Berk Sure Has A Way

Putting my mouth where my money is.

Archive for September 2011

Netflix Hatches a Hobbled Dinosaur

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On Monday, I submitted an article to Seeking Alpha about Netflix’s jarring changes.  You can read the whole article at Seeking Alpha but here is the summary:

I agree that Reed’s apology was the right thing to do and was well written, but the pricing change was a tactical misstep and a missed opportunity. The splitting of the business was perhaps the right long term move but feels more about the company than the customer. For such a successful customer focused company, these moves feel pretty jarring. Customers are clearly voting with their feet.

These rapid changes to the customer experience are detrimental to Netflix’s usability and brand. Perhaps these changes will pay off with better margins, more clarity, strategic focus and CEO accountability over the long term. These changes may have been inevitable, but I would have advocated a slower rollout, better communication, more user testing and ongoing site integration.

Full article here:  Netflix Creates a Hobbled Dinosaur.


Written by Kevin Berk

September 21, 2011 at 6:44 AM

Posted in Company Strategy

7 Luxury Stocks to Sell or Short

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Last week I posted a negative outlook on luxury good stocks on Seeking Alpha.  Of course, timing is everything and these stocks promptly rose further!  But if you didn’t see the article then, you have an opportunity now to sell at even higher prices!

During the 2008-09 financial crisis, luxury goods companies’ sales, profits and stock prices tanked. During the rebound they have grown dramatically, and many stocks are now above their pre-crisis highs. This situation will not last.

Here are seven vulnerable stocks: Estee Lauder (EL), Polo Ralph Lauren (RL), Tempur-Pedic (TPX), Coach (COH), Tiffany & Co (TIF), Nordstrom (JWN) and Lululemon (LULU).

The thesis hinges upon a continuing economic slowdown in the U.S. and Europe. A variety of factors will rein in spending among the wealthy while increasing costs at luxury goods companies:

1) Stock Market Volatility and Decline

2) The recent renewal in home price declines

3) Continued Economic and Political Uncertainty

4) Inevitable Increased Taxes

5) Higher Input Prices

With sales likely to slip, costs likely to rise and high PE and PS ratios, these luxury stocks are likely to fall over 30% from current prices.

You can read the full article on Seeking Alpha:  Luxury Goods Vulnerable.

Written by Kevin Berk

September 19, 2011 at 11:00 AM

Posted in Uncategorized

4 Strategically Smart Technology Mergers

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I posted a hypothetical piece to Seeking Alpha about tech mergers a month ago – 4 Potential Tech Mergers.

Here is the quick summary:

Oracle (ORCL) should buy Dell (DELL)

Apple (AAPL) should buy Adobe (ADBE)

Amazon (AMZN) should buy Sirius (SIRI)

Microsoft (MSFT) should buy Intuit (INTU)

Read more at Seeking Alpha: 4 Smart Tech Mergers

Written by Kevin Berk

September 14, 2011 at 2:45 PM

Posted in Company Strategy