Parchayi.com – Personal Finance Simplified

I’ve been following the Apple “Back to Mac” event live on blogs and news sites and just saw the new 11.6″  Macbook Air. It is a small notebook and starts at $999 – which is the price of the current lowest end Macbook. So it meets my definition of netbook – a small and light notebook that is available in the price range of a low end laptop.

I was disappointed that OS X Lion will come Summer 2011. That is a long way away. But the app store coming in 90 days is good news. If you’ve been following my Apple posts, I sold a third of my Apple stock when it reached $280 and I plan on selling another third at $375.

With the way Apple has been performing, I would say the stock is currently a buy but I’m uncomfortable with being so heavily invested in a single company. So I’m not adding to my Apple holdings anytime soon.

Let’s start with the disclaimer that I own Intel Stock. After this acquisition, which I will try to fathom as I write this post, the stock is back down below the dismal level I bought it at. When I bought the stock it was with the thinking that “it can’t go lower than this” and for a while it hasn’t. Until they overpay for a company that makes a mediocre product.

I can see geeks joking everywhere that Intel bought McAfee because the bloatware that McAfee sells is second biggest driving force for CPU upgrades after Windows. And CPU upgrades are good for business at Intel. But the real reason might just be one or more of the following

1. Diversification. Intel wants to move up from just being a hardware company, maybe?
2. Some future in-processor security mechanism. However McAfee is not a great acquisition for that purpose. They could have bought out one of the smaller players if it were just for the security aspect. A combination of 1 and 2 is more likely to be the driver.
3. They think adding McAfee will improve profitability down the line. McAfee has revenues of $2 billion and growing with margins of 80%. But I don’t see any common ground here where the acquisition will save costs. So either McAfee was seriously undervalued or the deal will bring major improvements to something Intel has in the pipeline.

As an investor I’m not exactly sure this is a good thing. It might be but I’m skeptical. I would have been much happier if they would have bought some smaller security vendor and thrown the Intel weight behind that to get people to move away from McAfee/Symantec instead. Intel spent more than half it’s cash on this deal. Maybe their headquarters being a stone’s throw away makes it easy to merge and form Intelton, CA.

Whatever it is, hopefully this foretells less malware in our future?

The Nasdaq is up almost 50% this year while the Dow is up almost 20%. Tech stocks are reporting stellar earnings with Intel, Microsoft, Amazon, Apple, Google amongst others all beating estimates.

If the trend continues, 2009 will really be the year of the tech stock. And it isn’t even really that much of a bubble. Many tech stocks have non stellar P/Es. They are still higher than the S&P average but maybe justified considering the performance. INTC had a dismal last year which drove it’s trailing P/E to around 50. But now it seems to be back on track and has a forward P/E of only 13.5! Google has a forward P/E of about 24, Apple about 26. Amazon has the highest amongst the P/E ratios at 46 but as long as the recession continues, Amazon will probably continue to beat expectations as more shoppers turn to online shopping for more items.

Walmart.com, my new favorite destination for online shopping with free site to store shipping and prices that often beat Amazon, even after tax and the simplicity of returning to store, great customer service also can’t seem to affect the Amazon juggernaut much.

Windows 7  is selling like hot cakes and if Windows Mobile 7 is even a thousandth as successful as Windows 7, we should see Microsoft making some headway into the Mobile market. Really the best phones are either running Android or Windows Mobile and the current iPhone has nothing on them except the App Store. Expect both Android and WinMo to catch up quickly.

What can I say, if you can stomach the risk, wait for the excitement of  the current quarter die out and get some tech stock for yourself during holiday season.

Disclaimer: Parchayi and me own AAPL, INTC and GOOG stock.

Looks like I’m Posting a lot about Microsoft lately. Miscrosoft missed analyst estimates and revenues were down 17% and earnings down more than 1.2 billion$ (yes that is billion) as compared to last year.

Maybe Vista is to blame, maybe the bad economy though Intel’s results would indicate otherwise. Every few weeks I hear about something new from Google. I just got invited to Google Voice and recently discovered Google Wave. The only thing new and exciting I’ve heard from MS in the online front is Bing. I did make a post a few weeks back criticizing Microsoft but they did one good thing. Released the Win 7 beta for everyone to try and also establish that it really is not as bad as Vista.

In related news, Amazon posted bad results too. MSFT + AMZN both posting bad results is driving the markets down today but the Dow is still over 9000. A few more bad earnings and we might fall below 9000 once again. A few more good earning and we might stay above for a few months.

If you are looking at investing in one of Amazon or Microsoft after they fall today, my pick would be Amazon.

Intel and Google, both companies that I own stock in, both recently reporting. Intel reported spectacular results on Tuesday (as compared to analyst estimates and the previous quarter, still below last years results). Intel also upped it’s guidance. Positive news from Intel lifted the market up.

Google was the next to report and even though Google made it’s biggest profit ever, growth was the slowest ever. Google also had some fewer employees than last year. Also Google’s profit was more a result of shaving off expenses and not from increasing revenues. This was a disappointment that dragged Google stock slightly lower.

Apple (I own and the stock is finally approaching my average buying price), Microsoft (don’t own) report next week. Positive earnings are expected from Apple and the stock is hitting new 52 week highs. Micrsoft, not so much even though Windows 7 might cause an upgrade cycle.

In any case, some good some bad, overall the picture is neither good nor bad. Just so so. Personally my expectations are for tech stocks in general to be sideways or slowly go upwards. I have been wrong before and I probably wil be wrong again but I just don’t have very high expectations in the near future from the market overall. Next year might bring some better news?

In the last few months I have found myself going to Walmart more and more often. It is not because we enjoy shopping at Walmart more now or enjoy Target less. It is (mostly*) because of Free Site to Store Shipping. Also due to an error on Walmarts part on one item I ordered online, their customer service rep not only offered to match the price we ordered at (the price had gone up since) but also offered to to ship it to our house instead of the store for free. *I said mostly because now there is a new attraction to going to Walmart – their 3$ wine. So far I’ve tried two of the white wines and they were both pretty good, far better than the one I got for $3.29 from Trader Joes in Richmond. (IMHO)

Also with the site to store shipping, you can completely avoid all store lines, go directly to the Site to Store pickup and take whatever you have ordered. Walmart.com’s prices have also been lower than anywhere else for the things we were looking at buying (mostly baby stuff) even after counting in taxes.

After creating our baby registry at Target.com, we realized that Target.com is operated like a completely separate entity. Items that are available in store are not always at Target.com and it was not easy to find only items available in store on the website. Also since target doesn’t offer free site to store shipping, it made no sense to add online items.

The other issue with Target is their “no price match” policy. Walmart will pricematch even items that require store cards and they will also price match sales prices of local stores.

Even in this bad market, I don’t understand how Target cannot offer simple things like Price Match, free shipping to Store to attract more traffic. But then they can’t even get the store and the website in sync completely. What can I say, Walmart is doing everything right. Maybe I should replace my Target stock with Walmart stock?

So the Microdoft layoff rumors did turn out to be true. It was 5,000 layoffs instead of 15,000 but still a large number.

Intel is also laying off 6,000 and closing factories, Ericsson is laying off 5000 and AMD 1100

Google results were the only good thing to come out in recent days.

Continuing my previous post on the citi-wachovia deal and some comments from me and others on that post at seekingalpha, here is what is known so far.

At the end of the year we will get proxy statements and will be able to vote on the deal. I sure as hell am not voting for it unless something significant changes about the deal. As it stands, Citi paid just over $14 billion for Wachovia’s assets that it plans to takeover. 12 to the Feds and the rest to Wachovia and the Feds brokered this deal. Citi also agreed to cover puto $42 billion in losses on Wachovia’s mortgage portfolio. Anything above that the Fed will cover. But the Citi CEO also stated that the losses will not go beyond $42 billion. What the hell is the Fed being paid $12 billion for then? Why is that not being paid to Wachovia? This is like robbing us Wachovia shareholders and paying the Feds for absolutely no plausible reason.

Another reason why this is seriously robbing us blind is that the deal was done with Citibank, which has not reported profits for a long time. It has problems of it’s own. Wachovia is an great bank with stellar customer service and I’m afraid Citibank will ruin all that. The golden west portfolio is what is the problem with Wachovia and if the Feds really want to solve this problem and want $12 billion in return I would radther have Wachovia pay them $12 billion to take over the entire Golden West portfolio than this strange deal. Also that monstrosity called Citibank will just become a bigger one. If you would have asked anyone before this deal – which bank do you think is in bigger danger of collapsing Citibank or Wachovia, IMHO most people would have answered Citibank.

In fact a lot of people were betting on Wachovia surviving, one prime example being Fidelity, who bought 70 million shares of Wachovia. Wachovia insiders have continuously bought stock so even they didn’t expect this to happen.

Tata Motors unveiled the Nano today – its highly anticipated 1 lakh Rs. ($2500 approx) car at the New Delhi Auto Show. The street price after taxes and destination fees will be about 1.2 lakh for the base model. Here are the specs: 30 HP, 624cc engine, Seats 5 (it seems). It has a 4 speed manual transmission and is completely barebones but at over 50mpg (20kmpl), it is fantastic with India’s high fuel prices. Tata also claims that the car meets or beats safety and environmental standards and is less polluting than two wheelers! If the Nano is a success, Suzuki will probably see a significant dent in its >50% market share in India. Their closest competitor the Suzuki 800 is twice the price of the Nano.

More info at Times of India

At the other end of the market, Tata is now the frontrunner for buying Jaguar and Land Rover from Ford. So Tata Motors has got you covered for everything from commercial trucks to the entire gamut of passenger cars and trucks. The stock fell 2.75% in the Indian market today amongst a broader 287 point decline in the market.

I’m a loyal Blockbuster Online customer (but not a stockholder) and have been following the Blockbuster/Netflix battle for a while now. I applauded the Total Access service, was disappointed when they limited my Total Access DVDs to five per month and now after seeing how Blockbuster works I can comment on all the places they went wrong.

The first thing that Blockbuster did wrong was operate Blockbuster online and the stores separately. The next thing after the Total Access program was the fact the the online-store partnership was structured badly. When I return movies to the store, the store actually mails them out to the Blockbuster online location. I would expect it would have saved blockbuster money if they kept the online operation in the stores themselves.

The other problem for Blockbuster (not the customers) is that with Total Access, a customer can have more than 3 (or whatever their plan limit is) out at a time. And with no late fees at the store and no incentive to return the movie fast, the stores have an even bigger lack of new releases. What Blockbuster can do to make this process easy is rent the in-store movies in Blockbuster online envellopes so that I don’t have to drive back to the store to return it in addition to including the in-store rental in the three out at a time. This might piss off some customers (like me) for a short while but in the long run it will be better for both the stores and the online service because with this method all plans can have unlimited in-store exchanges and Blockbuster can still make money (save on mailing + drive more cutomers to the store). They an also possibly convince more store customers to join the online service by making everything simpler – X movies at a time regardless of online or in store.

What I think would be the ideal situation is that the store be no more than a return and pickup point for the online service rather than a separate entity that seems to be sucking the life out of Blockbuster. They can move to a smaller store format and have kiosks to compete with those fast becoming ubiquitous 1$ per night (with the per night part in really small print) DVD rental kiosks.

Maybe I’m taking a simplistic view and what I’m saying is not as easy to implement as I think it would be – but it could save blockbuster money, get them more subscribers and make their operations more efficient. It would be like running one company instead of two.

There are some good things to say about Blockbuster like their attempts at exclusive deals, their acquisition of movie link and their current Jackass 2.5 deal and I hope they continue on the path in competing with netflix. I am currently a happy customer and if things keep going well, I might become a stockholder.