Friday, February 24, 2006

SINA Q405 Update

SINA reported a not so good quarter, guidance is even worse.

Meanwhile, as we witnessed, we are never lack of cheerleaders of this so called No. 1 online media in China. They screwed up last quarter, investors did not care, stock did not go down, it went up. They screwed up again, investors showed their amazing tolerance again. I guess this kind of phenomenon will keep going until people are fed up with the pains or the company management actually kicks to execute, or being taken over (an old rumor in the past year or two, I guess it will keep buzzing down the road).

Anyway, bottom line is SINA is still a leader in online advertising in China, dragged back by wireless exposure. It is a good asset to acquire for bidders, and could be a wise investment for those who have investment horizon more than a year or two. However, I don't think 2006 will be a good year for SINA. I hold my previous 'Neutral' view and cut back 12 month target from 27$ to 25$.

If you have followed my posts, I have yelled to sell SINA and buy SOHU in the past, after SINA went down and SOHU shoot up, I still believe SOHU will outperform SINA this year.



SINA Q405 Update Posted by Picasa

Wednesday, February 22, 2006

BIDU Q405 Update

Baidu.com (NASDAQ:BIDU), the so called 'Google of China', has reported a good Q405. It is not a surprise to me, actually its actual revenue and forecasted revenue numbers are quite close to my previous estimates.

The bottom line is that this is a good company, but the stock price went far ahead. I maintain my previous 'Underperform' view and 12-month price target 35$.



BIDU Q405 Update Posted by Picasa

Friday, February 17, 2006

GSIC After Q405 Update

GSI Commerce (NASDAQ:GSIC) reported a so so quarter, EPS 25 cents is shy of average analyst estimate of 30 cents. Q106 revenue guidance is also lower than expected.

After the report, I was a little surprised by the resilience of the stock. In the long run, I believe this company has the potential to evolve to a good story, but before the iceberg shows a tip, I won't be a big fan of it. I think it is a lousy stock backed by too many cheerleaders from Wall Street. I belive it is worth buying when price is in single digits.

I maintain my previous 'Neutral' view on this stock and lowered my 12-month target from 17$ to 15$.

Here is my updated financial sheet:


GSICQ405 Posted by Picasa

My take on some PC hardware companies

I was thinking to buy a new desktop a month ago to play video games. Nowadays, 3D games developers like Electronic Art(NASDAQ:ERTS) and Activision(NASDAQ:ATVI) are putting more and more efforts to make fancier visual and sound effects. As a result, latest 3D games require better CPUs, bigger hard disks, larger memories, and more powerful video cards.

Although ERTS and ATVI stocks have been performing poorly, these two companies' efforts to build better 3D games has helped and will continue to spur growth in demand for a few categories of computer hardware:

Want to play a 3D game and your machine can not run it? Buy a new machine. Here was my story. A month ago I was attracted by Microsoft's new 3D game 'Age of Empire III', I was seriously thinking to buy a new powerful PC to play the game. I did a lot of research on minimum hardware requirements for the game, such as 1.8 G HZ CPU, 515MB RAM, 128MB Video card memory,etc. Then I looked online to see where I can get a new machine. First I thought of DELL, which claimed for lower costs for same product. To my dismay, after I played with their hardware configuration, I did not see an apparent discount versus those PCs from other vendors. Plus, since I have been using a DELL laptop for years, I had a very negative impression with them. My laptop experienced touch pad problem only 3 months after I purchased, the battery did not work well after a year. After two years the monitor did not look to work quite well. I also witnessed many other technical problems experienced by my friends who were DELL users. Of course you can always call their customer service to get it repaired, but wait a second, they ask you to ship the machine back! One girl I know bought a DELL desktop two years ago, the machine sometimes fails and shuts down for no reason. Customer service guys asked her to ship the machine back to take a look, but sadly the girl was not strong enough to carry that 40 pound box and 30 pound monitor to the post office! Not to mention the shipping costs. Given all these bad memories, I decided to give DELL a pass, did not want to buy anything from them again.

Then I looked at Hewlett-Packard's site. I liked what I saw. You know what, the so called DELL low cost supply chain model is not rocket science, Hewlett-Packard did pretty well in borrowing it. Their website is well built, easy to browse various products, and lets me choose different combinations of hardware as well. In the end, I configured a machine at a lower cost than similar product from DELL. It is not only a matter of price, but also reliability, I did not see much failures on HP products.

It was from that point on, I started to believe it may be a good idea for people to sell DELL stock and switch to Hewlett-Packard. Now I still believe so.

Back to the topic of video game, I think it also helped a few other companies:

NVIDIA(NASDAQ:NVDA). If you are a hard core video game player, you probably have to seriously look through those video cards from NVIDIA. Because their cards are best of breed, there are very few other companies who could match up their quality and variety. This company just reported Q405 earnings yesterday, it was very good. In the long term, I think it will continue to be a good story.

AMD: Faster CPUs are every video game player's dream. Although players can choose between Intel and AMD processors, AMD has been stealing market share from Intel. In the past a few years, AMD processors have been selling at a discount to Intel CPUs, given it is a less fancy brand, people generally perceived that AMD CPUs were sold cheaper because their performance was not as good as those from Intel. It could be true a few years ago (I happened to buy a AMD CPU back in 2000 to save some money though I know Intel CPU performed slightly better), but not any more after AMD released its breakthrough dual core 64 digit processor last year. Intel did come up with a similar product, but based on some seriously technical surveys I read online, each excels in different area( such as video, audio, scientific calculation ,etc.), it was hard to say which is obviously better than the other. So far, AMD has about 20% share of overall CPU market, I am not surprised if AMD continues to take share from Intel.

So far, I do not have any holdings in the companies mentioned above, but going forward I may jump into those ships that I favor when opportunity comes. And if you are curious about what happened to my video game machine, I am sorry to tell you finally I did not pull the trigger to spend 1300 bucks to buy the machine, not only because I got two machines at home already, it is also because I tried to keep myself from getting addicted to video games ( I love them, I could play day and night). The June CFA level III exam is coming, I did not read a page yet.

Tuesday, February 07, 2006

SFCC update

SFBC International(NASDAQ:SFCC) new CEO held a meeting with street analysts on Feb 2nd. The meeting clearly was productive, stock went up 10% so far after the meeting. A couple analysts upgraded their rating and price target for SFCC stock, Goldman also disclosed on Feb 3rd that they acquired 9.6% of total SFCC shares, making it the biggest shareholder.

I think it is a matter of time before the stock gradually recovers to 30+ range. The biggest risk facing investors is any further loss of customers due to reputation damage. But since there is seldom any sure thing in the world, I believe the return vs. risk profile here is pretty attractive.

SOHU Q405 Report

To most street analysts, SOHU Q405 report was a surprise, but not to me. The Company reported good business developments for both online AD and wireless service. Next year growth guidance is above 25% for advertising.

I maintain my previous calls ( 1, 2 ) to buy the stock with a 27$ target in mind.

I am long SOHU.



SOHU Q405 Report Posted by Picasa

Wednesday, February 01, 2006

Chinese Penny Stock Mania

Feb 3rd, 2006 (Google blog showed the wrong date!)


I noticed that Chinese penny stocks listed in America are usually more volatile than penny stocks from other countries. In the past few days, there was a mania sweeping through almost all China related little stocks, some them are:
Ticker MktCap Close 2 week performance
CHNR 23 M USD 18.5 517%
CTDC 108 M USD 9.64 442%
CAAS 225 M USD 9.98 43%
NINE 234 M USD 6.7 18%
CESV 194 M USD 9.85 15%

Other small cap Chinese stocks were to some extent boosted by this mania. Those bigger Chinese companies such as SINA,SOHU,NTES,SNDA were not affected.

I guess this phenomenon could be attributed to a few factors:
* Penny stocks are easy to be manipulated.
* There are many Chinese in America who by instinct pays more attention to movements in Chinese stocks.

There may be some hidden values in these penny stocks, but except a few names such as CYD,CESV, I see little basis to buy and hold any other little Chinese stock. When the heat cools down, someone will be fooled.

Today ACTS, a leading MP3 player chip maker in China, gets upgraded to Buy at WR Hambrecht with 12$ target, the stock closed at 8.45, up 97 cents from previous close. If we look at current valuation, it appears to be very cheap. I guess the key is how sustainable revenue and earnings will be in the coming years. I am cautiously optimistic about this stock at current price level.

SFCC and TISA

SFCC is a mid term credit and even-driven play. It has been beaten down hard in the past month or two by unethical and illegal practices in forcing some illegal immigrants to take drug test by threats. This practice has cost the company two thirds of its market cap, as well as the seats of a few senior officers. I think as long as there will not be materially bad news coming out in the future, the stock will recover little by little.

However, things could turn out better than expected, because short sellers may not have the guts to keep holding on. The short position was about the same size of total float shares, there is a possibility of a short squeeze.


TISA is a tinny software company that makes information recognition systems. It has a market cap of 27 million USD, but with 10 million USD cash at bank, no debt. So far, it has about 4 million USD in rev and a small EPS of 1 cent. I like the company because
* Demand for intelligent information recognition and classification systems will grow as enterprises handles more and more incoming data electronically. However, a lot of data inputs these company gets are not in neat electronic format to be able to put into their back end enterprise systems (like CRM, ERP) directly, they may come as mails, receipts, fax confirmations, etc. In this case, they need TISA to help out.

* Strong balance sheet, low valuation.
Its cash position is strong compared its market cap. Also from a enterprise value over revenue perspective, its valuation is much lower than most software companies.

* Strong business momentum.
Based on latest news releases, the company's latest flagship product EFLOW 3 has been picking up strong momentum. Also, its Japanese division is performing better than expected.

I long TISA. I SPECULATE that its value could be finally realized. 5$ to 6$ is my one year target.