about NetFlix is not the great delivery and rental model, but the way it exploits copyright law. Once Netflix has purchased a DVD, assuming it does so at full price outside of a special contract it enters, it is allowed to rent/loan that DVD out an infinite number of times. That battle was fought and won on its behalf by the VHS rental industry long ago.

What this means is that Netflix is happy for you to cycle through loads of different DVD titles every month, so long as postage doesn't eat too deeply into its profit margin. Essentially, its product is postage bound, not copyright bound, which is a fantastic position to be in.

Any digitally streamed movie product from Apple, however, will almost certainly be copyright bound. Unlike Netflix, Apple will need special agreements to cover every movie it delivers. The easiest sell to movie studios is an a-la-carte movie purchase system like the music on iTunes. They then need to keep the cost per movie underneath Average_Netflix_Monthly_Fee/Average_Netflix_Monthl y_DVD_mailings to be competitive, but that's not all. They have to be cheap or fast or cool enough to ALSO justify the purchase of a new computer and/or the hassle of hooking a digital video stream up to a consumer television.

The other model for Apple is a monthly subscription with all-you-can-watch streams, possibly combined with the a-la-carte model to attract the greatest number of users. But this will be, in my estimation, a very tough sell to the studios, and even if you get it up and running, it would need to be first price compeitive with Netflix and second sufficiently cooler to justify the cost and headache of connecting the TV to a computer and possibly buying a new computer.

He isn't doing it because of Social Security, he's watching his wealth shrink by the day as the dollar tumbles.

The significant bulk of earnings for BRK-A comes from insurance investment income and non-insurance business. There are some international holdings like Cologne Re, but by and large the underwriting portion of BRK-A supplies earnings but are significantly offset by long-term liabilities which he smartly insists upon fully accounting for. Basically, while the reinsurance business supplies him with plenty of cheap cash, the parts of BRK-A that really throw off unencumbered cash are the non-insurance portions. Look at his largest equities investment holdings, and survey the range of business holdings. The vast majority (100% of the major equity positions he uses as a compromise proxy for holding the business, about 90% of the subsidiaries by count, they don't break out balance sheet, earnings statements, etc. by subsidiary unfortunately) are U.S.-based businesses; they have international operations and sales, but by and large they concentrate on the U.S. markets.

So you are saying that with a pre-dominant orientation to U.S. markets, he decides that his lesser orientation to international markets justifies repositioning his cash? That doesn't make sense because there are transaction costs to moving cash around like that, and Buffett is not in the habit of paying other people a lot to hold his cash for him. That's why outside of insurance-related risk management activities, you see him tend to just sit tight on top of a mountain of fairly mundane cash instruments with hyper-low transaction expenses. Because his overseas exposure is relatively limited, he doesn't have a huge incentive to switch cash allocation strategies away from a dollar denomination unless he was convinced we're facing a sea change in the forseeable future.

Furthermore, ever since we floated after closing the gold window in the 70's, we've seen fluctuations of the current magnitude before; in fact, worse differentials. BRK-A sat through all of those fluctuations because Buffett simply doesn't care about chasing the first and last 20% of a move. He's not moving because "he's watching his wealth shrink by the day as the dollar tumbles", he's moving because something much bigger has caught his attention. On the order of what traders call a "secular" change.

What a shithole we're digging, and it's all by design, it's happening today, and as far as I know it's not even impeachable, because it doesn't involve any titillating sexual indiscretions.

So you're saying this is all caused by the Bush administration and Republicans? All or most of it? Show me the numbers for that assertion, because the record shows both sides of the aisle fed copiously at the trough. Reckless spending is an equal opportunity sin. It took decades of irresponsible spending by everyone (citizens and Congress) to get us to this close to insolvency. If you snapped your fingers, erased the last five years, and replaced Bush with whoever you prefer, it won't materially change the fact that the American electorate wilfully voted over the course of generations for deficit spending, largely on goals that result in non-income producing assets, and their duly elected representatives complied. The sooner we stop pointing fingers to assign blame for sunk costs, which only wins political points and not national economic advantage, the sooner we can address the national behavioral problems that led us into this mess in the first place.

Public finances are a funny thing, they don't quite operate like a household or business. Because they can roll over debts and tinker with taxation to raise capital, and creditors don't ever really call due the entirety of the debts, everything can go swimmingly until the creditors as a group suddenly lose faith in t

Check American Airlines' latest financials from Edgar Online:http://yahoo.brand.edgar-online.com/doctran s/finSys_main.asp?formfilename=0000006201-04-00006 2&nad= You'll notice that wages, salaries and benefits are significantly higher than fuel costs. The numbers show that fuel costs have increased(not surprising) but they are still less than wages.

Oh wait it doesn't.

No offense intended, but you have no clue as to what you're talking about. This is why joe schmoe (ie: you) don't make good reporters. What you call a fact "advertising is what pays for the paper" is wrong. Circulation accounts for 25% of New York Times' Revenue.

This took me about 30 seconds to find. Before you start making up "facts", you should probably spend just a tiny bit of time researching.

Strictly speaking, Sun has at most 1.50B "cash in the bank".

Yahoo's "cash" is cash plus short-term bonds (2.37B). If longer term holdings are included the total is 5.48B, still short of the original poster's claim of 7B.

Here is their last 10-Q they had a total of $2.6 Billion listed as liabilities and about $7 Billion in Assets (with almost $4.8 B being cash or short term investments) So this is definately possible.

I remember back to something Steve Jobs said back in 97 or 98 when asked how he was going to grow desktop market share. His response was something along the lines of 'We have 6% of the desktop market, Mercedes has 6% of the automobile market. Why aren't you predicting the end of Mercedes?'

iMac, iPod and iTunes really helped them accumulate some iCash.

For example, Microsoft & Cisco, two of the richest companies on the planet generally don't pay taxes because they've been able to expense all the stock options they grant.

Yeah right. Take a look at MSFT's last 10-k filing. In 2002 MS paid over 3 Billion in corporate income taxes.

MSFT 2002 10-K

The maths for anyone who cares;

Corel shares;
24,000,000 Series A preferred shares
91,840,000 common shares.

VC bought 22,890,000 Series A shares at $0.5625=$12.876 Million.
They now offer $1.05 per share for the remaining 1,110,000 Series A and 91,840,000 common shares=$97.6 Million.

So all up your looking at about $110 Million for Corel, 'lock, stock and barrel'.

Check out their end of quarter financial report up to 28th Feb '03 for the lowdown on their financial position.
The long and the short is; $50 Million in cash/liquid assets, posting losses but with very few liabilities.

Investment was made in ~1986 from my recollection of events. Of course, if you weren't in the computer industry in 1986, you probably wouldn't remember it happening.

Microsoft holds equity stakes in a large number of companies; some of them are really surprising. For example: they have 1.9M shares of Borland stock.

You should read their SEC filings for their Section 13G and Section 13G/A filings. Unfortunately, if you want to see the filings from ~1986, you'll have to travel and look at MicroFiche (something else that was used the 1980's ;^)).

Microsoft SEC filings on stock held

-- Terry

Here ya go!

Edgar Online is the defacto source for this kind of stuff. Here's the link.

I see cash here and here at $5.1 billion. Your point is taken (short-term investments+cash is over $38 billion), but I wasn't talking out of my a**, either.

It's a lot easier to bow out of a market when it's a small portion of your total revenue or profit.

The IBM Storage Systems division is/was a part of the Hardware divsion. That division also includes PC, notebook, mainframe, and various other hardware sales. It, as a whole, accounted for ~39% of the total revenue and ~29% of the total profit of IBM for last year (as per their latest 10K).

Now those aren't numbers to sneeze at, but consider that the HD division is a segment of the entire Hardware division. And while the numbers aren't split out, if you read the 10K you'll see they blame a lot of the decline in revenue for the Hardware group on pressures in the PC and HDD market.

Given all of that, IBM can look at the long term market and spin off a portion of itself to an independant company which it retains a large share of. Realize some immediate cash gains, and you reduce the risk you are exposing the company to. If that 3rd party company folds, then you have a tax write off on an investment, and it doesn't look nearly as bad on the balance sheet.

But the important thing here is that IBM has this option. The storage device market is not their lifeblood. If you released a holographic storage system tomorrow that blew the entire HDD market out of the water, IBM would be hurt, but not fatally impaired.

The same is not true for most of the companies you mentioned. They're looking at potential extinction (particularly the middle men in the entertainment business - e.g. the studios and record labels). So they're fighting for their lives. They can't just "leave the market" or "restructure their business". There is no new market and no new structure for them to go to and retain anything even vaguely like what they have now.

I deeply disagree with their attempts to have government prop their industries up, but I'm also realistic. Cornered animals don't fight nice.

It might seem like a slap in the face, but there's a couple things to remember here:

One, eBay doesn't really make money on auctions from scammers. eBay bills monthly, and I doubt the guy is really sitting around with a credit card just waiting for eBay to charge him. I work for a company that charges our members monthly, and going after people with insufficient funds in their account is sorta like asking a VC for charity. So that pretty much puts eBay out the $175, plus the costs of investigating the fraud.

If you look at PayPal's financials, you can see that PayPal paid out $5.5 Million out of their $31MM in revenue in 2001 for "transactional losses" i.e. Fraud claims. In 2000, before they had their shit together, they paid out $11MM, $2.5MM MORE than their revenue for that year!!! I'm sure that eBay has a similar amount of cost in terms of Fraud Liability, albeit perhaps slightly less, since their credit card division (eBay Payments) is a bit smaller than PayPal. So while $200 is a pathetic insurance amount for a $3k notebook, it's better than nothing.

Two, my advice is that you should never buy anything on eBay over $200 using anything other than a credit card. Even if the guy has 2000 positive feedback, it's just asking for trouble. With a credit card, you can always initiate a chargeback, and 99.9% of the time, you'll get your money back.

Caveat Emptor. It's the name of the game, if you don't know the person you're buying from.

Ok, go here: http://www.edgar-online.com/brand/amd/search/ and find it yourself.

someone better mod me up for all my work

Why Becuase you googled a bunch of dubious sources out of your expansive asshole? J Random Geocities, a "Scientist" (in IP law?), and CRINGLEY of all people. Ack.

I, on the other hand, have it from the horse's mouth -- AMD Annual Report:

In January 1995, we reached an agreement with Intel to settle all previously outstanding legal disputes between the two companies. As part of the settlement, in December 1995, we signed a five-year, comprehensive cross-license agreement with Intel which expired on December 31, 2000. We are currently negotiating a new agreement with Intel but there can be no assurance that a new agreement will be successfully negotiated. The lack of a patent cross-license with Intel could lead to expensive and time-consuming litigation, the outcomes of which could have a material adverse effect on our business. .

Now give me the karma.

Interesting. According to their last 10Q (that's an SEC filing that is made every quarter) Microsoft has $3.1B in Cash. Microsoft has a suprisingly small amount of long term assets (just a few $billion). Most of their money is tied up in investments. All of this is available through Edgar Online but that requires a registration (may even cost money - I seem to still have an account from my prior job).

As for Bill Gates, it really doesn't matter. As much as you may hate him I don't see the courts "piercing the corporate veil" to get to him.

By the way, I am not disputing your point in anyway but just clarifying your made up numbers.

I'm having a hard time reconciling the Yahoo page with the Annual Report from October 19. The Yahoo financials report a non-recurring charge of $230,092,000 exactly in each of the four quarters. I believe this is an error. The annual loss is only $525,268,000 on $134,890,000 in revenues, whereas a quarterly loss of the size given would make for almost double that loss.

It does not appear that VA has any reason to expect continuing non-recurring expenses in the quarter-billion range per quarter. It appears that they have already paid their non-recurring expenses for goodwill from unfortunate acquisitions and from reorganization.

What's happening to SourceForge is more interesting in how it bears on the overall health of the open source and free software movement. Rather than repeating myself, I'd like to refer to this post, which suggests that we may be looking at a world where free software is relatively crippled compared to proprietary versions of the same software.

Tim

Companies strive to deceive. Amazon, like many companies, reports a thing called "pro forma" financial results. These are sort of like real financial results, except that they throw out a half dozen or so things that make them look bad, such as interest payments on their massive debt. When Amazon says it will soon make a profit, they mean a pro-forma profit, which means a loss. It's intentional deception and should be outlawed by the SEC.

You're absolutely right on this point. But the quick in/out investor doesn't really care. If the company beats analyst estimates (which aren't usually accurate) the stock will generally rise and you can take your profit. Anyone interested in staying in bed with a company for awhile will want to read 10K's filed with the SEC. These reports show the complete story and can be found at several places online. One place is Edgar Online.

" Our current patent license agreement with Intel expired at the end of 2000. We are currently negotiating a new agreement with Intel but there can be no assurance that a new agreement will be successfully negotiated. The lack of a patent cross-license with Intel could lead to expensive and time- consuming litigation the outcomes of which could have a material effect on our business."

Nah, you don't even need to be a shareholder to get information. Hell, you can get so much information due to required public disclosure that it becomes a matter of filtering out information. The SEC filings are a prime source for this. If you pull a symbol lookup on Yahoo! Finance for example , click on "Research", and then in the research section on the "More Info" line up at the top click on "SEC" to get 10-Q Quarterly and 10-K annual reports. (I'm a computational chem major but I have a business minor (need easy buffer classes, and believe me if you have half a brain you can get a 4.0 in business), so I had to use this stuff for some financial accounting classes.) There are other sources of this information, like EDGAR Online, who have everything, not just 10-Q/Ks.

WRT Amazon, here's a link to their last 10-Q from Oct. 30, 2000 and archived reports. This is dry reading, as they don't try to make it easy to read like the shareholder's reports, but this is the hard data that shows where the money goes inside Amazon.

--

The reason is clear: Hemos realizes that including an inflammatory editorial at the end of a post about an operating system being superior to the Linux will increase comments by at least 100%. More page fews = More Money!

In the S-1 filing, you'll see that Andover.net has structured the terms of Slashdot's acquisition agreement so that there is 5 to 20 millions in incentive dollars riding on the ability of Slashdot's crew doubling the number of page views in during the next two years. For information see: Andover.net's S1 filing

You can always check out Edgar-Online's IPO Express for upcoming offerings. Right now they have offering notices up through the end of August. Of course, all of these are tentative, but it gives you a great idea who is coming out soon. (Also, a company can withdraw or be added at anytime. Check it daily :-) )

You can't buy through here, it's only there to inform and educate....


--m