Market Commentary
Cody Willard's Mailbag
Cody Willard
04/08/06 - 07:59 AM EDT
The markets continued upward this week. The Nasdaq, S&P 500 and Russell 2000 hit multiyear highs Friday, though they quickly turned tail and faded in the afternoon.
Lots of great email this week. Nothing panicky on Apple (AAPL Quote - Cramer on AAPL - Stock Picks), as the stock popped off news that the company had released a program that will enable the Mac to run either Apple's OS X operating system or Windows. Of course, Apple turned tail with the market and faded Friday afternoon.
Here is some of the best email I received this week, along with my replies.
Emailer: I remember reading that you did some trimming of PortalPlayer (PLAY Quote - Cramer on PLAY - Stock Picks) last week.
So I was curious to find out your thoughts on this week's action. We see an
upgrade on Monday with about a 4% gain. On Tuesday I didn't hear anything
out there about it but the stock loses the previous day's upgrade gains and
then some. Now we're on Wednesday, where it receives a downgrade. I thought I saw it down as much as 5% to 6% in premarket and it fights through that downgrade to turn positive over 1%. Do you have any thoughts on this kind of action in a stock that seems like it's very hated? Could this be positive, negative, or just nothing big? Thanks for your time, bye.
Cody: I don't read much of anything into a few day's action in a single stock, but what I do read into this example is that PortalPlayer is definitely overhated. Now if the fundies are okay, then this stock is a screaming buy. I'm
not trading it here, though, and am just holding some common.
Emailer: Cody, the Apple Intel chips use a 32 bit system, but Windows is going to a 64 bit system. Why would anyone want to run XP on a Mac? They buy these things to get away from XP ... requires a reboot, too; this stuff raises serious enterprise questions for us, Cody...
Emailer: If flash memory is dropping like a rock (and Creative (CREAF Quote - Cramer on CREAF - Stock Picks) warned partly because of this in prices) why are Toshiba and SanDisk (SNDK Quote - Cramer on SNDK - Stock Picks) going to build a new NAND plant? Cody: In the early stages of adoption of new semiconductor technologies, you want to see prices drop rapidly to spur demand. It's called elasticity. It's what made Intel (INTC Quote - Cramer on INTC - Stock Picks) the giant it is, as they repeatedly drove down the prices to increase the addressable market. We are seeing SanDisk and its brethren try to make this same elasticity dynamic work for them in the early stages of adoption of flash.
Emailer: Can you address the issue of HD content and available bandwidth? How is HD content going to be delivered over wireless and/or broadband pipes with less than 30Mbs of speed? Or are you assuming that consumers will be content with lower-quality video in portable devices? I have no skin in the game other than a personal starvation for more HD content (I tend to shy away from price wars), but I have not heard/read you address this issue specifically and would be very interested in your take. Cody: Oh, HD is coming. But it's not going to be centrally controlled or "broadcast." You'll download it from the net and start watching it as it's downloading. Sure, it'll take some more buffering time than standard-definition video does, but streaming is still possible. Matter of fact, you can stream HD video off Apple's Web site right now using QuickTime, with a connection less than 1/30th the speeds you talk about. Portable devices won't have as much of a need for HD just because of their size.
Emailer: I don't understand the bearish central thesis of your article on cable stocks. You write: "And as the time allotted for watching the television-sourced video has heretofore been centered around sitting on the couch in the living room, focusing on the broadcasts from the cable companies, it's key to acknowledge that that model is changing and soon we are going to be able to access any video we want anytime we want from anywhere we want." It's great that soon we'll all have the ability to watch TV anywhere we want, but so what? Where do we want to watch TV (on a regular basis, not for two minutes while taking out the trash) if not in our living room? I don't get it. Just out of curiosity, do you have cable in your apartment? If so, how much do you pay a month and when do you plan on cancelling it? Regardless, it seems to me that the current distribution scheme works for the cable companies and the content providers, so I'm not sure why they would want to change it. Cody: Yes, I do have cable, and don't plan on canceling it quite yet. But looking longer term, sure, you can still sit in your living room, but that device hooked up to your TV will be a computer, not a 'cable box', and that computer will be streaming video over the Internet, not linked directly to a cable provider. And yes, I think people watching videos remotely, while traveling, etc., will be a huge driver. The short answer to why the cable companies would want to change their models even though they've been "working": They have no choice! Piracy, iTunes, and Google (GOOG Quote - Cramer on GOOG - Stock Picks) are already driving it. I trademarked the term "They can't stop the revolution" for a reason!
Emailer: Hey Cody, I haven't been following the news as much lately so I am a bit confused. In this morning's CC post, was there anything in particular you were trying to highlight regarding Darfur, or were you trying to illustrate the general malaise and short-term memory of our society/culture/and most of humanity? Hope you have a great day. Cody: Neither actually. I think the best weapon to fight genocide is for the developed world to talk about it until they do something about it. I have a detailed column about how I think capitalism and the communications revolution are going to end atrocities on this planet in next Saturday's Financial Times.
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