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Holy $*!&A (insert expletive) China Bubble!

September 21st, 2007 · No Comments

damn!

damn!

There’s a bubble, and then there’s a fricking bubble. I will point you to two China stocks that exploded 50% in 2 days. For no reason. And they are airline stocks, which languished for an entire decade (1997-2007). Then in 2007, they’re up 1000%, well at least China Eastern Airlines (NYSE: CEA) is.

China Southern Airlines (NYSE: ZNH) - priced at $97 up from the 10s
China Eastern Airlines (NYSE: CEA) - priced at $147 up from the 10s.
Stay far far away from these stocks. There’s bound to be painful downsides to a 50% two day gain. Btw, speaking of China, take a look at Kongzhong (Nasdaq: KONG) and Sohu (Nasdaq: SOHU). What did I tell you…not shabby at all =)

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Burst Media (BRST.L) - profitable, but barely so

September 12th, 2007 · No Comments

A glance at Burst Media’s (BRST.L) most recent earnings report doesn’t paint the rosiest of pictures.  Granted, the company turned in a profitable first half of the year, but at a not-so-amazing $279,000.  No, I didn’t lop off any zeros.  Year over year revenue growth is expected to come in at a fairly anemic 5-9%; again these numbers are not earth shattering for an internet company in a high growth sector.  Shares which had bottomed out last year, remain mired at low prices.  Shares fell 20% today from 17p to 13.5p (market cap of £11.20M or US$22 million).  That’s the equivalent of about 27 cents a share. At its highs a year ago, shares were trading at nearly 90p.  Again, it makes me wonder why they just don’t take the company private.   I mean $22 million is a pretty damn cheap price for an established profitable internet ad company;  especially given what Yahoo, Google, AOL and Microsoft are paying for companies these days.  Blue Lithium was just bought by Yahoo for $300 million.
The bright side is that the company continues to be profitable, ensuring its continued existence in the market place.  Good for me.  24/7 Real Media, which was eventually bought out, was never really profitable either.  Below are some articles from the financial press to give you an idea of Burst’s struggles.

On a personal note, yes I am biased in favor of Burst Media…
the company recently came thru for me, and sold a targetted campaign for my entertainment website (westlife.org).  It’s been years since they’ve been able to do that.  And the client is a damn respectable one…Clinique.  If there’s one great thing to be a Burst publisher, it’s the high ad quality (except those pesky ads from adtegrity that are worth s***).  In addition, they recently changed their payment terms from net 90 to net 45.  I never could understand the net 90.  It meant that publishers had to wait 120 days from the start of a campaign month to get paid.  Anyways, I digress…click thru to westlife.org …the Clinique ad is a can’t miss.

LONDON (Thomson Financial) - Burst Media Corp swung to a first-half net pretax profit but said it expects its full-year performance to be below market expectations, mainly hit by higher than anticipated ad campaign cancellations.

It reported a net pretax profit of 279,000 usd for the six months to June 30 compared with a 703,000 usd loss the year earlier, as sales grew 17 pct to 13.30 mln usd.

The company estimates revenue from the Burst Network will increase 5-9 pct for the 2007 fiscal year as compared to the prior year. Slightly offsetting the softness in revenue growth is projected triple digit revenue growth for Burst Direct and Burst AdConductor.

For the year to December 31, the company expects to report total revenue between 28.5-29.5 mln usd, which will lead to adjusted EBITDA of about 2.4-2.7 mln usd.

And another article….

LONDON (Reuters) - U.S.-based online advertising firm Burst Media (BRST.L: Quote, Profile, Research) said on Wednesday results for 2007 are likely to come in below market forecasts because of higher-than-expected ad campaign cancellations.

Burst, whose share price dropped 60 percent when it warned on 2006 profits almost a year ago, just five months after it floated, said it expects revenue of between $28.5 million and $29.5 million for the year to December 31, 2007.

AIM-listed Burst now expects adjusted earnings before interest, tax, depreciation and amortization of $2.4 million to $2.7 million, it said.

House broker Altium Securities had previously expected adjusted pretax profit of $4 million on revenue of $31.4 million.

The ad cancellations “appear to be a function of heightened competition as high profile players including Google and Yahoo look to increase their exposure to the fast growing online advertising space,” said Altium analyst Roddy Davidson in a note as it cut its recommendation to hold from buy.

Burst said the cancellations had happened since the company issued a trading statement six weeks ago which said it expected to meet 2007 expectations.

The firm also posted half-year results on Wednesday which were broadly in line with Altium’s expectations.

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High yield investments - Ford Interest Advantage

September 10th, 2007 · No Comments

With the instability of the equity markets, the interest rates offered by two financial institutions seem quite attractive at this point in time. Heck, even better than I would venture that the stock market will offer for the rest of this year.
What has really gotten my attention the past month, is the rate of interest rate hikes over at Ford Interest Advantage. This is coming with the backdrop that the Fed is expected to lower interest rates at its meeting this month. After lingering at 5.75% - 6.05% APY for most of the summer, the APY of these accounts are now 6.14 - 6.45%. I really wish I could get a commission for hawking these accounts, but I don’t. For an investment of as little as $1000, you will earn 5.97% APR (6.14% APY) interest now. In fact, this is the highest that these investments have paid out since January 2001.

Why the sudden one month 0.38% jump in rates? I can think of two reasons.
#1: The tightening of credit markets, thanks to the home mortgage mess. This could be making it a bit harder for Ford to borrow (I doubt this is a major influence right now, but it could have an impact later on as the economic decline worsens)
#2: What I think is the more likely reason is the increased competition for investor money. Countrywide Bank (aka Countrywide Financial) is offering a phenomenal savings interest rate. Of course, Countrywide (NYSE: CFC) is also desperate for money and capital to keeps its mortgage business running. I mean its stock price has fallen below the $18 that Bank of America is paying for its 20% share. For $10,000, investors at Countrywide can get a return of 5.65% APY on a 12 month CD. For the same $10,000, it is offering 5.50% APY for its money market account. The best part is that there is no risk, even if Countrywide does for some unlikely reason declare bankruptcy. You are FDIC insured.

Thus, with Countrywide’s offer, the spread between what Ford was offering through its Interest Advantage had narrowed to a piddling 0.10%. Ford’s investment product is not FDIC insured. You are in effect loaning Ford money and investing in unsecured debt obligations (rated below investment grade by the major credit agencies) . Thus you run a small but possible risk of losing all your money in the event of a Ford bankruptcy for a small 0.10% investment premium…which is probably a no go for most investors.

That’s the beauty of a free market system. Ford in effect had to raise the amount of interest it is paying out on its accounts, and thus the premium between it and Countrywide has widened to a more acceptable 0.50%.

Plus, the best benefit of the Ford Interest Advantage program versus any type of money market account: the ability to make as many transactions you want. All money market accounts are limited by federal law to a certain number of withdrawls per month (six). On the other hand treat, the Ford account can essentially be treated as a well paying checking account. It comes with free checks, and no fees for checks written for over $250. Ford may not be the safest place for your entire life savings, but it certainly is worth looking at for a chunk of your savings.

Ford Interest Advantage

Countrywide Bank 

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Belize (and Mexico) under the gun

August 20th, 2007 · No Comments

With Category 5 Hurricane Dean bearing down on the coast, the disaster in the making will prove interesting as it unfolds. 3000 people were evacuated from Ambergris Caye/San Pedro. Hurricane Mitch in 1999 caused tremendous damage on the island. With this one gunning just north of Ambergris Caye, the damage may prove enormous. The coral reef will serve as somewhat of a barrier, but with this much wind, it will be pretty insignificant. Pictures will tell a million words in the coming hours.

This map from the Weather Channel should auto update…and once the hurricane leaves, will probably be a blank image.

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Why you shouldn’t ride China Airlines

August 20th, 2007 · 1 Comment

Now normally, I like being nationalistic, pro-Taiwan and everything of the sort.  But China Airlines (you could call it the Taiwanese national carrier despite the name China) is a airline that is like ‘persona non-grata’ in my family.  Trips to Taiwan are only allowed on US carriers…namely Northwest Airlines (but United is OK too).  The reason?  Safety.  The US airlines have much better airline safety records than China Airlines.  By my rule of thumb, China Airlines, has a major disaster every 2 or 3 years.  Looks like they’re keeping true to the trend with this disaster in the last 24 hours.  Thank god everyone survived this one.

China Airlines has a troubled safety record. One of its 747s crashed in 2002 as it flew from Taipei to Hong Kong, leading to 225 deaths. Accidents involving the airline killed about 450 people in the 1990s.

→ 1 CommentTags: General