Wednesday, March 31, 2010

DropBox: Remote Backup & File Synchronization

Among my hobbies is writing fiction. When I travel, I often tinker with drafts or make whole new stories. However, the notebook computer I use when I travel isn't the one I use when I'm at home (which has a larger screen, and as of this month also a second monitor). So as I move from the desk to the living room (where the notebook lives while I'm at home) I end up editing recent drafts on both machines, and losing track of which is more recent. That is, I edit both the A and the B version several times before realizing that each has SOME edits I want to keep, and neither can be thrown away, and I need to figure out how to reconcile multiple totally different solutions to various issues in troublesome scenes.

Then, when I'm on the road working, I might edit a file with billing information. And when I get back to my desk, I might go to work on another project and edit the same file on my desktop machine, changing a different client's sheet in the same file of billing records. And I have the same problem: inconsistent versions, neither of which I can just throw away, requiring hand synchronization. Oh, the humanity.

DropBox has a solution. DropBox is a remote-backup service that is so simple and so powerful you'll not believe the first two gigs (that's not MB, that's GB) are free. (Actually, there's an offer that gives you an extra 250MB with this link, and gives me some extra storage, too; so maybe it's 2.25GB free.) When you set up DropBox, you tell it where you want your synched folder to be located on your local drive. You need not place anything in subfolders that are accessible to the world, though if you have a brochure you want everyone to be able to download you can certainly make it publicly available (or your trip photos or the portfolio you'd like to show prospective clients). But let's but to the good part.

You save things on your local drive like normal. Things you save in the DropBox folder (or any subfolder) get synched to DropBox' cloud, where it offers remote backup for free for the first 2 (or 2.25) gigs. But you can set up your DropBox account on more than one computer. When you change, add, or delete a file on one of the computers, DropBox updates all your other computers using the same DropBox account. You get immediate synchronization over the web for the little parts of your files that are different. No more inconsistently-edited differing versions on all your machines, ever. And free backup to boot. Gigs of it.

Yes, 2GB won't help a professional photographer or an audiophile with losslessly recorded music -- but then, 2GB is just what's free. Try the service's 2GB-for-free deal (or 2.25, while it lasts), and learn why John Gruber thinks it's the best thing since floppy backup. With it, he approached a hardware failure without fear of losing ten days of work he did while on the road, because he had internet while he traveled and that meant he had DropBox protecting all his new work.

I've rearranged my folder for work so that my work in progress is all on DroBox so I have the current versions of active projects synching across all my computers, and I think that at free there's little reason not to try it out. In only a couple of weeks, I've already begun noticing the benefit of synch, and I look forward to enjoying the security of troublefree off-site incremental backup.

The remote backup isn't magical, so there's some lag on synch -- especially for big changes. However, DropBox uses custom icons that tell you whether each file has been synched since its last local change, so you never wonder whether you're fully backed up. And that's a nice feeling.

UPDATE: When synching across different computers, it's easy to (a) have the DropBox folder in different places on each machine because of the mood you were in when you installed DropBox on the different machines, (b) have file handles that are different under HFS+ on each file system on each computer so that an "alias" file will simply not work across machines, or (c) have a path that is different because the volumes on your different machines have different titles. John Gruber teaches us that there is an answer: use symlinks, not aliases, for things you want backed up that other programs expect not to find in the DropBox folder. The symlink will be right on each computer on which you make it, and DropBox will just take care of itself.

Tuesday, March 30, 2010

Cramer on BDCs

Although Cramer dismisses ACAS, which he previously criticized as opaque, as "way too risky for me" despite being well below NAV, he makes a bullish call on AINV (good dividend is safe, he says) despite commenting that "I wish I knew more of what they own" and "it has been too big of a run for me here." Of course, Cramer is also reported to say "don't buy AINV."

Given that Cramer doesn't know what either company owns, why does he analyze them differently? Cramer's analysis can't be explained simply by the dividend, because his point of view predates the companies' differing dividend policy. Both are opaque to the extent that one can't tell what individual portfolio companies are doing.

Although I own both – ACAS more than AINV, admittedly – I have more enthusiasm for ACAS because ACAS holds not just debt but equity, and has a chance at participating in the upside when a portfolio company really performs outstandingly well. AINV may have steady debt income, but the outsized equity returns aren't part of its apparent appeal.

The value of illiquid equities may not seem like much, but as portfolio companies succeed, equity provides a nice upside. ACAS' holdings in AGNC and MION are good examples. AGNC trades well above the $20 IPO price and pays a solid dividend; MION is expected to become publicly traded later in the year in a transaction that will repay all the debt owed ACAS and leave ACAS holding over 40% of the company's equity.

What does AINV offer other than – one hopes – the steady return of senior debt interest? Given what I've suffered after buying near $20, I'm not exactly sold on the security of that deal. The high-upside opportunity of ACAS (enhanced by its below-NAV share price) on the equity side of its investments offers me some consolation for the share price shock I've suffered.

I'd love to hear the details of Cramer's analysis, but there just doesn't seem to be any analysis on these companies. Is there any?

Butcher's Dresden Novel 'Changes' Looking Good

NOTE: This wasn't written with careful thought to spoiler issues. Because it was written before the novel Changes was actually available, it hasn't got anything in it that could be considered a spoiler for Changes, but it does discuss prior books by way of background, and could thus contain spoilers for earlier books.

Jim Butcher's new Harry Dresden novel Changes is all set up to change Harry Dresden's future: to commit him to a path that will determine where he stands, and who stands with him, when the series approaches its apocalyptic climax.

Harry Dresden has been through personal crises and tests of his loyalty, but in Changes Butcher sets his protagonist up for a doozy: his estranged girlfriend surprises him in the first line of the book that they have a daughter together she had concealed from him, but the bad guys have seized her and she'll be there soon to tell him how to start sorting it out. Love betrayed, innocent victims in jeopardy, man-against-the-world, deadly enemies with unknown capabilities ... it's all set to be an exciting ride.

Oh, and the girlfriend's dangerous longtime sidekick doesn't like Harry, and begins sewing doubt he can be trusted. All his expected allies have betrayed him. Nice, eh?

What we don't see in the posted-online first four chapters are things like (a) how Harry's apprentice is getting along, (b) whether Harry's half-brother and his family will be part of the solution or part of the problem, or (c) whether Harry's contacts with the criminal underworld or to law enforcement will turn out to have application to a problem that seems largely to have occurred on another continent. (After all, Harry's commitments to other characters has been a tool by which he's been manipulated and by which he's been injured in the past; it only makes sense that they could be leveraged into an asset or a liability here.)

Details, Details
Overhanging all this we have things like Harry's true love and whether he'll lose it or regain it; the timing by which the powerful artifact heisted a few books back by a Valkyrie will turn up and whether the Valkyrie's employer will end up on the right side or the wrong side of the conflict (surely, on the wrong side!); whether Harry's handgun, lost a few books ago in Small Favor, is in the possession of bad guys who can use it to track or injure Harry; whether Harry's cop ally's career is really destroyed from Proven Guilty or whether it can be resuscitated; whether Butcher is done with the assistant medical examiner Butters as a character after Dead Beat or whether he'll turn up useful again one day; and the real motives and allegiance of Harry's godmother, the seemingly-evil faerie last seen trapped in an ice sculpture at the heart of the winter palace of Mab.

Ahh, so much to keep track of. It'll allow Butcher to send in plausible cavalry, like Han Solo saving Luke from Vader at the end of his flight to the Death Star's ventilation shaft, surprising and exciting readers who follow the series and understand what everyone is supposed to be doing. Without the careful arrangement of domino tiles, it would just not be so satisfying when Butcher shows you how he knocks them down for your amusement.

And this is part of the joy of Butcher's books: historically, he's been very good at making sure that small hints matured into important events, and making sure that all the details added up. I praised Butcher for his details when he was first mentioned on the Jaded Consumer, and I did it again when I reviewed his last book. Well, maybe it's not a review so much as a criticism, but it's hard to call such fawning criticism so I'm not sure what to make of it other than an advertisement. So, here's the subliminal message: Go buy Butcher.

[A little aside: I previously groused a bit about the apparent inconsistency of Harry's lost-but-then-unexpectedly-available handgun. However, Changes seems to explain this away with a line at the end of Chapter 4 about losing a "spare revolver" in a separate incident, suggesting that Harry's lost handgun in Small Favor was just one of several and perhaps not a big deal after all to have lost, while also explaining how he'd end up holding the revolver again in Turn Coat. To the extent the pistol's unexpected re-appearance in Turn Coat was a continuity error, it's been explained away; to the extent that we've been wondering whether Butcher will ever do anything about the weapon's potential to lead enemies or their spells to him, we've learned that the weapon may just not be that important to Butcher and thus not that useful as a magical conduit to Harry. Whether Butcher caught the issue himself, or someone asked him about it, or he's deliberately misleading us so that there's an opportunity to surprise us with the revolver later, there's now at least reason to feel like there's an explanation for Harry's observations and for his conduct in not tracking down the revolver himself. The revolver is either a big deal and will surprise him (and us), or it's not. There's no longer an overhanging continuity problem.]

All in the Family
In surprising Dresden with fatherhood, and making him feel the anguish of his miserable childhood all over again as he imagines his daughter growing up as an orphan. Dresden's own miserable experience as an orphan, then having a father-figure who turned out to be a sorcerer bent on controlling his mind for typical evil-sorcerer purposes, makes this prospect doubly awful. Exacerbating this is that Harry's utterly dependable ally Thomas, revealed in Blood Rites as Harry's half-brother, recently devolved in Turn Coat into a conscienceless monster who readily kills humans to feed the demonic hunger with which he is cursed as a White Court vampire. More alone than previously, Harry must rescue his own daughter with the aid of a women who, though at least once his true love, deliberately betrayed Harry by choosing not to tell him he was a father.

The stakes are high, and they are personal.

The Series
For those of you interested in Butcher's offerings in the Harry Dresden series, I give you this chronological listing, complete with links (where available) to free snippets:

The works, in chronological order of occurrence in Butcher's world, are:
and the final three, which are not expected to follow immediately but after some undetermined number of intermediate volumes, have unannounced release dates:
  • Hell's Bells
  • Stars and Stones
  • Empty Night

There's a DVD series of the Sci-Fi Channel's adaptation.
There's a graphic novel series Welcome To The Jungle.

With respect to the short stories, novellas, etc.: I wonder whether they may be conceived as advertisements. I learned that Jim Butcher's agent doesn't represent short story authors (by reading an email she sent to a prospective short story author declining to consider any short story), so I figure she tolerates the short stories solely because they allow the agent to place Butcher's work in front of fans of other authors in the urban fantasy genre, and thus potentially sell novels.

The Shorter Works
The novella Backup was such a quick read that it was hard to justify the sticker price on the basis of perceived value. Its illustrations might amount to something in the hearts of dedicated fans of Mike Mignola, but I didn't think they added a thing to the novella. Was the novella good? Absolutely. Was it worth $20 for an unsigned cloth hardcover? Well, most of us but paperbacks and expect to get a whole novel for $10. Backup was high-quality work, it should be read by fans of the series, and I can believe the limited edition with leather and a signature should go for a pretty penny ... but I really don't see a pamphlet like Backup being a full-retail purchase. On the other hand, maybe I've accidentally made an investment.

Perhaps Backup was designed to move Butcher into the rare book category, and thereby gain buzz for the rest of his work. It certainly laid out clear foreshadowing of the conflict within Thomas and the problems it was going to cause down the road. Had Thomas not been introduced initially as a "good guy" in Grave Peril, and confirmed in that role in White Night, the devolution of Thomas into an apparently out-of-control, slavering, conscienceless, vampiric murderer in Turn Coat would hardly have had the same impact. Transition from a trusted ally into a friendly but admittedly-reconfirmed murderer and tool of the enemy is something that requires long setup to make readers really feel. Backup isn't essential to the series, but it's valuable to understanding the pieces from which Butcher is building his world. It's a complex thing, with many parts, and the things you see from Harry's point of view are but a thin section of a much larger fruit.

Other than Backup, need readers pick up the short stories?

Maybe. The short stories are hit-and-miss. The free Restoration of Faith was a good read. I enjoyed Herot, mostly because it offered a window into Ms. Gard, a character who'd been previously mysterious. I thought The Warrior didn't work as a short story, though some of its elements could easily have supported a novel's subplot; Butcher actually explained to a reader at a book signing that The Warrior was Butcher's effort to depict Michael Carpenter's being shot in Small Favor as Michael Carpenter's Happy Ending. This is excellent subplot material, definitely an aid to readers' enjoyment of the characters, but as presented it just didn't seem to make a good short story. (By comparison, consider the work of T. A. Pratt, who really seems to get making a short story. I say Pratt because it might be unfair to mention Bradbury or Zelazny, but all is fair in love, and I love to read.) Given Butcher's careful construction of his stories and attention to details across multiple novels – a situation Dresden leveraged from the very opening line of Changes – readers can benefit from everything in the series, even the short stories. The Harry Dresden fan will want to catch all the details from all the non-novel projects in order to get the whole "history" of Harry Dresden, and thus should make an effort to buy/beg/borrow them all. Those who can't afford $50 for a novella can find it in the library. Little tidbits about dissent and conflict among Harry's allies, the weaknesses of characters with which Dresden interacts ... all these will help color the reader's appreciation of the Dresden universe while calming nerves that get jittery while waiting an entirely unacceptable whole year for another Dresden fix.

So pick up a copy. Everyone's doing it ....

Bullying Still A Problem

With another bullying-related disaster – this one, a teen suicide – the general lack of rules or consequences for harassment that falls short of rape or hospitalization is again highlighted.

Since social pain is processed like physical pain, there's little question how prolonged torture such as is routinely inflicted by packs of bullies can lead to effort to escape at any cost.

Perhaps a region-by-region analysis of the laws of defense are warranted. If bullying is known to create a risk of death by suicide, and is legally tantamount to the indiscriminate application of deadly force, does one's jurisdiction allow application of force by third parties – such as adult observers –against bullies on sight? Deadly force? (It turns out Texas law allows the use of force, but not deadly force, to prevent a suicide.)

Or is there a more effective way to solve this problem?

CNAM: Learn How Last Year Went

CNAM announced call-in (at (201) 689-8049) and web availability of its March 31 earnings conference call covering the year ended December 31, 2009.

The problem with this as "news" is that 2009 isn't what CNAM is all about. Investing in CNAM is about the stock reacting in 2010 as the company adds new recycling business, and the capacity of CNAM with its new capital infusion to dramatically increase its import and distribution capabilities.

The only "news" in the call will be discussion of the plant's 2010 capacity and the company's expected performance. Since I bought on the strength of the recycling plant, I'm particularly interested in surprise upside from capacity improvements in the old distribution business, that I'd basically written off as an unexciting offshoot likely only to reduce the company's acquisition and delivery overhead.

Stay tuned :-)

Sunday, March 28, 2010

iPad: Is There An Echo In Here?

Like the original iPhone, which was hard to get one's hands on when it launched, Apple's soon-to-ship iPad is already out of stock. Production issues, presumably connected to OEM touch-screen yield (it's not like losing workers to poisoning would be allowed to delay a product from a Chinese factory), first pushed the iPad release date from late March to April 3. Around the time news sugested iPad touch-screens were posing a production bottleneck and that Apple had tapped an alternate supplier to meet production numbers, Apple began informing pre-order customers wanting more than two iPads that orders would be limited to the two-unit cap discussed on the web site but not enforced on the order form. Pre-orders – totaling within the first two weeks of availability about a quarter million units bought before buyers had a chance to hold a demo in their hands – have consumed the entire existing production run, launch-day retail reservations have been halted, and new pre-orders are being quoted a ship date on April 12.

For all its talk about how e-Ink is superior to Apple's displays because of eye-strain issues, Amazon has apparently decided to enter the competition: Amazon bought a touch-screen manufacturer. Of course, it may be planning to add touch input to a low-illumination monochrome display that supports longer battery life, but who knows. Maybe Apple will drag Amazon into its mud pit where it hasn't a chance.

So, just as the iPhone drove smartphone manufacturers toward touch input and slicked interfaces, perhaps the iPad will push or pull tablet-like device manufacturers toward high-production-cost devices capable of competing with Apple on features that can be listed on a marketer's list of bulleted features. What will be missing from competitors' products, of course, is Apple's software: not only its applications but the standards-advancing, easily localizable, quickly growing, and mobile-dominant programming environment on which the iPad, iPhone, iPod Touch, and (by the way) the entire Mac line is based. Copying Apple's online store and other surface mimicry doesn't duplicate the whole user experience of Apple's products; the whole impact is a result of the combined function of the whole.

As Apple's capacity to produce the whole widget improves, Apple's ability to make products that are harder to duplicate also improves. Apple's products aren't just the hardware, though: they are a product of a couple of decades of NeXT-derived object-oriented programming environment developments. Although software improvements that make it easier for developers to leverage Apple's increasingly powerful hardware may not be visible to users, the effects are. And the ease of programming in Apple's environment aren't visible to users, but the improved quality of applications – which have developer attention spent where users will notice, rather than spent fighting the unreasonable demands of less thoughtful programming environments – is visible everywhere.

The iPad will expose another facet of Apple's high-quality product development process – a process that now combines processor engineering, case design, kernel development, device-driver optimization, developer tool production, and maintenance and expansion of a rich API for developing GUI interfaces and their associated data-management tools. The quality of this process is a competitive advantage whose significance seems to be ignored by analysts, who worry about whether Apple's next device will change the world, and who seem not to understand why Apple's last several devices have been so successful. So long as analysts misunderstand why Apple is successful, they will likely continue to undervalue the enterprise.

In the meantime, expect Apple to excel.

Remember, supply shortages are just another excuse for free buzz – advertising Apple doesn't need to spend a dime to receive – and keeps the public hungry for the things while Apple is perfecting its stable of iPad applications and its infrastructure for delivering iPad advsertisements. These things won't be bad for Apple, they won't be bad for cunsumers, and they won't be bad for shareholders.

Thursday, March 25, 2010

Perspective and Quality

There I was, minding my own business, when all of a sudden this article at CNN from an author I've never heard of declares that the "nice guy" is "disappearing". The author, who apparently runs a column called "relationship rant" (a title that might suggest she's chasing the wrong guys), purports to educate the reader about why the nice guy is vanishing:

Today's dating scene has become one that puts focus on the wrong things. It's all about what you own as opposed to what's inside someone's heart. Let's see, we no longer own cell phones, we have iPhones and smartphones. It's not about your home anymore; it's all about the McMansion and how many unoccupied bedrooms you have.
"The disappearing nice guy", Audrey Irvine,
The irony hear is that it is not "the dating scene" that determines who is alive in the world, and whom you are permitted to meet. Rather, it is the decision of daters where to go, whom to approach, and how to evaluate new acquaintances that drives our access to quality people. For example, regional cultural differences (that is, differences in what individuals accept as "mainstream" and "normal" values and behaviors) can create an environment in which non-mainstream dating may be the only way to find people who aren't so maladapted to human socialization that they make plausible prospective lifelong mates. The author even admits as much:
Today's dating scene has become one that puts focus on the wrong things. It's all about what you own as opposed to what's inside someone's heart. Let's see, we no longer own cell phones, we have iPhones and smartphones. It's not about your home anymore; it's all about the McMansion and how many unoccupied bedrooms you have.
In certain cities, specifically Atlanta and Washington, there is an undercurrent of "bling" that undermines the dating scene and the ability for wonderful people to find each other.
But this isn't about "today's dating scene" at all, it's about you when you consider prospective dates. If you want to know how many unoccupied bedrooms your prospect has in the house s/he owns (what? no house? buh-bye!) before you consider whether to go out, the problem isn't the music in the bar or whether men in the town travel in large packs or stroll singly through the park or some nebulous factor created by the "dating scene": the problem is you. If you don't notice the wonderful people because they aren't distinguishing themselves with bling (but are instead distinguishing themselves in ways you choose to ignore, like volunteerism or erudition or kindness), the problem may be that you should stop looking for bling.

I've Been To Atlanta
One of my longest-running friendships is with a gentleman who became enamored of a woman from Atlanta. I knew something was amiss when he was hesitant to introduce her ... I sure introduced him to L as soon as practicable and had him in the wedding ... if there was something about her that he thought made her incompatible with his friends, I wondered what hope there was for the two of them. What had he gotten into?

One fine day, well after their wedding, L and I visited him and met her. She explained that his clothes weren't adequate and that she had replaced them. She made several announcements about how she'd laid down the law on a variety of issues and that he was going to have to learn that was the way things were going to be. She explained that she had learned some folks who didn't work for Georgia's unemployment division, and didn't get mileage reimbursements, had no way to fudge their mileage numbers upward to give themselves a bonus. Imagine!

While this denigration of my friend and his values and his person was underway, I occasionally stole glances at him and I had the sense that he was ... well, not quite cowering, but not exactly bursting with pride in his bride. He understood I was seeing the face she gave the public: brash, loud, controlling. All the attitude one needed to survive in Atlanta at the height of bling-hunting season. And as I learned, that was a lot of attitude.

So J – a card-carrying nice guy – sacrificed several years of his life trying to make himself fit into her life and trying to give her seven and then nine year old boy a chance at sensible parenting. Eventually, he called to take me up on my offer to do "anything I could to help if he ever needed anything" and I drove to Atlanta to pick him and all his Earthly possessions up and bring them to a place where he was not being ground into lubricant for a dysfunctional societal microcosm that prized bling over humanity. He still sends her boy gifts on his birthday, which may be more than he's getting from his father. The gifts are sent to a new address, though: the boy's mother has left him with an out-of-town grandmother so he doesn't interfere with her plans to present herself as a hot commodity and thus bag a better deal for herself in Atlanta, where baggage such as loved ones is a competitive disadvantage.

Back in Houston, J regained work with a respectable national firm and has appeared to find a much higher quality of human for company than he was made to endure in Atlanta. Atlanta isn't small, and Atlanta has to have numerous high-quality people living and working to make the place function without an alarming suicide rate, but something about Atlanta apparently makes it uncool to be a decent human, so for purposes of protective coloration the high-quality people apparently masquerade as heartless grifters. If the author lamenting the disappearing nice guy wanted to find nice guys, perhaps she would do well to find a community that doesn't force them to hide for their own protection.

So my advice for people worried that nice guys are a dying breed is simple: stop ignoring the nice guys. The author that blames nice guys for being willing to be friends with women who think they are looking for life mates is exactly backward: if they wanted life mates and wanted "nice guys" to fill that role, they'd make plain to their "nice guy" friends that they want to settle down with someone who makes them feel the world is a place worth living. Blaming nice guys for being nice, rather than clubbing the girls on the head and dragging them to a cave, is just silly.

They're nice guys. If you don't want a nice guy, go someplace else. Turning them into physically aggressive alphas when they are by preference mentally engaged intellectuals is exactly the kind fo crap that drove J from his bad marriage in Atlanta: the trollop wanted to remake him into an ornament and grind away everything that made him comfortable being who he was. The author of the piece decrying the lack of nice men is falling into the same trap: she doesn't want a nice guy, she just claims she does, then complains it's the fault of nice guys she hasn't got one.

Well, duh.

Tuesday, March 23, 2010

CNAM: Doing More With More

Just yesterday, the Jaded Consumer recognized that CNAM's stock price had weathered admirably the slam of an additional couple million shares of stock overhanging the market following renewal of an expired registration of shares covered by warrants issued in connection with the private offering that funded CNAM's new recycling plant. The prediction made yesterday was that the selloff toward $7 would get reversed on the next contract announcement.

But the Jaded Consumer, while silently thinking about the cash CNAM would collect in conjunction with the $5/sh warrant exercise, didn't take the additional step of speculating on its use to the company. Today, however, we have some news. CNAM's wholly-owned subsidiary entered a 16-month contract to take delivery of 749,000 metric tons of Brazilian manganese ore – enhancing CNAM's capacity to import and deliver ores, and ensuring CNAM stood in a position to supply ores to major customers seeking to make steel. While the press release mentions that CNAM stands to pull in over $10m/month over the contract, it's interesting to note that CNAM needs some capital to pull this off. Interestingly, CNAM's receipts from the warrant exercise should be a bit over $10m – plenty to capitalize the first shipment and offer security against the risk CNAM wants to take a little time to make the most favorable possible sales.

While this is more of an import/export business than an opportunity to leverage the new recycling plant, the fact that CNAM is in a position now to fund this kind of exercise shows that the company now enjoys a level of solvency that didn't exist a few years ago (the $5/sh CNAM just realized on warrant exercise exceeds the entire proceeds from the private placement that funded the recycling facility, which yielded $3/sh less fees; since the warrants were issued with the shares on a 1:1 basis, this exercise – which likely resulted in payment directly to the company and without middle-man fees – in theory yielded over 66% more than the earlier private offering). Growing the scale of CNAM's importation and distribution business will allow CNAM to leverage its per-deal overhead into much larger volumes, as accesses an increased ability to finance larger transactions unaided.

The future of CNAM won't look much like its past.

UPDATE: Although up over $1 this morning, CNAM is now just up 30¢ or so. As volatile as this name is, I'm suspicious that it will attract attention from folks running in and out as the price oscillates. Imagine what the covered-call premiums would be like if standard options were available ....

Monday, March 22, 2010

CNAM: Standing Up To Pressure

Chinavesting, which is bullish on China Armco, mistakenly described the pressure on CNAM shares from over $10 back toward $7 as being "for no fundamental reason." The fundamental reason is that with an additional availability of nearly 2.5m shares, in which owners have a basis of $5 due to warrant exercises, the per-share metrics just took a plunge just as market mechanics were hammered by the exit of the shares' owners upon exercise.

CNAM, which had allowed the warrants' registration to lapse, re-registered the shares available under the warrants and owners exercised them. The fact that CNAM has maintained a price well over the $5 exercise price is a good sign for the market's psychology of CNAM. Comparing current prices to prior years' revenues, as Chinavesting does, is a disservice to potential investors. CNAM's future isn't about its old business, but about the new business CNAM just launched -- the business funded with the proceeds of the private offering that gave rise to the warrant exercise -- the new business that makes CNAM one of the largest metal recyclers in China. That CNAM has pre-sold the first three months of factory output with a $100m steel supply contract shows how different CNAM's new business is: in 2008, annual revenue was but $55m.

The next time we see a press release on a CNAM steel supply contract, the magic that drove CNAM from under $4 to over $10 is likely to revisit the shares as the company proves its success in the new business isn't a fluke, but the new normal. At $5, CNAM was trading at a P/E of 10 off trailing estimated earnings. With earnings likely to multiply with the dawn of CNAM's new recycling operation, so too should we expect to see share price multiply.

Of course it's easy for me to talk: my basis is in the realm of $3. Still, I'd like to see it fly. Based on recent performance – not just the stock price pops, but the landing of contracts – I think the flight plan is looking sound.

Sunday, March 21, 2010

Silly Wabbit, Overpriced Apps Are For Win9-Mobile joins a tradition of bad-mouthing Apple without a lot of serious justification by publishing an article with the highly suggestive title "Apple Bans Game, Days After Developer Publicly Trashes App Store." The Jaded Consumer calls this title "suggestive" because it tends to present to the reader the conclusion the article's author wants readers to draw: Apple banned a product to punish a developer for criticizing Apple. As disclosed in the article itself, however, the truth is much closer to that disclosed in the also-suggestively-titled article here at the Jaded Consumer, bearing the title "Apple Erases Booby Trap App."

You see, the developer described in the Kotaku article – Tommy Refenes, author of the zit-popping game "Zits and Giggles", which Kotaku describes as being developed as a "lark" – did in fact rant against the App Store about a week before his application was delisted. The rant included claims that, as a non-developer, the Jaded Consumer is at a disadvantage to evaluate – such as likening the App Store to the "Tiger handheld game of this generation[.]" (Googling the Tiger handleld shows it to be a piece of hardware supporting a number of third-party games.)

However, the author also steadily raised the price of his product into the hundreds of dollars, where (a) its description as a "dermatological simulator" could have mislead customers into believing it had features or realism it in fact did not, and (b) its price could be mistaken for a price a couple of orders of magnitude lower, causing anger in the face of the you-click-it-you-buy-it terms of the App Store. To prevent angry customers who feel cheated from hammering the blogosphere with vitriol against Apple, Apple rationally cut the useless and confusing product that wasn't helping anyone with anything anyway – so that, at worst, it suffered the vitriol of one prima donna developer and his small clique of sycophants.

The place to complain about Apple is not where it protects customers from unhappy surprises, but where it prevents customers from experiencing competition. Application non-approval on the ground Apple already ships competing functionality is just not cool. So not cool.

Let's see if Opera is allowed to compete.

Truth in Advertising: Executive Transparency?

A major California newspaper -- not an expected hotbed of partisan anti-Obama rhetoric -- has identified the Obama administration, which came to power on a platform of openness and transparency, as more secretive than the Republican administration it replaced. Freedom of Information Act denials have increased markedly from pre-Obama levels.

Comparing Obama's first year to Regan's, it seems both promised recovery from economic turmoil, but Regan went the extra step of articulating the plan (e.g., tax cuts). Planlessly stumbling forward might be effective in some things, but it doesn't inspire confidence.

On the other hand, maybe the plan for success is so secret and so subtle that it must be concealed to work, and isn't noticed despite implementation.

I wish.

PALM Suffers In Smartphone Market

Palm's decision to jettison Microsoft's handheld OS has, unfortunately, not saved it. Palm's poor sales volume means that its current channel inventory is thought to amount to nearly 200 days of sales, suggesting that the next few quarters won't see many resellers demanding additional stock from Palm. One analyst has given Palm a price target of $0.

Palm's decision to launch a standards-based WebOS founded on open-source components like the Linux kernel and the WebKit rendering engine seems curious in retrospect, but when that decision was made there was no shipping Android platform and Palm needed a solution that didn't leave it paying its profits in royalties. Still, has anyone actually used WebOS? Care to report on the experience?

Meanwhile, Apple's march toward handheld dominance seems on course: 40% of Blackberry users are willing to trade for an iPhone.

With respect to the Android/iPhone competition (well, with respect to the Chrome/Safari competition), has anyone seen javascript rendering benchmarks more recent than this? Under non-ideal (i.e., while I was writing this, with browsers that hadn't just been launched, and a computer that was also doing things like checking mail and talking to a scanner), I got the following results on Google's V8 benchmark suite v.3:
537 Firefox
3482 Safari
5818 Chrome

On v.5, I got:
577 Firefox
3140 Safari
6241 Chrome

One place Chrome seemed to really excel was the RayTrace portion of the benchmark, though benchmark portions designed to exercise memory management was three times better on Safari than Firefox but over an order of magnitude better on Chrome than Firefox. Google's engineers seem bent on building a general-purpose programming environment in their browser.

While Apple is clearly focused on turning out new hardware products, and is likely more concerned about producing a quality successor default filesystem than further optimizing what is probably at least the second-fastest javascript engine on the planet, Google may have an advantage in doing what it does best -- delivering software for browser users.

Friday, March 19, 2010

UNintelligent Strategy

An ex-envoy from the United Nations to Islamofascist extremists bent on turning the new democracy in Afghanistan into a regressive military autocracy has criticized the arrest of high-level Taliban figures by Afghanistan's weary and much-attacked neighbor Pakistan. The thrust of the ex-evboy's argument seems to be that with the arrested Taliban leaders out of contact with their supposed subordinates, the United Nations no longer knows whom to approach with peace overtures.

The Jaded Consumer's view on this is fairly straightforward: if the U.N.'s peace activity was worth the paper it was printed on, there wouldn't after all this time still be an evolving threat by proponents of establishing in Afghanistan a Taliban-led government through intimidating and seeking the deaths of Afghan civilians.

What exactly has the U.N. accomplished in the development of peace? Oil-for-corruption in Iraq? Teen rape, pedophilia, torture, and child sex trade by "peacekeepers"? Forced sodomy of Haitian mothers? Is this the kind of result we should hope for in Afghanistan – to the extent of leaving known killers at large?

It's fairly clear that detaining known leaders of deliberate killers is a much more likely mechanism to disrupt terror networks than allowing the U.N. to find a way to make money cooperating with them to oppress locals. Let's hear it for more such detentions.

On ACAS: News vs. Rumor

Noticing that ACAS took a 23¢ dive, I looked for possibly explanatory news. As is often the case, ACAS didn't have any news at all this particular day. However, trolling for something – anything – about the company on Google swiftly led me to articles and comments at SeekingAlpha, which in some respects was worse than bad news.

First, is ACAS really out of business except for hoarding cash to throw at hungry creditors? Or selling shares below NAV to pay overdue bills? Despite the apparent conviction of one poster, there's no evidence of either. Curiously, that poster says: "Why would they issue shares below nav [sic] and not repay lenders with it?" The answer, of course, is that management (which owns shares personally) has an incentive to do things that make the value of the company go up, not down, and selling shares for less than the value ACAS believes to be the value of the assets backed by the shares drives the value down, and thus management has a strong incentive not to do something this stupid.

The reason to sell for $1 shares backed with $0.50 in assets is to buy something priced less than $0.50 per dollar of value. This is almost the only reason to issue shares at such a discount. The alternative, of course, is to create a conversion feature for some innovative debt instrument to ensure creditors they can liquidate if they want – with the clear understanding that the pricing of the conversion feature and the conditions of exercise would have to be carefully weighed to ensure they made economic sense ... something paying off debt with below-NAV shares simply doesn't do. Moreover, the poster didn't cite any reason to conclude ACAS was up to something so vacuous, and nothing to contradict management explanations of its thinking on share issuance (which one can gather, free, from conference call recordings).

Long-published idiocy aside, of course, what was there to move ACAS? Apparently nothing.

This second point is worth thinking about: in the absence of news, and without any expectation of a dividend any time in the foreseeable future, ACAS can droop like a wilting flower simply because it's not giving anyone a reason to buy. The income investors are gone, and many of the remaining investors seem perfectly happy to worry about things like bankruptcy (a situation that could actually improve ACAS' cash flow by reducing ACAS' interest payments to non-default rates) and ACAS' ability to make interest payments (despite ACAS' substantial and growing cash hoard), while wringing their hands that ACAS isn't doing any business (when in fact over 2009 ACAS bought a dozen and a half distressed opportunities and invested additional money in existing portfolio companies, then this year obtained authorization to issue stock below NAV to take advantage of mispriced opportunities without adversely impacting its FAS-157-compliant valuations in the face of its debt:equity ratio issues). This kind of thinking is simply mysterious. While I'm happy to consider real sources of worry, I'm simply unable to understand panicked fantasy.

ACAS has good interest coverage despite the jacked-up "default" interest rate it faces (simply because its net-worth covenants have been blown, not because it's ever missed a payment), and ACAS is clearly looking for good distressed opportunities and working on ways to make them work despite its challenging financial situation. NAV is on the way back up, and as ACAS' financial situation becomes more clearly unbleak, the share price will follow.

While running for the hills may in hindsight have been a great idea when the stock was at $40, the explanations why to run simply haven't been the causes for ACAS' woes. Likewise, the predicted doom is unlikely to materialize as claimed. Are there risks? ACAS could fail to make a deal with creditors, and management could lose a lot of freedom to bankruptcy oversight while restructuring to deal with creditors – and lots of ACAS' portfolio has been pledged as collateral on debt, so ACAS needs to keep making payments or it's in trouble ... so factors that would threaten ACAS' capacity to pay its bills could crater the company by costing it the most valuable parts of its portfolio. But with interest coverage at 2x, NAV improving, and management continuing to be able to reap its claimed fair values on deal exits, what serious reason is there to doubt ACAS' management will pull off the seemingly simple trick of treading water?

But There Is News
The news that did come out isn't bad at all. ACAS' portfolio company Mirion Technologies, which has appeared repeatedly in press releases touting the company's success in landing contracts for materials and services in nuclear facilities around the world, is apparently set for an IPO under the symbol MION, due to trade on the NASDAQ. When the dust settles, ACAS will own a substantial and likely controlling interest in the definitely-liquid entity, will be paid a $8m fee to terminate a banking services agreement, and will have been repaid some $97.8m of the funds lent by ACAS and its affiliates. This will leave ACAS with some MION notes that MION will repay with new borrowings (see page 5) to be made with credit available on termination of MION's banking services agreement. ACAS will also be a seller of MION equity in the offering, though it will ed up owning 10,740,324 of the outstanding 18,583,660 shares following the transaction (or, if underwriters exercise their over-allotment options in full, 9,090,324 shares of MION. Thus, ACAS will not only be paid an $8m severance fee, and be repaid about $180m in senior and subordinated debt, but will also realize revenue for the MION equity it liquidates while selling down to something between 41.7% and 49.3% of the outstanding shares of MION. As a bonus, ACAS becomes owner of what is probably a control block of a publicly-traded corporation.

Since the fair value of ACAS' MION holdings was last given at $321.5m, and the predicted $16 per share IPO would value the company at about $297m, it seems that ACAS may trade its illiquid MION holdings for about $188m (in debt and termination fees, but excluding equity sales) plus a control block in a publicly-traded company worth roughly $300m, and the revenues ACAS derives from its sale of MION. Valuing the control block would be difficult without knowing the size of the control premium properly placed on the position, but it's clear that the transaction makes immediately liquid ACAS' largest holding. It's also hard to tell exactly what fraction of the MION being sold other than by MION is actually being sold from ACAS holdings, and how much is coming from ACAS-managed funds or other parties. The exact economic impact on ACAS is thus hard to know. However, it's clear that ACAS seems close to hundreds of millions in additional liquidity and an opportunity to diversify out of its largest holding while retaining a block of shares large enough to ensure ACAS' interests continue to be protected.

So, what's the bad news? ACAS looks likely to end up with increased liquidity in its holdings, over a billion in cash, and another publicly-traded affiliate. With results like these, companies looking for investment will be very keen to have ACAS look over the opportunities they offer investors. Being the buyer of choice in its market has long been an objective of ACAS, and success with MION enhances both its existing position and its long-term capacity to reproduce the same success.

Therefore ...
With the "news" being either non-existent or positive, the apparent sell-off in ACAS seems unwarranted. Folks may be tiring of ACAS' continued dickering with its creditors, but the delay seems to work all in ACAS' favor. Creditors' threats of acceleration have to ring hollow once one realizes that a debtor-in-possession in bankruptcy can continue operating his business provided he keeps making timely payments of non-default-rate interest, and acceleration would only cause ACAS to make a $1,000 filing fee to obtain bankruptcy protection while the creditors' claims were sorted out. The billion in cash can't help creditors' claims that ACAS needs to be liquidated to pay its bills, or that ACAS is in danger of failing to make timely interest payments. Bankruptcy could be a nice ride for ACAS.

The real risk of delay in making a deal with creditors isn't a cause for panic among investors: the real risk seems to be that ACAS' business continues to be conducted by ACAS' longtime managers, and interest and dividends keep being collected from portfolio companies, and ACAS' financial position keeps looking better and better until the terms of the deal with creditors becomes more favorable. ACAS never wanted to pledge its portfolio as collateral, and delay keeps ACAS in the position of making sure it retains the freedom to do as it needs to manage its business without interference by third parties or the risk of loss of portfolio in the event of another catastrophe. ACAS' management seems to be looking after shareholders' interests, and their own.

Tuesday, March 16, 2010

ACAS: Making The Portfolio More Liquid

What's the difference between AGNC and ACAS? AGNC is full of liquid assets and trades at a premium, whereas ACAS is full of illiquid assets and currently trades well below net asset value.

Also, ACAS has blown its debt covenants by suffering loss of net asset value. So, what's ACAS been doing? Hoarding cash. Cash may not produce returns, but it puts ACAS in a position to bargain with creditors worried ACAS can't pay its debts. It also puts ACAS in a position to persuade bankruptcy judges that it's in a fine position to continue paying interest timely for the foreseeable future, and operating its business as a going concern. Cash is what separates ACAS from a failed insolvent.

Cash is how ACAS will restructure its debt and end the default-rate interest that has sapped its NOI for over a year. ACAS' efforts to improve asset liquidity through ownership of publicly-traded portfolio companies and the presence of cash will improve ACAS' NAV and the ability of even fools to see ACAS' solvency. ACAS' improved liquidity is its strategy to move toward a future unclouded by old asset covenants breached when the market tanked in 2008.

Monday, March 15, 2010

Daily Monthly Apple Tablet Volume Like Competitors' Annual Volume?

There's some speculation that when pent-up demand drops off, daily orders may hit a "mere" several tens of thousands of units per day. While it's hard to imagine who these buyers might be, Microsoft's tablet volume was reported to be about a half-million a year one year into its debut. This looks like the volume Apple is likely to achieve in pre-orders. (The Kindle, which is a cheaper but special purpose device focused on eBooks, is thought to have achieved 3m in sales over its first 27 months of existence.)

If Apple ends up selling tens of thousands of units a day, this would be about a million per month – twice the volume Microsoft achieved by the end of its first year pushing tablets. Was Microsoft's effort to follow the Newton into handheld territory prescient, or premature? Microsoft took a position in 2003 on the future of handheld computing:

Previous efforts at pen-based, hand-held computing, such as Apple's Newton, ended in failure. But Microsoft executives say they are convinced the Tablet PC won't suffer the same fate. "In a couple years," said Microsoft's Loforte, "you'll be amazed at where the world's at."
"Take Note", by Todd Bishop

Of course, the iPhone hadn't been been launched yet.

Unlike Microsoft tablets, and like the Kindle, the iPad is expected to result in after-sales revenues from users' purchase of content – books, games, and other applications. In fact, Apple isn't the only company preparing to make money from Apple's iPad users: Amazon offers a Kindle reader for the iPhone and will be expected to offer its entire library to iPad users, and application developers have been working industriously since the iPad's announcement to produce products for the platform.

OpenCL Getting More Prevalent?

General Electric's new CUDA-expanding system board doesn't just promise unit sales, it reflects a broader demand for systems responding to demand for support of portable new programming standards like the OpenCL standard embraced by Apple.

The more demand by government and other major purchasers for OpenCL-supporting hardware, and the larger the portable code base grows, the more Apple will be able to offer hardware compatible with users' existing code bases – whatever operating system they end up using on the hardware.

Apple After A4

After some suggestion that the team Apple acquired in the PA Semi purchase might not have built Apple's A4, which may have been a product of existing Apple engineering teams, PA Semi's founder and team leader Dan Dobberpuhl has left for startup Agnilux.

So, if not Doberpuhl, what did Apple get with the purchase?

Suggestions invited!

Thursday, March 11, 2010

Standards Advance Mac Platform

Khronos Group's release of the OpenGL 4.0 specification moves the Mac platform further into the mainstream, as it moves more development onto standards that won't require a different code base on Macs than elsewhere. Moreover, the specification makes it easier for developers to leverage the various computational resources that appear in Apple products, improving performance for all applications on the platform by helping Apple hardware saturate computational resources with applications' demands, allowing Apple to offer even more price/performance to customers of anyone's software.

For example, close integration of OpenCL and OpenGL to allow coprocessors to handle more complex tasks without involvement of the CPU will both invite development under standards that make it easier for Apple to deliver a high-performance experience to users, and make it easier for developers to develop once a code base designed to leverage hardware acceleration enabled on any platform capable of delivering it, while giving every platform a reason to better optimize drivers for both OpenCL and OpenGL (since both will be expected to be in higher demand). The era of the proprietary graphics API and of non-portability to Macs receives another nail in its coffin with the new standards.

Already, standards-compliant resources like WebKit and OpenGL have moved Valve's software to more platform-independent development, so that Apple's platform gets new game title releases the same day as the major gaming consoles and competing operating systems – a circumstance that never would have happened a decade ago, regardless the performance of Apple's hardware. Moreover, because Apple's platforms will be running native code, not a ported quickie version or emulation, they will be able to deliver all the hardware acceleration Apple's environment can offer to code conforming to the standards.

Increased use of OpenCL, OpenGL, newer versions of HTML designed to support rich content, and so forth will all result in Apple's platform being able to deliver more predictably high-performance output. The move to standards favors Apple because it lowers the barrier to having applications run natively on Macs, and improves the quality of the software experience Apple can offer every customer of all its platforms.

Apple's strategy of embracing standards is a way to ensure it remains competitive as developers seek increasingly powerful ways to ensure their code remains valuable in the future.

Monday, March 8, 2010

Apple As Tier 1 Game Platform?

Valve software, which ported its Steam downloaded-game service and its Source graphics library to the Mac, chose to use native code rather than emulation to solve the port problem. Native code makes a certain sense. Steam includes WebKit, and Source depends on OpenGL. Game developers leveraging Valve's technology will be able to support Apple's platforms as well, though such support may not be automatic.

"Steam Play" will allow users to start and stop games on Macs and users of Microsoft's operating systems, users will be able to share servers and "lobbies" between players using either platform, and performance is expected to be comparable between the platforms.

With Apple's portables becoming a major game platform, the conversion of the actual desktop hardware into a "tier-1 platform" – in the words of Steam development director John Cook – is an interesting but entertaining occurrence. Whether it helps mainstream Macs, or reflects that Macs have become mainstream, may remain open for debate.

Booting into MS-Windows for games may be a thing of the past.

Chinese Currency To Dump Dollar Peg?

China – whose "remminbi" (or "Chinese Yuan") has had its value under government rather than market control, most recently by an official policy pegging it to the U.S. dollar – seems to be signaling that it's currency's peg to the U.S. dollar has a definite lifespan. Zhou Xiaochuan, governor of the People's Bank of China, said of China's currency-valuation policies: "Sooner or later, we will exit the policies." He just didn't say when.

Since the dollar peg had kept Chinese currency undervalued relative to the value it would have if freely traded, the end of the peg promises to elevate the value of assets valued in Chinese currency, including the present value of Chinese-currency income streams. This means everything in China could pop, simply as a result of currency conversion rate rationalization.

So, what has the Jaded Consumer thought worthwhile in China?

First, China Armco (Amex:CNAM), which I first invested in just over $3 around the time CNAM had its private offering about a year and a half ago. This company has just launched a steel recycling plant, and its future income will dwarf prior income because it will be engaged in higher-margin business as a producer than it enjoyed as an importer/distributor before it raised the funds to launch its recycling operation. Increased value of growing income is bullish, especially in the face of an impending currency re-valuation. All those facilities just build with U.S. dollars, all being re-valued in an overnight currency conversion ... what excitement!

Second, I've still got China Direct Industries Inc. (NASDAQ:CDII), which seems to have converted its business from primarily helping Chinese companies access U.S. capital markets (for a fee and participation with options and equity) to primarily operating portfolio companies to offer magnesium and basic materials in China (with a consulting sideline advising U.S. companies whose primary businesses are Chinese operations). CDII's portfolio companies make it a major supplier of magnesium in China, and as the US-dollar value of magnesium sales priced in Chinese currency climbs with local currency's price rationalization, the value of this market position will grow. CDII has gone from taking several Chinese companies public in the US every year, and being priced as a financial, to mostly being priced as a magnesium distributor that is still losing money. However, with total liabilities and equity of $77,719,439 and shares outstanding of 27,381,946, the company's book value per share of $2.84 has a long way to go from its current position at $1.76. Moreover, its operational expertise has delivered an enormous reduction in loss compared to its performance in the prior year. Although CDII has a production capacity of approximately 42,000 metric tons of magnesium, the company sold and distributed fewer than 12,000 tons in the 2009 period it describes as "transitional". Since magnesium is the third most commonly used structural material, CDII's magnesium operations should be better able to utilize their capacity as China and the world regain a more normalized construction and consumption pattern. I initially liked this business because it was an opportunity to buy a diversified portfolio of Chinese operations – the portfolio companies – and make money providing financial services while I was at it. The business is now different, in that the financial services no longer appears to dominate the company's future and the primary driver seems to be its consolidating control over various China-situated magnesium facilities. Since I've got it, and the shares appear underpriced both against current book and especially against values following a rationally-priced Chinese yuan, I'm holding in the expectation of significant price improvement (operations, plus currency re-valuation). This business sort of reminds me of the description given of an old value-investor's targets: unsexy businesses that weren't dead yet, old cigar-ends with some puffs left in them, being sold below the value of their constituent tobacco – nothing to make the papers perhaps, but a good buy nonetheless (and perhaps as a consequence).

There's much more in China, but the Jaded Consumer will call it quits here for now and pick it up later. Happy hunting!

Sunday, March 7, 2010

Pent-Up iPad Demand?

Changewave claims anticipation for iPad exceeds initial iPhone anticipation. This is surely an artifact of Changewave's sample, as Changewave admits surveying a segment of the technorati – the "frontline of technological change" – whose demand for gadgets is likely not reflective of the general population.

However, the interest in iPad as an eReader platform might really mean something. Cell phones are in much broader use than specialty products like eReaders, and sample bias toward the technorati might easily skew results into uselesness, but the technorati is the very population likely to be interested in esoterica like eReaders. The survey's prediction that iPads will soon dominate eReaders is thus interesting in a way the survey results comparing iPad demand to iPhone demand was not.

To compare iPad and iPhone demand, one wants data drawn from a different pool. For my purposes, I'd like data drawn from back-to-school sales: if the device will replace students' physical notebooks and textbooks, this should be reflected in back-to-school demand. Of course, this demand may be delayed until it's obvious whether iPads will offer content with the right digital rights. It's easy to screw up content's appeal with bad DRM.

Friday, March 5, 2010

All About Anticipation At Apple

Apple has announced iPad availability in the U.S. beginning April 3 for WiFi-only versions and late April for 3G versions. The rest of the world waits until the 3G version ships.

I think Apple's decision to ship beginning in early April after announcing late March (60 days from January 27) is not entirely an accident. When Jobs announces a product in "Spring" he's known to release it so late in the year that he shows a dictionary definition of "Spring" to prove it's still spring, despite that everyone in the auditorium feels it's summer. Pre-announcing the iPhone 3GS so far in advance that existing models' sales were clobbered by the Osborne Effect isn't a rookie mistake, either. I believe that carefully controlling information and disappointing expectations of immediate availability is a deliberate tactic to heighten anticipation and garner both first-day crowds and free press on product release. Apple is into the buzz.

With Gartner announcing in effect a doubling of touchscreen devices over the year, Apple's position as the company folks think of when they think of touch screens is important. Building buzz, staying in the news, and providing a carefully-crafted experience are all part of Apple's marketing and brand management effort.

Thursday, March 4, 2010

Starbucks, With Guns Ablaze

The Jaded Consumer wouldn't want to deceive anyone, so the following should be reviewed carefully before assessing the meaning of the title of this article: nobody got shot. Nobody even pulled a trigger.

On the other hand, there were some folks wearing firearms in Starbucks to test open-carry laws in jurisdictions in which it was theoretically legal to openly carry firearms.

That this inspired a reaction from gun-control enthusiasts should not surprise anyone, but now that Chicago's highly-restrictive (e.g., a total ban) handgun law will be reviewed by the United States Supreme Court in light of Heller, the impact of the tests will likely be a bit bigger than initially obvious. If local government turns out to have overstepped its bounds in regulating the bearing of arms, many jurisdictions' weapons laws may be void until amended into compliance with whatever the Supreme Court might pronounce as the Constitutional limit of firearms regulation. The reasoning adopted in Heller doesn't seem to limit the application of the Second Amendment as a limit only against the federal government, despite the text of the Amendment, but suggests that the right to keep and bear arms is so basic that local governments may also be barred from interfering with the right (whatever the "right" turns out to encompass).

Because the law at issue isn't really "regulation" but an outright ban, it's also possible that the Supreme Court will not address the limits of the power to regulate with any particularity, but form a majority around the simple thesis that a total ban is too far, whatever the limit may be. In that case, we should expect a lot more "testing" behaviors to illuminate the extent of the law.

Since Starbucks has voiced a position to accept customers who obey local law, one should expect it to be viewed as a friendly place for these "tests". Whether this makes you more interested in Starbucks, or less, is entirely up to you.

Living Well on Scraps: China Armco Metals

Earlier touted on the Jaded Consumer as a buy because its fortunes were being mis-assessed on the basis of prior-year operations as a metal distributor despite its preparation to enter higher-margin business as a steel recycler, and because its new AMEX listing would make it a higher-profile, more followed, more liquid investment, China Armco Metals Inc. (AMEX:CNAM) saw its stock leap over 40% in the pre-market on news of its first scrap metal contract to put into use its new recycling facility.

Kexuan Yao, the company's Chairman and CEO, described the $100,000,000 contract as having "essentially pre-sold the first several months of production from our newly opened facility as we ramp up capacity over the coming quarters." The contract calls for the company to supply 230,000 tons of steel to a major Chinese steel producer over a 10-month period beginning in March, 2010.

Shortly after its AMEX listing, CNAM rose over $4 then rushed past $5. After closing yesterday at $5.30, pre-market bid and ask were in the neighborhood of $7.50, though current prices are a little closer to $7. Assuming the company doesn't announce unhappy surprises, its future is looking good as it pursues more of the same business over the year.

Getting a mispriced business is nice, eh? Now, if only prices would rationalize over at American Capital ....

UPDATE: Okay, close at $8.50 the day of this post, up over 50%.

Wednesday, March 3, 2010

Unit Share Isn't Profit Share

The Windows 7 PC rush has only lowered Dell's profit.

How sad, the life of a commodity vendor.

Flash Chicken: Apple Winning

Remember the iPhone/iPad-related squabble between Apple and Adobe on support for Flash?

(Jaded Consumer offers some opinion here and here on Apple's nonsupport of Flash on new platforms.)

The next chapter, after Microsoft's decision to support iPhone by sending it H.264 instead of expecting iPhones to speak Microsoft-ese, is here. Virgin America has dropped Adobe's Flash to court iPhone users. Virgin's experience was interesting: its site used Flash for things like transitions between advertisements, which could be adequately handled without the heavy load of Flash. Logically, Virgin dumped Flash because it didn't need the headache and it didn't want its customers to have to endure the wait, especially on thin-pipe clients like roaming mobile devices. Apple isn't moving to support proprietary plug-ins, content providers are moving to drop the crazy expectation that client platforms will install proprietary plug-ins to support the content they want users to get hassle-free. By standing with standards, Apple seems to be winning the Flash chicken game by waiting for the world to take advantage of improving standards.

Given that most folks' use of Flash seems to be to show video, HTML5 could lead lots of sites down Virgin's path toward avoiding the headaches caused by Flash.

Monday, March 1, 2010

Asian Uptick

In a post titled "Asian Beauties" the Jaded Consumer recently discussed China Armco Metals Inc. (Ticker:CNAM) as a just-listed-on-the-AMEX story involving a new business model and an impending return on recent capital investment.

The stock went from just over $4 to about $5.30.

If the Jaded Consumer has the power to move stocks with posts, then blame must be accepted for the collapse of ACAS from nearly $50 to well under $2. So, no claim of credit here. However, as AMEX listing brings CNAM into view of more analysts, the things that are going right at CNAM will become more broadly evident. Now that CNAM isn't a pink-sheet stock, folks who would have feared to invest for fear of being able to sell (low-volume pink-sheet shares can become impossible to exit because of wide spreads and lack of volume ... trust me, it's lousy) will be able to see both regular volume and a respectable listing. CNAM's story will have an audience, and that audience is apparently beginning to grow already.
Assuming CNAM doesn't issue an earnings warning soon, the company will have traded at about 10x trailing earnings in the face of both globally improving business conditions and margins improvements having to do with the transition from a basic materials broker into a source of recycled steel. I wouldn't want to make bets based on particular numbers, but the future looks bright for CNAM.

Update (March3, 2010): the action on CNAM wasn't a one-day thing, though it's been volatile. CNAM will present at a Beijing investment conference, and optimism continues in heavy trading:

Starbucks Appreciates Customer Calls, But Not Enough To Solve Their Problems

After my recent experience with Starbucks' online feedback service over the weekend when its customer service line was down, I called today to find out what Starbucks would do to solve my problem.

They reviewed the notes from the previous call, listened to my explanation of how ridiculous their feedback system was and how worthless their "solution" to my concern was. The response? They appreciated my call to let them know.

Not that they felt like lifting a finger to look into the problem, much less solve it. They could – had they desired – contacted the manager of the store in question, found out who was on duty when my card was rung, and ascertained the facts behind the problem transaction. They could have learned something about how to prevent it, not simply recorded an incident of failure. They might have learned about the peculiar conversation between the school teacher who didn't like Where The Wild Things Are and the barrista, and about how Maurice Sendak thought children afraid of his monsters didn't need to see a watered-down version of the movie but could stay home and wet themselves, and while they were learning about the day in question they might have found out that I was really there and there really was a transaction that got messed up and they really needed to do something to fix it, at least in the future.

Because Starbucks didn't get me to answer a survey before I hung up, they've obtained only good feedback from me to date in their customer survey system. This kind of bias – where unhappy customers driven off the line by obviously insincere saccharine niceties never last long enough to provide a survey result, and only happy customers interested in rewarding apparently adequate customer service stay on the line by way of appreciation – likely pervades all Starbucks' feedback systems, and assures management (in error) that everything is copacetic out on the front lines.

Check out the five-year chart comparing Starbucks to McDonalds:

Starbucks' hold line contained information about a coffee grinder recall. If Starbucks' effort to make money in coffee has really degenerated to the point of trying to increase profit by helping them make coffee at home – and their apparently sluggish (the salesman laughed as he tried to sell it to me) effort to sell customers "via" instant coffee confirms that this is the case – SBUX is really headed toward a sad life as a commodity vendor selling stuff people can get anywhere, including more convenient places and places that will sell for less.

Starbucks certainly won't be differentiated by its customer service.