Any Stockpickers out there?

[PhilMongoose]

Thanks. I’ll watch it later. I do believe that ADBE to be one of the more vulnerable companies and not just due to AI.

EDIT: OK. I watched it. Personally, I don’t use many ADBE products.

I think Black Magic is better than Premiere and free. I’m too cheap to buy Photoshop and use Gimp instead. Even PDF tools, I use open source versions.

Many of their products now have free or cheap competitors. And AI is truly a threat.

Still, you can’t argue with this:

Earnings up. Sales up. Shares outstanding down.

And look at the ratios! PEG 0.55. P/FCF 8.5! ROIC 43% fP/E 8.

[San_Francisco]

@PhilMongoose

It’s all software that you run to get something done. Whether it is a platform is irrelevant

What company would you rather own as a stock:

• A company that makes a couple of successful iOS apps?
• A company that developed and controls iOS (the underlying platform)?

Whose products and business are more easily replaceable?

[PhilMongoose]

iOS because Apple gets a cut of every app sold on the platform.

But that is not the case with Microsoft windows.

Whose products and business is more easily replaceable?

So we come to the factor that matters, not whether it is a platform or not - which was my point. Symbian was a platform. So was Windows Phone OS.

[San_Francisco]

@PhilMongoose

Symbian was a platform. So was Windows Phone OS.

No, they weren’t really. They hardly had any apps - or, more generally, dependent (third-party) apps or services - that ran on them. Which is why they failed vs. operating systems that successfully established platform status and rich ecosystems depending on them.

Coming back to your question:

@PhilMongoose

Now the big question is are these software providers more like the desktop market, or more like the server market where Linux has over 50% of the market?

They’re more like desktop application software. You’re making the case yourself:

@PhilMongoose

I think Black Magic is better than Premiere and free. I’m too cheap to buy Photoshop and use Gimp instead. Even PDF tools, I use open source versions.

Many of their products now have free or cheap competitors. And AI is truly a threat.

MS Office has macros and APIs that interface with it. Photoshop has… plugins, but they’re arguably less of an “ecosystem” platform as MS Windows or iOS.

The key to picking software stocks and identifying companies with viable long-term business models is their strength as a platform and in ecosystem that makes them hard to replace.

[PhilMongoose]

@San_Francisco

No, they weren’t really.

In your view what are required elements to be a platform and why is windows one and symbian not. Because your view doesn’t seem to accord with normal definitions.

[mabi]

@PhilMongoose

Earnings up. Sales up. Shares outstanding down.

Cool you watched the video, although a bit too alarmist in my opinion there is probably a lot of truth. Best part, I learnt a new economical term: “rentier capitalism”. I was aware about this trend of milking your customer on a monthly basis but was not aware of the extent. Seems like Adobe stated this trend back in 2013 based on that video. More worrying is that this not motivate the company to innovate much.

So the question for ADBE is probably more how long can they continue with these good numbers…

[gaijin]

@mabi

So the question for ADBE is probably more how long can they continue with these good numbers…

Would the low stock price and the high earnings of ADBE not make them a prime candidate for a takeover?

[mabi]

@gaijin

Would the low stock price and the high earnings of ADBE not make them a prime candidate for a takeover?

Ah interesting view… but by who? Apple? MS?

[gaijin]

@mabi

Apple? MS?

Why should they buy a dying business?
I was more thinking of a company like Bending Spoons. But probably the price of Adobe would have to go down a bit more for them to be able to afford such a purchase.

[PhilMongoose]

A dying business can make you a lot of money, esp if it take longer to die than people expect.

If ADBE continues as is for 9 years, it will have thrown off its market cap in free cash flow even if the company becomes worthless.

[gaijin]

@PhilMongoose

A dying business can make you a lot of money, esp if it take longer to die than people expect.

Agree. It‘s not the kind of business that Apple or Microsoft are interested in, but it‘s the business model of bending spoons and alike.

[San_Francisco]

@PhilMongoose

In your view what are required elements to be a platform and why is windows one and symbian not.

Technically, you could install third-party applications on Symbian, which makes it a platform as much as Windows.

It just lacked real relevance in the market, with only a small fraction of users doing it and little money spent on them.

[ma0]

Broadcom

[PhilMongoose]

Symbian had an app store and tens of thousands of apps. Some were unmatched even today.

However this faded into obscurity as the fully touch interface of the iPhone won and quickly displaced both symbian and blackberry.

[Kay4rElle]

anyone looking at DRAM or SLS?

DRAM is a semi conductor ETF, it holds Smsung and all the other guys, i use it to gain exposure overall without havin single stock exposure.

SLS is the current hype over the web, i am not sure for now if it is a play to follow trough or not.
Apparently they have a cancer treatment in experimental phase (2?) where people would normally live 6 months. The trial started 2 years ago and from the 80 patients 2 are still alive.

Once all have passed away they can publish the data. The overall consens is that since 2 years is longer than 6 month the drug should work.

[San_Francisco]

@Kay4rElle

SLS is the current hype over the web, i am not sure for now if it is a play to follow trough or not.

You may want to follow through, as long as you’re confident in placing bets on a roulette table.
Or you expertise in early-stage cancer drug development.

[PhilMongoose]

SaaS portfolio finally in the green, but allocation negative alpha is painful: