Friday, October 28, 2016

Cleveland Takes 2 -1 Lead In Series; Whiting: Takeover Candidate (Again?); Amazon's Brick-And-Mortar Bookstores -- October 28, 2016

World Series: three possibilities right now, bottom of the 9th:
  • Indians win third game, 1 - 0
  • Chicago ties it 1 - 1, taking it to extra innings
  • Chicago wins, 2 - 0
Down to their final out. "Last" batter is 2 for 30 in post-season. Wow, redeemed himself. Gets to first on an error. Steal to third. All the batter at the plate needs is a single. Down to the final strike. Strike out. Cleveland wins, 1 - 0. Heart breaker.

Back To The Bakken

Could Whiting Re-Emerge As A Takeover Candidate? -- Forbes
Led by 69-year-old CEO Jim Volker, the company has one of the biggest acreage positions and is one of the largest oil producers in the Bakken/Three Forks area within North Dakota’s and Montana’s Williston Basin, where it owns 444,000 net acres in the core oil zones with around 5,500 potential gross drilling locations,
Gheit points out. It also has 129,000 net acres in the oil window of Colorado’s DJ Basin with more than 6,200 potential gross drilling locations, where it is rapidly growing its production in the Niobrara and Codell zones. Whiting believes it can expand production by double-digits at $55 per barrel oil, Gheit says.
Whiting’s shares are already on a bit of an upswing, with its stock increasing by 8% at one point on Thursday to $8.94 per share after releasing third-quarter results. While the company’s loss widened to 47 cents per share vs. analyst consensus of 41 cents, Gheit said the company’s financial flexibility has improved on debt reduction through asset sales and equity exchanges and its operating results “significantly improved.”
For newbies: 444,000 net acres / 1280 acres = 350 drilling units. In the core, they will eventually drill at least 24 wells/1280-acre drilling units. 24 x 350 = 8,400 potential gross drilling locations. And 24 may be less than what we will eventually see.

Plus, they are now adding 2580-acre overlapping drilling units.

From The Motley Fool: three impressive numbers from Whiting's 3Q16 earnings report.
  • production for 3Q16 at high end of guidance;
  • free cash flow of $66 million -- any free cash flow is a rarity in the oil industry these days; especially the Bakken (remember, Whiting was the only company in the Bakken who said it could make money on $25 oil); and, 
  • Whiting has increased its production guidance to 47 million boe full year
Amazon Brick-And-Mortar Stores


October 30, 2016: I am still overwhelmed by Amazon. I think most folks consider Amazon a company that sells books over the internet. It does. But, its web services is its most profitable business. Web Services is not online retail. This past quarter that division saw its biggest operating profit margin, even after the company reported a whopping 55% jump to $3.2 billion in quarterly revenue

Amazon has three core competencies:
  • online retail
  • Amazone web services (AWS)
  • Prime service
The article notes that
Amazon stepped up its investment this quarter in areas like warehouse build-outs, international expansion, and Prime video content. It's also spending more on shipping and hardware development, all areas of growth that could one day become the fourth largest business for Amazon (alongside online retail, AWS, and Prime service).
Original Post
In case you don't have time or the interest to read this post, at least take a look at this: brick-and-mortar Amazon stores

As we come to another end-of-the-week, I think the story that stands out most is the "hysteria" over Amazon missing "estimates" for their 3Q16.  It suggests to me that folks are not paying attention. Two things: Jeff Bezos has never seemed all that interested in profits. In that regard, he was a lot like Steve Jobs.

Second, he puts "all" his cash flow back into his company. 
From an earlier post, the numbers were incredible:
  • Amazon reported earnings that were up more than 200% from the same period last year.
  • Net income was $252 million. That's a "positive" (in the green) income. Not a loss. Not a billion-dollar loss. Not a two-billion-dollar loss. 
  • Revenue from Amazon Web Services soared (their word, not mine) 55%, the biggest year-on-year leap in sales, as prices came down and AWS rolled out new features. 
  • Operating margin at AWS increased to almost 32%.
But it gets better.
  • Amazon forecasts as much as a 27% increase in holiday sales this year, compared to last year, which I assume was a record then. 
  • Amazon expects operating income as high as $1.3 billion in 4Q16 compared with $1.1 billion in 4Q15. 
And it still gets better: Amazon's operating cash flow increased almost 50% for the 12 months ended September, and free cash increased to almost $10 billion. 

Now why did Amazon have such a bad quarter in which earnings were up 200% and its web services soared 55% and so on? Because it was spending record amounts on building the company to exceed customers' expectations:
  • Amazon opened 18 fulfilment centers during this quarter, the biggest growth in its network since 2012;
  • and, a whole bunch of other stuff; but,
  • you get the point. 
Earnings were up more than 200% in a quarter in which he added 18 fulfilment centers.

And then look at this for those who had forgotten: brick-and-mortar Amazon stores.

NFL Ratings

On October 6, 2016, I wrote: Folks come to NFL games to be entertained, not to be reminded of Kaepernick. Today, CBS Boston posts poll showing that national anthem protests leading cause for NFL ratings drop.

Along With Hunter S Thompson, One Of My Favorite Personalities

Over at The Spectator: ‘The woman is a disaster!’: Camille Paglia on Hillary Clinton.
Talking to Camille Paglia is like approaching a machine gun: madness to stick your head up and ask a question, unless you want your brain blown apart by the answer, but a visceral delight to watch as she obliterates every subject in sight. Most of the time she does this for kicks. It’s only on turning to Hillary Clinton that she perpetrates an actual murder: of Clinton II’s most cherished claim, that her becoming 45th president of the United States would represent a feminist triumph.
‘In order to run for president of the United States, you have to spend two or three years of your life out on the road constantly asking for money and most women find that life too harsh, too draining,’ Paglia argues. ‘That is why we haven’t had a woman president in the United States — not because we haven’t been ready for one, for heaven’s sakes, for a very long time…’
Hillary hasn’t suffered — Paglia continues — because she is a woman. She has shamelessly exploited the fact: ‘It’s an outrage how she’s played the gender card. She is a woman without accomplishment. “I sponsored or co-sponsored 400 bills.” Oh really? These were bills to rename bridges and so forth. And the things she has accomplished have been like the destabilisation of North Africa, causing refugees to flood into Italy… The woman is a disaster!’
A breath of fresh air. 

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