- Soleil-Hudson Square Research's Daniel Ernst is back commenting on Netflix (NASDAQ:NFLX) after the co issued an SEC form 8K acknowledging one of their executives had stated that the company was at work on a proprietary set-top box to deliver movies over the Internet. However, Netflix indicated that management was considering a broad range of options and no final decisions had yet been made.
Ernst says they stand by their analysis that shows a) a material erosion of Netflix's economic model with the inclusion of set-top boxes and b) the company faces increased risks as Internet delivery of movies becomes increasingly viable. He notes that if they could be certain that proprietary boxes represented 0.0% of the company's plans, they might be more positive. However, if not a box, they wonder how Netflix might get content to the TV from the PC to address mainstream movie-viewing. Further, we believe Netflix will lose a key competitive advantage in the electronic delivery domain; e.g. their expertise and efficiency of physical delivery. Maintains Hold.
Notablecalls: Ernst has a point. Netflix will eventually need to get their DVD content to the TV in order to compete with Comcast and other players entering the field. That will prove to be a drag on profitability. Analysts will eventually need to update their models.
- CIBC comments on Focus Media (NASDAQ:FMCN) after Clear Channel Outdoor announced that its 51%-owned Chinese subsidiary, Clear Media, acquired 634 bus shelter advertising display panels in Beijing for $10M. This move follows the 2004 acquisition of 3,000 ad panels in Beijing.
As such, this investment aims to strengthen Clear Media's traditional street furniture business, rather than expand into new advertising formats, supporting firm's thesis that FMCN will see limited competition for their digital indoor business.
FMCN also represents firm's best defensive name if US economy were to see slower economic
growth. Trading at 26x '07 EPS estimate, with 90% EPS growth forecast this year, they believe investors are not fully "sold" on the Focus story and currently doubt existing Street estimates. Firm reits their Sector Outperformer and $74 tgt.
Notablecalls: It's essentially a nice call but won't bring any real buyers. But I do like the chart.
- Soleil Securities Group's Marla S. Backer is commenting on DreamWorks Animation (NYSE:DWA) after attending the International Licensing Show yesterday. Firm's impressions of the response the Company received from attendees " including potential licensing partners, media buyers and investors " are positive.
As evidenced by the marketing material at the booth, properties that DWA is promoting most aggressively are: Shrek3, Bee Movie and Kung Fu Panda. These films are slated for release on May 18, 2007, November 2, 2007 and in August, 2008, respectively. The DWA booth " one of the larger on the exhibition floor " was continuously crowded. They believe that Shrek3 is the primary attraction for potential licensing partners.
The buzz on Shrek3, Shrek the Third, is building. Firm spoke to several people as they emerged from the DWA booth, many of whom had seen the Company's screening. They were enthusiastic about Shrek3 and expect it to be highly successful. Shrek2 grossed $436.7m domestically, up from $267.7m for the original Shrek. Maintains Buy.
Notablecalls: Not actionable but good to know category.
Ernst says they stand by their analysis that shows a) a material erosion of Netflix's economic model with the inclusion of set-top boxes and b) the company faces increased risks as Internet delivery of movies becomes increasingly viable. He notes that if they could be certain that proprietary boxes represented 0.0% of the company's plans, they might be more positive. However, if not a box, they wonder how Netflix might get content to the TV from the PC to address mainstream movie-viewing. Further, we believe Netflix will lose a key competitive advantage in the electronic delivery domain; e.g. their expertise and efficiency of physical delivery. Maintains Hold.
Notablecalls: Ernst has a point. Netflix will eventually need to get their DVD content to the TV in order to compete with Comcast and other players entering the field. That will prove to be a drag on profitability. Analysts will eventually need to update their models.
- CIBC comments on Focus Media (NASDAQ:FMCN) after Clear Channel Outdoor announced that its 51%-owned Chinese subsidiary, Clear Media, acquired 634 bus shelter advertising display panels in Beijing for $10M. This move follows the 2004 acquisition of 3,000 ad panels in Beijing.
As such, this investment aims to strengthen Clear Media's traditional street furniture business, rather than expand into new advertising formats, supporting firm's thesis that FMCN will see limited competition for their digital indoor business.
FMCN also represents firm's best defensive name if US economy were to see slower economic
growth. Trading at 26x '07 EPS estimate, with 90% EPS growth forecast this year, they believe investors are not fully "sold" on the Focus story and currently doubt existing Street estimates. Firm reits their Sector Outperformer and $74 tgt.
Notablecalls: It's essentially a nice call but won't bring any real buyers. But I do like the chart.
- Soleil Securities Group's Marla S. Backer is commenting on DreamWorks Animation (NYSE:DWA) after attending the International Licensing Show yesterday. Firm's impressions of the response the Company received from attendees " including potential licensing partners, media buyers and investors " are positive.
As evidenced by the marketing material at the booth, properties that DWA is promoting most aggressively are: Shrek3, Bee Movie and Kung Fu Panda. These films are slated for release on May 18, 2007, November 2, 2007 and in August, 2008, respectively. The DWA booth " one of the larger on the exhibition floor " was continuously crowded. They believe that Shrek3 is the primary attraction for potential licensing partners.
The buzz on Shrek3, Shrek the Third, is building. Firm spoke to several people as they emerged from the DWA booth, many of whom had seen the Company's screening. They were enthusiastic about Shrek3 and expect it to be highly successful. Shrek2 grossed $436.7m domestically, up from $267.7m for the original Shrek. Maintains Buy.
Notablecalls: Not actionable but good to know category.
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