Height of Social Network Data Mining!!!

This is typical example of relying too much on Social Media Data Mining and let Computers and Algorithms act on their own without human intervention.

In case you haven't caught up.. yesterday Dow lost almost 250 points in matter of few minutes wiping out almost 200 billion USD worth Market Cap. For some reasons, there wasn't enough liquidity in market (I can't understand this.. please review link from WSJ below) so it couldn't go further down. Otherwise, it could have easily triggered chain reaction and invoked all Computer Algorithms supposedly designed to safeguard respective portfolios.

The tweet responsible for this came from hacked twitter account of AP. As per tweet, there were some 2 bomb blasts in white house and President Obama was hurt.. Just one fake.. fraud tweet can clean up $200B!!!

I think, given the relative immaturity of Social Media Mining and associated Business Intelligence.. it was bound to happen.. However, it will be matter of time when algorithms will become even more mature and resilient to such actions.. at the same time hackers will also.. so this cat-mouse game is going to continue forever..  Only new angle we need to be aware is that this new area of reliance on Social Media for news and security breach.

All this may not effect your inbox or add new fraud credit card charges but it may impact you in your retirement accounts or brokerage accounts.. The added cost of securing and building defense against such attacks is definitely going to impact you in some form or other for sure..

http://online.wsj.com/article/SB10001424127887323735604578441201605193488.html

Rajat Gupta.. Sad decline from fame and honor..

These type of news makes you think..

99% other folks who does this may not ever get caught.. that may make you believe that you will be most likely never be in this 1% category of who gets caught. But still once in a while these things do happen and in general create big deterrent for repetition of such things.. It also makes you wonder about how link between personal character and professional character and success.. Are such things worth tarnishing your reputation... Rajat was The icon and legend in his field..

It reminds me of one of my very good friend's email signature..

"Success is Journey.. Not the destination!!!"
how true..

Moment we assume that we are successful.. it is the start of our decline.. in any aspect.. it applies universally..

Good thing about US is that they are good in catching such folks.. even though it is really easy to catch such folks.. In stock market if some one is getting continuous success without any significant failures.. that has to be some kind of insider info.. as a simple rule if you are making more than double of the average market gains over 3-5 years of horizon you have to have some kind of extra information.. It is simply not possible to get continuous extraordinary gains in stock market..


Ex-Goldman Sachs exec gets prison in insider trading case

By Peter Lattman

New York Times

NEW YORK — Rajat Gupta, the former Goldman Sachs and Procter & Gamble director, was sentenced to two years in prison Wednesday for leaking boardroom secrets to former San Francisco hedge fund manager Raj Rajaratnam. Gupta, 63, who ran the consulting firm McKinsey & Co. and served as a top adviser to the foundations of Bill Gates and Bill Clinton, is the most prominent figure to face prison in the government’s sweeping crackdown on insider trading.

He was also ordered to pay a $5 million fine. In a statement, the U.S. attorney in Manhattan, Preet Bharara, said of Gupta, “His conduct has forever tarnished a once sterling reputation that took years to cultivate.” Bharara added, “We hope that others who might consider breaking the securities laws will take heed from this sad occasion and choose not to follow in Mr. Gupta’s footsteps.” The Justice Department’s campaign has reached onto the trading floors of some of Wall Street’s largest hedge funds and inside the most revered boardrooms of corporate America. Over a three-year stretch, more than 70 traders, bankers, lawyers and corporate executives have been convicted of insider trading crimes.

Judge Jed S. Rakoff of U.S. District Court in Manhattan handed down a more lenient prison sentence than the eight to 10 years stipulated by nonbinding federal sentencing guidelines.

An Indian from Kolkata and a graduate of Harvard Business School, Gupta rose swiftly through the ranks of McKinsey and headed the firm for a decade. He was a trusted adviser to captains of industry, including Henry Kravis of the private equity firm Kohlberg Kravis Roberts & Co. and Peter Dolan, the former chairman of Bristol-Myers Squibb. A noted humanitarian, he has also played a leading role in organizations fighting diseases in poverty-stricken nations.

Gupta is one of 23 people criminally charged in a seven-year insider trading conspiracy orchestrated by Rajaratnam, who headed the Galleon hedge fund and was convicted in 2011.

In May, a jury found Gupta guilty of providing Rajaratnam with advanced word of secret, market-moving news that he learned as a Goldman director.

Gupta’s sentence is far less than the 11 years being served by Rajaratnam in a federal prison in Ayer, Mass. But it is in line with prison terms handed down by Rakoff in other recent insider trading cases.

The judge rejected the recommendation from Gupta’s lawyers for a sentence of probation combined with a “rigorous and lengthy program of community service” that included a proposal to work in Rwanda on a health program to combat HIV.

Is this the only way left for Facebook to make money?

Initially, I was kind of surprised to see this news. but then later on realized.. what else to expect from FB. To prep up their stock prices they can resort to anything. Bingo is just beginning.. This is where I feel Google as much better company.. at least for now.. there is no pressure from Google founders to really make stock go super north.. where as we can see here in Facebook, that they will do anything and everything to make stock go up.

I am fine with it.. there is nothing wrong legally or for that morally.. who we are to decide what is moral and what is not.. It is just that.. this thing is not aligned with my values. I personally am great fan of facebook as platform and had much higher hopes of its usage and applications.. may be I was wrong.. may be not.. time will tell..

Facebook debuts bingo game played for real cash in U.K.

By Salvador Rodriguez

Los Angeles Times

When it comes to the U.K., most people are getting into the Olympic Games, but not Facebook. It’s getting into a different type of gaming in the U.K. — gambling to be exact. The 955 million-member social network began allowing users in the U.K. to play a new bingo game using real money.

The game, called Bingo & Slots Friendzy, lets users 18 and older ditch Facebook Credits and play with their real money while Facebook takes in 30 percent of the money collected by the app, as it does with all other apps.

“Gambling is very popular and well regulated in the U.K. ... For millions of bingo users it’s already a social experience so it makes sense for us to offer that as well,” said Julien Codorniou, Facebook’s head of gaming for Europe, Middle East and Africa, according to the Financial Times.

The decision to allow this type of gaming in the U.K., where gambling is more accepted than in the U.S., is seen as a test by Facebook to determine if it may want to bring the practice stateside.

“Facebook is a place that allows people to connect and share,” a Facebook spokesperson told TechCrunch. “Real money gaming is a popular and well-regulated activity in the U.K. and we are allowing a partner to offer their games to adult users on the Facebook platform in a safe and controlled manner.”

Business Insider says, quoting an “industry insider,” online gambling would turn Facebook into a $100 billion-revenue company. That number seems a bit high, but Facebook likely would stand to see its revenue grow drastically.

Currently, its Facebook Credits revenue stream has been growing at a snail’s pace, growing by only $6 million between its last two quarters. The infusion of gambling could change that.

I think investors are over-reacting on FB stock

I think investors are way too much over reacting on this. This concept of watching quarterly results every quarter will eventually hurt them only.. at least in this case.. or may be benefit them by letting them buy FB dirt cheap now..

You have to understand one thing, Facebook controls biggest and most significant and most strategic information about consumers. There is no denying about it. Even Google or any other company doesn't have that detailed and accurate information about customers. FB just needs to figure out how and where to use this power properly without annoying there very customer as well sourcing base of this immense wealth. Nobody can do better or more accurate advertising than FB.  However, they have not been able to do it properly or I should say, show it off to investors. FB's privacy policies are always in news.. Let us see what they come up with now.. Pressure is high, my hope is that they won't try to squeeze their user base with something totally ridiculous policy change or something like that.

Having said that, I don't know the fact that how much of it is already analysts have taken into account. In my view, FB pricing was based on this fact only, but subsequently they were not able to keep this idea in brains of analysts and investors.

All this Zynga fallout etc.. is non-sense. It was a very small piece of the pie for FB any how. In long term, this Zynga shinga is not going to matter for FB. This will definitely matter in Quarter to Quarter earnings and that is one reason, I really don't like them and definitely won't react much to them. They do indicate your operational health but that is very very tactical and unless totally botched, they are not going to impact long term growth of the company.

Final disclaimer, I don't have FB stock neither do I have any plans to acquire or short them in any short/medium term.

COMPANY HURT BY EARNINGS, ZYNGA FALLOUT

Investors pummel Facebook

Social media giant’s bad week ends with 12 percent drop in stock

By Brandon Bailey

bbailey@mercurynews.com 

MENLO PARK — Facebook continued taking a pounding on Wall Street Friday, as its stock price hit a new low, wiping out billions in shareholder value after a week of bad news for the social networking giant.

Facebook’s market value is now close to half the record $104 billion valuation that the company set when it began selling shares in May. Other social media companies are also struggling, despite early excitement over what was expected to be a new “hot” industry. Zynga, Pandora and Groupon are all trading far below their initial public offering price.

Shares in Facebook fell 12 percent on Friday, closing at $23.70, after heavy trading in the wake of an earnings report Thursday that showed the company’s revenue growth is slowing. While some Wall Street analysts stood by their earlier conclusions that Facebook has significant earnings potential, they said investors are worried about rising operating costs and the company’s unwillingness to predict future revenue.

“We acknowledge that it is difficult to determine the true value of Facebook,” Wedbush Securities analyst Michael Pachter wrote in a note to investors Friday. Although he said he expects Facebook’s business to grow, Pachter said this week’s earnings report, coming after the company’s “messy” stock market debut in May, “will likely keep some investors away from the stock.” 

Adding to investor worries is the bombshell dropped Wednesday by Zynga, the online gaming company whose business is closely tied to Facebook. Zynga’s stock fell nearly 40 percent over two days, closing Friday at $3.09, after the company reported earnings far short of estimates and lowered its forecast for the year. 

Facebook executives did not speak directly about Zynga’s troubles during a conference call Thursday, but they reported that Facebook saw virtually no growth over the past three quarters in its revenue from fees for processing online payments. 

Zynga’s games are a major source of those Facebook fees, although Facebook recently introduced a new online “App Center” that’s expected to help diversify its revenue base by helping users find games and apps from other developers besides Zynga. 

Analysts generally gave good marks to Facebook CEO Mark Zuckerberg for his presentation during the company’s conference call Thursday. The 29-year-old company co-founder answered questions and outlined the company’s strategy for increasing revenue by developing new forms of mobile advertising and by serving as a platform for other companies to base a variety of online businesses. But as Facebook seeks to build its own business, the company is increasing its spending on hiring, marketing, research and facilities. That drove the company’s operating margin, a measure of profitability, down to 43 percent from 53 percent a year ago. 

Chief Financial Officer David Ebersman reported the company has grown from 3,200 employees to nearly 4,000 in the past six months. “At this early stage of our growth,” he told analysts, the company is focused on “investment” to expand rather than on managing its costs. 

Ebersman declined to give a revenue forecast for future quarters, but he warned analysts that spending will grow even more in the second half of 2012. That worries many investors, according to Macquarie Securities analyst Ben Schachter, who blamed “a general unease about revenue visibility” among reasons for the plunging stock price. 

Also in the back of shareholders’ minds, Schachter said in a research note, is the looming expiration of a regulatory “lockup period” that barred employees and early investors from selling stock. If enough of those shares go on the market next month, that could drive the price down further. 

The value of Facebook shares has fallen 38 percent since the company’s initial public offering, when the stock was priced at $38. Estimates of the company’s total market value vary according to the number of shares used to calculate the value. 

As the company’s biggest shareholder, Zuckerberg saw the value of his holdings drop more than $2.8 billion in the past two days, although his 503.6 million shares are still worth nearly $12 billion. 

Analysts who are bullish about Facebook said its falling stock price represents a buying opportunity for new investors. Needham’s Laura Martin argued in a report Friday that Facebook has enormous potential to increase its revenue from advertising and e-commerce — in part because the social network is heavily used by women, who Martin said have more influence over consumer purchasing than men. 

But analyst Trip Chowdhry of Global Equities Research, who has consistently criticized Facebook for setting its IPO price too high, advised investors to “remain on the sidelines for now.” 

Contact Brandon Bailey at 408-920-5022; follow him at Twitter.com/ BrandonBailey. 

Will Netflix come out of this mess?

I think Netflix needs to take some corrective actions before they plunge too deep in financial mess. Actually lot of it was already projected due to expansions in newer markets. What is new is slow growth rate of new subscribers and bigger attrition of DVD-by-mail business.

In my view they should do following tactical initiatives while they continue to focus on bigger grander vision of providing entire world with all the possible media streams..

1. New Class of Subscribers - Get more subscribers in College campus by limiting not only number of simultaneous streams any account can view but also, limit the number of different locations simultaneous or otherwise.. That should stop account sharing in college campus and will force lot of new subscribers. $10/month is not a big deal for college grads it is just that it is so easy to share Netflix account it simply doesn't make any sense to pay. Disclaimer: this is based on the rumors I have heard. I haven't actually seen it yet. They can easily do it by minor enhancements on tracking IP address of clients and possibly some other ways as well.. 
2. Roam-ability - It is big bummer that when you travel, you can't watch Netflix as you are outside US. They should give some kind of ability to select portable devices of users to be able to view content while traveling outside US. They can charge little bit of premium for it or not.. At least I won't mind paying few extra bucks if they let me watch it on my laptop while I am travelling international. Though, I don't know how many users will care about this feature.. but definitely, it will remove big pain point for many. 
3. They need to stop treating DVD by mail as second class citizen in their company. It was their foundation and still is a great cash cow for them. Nobody treats your "Present" so bad for the sake of better "Future". As long as it doesn't generate loss for them, they should continue to push it harder. I would still love to have DVD by mail service. It was so convenient and you could watch lot more and better movies at better quality without worrying about internet speed or while traveling or camping or anything..  Netflix is in Media Streaming business.. they shouldn't care about Physical Media.. They did grave mistake of first offering streaming for free to DVD by mail customers and then start charging it separately. At least I can't understand it.. They could have created separate category of Premium streaming or some other category.. They could have stopped adding more content in this free version of streaming to push their premium Streaming version or they could have simply hiked prices like a dollar or two.. but that was ridiculous thing they did.. okay.. it was done.. but still before they go to graveyard.. they can rectify and come up with better DVD by mail plus streaming option with mid point pricing of yesterdays and today.. 

Netflix is great company and in all probability they will survive this storm. I can't predict if this is right time to buy their stock or sell. But they will be there for sure.. Question is, will they thrive like old days or just survive and grow slowly to be ultimately eaten up by some other big fish..

STOCK PLUNGES

Investors punish Netflix’s Q2 results

Subscriber growth less than projected, outlook may point to losses

By Troy Wolverton

twolverton@mercurynews.com 

LOS GATOS — Netflix’s stock plunged more than 16 percent in late trading Tuesday after the company posted weak subscriber growth and warned of future losses that call into question analysts’ forecasts for next year.

As part of its second-quarter report, which included a 91 percent drop in earnings, the Los Gatos company warned that it may not meet its previously stated goal of adding 7 million new U.S. streaming video subscribers this year, after adding a paltry 530,000 new subscribers in the second quarter. The company also warned that it might post losses in both its third and fourth quarters thanks to a costly international expansion of its streaming video business.

Thanks to those losses, Netflix’s bottom line is likely to finish somewhere around break even for the year, said Michael Pachter, a financial analyst with Wedbush Securities. Meanwhile, the company continues to lose subscribers to its DVD-by-mail business, which provides the bulk of its profits.

Combine those two factors, and it’s unlikely that the company will meet Wall Street’s expectations of a $2.13 per-share profit for next year, Pachter said. And if it can’t hit that target, its price has to come down, he said.

In after-hours trading, Netflix’s stock was down $13.39, or 16.7 percent, to $67.

“It’s becoming clear to people that $2 (profit) figure is fricking wrong,” Pachter said. “The company is overvalued. That’s why it’s down.”

The online movie company announced Tuesday it earned $6.2 million, or 11 cents a share, in its most recent quarter. That was down sharply from the $68.2 million, or $1.26 a share it earned in the same period a year earlier.

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JUSTIN SULLIVAN/GETTY IMAGES ARCHIVES

Netflix profit fell 91 percent in the quarter, and it warned it may fall short of the 7 million new streaming customers it had projected for the year.

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But it was up from the first quarter, when the company posted a loss of $4.6 million, or 8 cents a share, a rare trip into the red for Netflix. 

The company’s sales in the second quarter were up 13 percent from the year-ago period to $889.2 million. 

The results topped Wall Street’s expectations. On average, analysts polled by Thomson Reuters were expecting the company to earn 5 cents a share in the quarter on sales of $888.9 million. 

But the company clearly faced challenges. Its international business posted an $89 million segment loss in the quarter, helping to bring down its overall results. Netflix also continued to shed DVD subscribers. The total number of DVD customers fell to 9.2 million by the end of the quarter, down 850,000 from the previous period. The company has lost about 5.8 million DVD customers since last summer, when it raised prices as much as 60 percent and announced — and then canceled — a move to rename and spin off that business. 

Despite those subscriber losses, Netflix’s DVD business posted a $133.8 million segment profit in the quarter. The U.S. streaming business, which now has 23.9 million customers, posted an $83.1 million profit. 

Netflix doesn’t include technology, development or administrative costs when it calculates the segment profits of its business divisions. If those costs are included, Netflix’s U.S. streaming business would probably show a minuscule profit, if it was able to show one at all, Pachter said. 

Netflix forecast that it would add 1 million to 1.8 million U.S. streaming subscribers in the third quarter but said that it would have to hit the top of that range to be on target for its annual goal. 

In a statement, CEO Reed Hastings and Chief Financial Officer David Wells touted the company’s return to profitability in the second quarter, noting that Netflix’s results exceeded the guidance they gave last quarter. They also argued that the company’s international expansion, which led to the company’s loss in the first quarter and could lead to losses in the next two quarters, is the best thing for Netflix’s long-term business. 

“We have enormous challenges ahead, and no doubt will have further ups and downs as we pioneer Internet television,” Hastings and Wells said in the statement. We are making progress in every market we serve, and see a oncein- a-generation opportunity ahead to build the world’s most popular TV show and movie service.” 

In the current period, the company expects its bottom line to range from a loss of $6 million, or 10 cents a share, to a profit of $8 million, or 14 cents a share. It forecast sales ranging from $890 million to $911 million. Before the report, analysts had forecast that Netflix would earn 11 cents a share in the third quarter on sales of $905.9 million. 

Contact Troy Wolverton at 408-840-4285. 

Where is Growth Engine of Apple

Apple's stock is all time high crossing $600 range for first time in the history of the Company. Most of the analyst says that this will continue for long time with everyone's target for stock even higher for $800 or more..

Now, question is how much and how long this train will continue. It will definitely continue for short term. Apple is benefitting from sound policies and fundamentals of past decade or so. However, I am cautious, especially when every one is of same opinion, usually that means it is mad rush without applying any brain or introspection..

Another thing, this recent dividend and stock buy back decisions are mainly targeted towards boosting stock value. Steve Jobs was principally against these changes. I don't think that he was God and knew everything correctly. So we can't assume that his way was the best way. However, now it is very clear that this recent dividend and stock buy-back announcement was mainly for increase shareholder value which essentially means that increase in stock price. Essentially working other ways to increase stock value. Which is good. Off-course, CEO and Board is primarily responsible to shareholders.

However, I am with Steve Jobs on this side.. CEO should primarily worry about increasing value of company by increasing value of company by creating more value for customers. All these artificial means like buying back stock or dividend are really short term and also really not very effective in increasing total value of company. If CEO just focus on creating value for customers that will automatically increase value of company overall. Stock dilution or cash in hand or not won't matter. Customers will love your company and reward it any how. In my view these type of things are merely a distraction for CEO. These should be attempted when other strategies are not working or you artificially want to increase stock value by speculations or mathematical jugglery.. This is not a good sign.. along with all the analyst being upbeat.. both of them are sign of brewing trouble or some kind of vacuum in strategy or road map..

There is no easy way, but CEO's salary/bonus should be totally de-linked from  short term stock performance. I hope I am wrong here but this seems to be simple effort by board and top executives to increase value of their bonus pool instead of overall real value of company. Times are good so nobody will notice these type of gimmicks and most likely these type of notes will be brushed aside.. Even my heart wants my brain to be wrong.. I love Apple and its product..

OVERFLOWING IN CASH

No end in sight

to Apple growth?

Even after paying for dividend and stock buyback, tech giant’s shares are likely to keep rising


By Patrick May

pmay@mercurynews.com 

With Apple’s announcement Monday that it would use some of its ever-swelling cash reserves — now tallying some $98 billion — to pay a dividend, the Cupertino tech giant was getting attention for something other than its hit products.

Apple’s stock has soared, up 77 percent in the past year and hitting a record Monday, widening its lead as the most valuable company on the planet. But despite that ascent, most stock analysts who follow the company think its shares are still worth buying and expect them to keep rising.

Traditionally, companies have begun to offer dividends after their earnings and stock price growth slow. But not so with Apple, said Brian Marshall with the ISI Group, adding that the dividend announcement completes “a trifecta — investors are getting growth, value and yield.”

“Historically, people would say a growth-stock company giving a dividend was a sign to investors to sell,” he said. “But that’s not the case here.” 

Others also welcomed Apple’s decision — announced by CEO Tim Cook during an unusual conference call early Monday before the U.S. markets had opened — to initiate a dividend and share repurchase program this year. 

Darren Chervitz, co-manager of the Jacob Internet Fund, which owns Apple shares, said it was an anticipated and apt attempt by Apple to deal with what had become an unwieldy amount of cash. Yet because of Apple’s booming profit, its cash hoard may continue to swell despite the dividend and stock buyback. 

“We’re big Apple shareholders, but I’m not in the guessing game of when the growth will slow,” Chervitz said. “We’ve never seen anything like this company before, and revenue growth accelerating as it has is unprecedented.” 

By one traditional measure of stock market value, the price-earnings ratio, Apple’s shares are trading below those of Procter & Gamble, and just above General Electric. Both are solid companies but neither is seen as a fast-growing powerhouse like Apple. 

Cook said Apple would offer a quarterly dividend of $2.65 a share sometime in its fiscal fourth quarter, which begins July 1, and that the dividend and share repurchase program would cost $45 billion over the next three years. The share repurchase is intended to help offset the effects of employees exercising stock options and selling off shares, and could bolster Apple’s share price. 

Apple generated about $30 billion in cash in its latest fiscal year, even after accounting for investments in equipment and other companies. As Apple’s cash pile has grown, the company has felt increasing pressure from investors to do something other than sit on it. 

During the call, Cook made it clear that Apple sees a lot more growth to come. 

“We have used some of our cash to make great investments in our business through increased research and development, acquisitions, new retail store openings, strategic prepayments and capital expenditures in our supply chain, and building out our infrastructure. You’ll see more of all of these in the future,” Cook said in a statement issued shortly before the 20-minute conference call. “Even with these investments, we can maintain a war chest for strategic opportunities and have plenty of cash to run our business.” 

Declaring a dividend, a move long resisted by former CEO Steve Jobs, has benefits that could push Apple’s stock higher: It will reward shareholders and open ownership of Apple shares to a wider range of funds. Many “valueoriented” funds are not allowed to buy stocks that don’t pay dividends. 

On Monday, Goldman Sachs raised its target price of Apple stock to $700 a share and other brokerage houses set it even higher. 

While the markets cheered Apple’s announcement that it would pay dividends for the first time in 17 years — its stock Monday shot up to a record of more than $601 — not all analysts were elated by the news. 

“I’m feeling sad because this means the days of hypergrowth for Apple are over,” said Global Equities Research analyst Trip Chowdhry. “The uniqueness associated with Apple is probably going to change starting today, because it’ll become like Cisco or Microsoft — another mature company with a strong past of dramatic growth.” 

However, there is no evidence yet that Apple’s days of dramatic growth are waning. Last quarter, its revenue soared to $46.3 billion, up from $26.7 billion for the same quarter a year ago, putting Apple on course to become the world’s largest technology company in terms of revenue. And Apple announced Monday that in the three days since its new iPad went on sale, the company had sold 3 million of the tablets. 

The spectacular sales figures for iPads and other Apple products will guarantee that Apple will have more than enough cash on hand to keep up its growth, Cook said. 

“Our main goal,” he told analysts, “is to make the most innovative products in the world, and we decided how much (cash) we needed to do that. We also looked at other things we might invest money in that would come out of domestic cash. After we’d done that and allowed for a war chest for things we can’t predict, we had extra cash left over. We have plenty to run the business, and we felt it would be the right action to declare a dividend.” 

Analyst Charles Wolf with Needham and Co. said, “The decision today will have no impact on Apple’s performance. Reducing their cash is financially irrelevant to the business going forward, which is really dependent on Apple continuing to innovate. And I think they have a clear glide path for at least a couple of years.”