Final Four is set, ready for CBS!

The grandest stage in College Basketball was once again a rousing success for television network CBS Corp (CBS). Year after year the NCAA tournament is filled with drama, action, heartbreak and incredible performances, just about everything a television network would want from one of its prime-time tv shows.

Now, although the later stages of the tournament this year lacked a glass-slipper boasting Cinderella, the games attracted an impressive audience, especially online. With the help of Akamai Technologies (AKAM), CBC was able to stream all the tournament games in the highest quality it had ever streamed the event before and the results were impressive. A few statistics from BusinessInsider (Link) show traffic up 57% year over year, and streamed content up 65% on the CBS website. Certain advertising opportunities, such as the "Boss Button" also showed impressive gains with 25% growth in clicks. In comparison, for the first days of the tournament CBS saw increased television ratings of 4%.

What does this all add up to? Well for North Carolina, UConn, Michigan State and Villanova, a chance to play on the biggest stage for a National Basketball Title. For shareholders of CBS, whose value has declined over 80% in 1 year, in the midst of the recession, operating losses and dividend cuts, the hope is for a continued spark from the tournament. However this spike has all but fizzled along with the market. Today's 13% decline has given back most of the gains made by CBS in the last 2 weeks.

With the economy still lurking in a grim down-turn and advertising being hard to come by, it is the major events that still attract audiences and advertisers and CBS has a tent-pole with March Madness. But, by the numbers, for my money the audience is moving online, and companies like content delivery network Akamai increasingly stand to benefit as higher-quality (read: more expensive) live streaming and content downloads build out an even more expansive user base in the years to come.

Disclosure: Author does not own any of the companies mentioned

Markets Lull Ahead of Earnings but Tech Continues to Sizzle

An overall negative market day in North America was propped by continued strength in Technology stocks. The Dow Jones and S&P were both lower but the Nasdaq managed to eek out a quarter percent gain. Volume levels were lower across the board as earnings from major companies are seemingly around the corner.

Technology was at the forefront all day as many new all time highs were not only reached but breached once again. Google (GOOG) most notably passed the $600 mark closing at $609.62.
Apple (AAPL) and Research In Motion (RIMM) continued to show strength with gains of 4% and 3.7% respectively. Previously beaten down names like Akamai (AKAM), up 8.4%, and Garmin (GRMN), up 4.5%, made rebounding strides today.

The winter season has so far been mild, which has put a dent in oil prices, dragging down Exxon Mobil (XOM) and Co. Gas Prices however, have sustained at high levels and that re-ignites investor fears that consumers will take their holiday spending down a notch. It'll be a battle between the bulls and the bears over the next few weeks as the markets seeks a true direction throughout the winter months. So far the Bulls are proving they have the edge, especially in Technology.

Disclosure: Author is long AAPL, GOOG, AKAM

WC Investing Q&A: Session I

Well its time to introduce something new to the WC Investment Blog. The best way to offer feedback I think is through Q&A Sessions. So here we are with the first one, of hopefully many more.

I've been fortunate enough to have generated a level of interest in my Investment Writings and because of this I've been asked a variety of questions on an amalgam of stock topics. So I thought instead of burying some of my responses in commentary and outside sources I would bring them to the forefront here, officially. Just so there's no confusion, this isn't a lightning round by any stretch, (I'm pretty sure Jim Cramer's got that trademarked) but I will try to keep responses relatively brief.

So let's get started.

1) Talked before about Diageo (DEO) as an Alcohol play, is there anything riskier and more obscure out there?

One company is Central European Distribution (CEDC) and what they do is distribution of, you guessed it, alcohol into and throughout Central Europe. They also produce and sell vodka throughout Poland and distribute an overwhelming number of other brands through the region. One year chart looks beautiful here and I first mentioned this play when shares ran from $18 to $39. I thought then part of the boat had sailed but the company is still worth a look. Forward P/E of 19-low-20s and a Price to Earnings Growth ratio estimate at about 1.40-1.5. If speculative plays in the alcohol space is the name of the game this is one of the only games in town.

2) Akamai and its upcoming Competition?

Akamai's (AKAM) a solid tech company. I like it and own Call options in it. It got really crushed when it reported its previous quarter numbers and now its earnings season again for this company. While it's had a pullback, I think AKAM remains stronger positions than its competitors in the Internet back-end bandwidth game. Major League Baseball is seeing a resurgence of traffic now as the playoff races finished up and the post season has begun and AKAM's sure to benefit. Limelight Networks (LLNW) seemed to be up and coming but it faltered heavily over the late summer months. There are concerns over margin contraction due to competition , but I still think AKAM it is the best company in this space.

3) VMWare IPO and beyond?

I talked about my thoughts on VMWare (VMW) and its IPO here (Link). I was weary of overpaying if VMWare jumped to $60 on its first day. I thought EMC (EMC) was the better play since they still hold 89% of VMWare all to themselves. VMWare has got it going though and as it breaks $90 and heads for $100 its even scarier. But the business that its in will be a big one in corporate circles and it is the only game in town right now when it comes to virtualization. On any pullbacks I would like to own it, but till then EMC still gives you great VMWare exposure with less risk.

4) How does Ebay go about increasing listings? And How is Ebay affected by Macroeconomics

Ebay's (EBAY) most important business is the core auctions business. They are seemingly the only one and as such have major control over pricing. Ebay was losing its core business to its own stores/Amazon's personal stores and other such merchants online. This was due to Ebay increasing prices too much. This drove down listings. When Ebay earlier this year reshuffled their pricing schemes it seems to regulate the business back and hence led to an increase in listings. So that's one way, a second is advertising. Ebay does a lot of it, but to further increase listings they need to do more. Ebay ran a pretty successful I think "It" campaign through TV and print ads but I havn't seen anything like that in quite a while from the company. Third, Ebay needs to further expand into more worldwide markets. They've made some strides in Europe but there's still a lot of room for growth there. The East markets are tougher for American companies to crack since they have traditionally had a hard time understanding the consumer and cooperating with regulations.

As for Ebay's macroeconomic issues, it like all technology stocks is susceptible to factors like inflation, interest rates, employment, consumer confidence etc. Interest rates, while not seemingly a factor in terms of core business for Ebay do have a big effect on general market trends. When the Fed cut rates earlier the market rallied in relief that the sub prime crisis could be further averted. Had rates not been cut Ebay would've tanked hard with the rest of the market. The employment issue is also a broad market issue, but Ebay feels the effects. Sellers of merchandise on Ebay will have a hard time getting rid of their things if the people who were just buying have suddenly lost jobs. The same goes for consumer confidence. People will only feel free to use their loose cash if they feel their economic situation warrants it. Hence they need to feel confident that they have enough to get by regardless of some casual spending.

The biggest issue for Ebay and other highly valued technology companies is that macroeconomic factors have a direct correlation to P/E ratios. When the economy is strong and macro-economic data points to growth and continued strength the leaders in the markets enjoy P/E premiums, so a company like Ebay can be valued fairly at 40-50 times trailing earnings. When these macro-economic indicators start to shift negatively and fears of a recession in the economy loom its very easy for those P/E premiums to contract sharply, and even though Ebay's growth could be consistent the company would trade at 25-30 times earnings rather than 40-50 times.

5) Altria and the Philip Morris International spin-off, what to do now?

I've liked Altria (MO) in the past and its done well. I liked it going into the run up to the Kraft split and now also before the PMI announcement was finalized.
I think PMI is much better to own as a pure smoking play that actually has some growth.
Smoking in North America is all but dead in the growth department. That's the main reason why I'd be hesitant with Altria. I do think owning it is a good idea for the PMI spin. I think people will jump into that when it becomes fully PMI. Only way to do that initially will be to own MO. I can see MO coming into the $75-77 range at the end of the year from its current $69 range.

6) Fund Holding Performance through the last quarter?

I'm working on something that should be up very soon.
I intend to publish the fund's largest holding, gainers, losers and trades that were closed during the September quarter.

Earnings Week: July 23-July 27

Some earnings of note for the week of July 23rd to the 27th

Monday July 23
Merck (MRK): expected $0.72/share

Tuesday July 24
AT&T (T): expected $0.67/share
LeggMason (LM): expected $1.24/share

Wednesday July 25
Akamai (AKAM): expected $0.30/share
Apple (AAPL): expected $0.72/share
Baidu (BIDU): expected $0.43/share
Colgate-Palmolive (CL): expected $0.83/share
GlaxoSmithKline (GSK): expected $0.94/share

Thursday July 26
ExxonMobil (XOM): expected $1.94/share

Interesting week ahead as more financials and world banks report, and big oil takes center stage later in the week with Exxon. All eyes will be on AT&T and Apple for an incling of how well the iPhone sold in the first 2 days of its launch.

Long Term Growth Rates of Nasdaq 100 Companies

Interesting list of companies that make up the Nasdaq 100 and their projected long term growth rates. Link provided below.

http://www.nasd100.com/growth/index.html

Those investors looking for companies with future growth propects, this I believe is a great starting point for additional research.

Of note: Google (GOOG) ranks 6th, Akamai (AKAM) 7th, Yahoo (YHOO) 12th, Apple (AAPL) 22nd