Best Coffee: Making Free Money Online

Netflix is one of the best performing stocks this year, up 225 percent year-to-date, with a $9.3 billion market cap. But it is also priced to perfection, with a lot of short sellers hoping to profit from its fall and antsy Wall Street analysts downgrading the stock. Today, CEO Reed Hastings defended Netflix’s prospects in a very public, very detailed, and very unusual blog post on Seeking Alpha. The post was in response to a specific short seller, Whitney Tilson, who last week laid out his case against Netflix in another Seeking Alpha blog post. By addressing this one short seller, of course, Hastings is trying to address the market’s jitters as a whole, and he does a pretty convincing job of it.

Tilson raised a number of concerns, ranging from the recent resignation of Netflix’s CFO to pressures on Netflix’s margins to market saturation and increasing competition in streaming video. Hastings acknowledges that Tilson “only has to be right on one or two of these issues in 2011 for him to make money on his short of Netflix. . . . Odds are he is wrong on all of them, in my view.”

Hastings then goes on to rebut the short seller’s argument (short sellers are investors who bet against a stock). I’ll summarize each of Hasting’s counter-arguments below:

The CFO left because he wasn’t going to become CEO anytime soon.

The First Sale Doctrine (which allows Netflix to rent DVDs after purchasing them) may be under attack, but it won’t change in 2011. And Netflix’s video streaming business is growing so fast that by the time it does have any impact on DVD costs, it won’t matter anymore.

Internet bandwidth costs should continue to decline, and while ISPs might like to charge content providers for data, that won’t happen in 2011.

Free cash flow has taken a hit because of the increased payments Netflix is making to media companies and content owners, but Netflix will begin smoothing that out on a quarterly basis instead of taking big hits once a year.

Market saturation in streaming video over the Internet is not yet an issue. Market demand is still accelerating.

Criticisms about “weak content” are not supported by subscriber’s voracious appetite for what Netflix has to offer, but Netflix is trying to get better movies and TV shows all the time.

Content costs are going up, but postage costs are going down as viewers shift to streaming.

If necessary, Netflix will take a hit to growth before taking a hot to margins. ”Management at Netflix largely controls margins, but not growth.”

Netflix is facing a growing number of competitors in streaming video, but it maintains advantages in scale and brand.

TV Everywhere could become a long-term threat, but it is more of a defensive move fro the cable companies rather than a new profit engine.

International expansion could have an impact on margins in the short term

Let’s drill down further into some of these issues. Netflix is obviously betting big on the transition to streaming video. The more it can get subscribers to watch streams instead of DVDs, the more it saves on postage. On the flip side, video content owners are demanding more money for those streaming rights. Hastings thinks that concerns about too many streaming services coming online is overblown at this point:

Streaming is growing rapidly; it is propelling Hulu, YouTube, Netflix and others to huge growth rates. Streaming adoption will likely follow the classic S curve, and we’re still on the first part (acceleration) of the S curve. Since we expanded into streaming, Netflix net subscriber additions have been 1.9m in 2008, 2.9m in 2009, and over 7m this year (estimated). While saturation will happen eventually, given the recent huge acceleration of our business specifically, and streaming generally, saturation seems unlikely to hit in the short term.

And while a major new streaming competitor could come in and blow away Netflix’s lead, Hastings makes the case that Netflix has a huge competitive advantage when it comes to the number of existing paying subscribers and its cost to acquire new ones:

For a competitive firm to materially hurt our growth, they have to have some positive differentiator (price, additional content, integration, etc.), and then they have to market their service effectively. This wild-card of major new competitor offering great content and marketing aggressively is the single best near-term short thesis, but no one knows if it will happen in 2011.

The core competitive barrier for direct competitors is brand/subscriber-evangelism. Our large subscriber base is very happy with Netflix, and tells their friends about Netflix. That means that the cost of acquiring the incremental 1m subscribers is lower for us than for a competitor, and thus our net additions are higher

Finally, in terms of the quality of the movies and TV shows Netflix makes available for streaming versus what people get on cable TV, Hastings points out:

. . . at $7.99 per month, consumers don’t expect to have everything under the sun. A variant of this misunderstanding is when DirecTV (DTV) advertises against Netflix, calling out some Netflix content weaknesses. When an $80 per month service is picking on an $8 per month service, the $8 per month service just gets more attention from consumers and grows even faster.

The key question is whether some combination of Netflix, Hulu Plus, YouTube, Google TV and other Internet video services will some day effectively replace the cable TV experience. And if it can, whether that combination will cost more or less than the $80 or more people pay for cable today. But remember, people are already paying for Netflix, which helps Hasting’s case.

Whether or not the stock will keep going up is another question entirely. At $178 a share, would you buy or short the stock?

Christmas cards get more and more expensive every year so if you‘re looking to save money on cards this year, there are a few useful websites where you can create and print template-based printable Christmas cards directly from the website or download high resolution PDF files for printing. Avery half-fold card stock prints well in inkjet printers and they look just as good as the real thing.

I’ve located 5 sites that I found fairly accessible and basically free to use, although there are many others out there that ask for money. But there is no need to pay anything when you have 5 sites like these that offer free printable Christmas cards.

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123printcards

One of the easiest and straightforward card printing sites is 123printcards. That’s right, in three easy steps, you can customize the title, add a thoughtful message and print our your card on letter size card stock.

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The site has 38 different styles of cards, featuring cute, festive and colorful holiday drawings. Some layouts are color intensive, so they may not print well on regular typing paper.

Another linked page on the site enables you to add a photo to one of eight printable Christmas card templates, featuring images of Santa Claus, snowflakes, snowman, Christmas tree, ornaments, winter scenes, and more. The size of these cards are 5×7, and are useful for Christmas card invitations, seasonal and personal greetings.

KeepandShare

KeepandShare has a page of nine Christmas cards of assorted layouts that can be printed on card stock.

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You can download them as single high resolution PDF files and print them out or send them as eCards. Each card has 2 pages in the PDF Christmas card file, so it’s easy to print out. First print out the first side, setting your PDF software to print page “1″. Then flip your paper stock over and put it back in the printer and print page “2″. You don’t have to register on the site to use the resources.

AmericanGreetings

AmericanGreetings offers a more advanced card printing service, in which you can customize templates in their online Create & Print editor.

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You can add photos, artistic elements, customize text, and change font size on the front and inside cover the layouts.

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You can use the service and website for free on a two week trial basis, which enables you to print your card layouts directly from the site. You can also post your Christmas card right on your Facebook account or use it as an e-card.

ActivityVillage

ActivityVillage includes a collection of a dozen layouts that can be printed directly from the site or downloaded in PDF format. From there, you can hand write your greetings and add art elements.

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These cards are geared more towards kids and maybe your office co-workers. The site also has resources for classroom printables, including holiday posters, coloring pages, games, jigsaws, stories and poems, etc.

Christmas Greetings Ideas

If you’re looking for some inspirational messages for your Christmas cards, check out Printable Greetings. It includes an handful of messages like, Friends and family are like the tinsel on the Christmas tree, they provide the sparkle for the season.

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For additional sites with charming message greetings, check out my MUO article here and for more ideas on season’s greetings, check out Simon’s 3 Sites to Make Funny Video Greeting Cards.

The printable Christmas card sites listed above are the most accessible resources I found, but if there are ones you know about, please share them in the comments section below.

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Thursday 23 December 2010

Making Free Money Online

123printcards

KeepandShare

AmericanGreetings

ActivityVillage

Christmas Greetings Ideas

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