Oath Inc Failure is a failure waiting to happen. Read on to find the reasons why.
BY MALCOLM BERKO
RELEASE: WEDNESDAY, DECEMBER 13, 2017
Oath Inc is a Failure Waiting to Happen
Dear Mr. Berko:
I’m a financial adviser with lots of money under management, and I and two others in our office need your help. Here’s the problem, and then perhaps a personal letter from you to Oath, which is the name Verizon gave to its newly merged AOL-Yahoo organization, would help.
For two decades, we used the stock platform made available by Yahoo. It had all the data we needed to analyze thousands of companies. Yahoo’s platform was easy to use; the information was easy to understand, and the presentation was clear. We didn’t need other stock platforms, because the content was enormous.
But 10 months before Verizon bought Yahoo, the platform was abruptly changed to its current format, which is disgustingly inferior to the old platform.
We wrote to Oath and its president, Tim Armstrong, twice. We offered to pay a fee for the return of the original platform and told him that dozens of other brokers we know in Miami, Tampa, Orlando, etc., would gladly pay an annual or monthly fee for the return of the old platform. And we know brokers in Cleveland, Pittsburgh and Cincinnati who would also pay to have access to the old Yahoo platform again. None of us realized how good the old Yahoo stock platform was until it was taken from us.
We have tried to call Mr. Armstrong, but we’ve had no luck reaching him. Do you know him? Could you help us? We would gladly pay $1,000 a year for access to the old Yahoo stock platform. — 3 Guys in Fort Lauderdale, Fla.
Dear 3 Guys:
Two more guys and you’d have a hamburger franchise.
Don’t feel bad that Timmy hasn’t responded. He doesn’t give a hoot. He won’t respond to my letters, either. I wrote to him in September because dozens of readers/investors asked me to write to Oath on their behalf. Timmy is too busy to care.
As you mentioned, Oath is a new subsidiary of Verizon Communications (VZ-$52).
Oath serves as the umbrella company for VZ’s digital division, including AOL, which was acquired in June 2015, and Yahoo, which was acquired in June of this year.
Timmy Armstrong’s strategy to generate advertising revenue is “to build global brands people love, build global brand platforms partners love” and “build a global company talent loves.”
Timmy believes that implementation of his “love” vision will increase user traffic from the current 1.2 billion to 2 billion, a 67 percent increase, in two years. I suspect that Timmy is smoking some of those left-handed Luckys.
Timmy and what’s left of his AOL people, plus the remaining Yahoo employees, have failed miserably in the past few years to build platforms sufficiently attractive to generate enough advertising dollars to pay the bills and provide a return on investment.
For years, Yahoo and AOL failed to attract enough advertising as standalone entities.
Now Timmy is playing double jeopardy. By combining two ignominious failures with zero proven talent, there’s no flaming way in paradise Oath will contribute a shilling or sixpence to VZ’s bottom line.
If the past is prologue, it’s certain failure all over again, because the Oath folks haven’t the foggiest idea what global brands the consumer will love.
Timmy’s failures at AOL are proof of his future failures. And a manager who doesn’t respond to client letters is a failure waiting to happen.
I’ve sent a list of six services I use. I won’t mention their names publicly because it’d be considered unpaid advertising and other names I failed to mention would hound me. These services are not cheap, so I’d recommend that you three combine your purses to subscribe. I’ve used these research services for at least 20 years. Frankly, their recommendations are only slightly better than the free stuff, but the revenue statements, profit and loss statements, and cash flow statements they publish are wonderfully detailed and give me a clear picture of the company I’m investigating.
Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775, or email him at [email protected] To find out more about Malcolm Berko and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.
COPYRIGHT 2017 CREATORS.COM
Yardeni: Jobs Report Validates Stock Market Recovery, Credits PPP
Friday’s unexpectedly good jobs report showed that the country added 2.5 million jobs in May. This is just more proof that the stock market surge since March 23 is real, according to Ed Yardeni, president of Yardeni Research.
The single largest monthly job increase on record caught him off guard. However, he credits the government’s Paycheck Protection Plan. Yardeni says it reached the goal designed for it.
“I was surprised, but with the benefit of hindsight, it kinda makes sense because we had the Paycheck Protection Program that was basically implemented in April encouraging small businesses to keep people on their payroll,” said Yardeni during a Friday appearance on CNBC. “I think what might have happened is that businesses let a lot of their employees go in March and certainly in April, and once they got approval for the PPP loan, they turned right around and called up their employees and said you are still on the payroll.”
Yardeni says the jobs report is further proof that the stock market rally since the March 23 lows is real. He also mentioned that the perceived disconnect between the stock market and the economy is overblown.
“There’s been a lot of chatter about the disconnect between the stock market doing so well and the misery we are still seeing on the health front and the economic front and social fronts. The market has been a ray of sunshine — basically investors being convinced that we’ll get out of this, we’ll solve a lot of our problems and the economy will recover along with earnings,” said Yardeni. He also said, “The economy may very well be catching up with the stock market rather than the stock market going off on its own.”
Yardeni on Economic Recovery
Yardeni said there’s an “alphabet soup of scenarios from V’s, W’s, U’s, etc.,” regarding the shape of economic recovery. He believes we will start out in a V-shaped recovery. Although, he states that it will end up looking more like the Nike swoosh. But he says good news exists. The worse the GDP becomes in the second quarter, the better the stage for a massive recovery in the third quarter.
“I think it’s going to be a V initially, real GDP could be down 40-50% in the second quarter. The worse it is in the second quarter the greater the likelihood we’ll see something like a 20% increase in the third quarter and maybe something like 5% in the fourth quarter,” said Yardeni, “So it’s going to look like a V in the second half of the year but V means you get all the way back to where you were in 2019. I don’t think that’s going to happen very quickly so maybe it’s not going to be an alphabet, maybe it’s going to be more like the Nike swoosh where you have sort of a V bottom and then you gradually start to come back.”
Stocks have recovered almost all of their losses from the February bear market. With this, Yardeni had answered the question regarding where he sees opportunities today. He said that any opportunities disappear quickly, so investors need to act quickly. “I think you look for where things have lagged. But you have to be pretty quick here because the laggards have actually had a big move just in the past week. It’s hard to give people advice when things move so quickly. I think the prospects are really quite good for technology to do well, for healthcare to do well, financials to do well. I think it’s going to be a pretty broad bull market here.”
Most importantly, Yardeni says don’t overthink things. The market has been rising, so don’t fight it, just go along for the ride.
“Go with the flow. Ever since March 23 we’ve seen a rebalancing away from bonds and into stocks, and I think that will continue to be a theme here in the financial markets for the next several months.”
Tesla CEO Elon Musk Says Stock Price ‘Too High’ To Cap Bizarre Week
Tesla CEO Elon Musk capped an interesting week. He did so by tweeting out “Tesla stock price is too high imo (in my opinion)” Friday morning, and shares immediately fell 10%, wiping out nearly $15 billion in market cap in just a few hours.
It was the latest bizarre antic for Musk who earlier in the week cursed and called the stay-at-home order “fascism” during the Tesla earnings call, and followed that up the next day by interrupting a NASA conference call when a reporter asked NASA’s administrator about Musk’s COVID-19 comments. Musk had previously tweeted in early March “The coronavirus panic is dumb.”
Without being introduced on the call, Musk responded to the reporter “I think this is a different subject,” he said. “Wrong press conference, move on.”
Friday’s tweet about the Tesla share price came during a string of tweets on different topics and subjects. Some of those topics including lyrics to the Star-Spangled Banner. Others say he was selling all his physical possessions. Another say that his girlfriend is mad at him.
Musk started the week by tweeting “FREE AMERICA NOW” on Tuesday evening. Also, during Tesla’s earnings call on Wednesday, he said the shelter-in-place orders in California were “fascist” and that government officials should “give people back their (expletive) freedom.”
“The expansion of shelter-in-place, or as we call it, forcibly imprisoning people in their homes, against all their constitutional rights, is, in my opinion, breaking people’s freedoms in ways that are horrible and wrong, and not why people came to America and built this country,” Musk said. “What the (expletive)!”
He continued, “If somebody wants to stay in the house that’s great. They should be allowed to stay in the house and they should not be compelled to leave. But to say that they cannot leave their house and they will be arrested if they do… this is fascist. This is not democratic. This is not freedom. Give people back their (expletive) freedom.”
Thursday’s outburst during the NASA conference call was related to Musk’s tweets that seemed to downplay the severity of the coronavirus pandemic. A reporter asked NASA administrator Jim Bridenstine his thoughts on Musk’s COVID-19 comments. However, Musk, the founder of SpaceX, quickly interrupted to tell the reporter to “move on.”
Friday’s much more devastating Tweet-storm could get Musk into even more hot water with the Securities and Exchange Commission. As part of his 2018 settlement over the “taking Tesla private at $420” tweet, Musk agreed to have all his social media posts reviewed prior to publishing them.
When a Wall Street Journal reporter asked Musk if he was joking, or if he had the “Tesla stock is too high imo” tweet approved, Musk simply responded “No.”
Investors on both sides of the Tesla debate are waiting to see what action of any the SEC could bring against Musk for the tweet. Some believe the tweet was in clear violation of the 2018 settlement. Meanwhile, others say while uncommon, it’s not illegal for a company CEO to publicly discuss their company’s share price even if investors are harmed by the comments.
One thing is for sure, Musk continues to prove he’s the greatest showman alive.
The Fed is Propping Up Bond Prices, Are Stocks Next?
Last Monday the Federal Reserve announced that it would spend nearly $700 billion to buy up Treasurys and mortgage-backed securities as part of its “aggressive action” to soften the impact the coronavirus is having on our economy.
As part of the stimulus package, the Fed also said it would start buying exchange-traded funds (ETFs) that track the corporate bond market. For now, it appears the purchases will be limited to investment grade or highly-rated corporate bonds and won’t include more risky high-yield (or junk) bonds.
It’s the first time that the Fed has directly bought securities in an attempt to add liquidity and jump start a frozen market.
“This will provide much-needed liquidity to the bond market and to ETFs,” said Todd Rosenbluth, head of ETF and mutual fund research at CFRA.
Steve Blitz, chief U.S. economist for TS Lombard, says the Fed’s move is helping investors enter and exit a position if needed. “All of this is to make sure that people who want to sell have a buyer. The Fed is taking both sides of the market so people who need to raise cash can do so.”
It’s clear why the Fed prefers to buy corporate bonds through an ETF as opposed to buying bonds in individual companies. With one purchase order, it can impact the bond prices of hundreds of companies at once, as opposed to the time consuming task of identifying, pricing and then buying bonds of individual companies.
By moving into the ETF space and buying up bonds, the Fed may also be trying to calm a part of the market that has seen record outflows over the last few weeks. Just two weeks ago, the iShares iBoxx $ High Yield Corporate Bond ETF saw a $1.2 billion outflow, or roughly 8% of it’s total value.
The question becomes, if the market continues to slide as the coronavirus outbreak batters the economy, would the Fed extend its reach and start buying stocks via index ETFs?
It’s an unprecedented move, but then again so was buying bond ETF a little over a week ago.
It would allow the Fed simultaneously impact the stock price of hundreds of companies at once. With the SPDR S&P 500 ETF, the Fed could move the stock price of all S&P 500 companies with a single purchase.
The same would apply for all broad index ETFs like the Dow Jones Industrial Average (DIA) and Nasdaq (QQQ).
Vincent Reinhart, chief economist and macro strategist at BNY Mellon Asset Management, says it could be in the Fed’s playbook.
“Other central banks have done it. It’s the ETF route that the Bank of Japan has taken. I would not rule out them doing equities.”
Lindsey Bell, chief investment strategist at Ally Invest added “We’ve seen the Fed show that they’re willing and able to do whatever it takes to make sure the markets are opening in an efficient manner. They’re taking whatever steps they can. That would be new territory for the Fed, not that they’re scared of new territory.”
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