Ignore the cloud / the future is cloudy

In my opinion, investors should mostly ignore the hype around “cloud” computing.

There are different definitions of so-called “cloud” computing.  In a literal sense, cloud computing refers to computers attached to a network.  Such technology has been around since the 1960s.  The current interest in cloud computing largely has to do with the pervasiveness of fast Internet connections.  “Cloud” software can be thought of as “software that requires a fast Internet connection”.  The widespread adoption of broadband Internet allows certain forms of cloud technology to become more viable.  For example, backing up large amounts of data over an Internet connection now makes sense.

However, all software companies are largely on the same footing when it comes to cloud computing.  If cloud computing makes sense for a particular market segment, anybody can (re-)design their applications to take advantage of fast Internet connections.  Software has always been an arms race between competitors improving their product with new features.  Cloud computing is simply part of that arms race.  Personally, I don’t see cloud computing as being a paradigm shift like the Internet was.

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Ever-Glory (EVK) – Domain registration + web footprint

EVK’s English/investor website is at everglorygroup.com.  The site’s domain registration shows the Registrant Organization as “JIANGSU EVER-GLORY INTERNATIONAL GROUP CORPORATION” and “JiangSu Ever-glory Group Co., Ltd.”.

According to EVK’s 10-K, this does not seem to correspond to any of EVK’s subsidiaries or the parent company (see the subsidiary diagram in the 10-K).

image21i subsidiary chartevk-domain-registration

It does seem to correspond to Jiangsu Ever-Glory International Group Corporation (“Jiangsu Ever-Glory”) [emphasis mine].  The 10-K describes this related-party entity as follows:

Jiangsu Ever-Glory International Group Corporation (“Jiangsu Ever-Glory”)

[…]

Jiangsu Ever-Glory is an entity engaged in importing/exporting, apparel-manufacture, real-estate development, car sales and other activities. Jiangsu Ever-Glory is controlled by Mr. Kang.

This is a little strange.  Normally companies put their own information in their own domain registrations.  (To be fair, you can put in whatever you want for a domain registration.  One benefit of accurate domain registration information is that following ICANN rules can help companies in ownership and trademark disputes over a domain name.)

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Thoughts on the Charter / Time Warner merger

The CHTR / TWC merger is mostly about rolling up and turning around poorly-managed cable assets.  The bet is on Tom Rutledge (Charter’s current CEO) being able to turnaround poorly-run cable assets.  Ideally, he will get the productivity of the assets similar to or higher than Cablevision, his former employer.  For a deeper dive, see my post on “Malone’s cable strategy“.

charter-EBITDA-per-home-passed

I think that it is likely that Charter is much better off with the merger than without it.  Its shares trade at a premium valuation (relative to TWC), presumably because the market recognizes that Tom Rutledge can squeeze a lot of extra productivity out of cable assets.  Charter shareholders benefit if its shares are used to acquire companies with relatively less expensive shares.

As well, the turnaround game works best when the company consists mainly of poorly-run assets.  Post-turnaround, there is little room for value creation.  Constant takeovers are good for Charter because it dilutes Charter’s ownership of mature post-turnaround assets.

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Web sleuthing – Part 2 – Archive.org

Archive.org allows you to look at old snapshots of websites.  It’s a very powerful tool and free to use.  This can be useful to try to figure out the ownership history of a company, subsidiary, or a website.  Websites generally contain “about us” pages and contact information such as email addresses.

Archive.org can also be useful to look at how a company’s strategy has changed over time.  For example, I noticed that Coach (COH) no longer offers handbags with very large logos (the extremely large C monogram, the large horse carriage logo, etc.).

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