Amazon Deal ‘Final Straw’ for Netflix

My appearance on CNBC today discussing $AMZN $NFLX $CSTR $VZ

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Jackson: Facebook Will Surprise on the Upside

Here's my appearance this morning on Bloomberg TV talking Facebook, Zynga, and Netflix

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What's Netflix Hiding?

Why it's a red flag that Netflix (NFLX) doesn't answer analyst questions directly.

Read the full post in TheStreet

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Bloomberg Video: Jackson's Thought on Netflix, Yahoo!, Apple

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Be Wary of Youku

By Eric Jackson
RealMoney Contributor
3/28/2011 11:30 AM EDT
Click here for more stories by Eric Jackson

Youku (YOKU - commentary - Trade Now) has been probably the hottest IPO of the last 12 months. But there's good reason to be wary of holding the stock from here. Some growing competitive threats within China and a looming IPO lockup expiration in a little over two months will weigh on the stock.

Youku is a leader in the exploding online video space within China. It went public last Dec. 8 and closed at $33.44 -- 160% above its offer price of $12.80.

On Friday, the stock closed a penny under $50 -- its highest close ever. That means that it now has a market capitalization of over $5 billion. This is a company that did $23 million in revenue in the fourth quarter, with a net loss of $6 million.

Youku is a great "story stock," like Tesla Motors(TSLA - commentary - Trade Now) or some pre-revenue biotech company in a hot new space. It has low to no revenue but infinite upside, so the story goes.

I've defended the company before, especially at the time of its IPO and in the following weeks. Skeptics have been saying this company was over-hyped. In its defense, it is the No. 1 online video player in China today. Great U.S.-based venture capitalists have poured money into it. And its CEO, Victor Koo, is well-spoken and very credible. Listen to the recent earnings call, and you can understand why many U.S. investors would be comfortable buying into a company under his leadership. He gives the sense of a very steady hand on the wheel.

However, I can't defend Youku at the $50 range with over a $5 billion market capitalization -- 4x its IPO offer price.

When Youku went public, the most common reference point you heard in the U.S. media was that it was the "YouTube of China." Over the last couple of months, you hear a shift, and the majority of people drawing comparisons now call it the "Netflix (NFLX - commentary - Trade Now) of China."

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[*** This post is an excerpt of the full article, available by clicking here to go to RealMoney.com. Note: subscription required. ***]

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What Can Save Cisco?

By Eric Jackson02/10/11 - 03:15 PM EST

I participated in TheStreet.com's live blog last night covering Cisco's(CSCO) earnings call. It was a fun event. I particularly enjoyed watching peoples' reactions change as the call got well underway.

When Cisco's earnings report first came out, it looked like a "beat." Consensus called for earnings per share of $0.35 on revenue of $10.3 billion. The company reported earnings of $0.37 per share on revenue of $10.4 billion.

Initial responses from the majority of the live blog's participants -- most of whom appeared to be long the stock -- was positive. Cisco's shares briefly (maybe for about 30 seconds) traded in the green after yesterday's close. However, it didn't take long for the stock to start heading south -- quickly and steadily.

There was no mention of guidance in the initial earnings press release. Earnings season, however, definitely has a "show me" quality to it. The market seems to place even more weight on guidance than it does on whether current-quarter expectations are met (and God help any company that doesn't meet them).

Once revealed, Cisco's guidance was definitely tepid. The company forecasted earnings per share of $0.35 to $0.38 for the coming quarter. Analysts expected the company to guide to $0.40 per share.

Another cause for concern was the continued sag in gross margins, which were down to 62.4%. Wall Street was looking for gross margins of 63.3%.

As I mentioned on the live blog last night: though I have no position in Cisco, I interpreted yesterday's results as a big reason to sell the stock in the afterhours session. Often, if a stock sees a big, earnings-inspired move in afterhours trading, that move (up or down) gets extended further the next day when regular trading resumes. Deserved or not, that's just the way it's gone, whether it's Netflix(NFLX_) on the upside or Cisco here.

Shares of Cisco held above $20 during conference call last night but have been below $20 all day today.

When the call began, I was struck by a couple of things. First, John Chambers wouldn't shut up. He talked for a long time before he passed the ball to the CFO. Then, before taking questions, Chambers came back and talked even longer than he did the first time. The Q&A session didn't start until 50 minutes into the call. I think the endless droning worried analysts. If you keep talking about how everything is fine, it usually means everything's not fine.

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[** This post is an excerpt of the full article, which is available on TheStreet.com by clicking here. Free Site.**]

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Whatever Happened to Tudou?

By Eric Jackson
RealMoney Contributor
1/14/2011 7:49 AM EST
Click here for more stories by Eric Jackson

Whatever happened to Tudou? The "YouTube of China" filed an initial public offering (IPO) and applied to trade on the Nasdaq under the symbol TUDO in the U.S. in early November. This was a week before its rival Youku (YOKU - commentary - Trade Now) did. Yet, we haven't heard from Tudou since. What's going on?

Initially, when both Tudou and Youku filed their prospectuses to do an IPO, many Western investors were wondering if Tudou wouldn't be the more successful of the two issues. Even though Tudou is No. 2 to Youku in market share currently, its reported numbers reveal that, unlike Youku, Tudou has been profitable in 2010. Tudou's offering will be led by Credit Suisse, which is very widely respected for its tech deals in China (although Youku was able to nab Goldman Sachs as its lead underwriter).

And even though Tudou was No. 2 in the market, it was close enough to Youku that many investors thought it was basically a dead heat between the two currently (different numbers have been bandied about, but it basically looks like Youku has 20% of the market while Tudou has 16%).

Few observers expected the type of successful IPO Youku received when it finally went public in December. The stock was immediately a hit and tripled its offer price. Critics quickly sputtered that investors were being irrational. One person called it the most overvalued stock in the universe.

While Youku has been highly volatile for the last month since its IPO, the price has held up - the stock is currently trading in the midrange of its public trading price (since its IPO). Partly, it has been supported by the recent news that Youku has struck a deal to stream the Hollywood movie Inception over its service to subscribers. This deal fed into some observers who have said that both Tudou and Youku are more likely to become the future "Netflix (NFLX - commentary - Trade Now) of China" rather than another YouTube. With Netflix moving to focus more on streaming movies to its customers rather than mailing DVDs, you can see how the Inception deal would get people excited.

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[*** This post is an excerpt of the full article, available by clicking here to go to RealMoney.com. Note: subscription required. ***]

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Netflix: Love the Product, Love the Stock

By Eric Jackson
RealMoney Contributor
6/17/2010 1:30 PM EDT
Click here for more stories by Eric Jackson

I'm in love with the Netflix (NFLX - commentary -Trade Now) product. I know very few customers who don't. Most of the stock jockeys who chat about whether Netflix is a buy, sell, or hold seem to get disconnected from the actual service that is the basis for the stock's price.

What's not to like about being a Netflix customer? It's cheap on the monthly subscription fee considering how many movies I'll rent in a month. It's also efficient. The DVDs typically arrive a day after I order them -- via regular mail. I had a problem once in the last two years of using the service, and the company's customer service was great.

And as much as I enjoy the traditional discs-in-envelopes business, I am an even bigger fan of the Netflix on demand service that I use through my TiVo (TIVO - commentary - Trade Now) service. The service is quick. Downloads appear to be quicker than those from the traditional cable company on-demand services. Even the Amazon (AMZN - commentary - Trade Now) on-demand movies that I can get through my TiVo appears to be slower.

The Netflix on-demand service -- which of course is the future for this company -- is quick and easy. It has the best interface I've seen of presenting possible movie choices to you and learning from your history of selections. It's a smarter service -- and it gets smarter as more subscribers use it. Netflix is in a good position to keep doing well in this business even after the mail-order business is gone.

My biggest complaint against Netflix's on-demand service is that the company still has a relatively small catalog of titles, considering this is one of the industry leaders. Hopefully, with more cash in the bank and a bigger user base, the company will be able to change situation this soon with the Hollywood powers-that-be.

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[This post is an excerpt of the full article, available by clicking here to go to RealMoney.com. Note: subscription required.]

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