Monday, March 28, 2011


No Competition for Netflix

The investment graveyard is full of Netflix shorts.

From my perch, Netflix is still in its relative infancy -- yup, you heard me correct! -- very similar to AOL sans TWX back in the 1992-1995 period, when it aggressively added subscribers at a frenetic pace by distributing promotional discs. (Some of you graybeards will remember this!)

And, I will underscore the fact that, back then, there was far more skepticism regarding AOL's marketing initiatives and business model than there is about Netflix's current strategy.

Far more!

Fast-forward to today.

Ironically, I view Netflix is to its competition (e.g., Time Warner's attempts to compete by putting movies on Facebook) as AOL (which was until recently part of the Time Warner empire) was to second-place competitor Compuserve 25-27 years ago.

Ultimately, Compuserve, which was jettisoned by HRB, ran so far behind AOL competitively that it disappeared off the face of the earth.

Subsequently, AOL continued to add subscribers at breakneck speed in the latter part of the 1990s, just as adoption of the Internet expanded broadly.

That was, of course, until, AOL's competition caught up in the new millennium. But, by the time AOL stumbled, fortunes were made in the stock as its equity capitalization grew to be in excess of $150 billion.

In all likelihood, Netflix's lead has now grown so wide that its success will probably resemble the success that AOL achieved in the late 1990s. Yup, Netflix's competition is Compuserve redux -- for now.

Don't Drink the Water

Reuters reports that radioactive water is leaking from one of the crippled nuclear reactors in Japan.

Dallas Fed Disappoints

The Dallas Fed Manufacturing release was disappointing. At 11.5, it compared to the prior month of 17.5 and to consensus of 18.4.

Reuters reports that Unilever and Procter & Gamble may raise detergent and soap prices by as much as 15% in China.

Runaway inflation in China?

It looks like St. Louis Fed President is calling an audible on QE2 this weekend.

Run, don't walk, to read Dr. Gregory Mankiw's chilling op-ed on the U.S. budget deficit in Sunday's New York Times.

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