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International Business Machines Corporation Message Board

jpmarketer 124 posts  |  Last Activity: 8 hours ago Member since: Jan 16, 2008
  • It was about noon yesterday I covered at 47 and called for a turn.

    But now, in the high 47's, too far, to quick.

    Fact is, the market is teetering. CREE's got a high beta, earnings aren't until August and there is no catalyst in site. The commoditization issue isn't going away, and will only get worse.

    Further, last night's ousting of Cantor ushers in a whole new era of political instability at a time when that was thought gone.

    If the market drops a bit now, CREE's going with it. I think we see that high 46's again, soon, at least, again depending on whether the market swoons, which I think it will. S&P at 1943, come on....

  • Just covered the short at 47. Could be more, and don't see order book right now, but there was a lot of support in the 46.80's/90's.

    Correction remains a risk, but staying nimble. Will stop out, but playing with profits from short just removed.

  • Reply to

    Cree's Problem as I See It

    by jpmarketer May 29, 2014 10:35 PM
    jpmarketer jpmarketer Jun 9, 2014 11:34 AM Flag

    10 days along now, CREE's relative price performance is still dismal, chart is sinking and the market is getting more and more tense. S&P at 1952, correction looming, and CREE earnings are in August. Staying short till some drop toward support high 46's.

  • Reply to

    Just bought 4 great leds from HD

    by vestedkilljoy Jun 5, 2014 5:30 PM
    jpmarketer jpmarketer Jun 6, 2014 1:16 AM Flag

    I have been short CREE recently but I too bough a product recently -- the 75W bulb that uses 13W. Also a great product. Using it with a 10-year old dimmer and so far so good.

  • jpmarketer jpmarketer Jun 5, 2014 11:15 AM Flag

    It's because earnings growth is slowing and the multiple can't be justified anymore.

    It doesn't matter how great their products are (except in niches) if they can't price up.

    Adoption/conversion is accelerating, but this marketplace is flooding with competitors, competitive products, and the price wars we see in any developing category.

    That's why, the street sees it, institutions see it, and there is selling pressure on shares which can be expected to continue.

    Management leveraged its cash position to place a put on the decline, but they won't use it yet because they know where the end point is and they need to keep dry powder.

    Out of date word, but the paradigm on this one has shifted and if you're stuck in the mud, your money will leave your pocket.

    May rise again in July heading toward earnings, but for now, this is not only dead money, but in distribution, as the chart clearly shows. That's why.

  • Reply to

    EPA carbon pollution law

    by blackoutbuzz Jun 3, 2014 2:58 PM
    jpmarketer jpmarketer Jun 3, 2014 6:17 PM Flag

    I don't think there's any question that LED adoption will be sweeping. Its' about CREE's ability to maintain pricing, and resulting margins, at a level that fuels the earnings growth needed to support today's multiple.

    That's becoming a hard argument to make, and with the market teetering at all time high's, a big CREE whoosh down is probable, imo, before a rebuild of the pps toward earnings.

    Relative price performance past few days dismal, it's happening.

    Could see 50 cents to a dollar swing up with volatility, but short term trend is down, so buy here at your own peril.

  • Reply to

    Cree's Problem as I See It

    by jpmarketer May 29, 2014 10:35 PM
    jpmarketer jpmarketer May 31, 2014 9:30 PM Flag

    I appreciate all the back and forth - pro and con. It's a lot better than what usually goes on on this board, and accomplishes the same thing -- arguments pro and con.

    I happen to be a supporter of this company. Great company, great product, but doesn't mean great profits. LED penetration is going through the roof, but CREE's share in different segments, and their ability to price with the right margins is what matters, and that's not settled.

    One can look at any category that has matured/is maturing within the context of today's technology -- like chips, or now, smartphones. Apple better hit a home run on this round with music streaming or something else, or they're freakin toast. I like them too and have a bunch in my IRA. Bu they better innovate and box out, because incremental smart phone improvements, even their next big screen, aren't going to cut it. That's the bottom line to me, no matter what the hype is about Jimmy, Tim or any of them.

    CREE making better bulbs now, with the mix of competition (both price and technology players) is great, worthy of all these PR's, but it's like AAPL making a better phone. There are going to be diminishing returns, until margins start to erode. Oops, that just started, this is what I mean.

    And the S&P isn't staying here, and the 10-year is at 2.4 something. Baton down the hatches, something, I don't know what, is going to happen soon, in either the bond market or the stock market, it's gonna pop like an Achilles.

  • Reply to

    Cree's Problem as I See It

    by jpmarketer May 29, 2014 10:35 PM
    jpmarketer jpmarketer May 31, 2014 2:02 PM Flag

    quantumwelldiver --

    Please forgive me if this stuff has been covered before. I'm a relative newcomer. I have, at times, been long CREE, and at other times short, as trades. I play ENOC the same way, and support both companies as innovative and growing.

    CREE's technology leadership is the coolest thing to me. I don't understand enough of the market and their business yet (will soon) in terms of:

    Segment split - Residential, Commercial, Industrial, Public, Government, other.
    - How much consumer versus non-consumer
    - Distribution channels, and Cree's key accounts besides Home Depot
    - The extent to which the "halo effect" of CREE's technology leadership can translate into pricing advantages (pricing up) versus the competition on more commoditized SKU's.

    If the halo effect of CREE's technology leadership does not allow them to command a price premium on the entire Brand, they will be lost in the wave of global commoditization.

    The massive Category adoption that's about to take place makes me confident that the vicious offshore component will not only live long, but prosper.

    I would want to understand not only CREE's key accounts and segments, but also, their strategic plan for the targeting of their efforts. For instance, 40% global share in a segment where CREE's technology leadership could sustain a competitive advantage, at 50% margins, would be very comforting.

    See, a company doesn't have to be everything to everyone, and be a leader in every product or customer segment. If I can see a plan for targeted development, that leverages the Company's strengths, and it translates into a great growth rate at margins which translate into equally strong earnings growth, then I'll be more confident. More studying to do but don't see it yet.

  • Reply to

    Cree's Problem as I See It

    by jpmarketer May 29, 2014 10:35 PM
    jpmarketer jpmarketer May 30, 2014 7:00 PM Flag

    Thank you. It's a short term position and I'm well on the way to my target.

    Re the buyback, yes, I understand. It's about 5% of the outstanding at the current PPS?

    That's about $2.40 per share cushion provided by the whole $300 million if executed now or soon?

    I'm looking at the multiple, a street mentality developed over time and based upon growth that didn't anticipate the mix shift toward lighting.

    The increasing commoditization, coincident with the mix shift, is a one-two punch. I think a one-two punch that isn't more than offset by the buyback, category growth or CREE's efforts at differentiating through technology. Their stuff is great, but they can't price up as I said in previous posts.

    I managed a major Brand during the commoditization cycle of the Motor Oil Category. A time when the mix was shifting from more profitable packaged quarts (DIY) to less profitable bulk and drum (DIFM - Quick Lubes, Car Dealers, etc). I am really impressed with CREE's Technology leadership and their consumer savvy. I just don't think they can outrun the commoditization, the margins are eroding, everyone is seeing it and the time is now.

    Multiple collapse imminent with the next NAZ downturn, which by the way, is about to be featured in a theater near you.

    That's my call. I'll stop out on any significant rise (possibly still with a profit), and say I was wrong if it rockets. This is as much a market call as it is a CREE call. Great company and products -- PPS going South.

  • Reply to

    Cree's Problem as I See It

    by jpmarketer May 29, 2014 10:35 PM
    jpmarketer jpmarketer May 30, 2014 1:05 PM Flag

    arronedward --

    If the technology leadership allows them to price up, whereas others can't follow becasuse they don't have the technology -- then yes, they can make a lot of money and sustain it.

    But the curse of commoditization, particularly for those companies who invested so heavily in developing the technology in the first place, is that the low cost producers end up standing at the end of the day. No one else is, because the low cost producer dumped into the market. Think chips (early days, commodity categories), solar panels, and so many more --

    I have Cree bulbs in my home. Just bought the 75W that uses 13W, and the light, the color of the light, everything -- really cool. I like the company, but Durham-based Cree isn't going to compete with the offshore sources when the technology curve flattens, commoditization takes hold, and the ability to price up evaporates. We're sliding into that phase, I believe, and it's why I'm short CREE at this point.

  • Commoditization. Porter said there are only two ways to achieve a sustainable competitive advantage. Low cost producer or legitimate product differentiation.

    One could say that Cree is innovating, and is differentiated in their technology development.

    Problems with this are:

    1. How sustainable is the technical/innovation edge, and
    2. Can Cree price up as a result of this differentiation?

    That was another key part of Porter's thesis -- Strategically, one must be able to leverage differentiation by pricing up, in order to achieve superior profits and win long-term.

    From what I see of this category, the vicious offshore competition lies in one corner of the quadrant, with deep-pocketed/technically advanced competitors in the other corner.

    No one's pricing up for squat, as long as the vicious offshore component remains. And as the technology develops and adoption increases, technology differentiation will flatten, making the problem even worse.

    People are starting to see this dynamic, no matter how they express it. That's why the gap down, and it's not over IMO.

  • Reply to

    PJM Results for 2014

    by lesserfool75 May 23, 2014 5:25 PM
    jpmarketer jpmarketer May 23, 2014 8:01 PM Flag

    What does it mean/what are implications for Enernoc

  • jpmarketer by jpmarketer May 23, 2014 5:23 PM Flag

    I don't know that they mean - but they are:

    Prices double last year, but
    Demand response down -12% from 12,408 MW to 10,975 MW.

    Google PJM Capacity Auction Results - came out around 5:10 pm

  • Reply to

    SHARE PRICE DECLINE

    by thekadog May 20, 2014 2:18 PM
    jpmarketer jpmarketer May 22, 2014 6:38 PM Flag

    Thank you Stacker and Lesserfool for the PJM heads up. Sold today at 18.40 something for a small loss. Don't want to be holding for auction results tomorrow. Does anyone know expectations, and where posted first?

  • Reply to

    SHARE PRICE DECLINE

    by thekadog May 20, 2014 2:18 PM
    jpmarketer jpmarketer May 22, 2014 12:23 AM Flag

    You're all a bucket of cheer. I took a position (two buys) average cost 18.58 on Tuesday.

    The price just plummeted around 23%. Hopefully all of your gloom is covered, and the shorts will do the same soon, en masse.

  • jpmarketer jpmarketer May 16, 2014 11:33 AM Flag

    Don't know but I skidoodled at 19.26. It's at 1940 something now. It was only 300 shares and I took my $155 after trading fees and felt very lucky. I have no idea where it goes from here, whether the decline is market-driven, Market Maker-driven, ENOC driven, no clue. Have to read the report, listen to the call, take it all in again and get a feel. Don't know when PJM is but will look.

  • Despite what I said below. Impulse buy. Usually don't do well on those!!!! We'll see.
    But if nothing is wrong, how much more downside is there?

  • Motsam, Samgean, Lesserfool, Stacker, others -- What the hey?

    I've been very busy on a project since earnings -- have not read the report, just the PR's. What's going on -- is there anything behind the scenes, or is this just mm manipulation/small cap sell-off and ENOC's getting dragged down? Thought 24 was overblown, but didn't expect to see 18 something, unless things have fundamentally changed? No position now, but wont' jump in until studying up.

    I would have thought today's headline on Obama administration looking for 25% more efficiency by _____ would have grid implications/be good for Enernoc in terms of energy savings, efficiency and their SaaS offering.

  • Reply to

    Philips LED Advertising Spend

    by jpmarketer May 4, 2014 7:25 PM
    jpmarketer jpmarketer May 6, 2014 10:30 AM Flag

    Hello Creamer,

    I don't want to get involved in the backs and forth. I trade short term -- sometimes long, sometimes short, and I don't pump or bash. Your comment about the "instances" is something in my wheelhouse.

    The facts you presented are one piece of the story -- But there are many more measures of both "presence" as you put it, and performance for a brand in a retail store. So here are some of my thoughts/questions --

    More instances on the web site -- does this mean more SKU's stocked for Philips? if yes, is their product line rationalized? What percentage of total sales volume does each Philips SKU account for? Expressed in both volume and dollars. NOW, we start to get a feel for their "presence" in-store. We do the same thing for CREE, compare, and it's very telling.

    But there's so much more.

    For both Brands -- what is the total amount of shelf space, how many facings? How often is each brand "featured," in HD's advertising, and then displayed (ie an endcap display) to execute against the feature ad (regardless of the medium -- circular, hard copy, online, facebook, TV, doesn't matter).

    How often is each brand price promoted, and what does the ins-store merchandising look like.

    There are many, many mre things that determine a Brand's presence in a retailer. I've centered in on the in-store piece. Multiply that by 3 for online considerations.

    And BY THE WAY, WHAT IS GOING ON PAST TEN MINUTES -- VOLUME ALREADY AT DAILY AVERAGE AND PPS UP 3% WHILE naz DOWN -.25%. THAT HAD THE FLAVOR OF A SHORT SQUEEZE JUST NOW, SO THERE'S NEWS IN THE PIPELINE, OR SOME OTHER CATALYST OUT THERE. And we just bumped along a 45+ bottom for a week.

  • It's very heavy right now, at least in the New York Market, but probably national. It is raising awareness of the whole LED segment in addition to awareness of/credibility for the Philips Brand.

    I am just starting to look at CREE and I don't yet understand each company's competitive position, share, pricing, etc.

IBM
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