The Big Picture - Macro Perspective on the Capital Markets, Economy, Technology, and Digital Media

SNL

Source: SNL on Verizon’s 4G marketing: “It’s an old person’s nightmare” (Venture)

Hat tip boingboing

I have been arguing that $100B is rather rich for Facebook. Perusing the S1, and discussing this with Bloomberg’s Dave Wilson has further confirmed this.

Why? It has to do with what they consider a daily or monthly “user.” Indeed, this is extremely significant, because the excitement about Facebook’s reach and user base is driving valuations to levels that may be setting the company up for investor disappointment.

Consider the 843 million monthly users and the 450 million daily users. Those sound like enormous numbers — but what do they really mean?

As it turns out, there is far less to being counted as a FB user than meets the eye. If you click on a Like button any given day, you are counted by Facebook as an active user that day.

From the S-1:

Daily Active Users (DAUs). We define a daily active user as a registered Facebook user who logged in and visited Facebook through our website or a mobile device, or took an action to share content or activity with his or her Facebook friends or connections via a third-party website that is integrated with Facebook, on a given day. We view DAUs, and DAUs as a percentage of MAUs, as measures of user engagement. (emphasis added)

All of those people clicking all of those “Like” buttons are counted as active that day, EVEN IF THEY NEVER GO TO FACEBOOK.COM.

Think of what this means in terms of monetizing their “daily users.” If they click a like button but do not go to Facebook that day, they cannot be marketed to, they do not see any advertising, they cannot be sold any goods or services. All they did was take advantage of FB’s extensive infrastructure to tell their FB friends (who may or may not see what they did) that they liked something online. Period.

This helps to explain why Facebook’s annual revenue per user is so low:

Facebook – $5.02
Google $30
Netflix – $148.20

It also helps to explain why Facebook’s valuation may be so greatly exaggerated. Retired Neuberger Berman value investor and present CNBC commentator Gary Kaminsky observed that at similar multiples as Facebook, Google would be trading at $850 and Apple trading at $1250.

The question for investors: Can Facebook monetize their users at a rate 5-10X greater than what they are currently doing? If they can, their valuations are far more reasonable. If they cannot, then this is a very very expensive company.

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Valuation Issues

Source: Barron’s

Via Venturebeat, we see this massive Google revenue review:
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click for ginormous version

Move over helicopters! There’s a new way to capture amazing aerial video. Meet the remote-controlled octo-copter named Cinestar. Its 3-axis gimbal holds a camera rock-steady during flight. You have to see the shots it takes to believe it.

CineStar 3 Axis Gimbal from tabb firchau on Vimeo.

By now, everyone knows that Apple had a blowout quarter: Q1FY12 sales of $46.33 billion, profits of $13.1 billion, with gross margins of 45%, translates into EPS of $13.87.

But the data points that surround the company today are simply astonishing. Consider these astounding Apple facts:

• Apple reclaimed the title of the world’s most valuable company $415B vs Exxon Mobil’s $413B (Yahoo Finance)

• The $97.6 billion in cash that $AAPL has is higher than the market value of 448 of the companies in the S&P 500. (Capital IQ)

• This was the 2nd highest profit quarter of any company ever. ExxonMobil’s Q3 08 profit of $14.8 billion needed $147 barrel oil and $140 billion in revenue. (WSJ)

• Sales rose 73% to $46.3 billion — so much for the law of big numbers working against them (CNN/Money)

• In 2009, Apple sold more iPhones than it did in 2007 and 2008 combined. In 2010, Apple sold more iPhones than it did in 2007, 2008, and 2009 combined. Last year, Apple sold 93.1 million iPhones, slightly more than it did in in 2007, 2008, 2009, and 2010 combined (Matt Richman)

• Apple’s profit of $13.1 billion was equal to their revenue in Q4 2010

• If Apple was a country, its market cap would make it 29th biggest nation, its annual revenue would make it the 52nd, its cash position 66th, and its earnings 79th, in terms of GDP  (Global Macro Monitor)

• Apple’s profits ($13 billion) exceeded Google’s entire revenue ($10.6 billion)  (Manjoo)

• Apple has now sold 315 million iPhones, iPads and iPod Touch devices running its iOS software (CNN/Money)

• Google would activate 59,653,187 Android-based devices during Apple’s fourth calendar quarter. Apple has said that iPod touch sales make up more than half of all iPod sales. That means Apple sold at least 7.7 million iPod touches. And that number, plus 37.04 million iPhones and 15.43 million iPads, means iOS outsold Android last quarter. (Matt Richman)

• Apple sold three times as many iPads as Amazon sold Kindle Fires (Tech Crunch)

Last, my favorite chart set, via Dan Frommer:

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Today’s must read MSM piece is a 4500 word beastie, ostensibly about the iPhone, but actually about the broader technological trends that drive the economy, especially regarding employment. It reveals what happens when we shift low cost jobs overseas — the impact is a variety of more sophisticated, higher paying technological jobs follow as well. The video “iPhone Economy” is especially informative.

In the print edition, there is a fantastic graphic showing the change in Manufacturing versus Service Jobs; unfortunately, it is nowhere to be found on line (not even Economix), but I will make discreet inquiries.

Meanwhile, its your reading assignment for today.

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Source:
How U.S. Lost Out on iPhone Work
CHARLES DUHIGG and KEITH BRADSHER
NYT, January 21, 2012    
http://www.nytimes.com/2012/01/22/business/apple-america-and-a-squeezed-middle-class.html

Interesting interactive graphic showing what nations are censoring the internet, what content they are restricting, and the methods they using.

Hat tip Good