Google, Apple, RIMM, other stuff

Google stock has been very weak this year for a few reasons -- 1. because Cramer and others got every growth and mo investor in the world to buy the stock so it became ridiculously over owned and if I had any sell discipline whatsoever I would have sold when the stock started falling from the $740 to the $600 level. 2. Because their revenues are tied to the economy somewhat -- even though the growth is still very fast, their ability to exceed expectations is hurt during a slowdown. 3. the company's decision to improve click quality -- meaning remove all the accidental or false clicks but charge a higher price for the real click throughs -- has led to confusion about their growth.

They are purposefully reducing click volumes but raising prices -- the effect is much lower growth or even declines in paid clicks but much better pricing metrics. this makes it tough to predict how the quarter is going -- that plus the environment of lots of investors selling because the stock is no longer going up.... gets you down $50 or so in a couple of days.

While I obviously regret not trimming my position when the stock was up huge in the fall, the company continues to impress with their growth and profitability.

Apple -- lot of moving parts with that story. Have briefly looked into it and thought about it. No doubt its cheaper than RIMM but its more complicated than RIMM as well. Apple's main revenues come from selling PC's -- a business that is also growing rapidly given the market share gains vs. Windows. At some point those share gains will slow and their growth/pricing power in that business will be impacted by the shift to mobile devices. May not be for a year or two or more but it is inevitable. Apple also has a big iPod business that requires them to constantly come up with reasons for their customers to upgrade or replace their existing iPod. That will get harder and harder I suspect.

The iPhone is supposed to take care of that problem but Jobs is too stubborn trying to maintain some exclusivity to only a handful of carriers in the world -- that severely limits their distribution. But the exclusivity also drives high margin carrier payments for subscribers using the iPhone. Unlocked iPhones obviously get in the way of that high margin revenue stream. More importantly, the iTouch is an iPhone without the phone -- Internet access using wifi is available using the iTouch and its $100 cheaper -- not sure how the costs differ -- its quite possible that the costs are even lower so the margins on an iTouch could be better than an iPhone. As more users think about getting an iTouch instead of an iPhone not only does Apple lose the carrier payments but they also lose that extra $100 in the hardware pricing.

RIMM has no legacy issues in that the share of revenues from a smartphone is much higher -- not sure its 100% but its a lot closer to that than Apple's percentage. They are also a smaller company --both of which makes faster growth easier. Valuation reflects that. would be interesting on another pull back towards $100 but I need to get more comfortable with the story to know exactly what my price limit to buy is.

Some trades I have contemplated -- buying some more BLUD, selling a small piece of my ILMN, buying some more TSRA (options?), etc.

Rather smart sounding fella writing on the MCF yahoo board has called into question the valuation assumptions around Contango -- he argues its fairly valued rather than very cheap. His case is pretty decent. makes me a little nervous after having just bought more -- where was he a few weeks ago when I decided to add! That said, MCF is at bottom a bet on management and natural gas prices -- both of which will hopefully help improve the odds even if the current asset value isn't as strong as I thought. Also, if CLB gets back to $107 again, might just switch some MCF into it (presuming MCF hasn't also fallen a lot).