Moody's List Of AAA Credit Corporations

Today's Standard & Poors loooooong anticipated downgrade announcement of General Electric's credit rating from AAA to AA+ (the next level down) most likely portends that Moody's Corp (MCO) will be quickly following suit with its own credit ratings downgrade of GE. If Moody's indeed decides to downgrade GE then there will only be 4 companies operating in the S+P 500 UNIVERSE today commanding Moody's HIGHEST Level Credit Rating of AAA:


* Automatic Data Processing (ADP) - a $18 Billion marketcap financial firm


* Berkshire Hathaway (BRKA) - a $130 Billion mcap insurance conglomerate


* Exxon Mobil (XOM) - a $330 Billion mcap oil and gas company


* Microsoft (MSFT) - a $150 Billion mcap technology company


* TIAA-CREF (private...not in the S+P 500) - a not-for-profit retirement organization for 3 million people


FYI, A triple A credit rating is desirable as it essentially allows companies to borrow money at the cheapest interest rates possible (allowing said company to maximize potential returns from that borrowed money). General Electric held Standard & Poor's AAA credit rating since 1956. Per its most recent annual company filings with the SEC, and under the terms of its existing debt instrument guarantees and covenants, GE would have to post additional collateral on its long term debt if its credit ratings were to be cut four more levels to below AA-/Aa3.




bloomberg.com/apps/news?pid=20601087&sid


Data Courtesy: Bloomberg
Full Disclosure: I own shares of GE.

Will EA FINALLY Take (Two) It Up A NOTch ?

Video game software developer Electronic Arts (ERTS) today FINALLY agreed to drop its HOSTILE $2.0 Billion Takeover bid ($25.74/share) for smaller industry peer Take Two Interactive (TTWO). With that move FINALLY out of the way (Take Two has had to reject EA's uncompromising bid as too LOW for 5 times already!!!), I'm thinking Electronic Arts may FINALLY be giving the management of Take Two Interactive some respect by enabling takeover discussions to go the FRIENDLY (as opposed to hostile) route.


While some interpret today's development as meaning EA is ready to move on and abandon its bid ALTOGETHER for Take Two...

1.) So be it, I think TTWO can do fine as an independent company given its recent momentum and 'out-year' earnings visibility courtesy of blockbuster successes GTA 4 (TTWO will be selling extra content for the Best Selling video game of ALL TIME later this year) and the COMBO Movie/video game title, BIOSHOCK.

2.) In the scenario that EA leaves the table, I HOPE the shares tank so that I can load up because I truly believe another company (Activision...Viacom...Microsoft...Sony, etc.) will come into the fold and bid on TTWO.

3.) In the event EA leaves the table, who's not to say they don't come back within 3 months, 6 months, one year or 2 years ?

4.) Oh yeah, TTWO has ALREADY casually mentioned its in formal takeover talks with an interested party not named Electronic Arts.


... I do NOT agree (keep up..and make sure you say NOT like Borat). I believe Electronic Arts NEEDS Take Two (with that said...and as subtly hinted above, I should point out that Take Two does NOT need Electronic Arts). EA needs TTWO because there's absolutely NO WAY Electronic Arts makes good on its own recently highlighted Company GROWTH Goals (sales, profits, units, marketshare, etc.) without adding a primetime video game software developer like Take Two. It's quite simple really...EA canNOT grow its video game business fast enough organically to accomplish its goals (the industry doesn't grow on trees...well not for a MATURE $15 Billion video game BEHEMOTH like Electronic Arts anyways)...they need to tap into the power of the All-Mighty ACQUISITION. Sitting on its heals would do nothing but compromise EA's already fragile + less than stellar integrity with shareholders. Bottom line - I continue to be a fan of Take Two Interactive..whether it ends up receiving a higher bid from EA or NOT (say it in that Borat voice again).

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* TRACKING 2008 GTA 4 Sales by Month courtesy NPD (rounded):

APRIL: 2,850,000 units

MAY: 1,310,000 units

JUNE: 396,000 units

JULY: 132,000 units


Full Disclosure: I own shares of TTWO.

U.S. Internet Browser MarketShare

According to research firm Net Applications, U.S. Internet Web Browser Marketshare (as of May 2008):

1. Microsoft's Internet Explorer (MSFT): 74% (79% a year ago)


2. Mozilla's Firefox: 18% (15% a year ago)


3. Apple's Safari (AAPL): 6% (5% a year ago)

Data Courtesy: Net Applications
Full Disclosure: I own shares of AAPL.

Google's ANDROID Demo !

Click on the below Youtube Link and check out Google's recent Demo of ANDROID (5/28/08)...Quick first impressions --> I'm def digging the web page 'MAGNIFIER' (double-click on the screen and you get a magnifying glass that you can drag over any portion of any Web page) + the 'street view' built-in compass:


http://www.youtube.com/watch?v=sOSk9TW7z-4

* Android is not a phone...its a mobile operating system, or platform, for cell phones and other mobile/wireless devices...Google (GOOG) is developing the system and giving it away to cell phone manufacturers in return for allowing Google to place advertisements in Android mobile programs.

* The final decision on included features for the mobile os would be made by the cell-phone manufacturers -- not the creator of the operating system (GOOGLE). That's the exact opposite of mobile business plans used by Research In Motion (RIMM) with BlackBerry, Microsoft w/ Windows Mobile and Apple (AAPL) with OS X.

Full Disclosure: I own shares of GOOG and AAPL.

5 Reasons To GOOGLE

Five Long Term Reasons to Own GOOGLE (GOOG):

1.) Internet Search --> Google's core competency is Internet search and they are #1 WW (excluding China of course...BIDU). According to the Financial Times, about 1/2 of the World's $55 Billion online advertising budget will flow through Google in 2009. Also, the fact that Microsoft (MSFT) and Yahoo (YHOO) have been unable to tie up is also a large positive for Google and its Internet search marketshare.

2.) Youtube.com --> Google has yet to monetize this property but in terms of addressable audience, the web site hosts about 130 million viewers daily !

3.) Android --> Google's mobile phone operating system, Android, will likely be released in late 3Q08. This represents another potential large area of growth for the company as Google has itself stated that it believes search queries made on phones will exceed those performed on PC's by 2111 (3 YEARS).

4.) Corporate/Enterprise Market Initiatives --> Please refer to my 'Goog's Going Corporate' blog posted 4/30/08...initiatives include business applications (product similar to Microsoft Office) and of course, web services. Who understands the Internet better than Google (aka GeneralElectric.com)? No one. Therefore it only makes sense for Fortune 500 companies to seek the expertise + web services of Google when it comes to doing business on the World Wide Web.

5.) WW PROPRIETORY Consumer DATA 'Banks' --> A significant result of Google being #1 WorldWide in Internet search...Google collects + owns a vast amount of consumer web search information and therefore has the UNIQUELY ADVANTAGED capability to view and analyze consumer habits and trends. This has to be one of the major reasons why Google is so gifted at attracting money from advertisers...advertisers probably partner with Google because they believe Google is able to understand their target audience/customer base the best.

*Related, I also like Google's intangibles. I enjoy their innovative Websites, Tools and Missions. I am a HUGE fan of Google Finance, Google Earth, Gmail, Google Maps, Google Notebook, etc. I also respect Google's foray into alternative energy solutions via Google.org

Full Disclosure: I own shares of GOOG.

GTA 4 KILLED the Movie Star !

It's OFFICIAL...Take-Two's (TTWO) Grand Theft Auto IV has ALREADY crushed video game sales records as it pulled in $500 million in its FIRST WEEK !

Nevermind video games though (stop thinking SMALL)...even 'blockbuster' MOVIES like Iron Man are NO competition to ELITE video games like GTA 4.

In my opinion, the media made a big deal out of NOTHING this week with regards to Iron Man and its 'smashing' first weekend SALES debut of $100 million. Take Two must be laughing it UP as Grand Theft Auto 4 raked in 3 TIMES that amount of sales in its FIRST DAY.

Ok, Ok, if you still don't like my GTA 4 VIDEO GAME KILLED/WILL CONTINUE KILLING THE MOVIE STAR investing thesis then lets ignore sales...Lets attack the opposite end of the spectrum and talk COSTS. Iron Man cost $150 million to make and an additional $75 million to market. GTA 4? The Biggest + most expensive video game of all time cost a total of $100 million to produce.

Either way you SLICE + DICE it (SALES, COSTS, MARGINS - video games carry SIGNIFICANTLY higher gross margins than most products/services...think about it...once you have the video game software developed all you need to do is copy cd's to increase supply. AFTER the upfront R+D costs, the incremental cost per unit shipped basically becomes the incremental cost of each CD/piece of packaging shipped), GTA 4 is the talk of MY money hungry town..NOT Cornywood and its 2 hour Commodity Man movie.

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Some GTA 4 1st week Sales Stats:

*GTA 4 sold 6 million units WW in its first week (average Rev per unit = $83.33!)

*The title sold about 3.6 million units on April 29, its opening day, bringing in roughly $310 million.

*GTA's 4 FIRST DAY SALES surpassed Microsoft's (MSFT) HALO 3 FIRST WEEK sales by about $10 million. GTA 4 blew by Halo 3's previous record of first week sales by $200 million !

*According to BusinessWeek, Microsoft said Xbox 360 sales jumped 54 percent in the week following the title's launch, compared with the prior week, and more than 2.3 million people played it on its Xbox Live online service.

*"Retailers say roughly four out of every 10 Xbox 360 consoles sold also included the sale of a copy of 'Grand Theft Auto IV,'" said Aaron Greenberg, director of product management at Xbox 360 and Xbox Live.

*Sony (SNE) spokeswoman Laura Bakken said the company's 10 largest retailers have "all seen a pretty substantial lift" in PS3 sales, but she did not give specifics.

http://www.businessweek.com/ap/financialnews/D90H0BHO0.htm



Data Courtesy: BusinessWeek.
Full Disclosure: I own shares of TTWO.

REF - 2007 S+P 500 Stock Buybacks

According to CNBC.com, Companies in the Standard & Poor's 500 index used their cash to buy back a record $589 BILLION of their own stock in 2007.

Some related facts:
*Repurchasing/Buying back stock takes a company's shares (supply) out of circulation and as a result (all other things equal), this will result in an increase to a company's EPS/earnings per share (which would ultimately increase share price as well assuming a constant P/E multiple)

*Companies are currently opting for Stock Buybacks vs. Dividends as the preferred means of returning cash to shareholders...In 2007, stock buybacks increased by 37% vs. dividends which increased by only 10% to $246 Billion (less than 1/2 the cash spent on 2007 stock repurchases)

*S&P 500 industrial companies (a list that excludes banks) still have about $616 Billion in CASH

*The Information Technology (IT) sector bought back the most stock in 2007...makes sense as most tech companies compensate their employees with stock options. Once these options are exercised by employees, the companies have to decide whether or not to buy back company stock vs. allow their company's share count (supply) to expand (which, all other things equal, would DILUTE earnings per share/EPS and stock price)

*During 2007, the Top 10 Stock Buyback companies accounted for $150 Billion...these companies were ExxonMobil (XOM), Microsoft (MSFT), IBM (IBM), General Electric (GE), Hewlett-Packard (HPQ), Home Depot (HD), AT&T (T), Transocean (RIG), Pfizer (PFE) and Cisco Systems (CSCO)

*2007 was the first year companies spent more than their annual earnings on buying back stock...S&P 500 companies earned $587.23 BILLION last year

*S&P's senior index analyst Howard Silverblatt believes these same companies will spend about $100 Billion per quarter buying back stock in 2008

Data Courtesy: CNBC.com
Full Disclosure: I own shares of IBM and RIG.

REF - World's Largest Internet Users

According to the 2007 data from the CIA World Fact Book, below are the WORLD's LARGEST INTERNET POPULATIONS:

Rank / Country (Internet Users...% of Pop)
* World (1,173,109,925…17.8%)
* European Union (273,234,619…55.7%)

1 United States (210,575,287…69.7%)
2 China (162,000,000…12.3%)
3 Japan (86,300,000…67.1%)
4 Germany (50,426,117…61.1%)
5 India (42,000,000…3.7%)
6 Brazil (39,140,000…21.0%)
7 United Kingdom (37,600,000…62.3%)
8 South Korea (34,120,000…66.5%)
9 France (32,925,953…53.7%)
10 Italy (31,481,928…52.9%)
11 Russia (28,000,000…19.5%)
13 Mexico (22,700,000…21.3%)
12 Canada (22,000,000…67.8%)
14 Indonesia (20,000,000…8.5%)
15 Spain (19,765,033…43.9%)
16 Vietnam (18,226,701…21.4%)
17 Iran (18,000,000…27.5%)
18 Argentina (16,000,000…49.7%)
19 Turkey (16,000,000…21.1%)
20 Taiwan (15,400,000…67.4%)
21 Australia (15,085,600…71.9%)
22 Malaysia (14,904,000…56.3%)
23 Netherlands (14,544,400…87.8%)
24 Poland (14,084,600…36.6%)
25 Philippines (14,000,000…15.4%)
26 Pakistan (12,000,000…7.3%)
27 Colombia (10,097,000…22.8%)
28 Thailand (8,465,800…13.0%)
29 Nigeria (8,000,000…5.9%)
30 Portugal (7,782,760…73.1%)
31 Peru (7,324,300…25.5%)
32 Chile (7,035,000…43.2%)
Other Notables:
36 Egypt (6,000,000…7.5%)
40 Venezuela (5,297,798…20.4%)
44 Saudi Arabia (4,700,000…17.0%)
56 Singapore (2,421,800…53.2%)
61 UAE (1,708,500…38.4%)
64 Ecuador (1,549,000…11.3%)
65 Dominican Rep (1,500,000…16.2%)
73 Uruguay (1,100,000…31.8%)
76 Guatemala (1,000,000…7.6%)
76 Puerto Rico (1,000,000…25.0%)
79 Costa Rica (922,500…20.5%)
88 El Salvador (637,100…9.5%)
90 Bolivia (580,000…6.4%)
108 Panama (300,000…2.2%)
113 Honduras (260,000…3.8%)
117 Cuba (190,000…1.7%)
130 Nicaragua (140,000…2.5%)
157 Iraq (36,000…0.1%)

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Some Quick Takeaways:

*The WORLD is less than 20% penetrated.
*China is only 12% penetrated!
*India is only 4% penetrated!
*Brazil, Russia and Mexico are only 20% penetrated!
*The. U.S., Canada, Japan and EU are relatively mature markets (60-70% penetration)
*MANY South American countries are 'under-penetrated' (Brazil, Mexico, Columbia, Peru, Venezuela, Ecuador, Dominican Republic, Guatemala, Puerto Rico, Costa Rica, El Salvador, Bolivia, Panema, Honduras, Cuba, Nicaragua, etc.)

Data Courtesy: Wikipedia.com, snagged on 4/30/08.

GTA 4 Reviews - Hype $URPASSED !

The REVIEWS for TAKE TWO Interactive (TTWO) owned GRAND THEFT AUTO 4, quite possibly the most HYPED VIDEO game of ALL TIME, are starting to roll in ahead of its blockbuster Tuesday, 4/29/08 release...

Net of the net, not sure how it's even possible but according to many of the below reviews, it looks like GTA 4 will SURPASS its ONCE in a LIFETIME HYPE.

This sure to be HIGH visibility development bodes well for the entire video game industry in 2008.

*FYI, I am currently playing the positive trends in the video game sector via my ownership of Gamestop (GME) shares. Also, in a somewhat risky move, I got back into TTWO today around $26.50/share believing Electronic Arts (ERTS) will now be FORCED to up their current $2 Billion takeover bid for Take Two. In my opinion, Electronic Arts' own aggressive 2009/2010 earnings per share + revenue growth company stated goals depend on adding Take Two Interactive to their portfolio. Also, with close to $2 Billion in cash, the company can easily afford to up the ante...especially when we're talking about purchasing what should now be undoubtedly viewed as the MOST SUCCESSFUL VIDEO GAME FRANCHISE OF ALL TIME!!!)



GameRankings:
http://www.gamerankings.com/htmlpages4/933037.asp

Metacritic:
http://www.metacritic.com/games/platforms/xbox360/grandtheftauto4

IGN (includes a video review):
http://xbox360.ign.com/articles/869/869381p1.html

Gamespot (includes a video review):
http://www.gamespot.com/ps3/action/grandtheftauto4/review.html?tag=tabs;reviews

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*Lastly, check out Bloomberg's article re GTA 4:

http://www.bloomberg.com/apps/news?pid=20601213&sid=aq2SsuOGlsHs&refer=home

Full Disclosure: I own shares of GME and TTWO.

HOLY BLiStering Growth MARIO

BLI$TERING GROWTH + Numerical Evidence of Video Game Industry Sales Momentum..According to the NPD Group, March 2008 sales were up 57% vs. March 2007 to total $1.7 BILLION:

http://www.thestreet.com/story/10412598/1/video-game-industry-enjoys-torrid-sales.htmlpuc=newshome

http://www.gamespot.com/news/6189493.html

My Takeaways:
*Video Game SOFTWARE sales rose 63% to $945 million...expect more of the same thanks to 2008's strong software line-up (please refer to my "Gamestop's All Star Line-Up" post for the Star-Studed Ro$ter)

*Video Game Hardware sales rose 46% to $550 million

*On the Hardware front, Nintendo continues to kick some MAJOR a$$ (Wii + the DS)..their not doing too shabby in software sales either (#1 Super Smash Bros.)

*The Xbox 360 and PS3 basically shipped the same numbers in March 2008 (250K)...its probably a NET Positive for the video game industry as a whole if the PS3 continues this positive sales trend of making inroads against Xbox 360 sales...wonder if the BluRay factor is finally starting to matter...

*Sony's older PlayStation 2 console stayed strong as it sold 216,000 consoles last month (interesting...had no idea that 'old' console was still putting up solid numbers..def underestimated its 'staying power'...)

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"You'd never know that the U.S. economy was under distress by looking at the video games industry sales figures," NPD analyst Anita Frazier said in a statement. "Year-To-Date GROWTH is a rock-solid 27 Percent through March 2008."...The amazing year-over-year increase in software sales isn't just explained by a few top games...As compared to last March, TWICE as many SKU's achieved sales in excess of 100K units this month."

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The MARCH 2008 Numbers:

*US VIDEO GAMES INDUSTRY:
Software: $945.6m (+63%)
Hardware: $551.3m (+46%)
Accessories: $220m (+58%)
Total Games: $1.7 billion (+57%)

*TOP-SELLING HARDWARE:
Nintendo Wii--721,000
Nintendo DS--698,000
PlayStation Portable--297,000
Xbox 360--262,000
PlayStation 3--257,000
PlayStation 2--216,000

*TOP SELLING SOFTWARE:
Title / Publisher / Release Date / Units
1. Super Smash Bros. Brawl (Wii) / Nintendo / March 2008 / 2.7 Million
2. Tom Clancy's Rainbow Six: Vegas 2* (360) / Ubisoft / March 2008 / 752.3K
3. Army of Two (360) / Electronic Arts / March 2008 / 606.1K
4. Wii Play w/ Remote (Wii) / Nintendo / Feb. 2007 / 409.8K
5. God of War: Chains of Olympus (PSP) / Sony / March 2008 / 340.5K
6. Crisis Core: Final Fantasy VII (PSP) / Square Enix / March 2008 / 301.6K
7. Guitar Hero III: Legends of Rock (Wii) / Activision / Oct. 2007 / 264.1K
8. MLB 2K8 (360) / Take-Two Interactive / March 2008 / 237.1K
9. Call of Duty 4: Modern Warfare* (360) / Activision / Nov. 2007 / 237K
10. Army of Two (PS3) / Electronic Arts / March 2008 / 224.9K
*Includes Collector's, Limited, Legendary, Bundles (Guitars) Editions

Data Courtesy: TheStreet.com + VideoGames.com.
Full Disclosure: I own shares of GME.

Gamestop's All Star Line-Up

For my own reference, A List of KEY Upcoming 2008 VIDEO GAME Releases that should continue driving positive sales momentum for the niche industry throughout the remainder of calendar year 2008:
*FYI, I care about this because I am currently trying to exploit growth in this industry via my ownership of Gamestop Corp. (GME). Gamestop is one of the world's largest video game retailers (they currently operate over 5.25K stores WW).

2Q08:
*Gran Turismo 5 - 4/15/08
*Mario Kart Wii - 4/27/08
*Grand Theft Auto 4 - 4/29/08
*Wii Fit - 5/21/08
*Ninja Gaiden 2 - 6/03/08
*Metal Gear Solid 4 - 6/12/08
*Rock Band Wii - 6/22/08
*Sould Caliber 4 - 6/24/08
*Guitar Hero Aerosmith - 6/28/08

3Q08:
*Saints Row 2 - 8/26/08
*Star Wars: The Force Unleashed - 9/16/08

4Q08:
*Gears Of War 2 - November 2008 (4Q08)
*World Of Warcraft: Wrath Of The Lich King - 11/03/08
*Resistance: Fall Of Man 2 - 11/04/08

Data Courtesy: Videogames.com.
Full Disclosure: I own shares of GME.

Export Heavy INTEL Sees No Slowdown

Intel (INTC), the world's largest semiconductor company ($130 Billion marketcap), is not seeing a material change in demand in today's enterprise spending environment amidst a possible U.S. recession. Intel CEO Paul Otellini was recently quoted saying the following in an interview with Germany's Spiegel magazine:

"Until now, we are not experiencing any dramatic changes worldwide for our products, not even at home in the United States...Even on Wall Street, which has been severely shaken, considerable investments are being made in this area right now."


Other Interesting Points:
*Exports now account for 80% of Intel's sales ! (NO WONDER they don't feel the effects of a U.S. slowdown!)

*Intel CEO Otellini also said companies normally invested more in information technology during hard times because it was a way of boosting productivity

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Can we EXTRAPOLATE Intel's positive comments and increasingly international sales trends to the other MEGA-Cap Enterprise Tech sector companies like IBM (IBM), Microsoft (MSFT), Hewlett Packard (HPQ), EMC (EMC), Cisco (CSCO), etc. ????



http://www.cnbc.com/id/23970508



Data Courtesy: CNBC.com, snagged on 4/06/08.
Full Disclosure: I own shares of IBM and EMC.

GME - Supplier Power + USED Game Sales

A couple of Random sales facts on Gamestop (GME) I recently came across courtesy of the below link:

* Despite dealings with approx 40 different companies during 2007, only FOUR made up 65% of GameStop's 2007 sales (is GME's business model spread too thin + vulnerable to ceding margin to these BIG video game industry SUPPLIERS in the near future??!):

1. Nintendo - 21%
2. Sony - 17%
3. Microsoft - 16%
4. Electronic Arts - 11%

*USED video game sales accounted for approx 43% of Gamestop's 2007 gross profit !

P.S. - We are now only 23 days away from GTA 4 !

Data Courtesy: http://www.gamingtarget.com/article.php?artid=8548
Full Disclosure: I own shares of GME.

IDKT - ComScore Sample Size

I Didn't
Know
That
...Internet survey usage data provided by 'web measurement firm' ComScore (THE data used by so many investors to gauge + predict the earnings results of Internet Ad companies like Google, Microsoft, Baidu, Yahoo, etc.) is based on a worldwide sample size of (ONLY) 2 million users.

For some perspective, the entire U.S. population is about 305 million. The world's population? About 6.7 Billion. Both stats courtesy of Wikipedia.com.

Full Disclosure: I own shares of GOOG and BIDU.