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Category: Investing

Is free software profitable in the long run?

Is free software profitable in the long run?

Quicken reduced the cost of Quicken Online to free. This is great for consumers, but I have to ask myself why Intuit would make such a move. What does Intuit see that would cause them to move in this direction? Are some of the new online financial applications starting to take root and they see this as a move to fend off competition?

If you are giving your product away free, while incurring costs, how exactly is this great for your business long-term? The only thing I can think of, is that you use the consumer base as a breeding ground for future business or complementary product sales. This strategy seems risky to say the least. Consumers will move to free online applications over paid applications, and will then move amongst the various free applications at will. I do not believe in consumer online loyalty in the software space, as everything is just a click away.

Companies that move in this direction may be protecting their brand and customer base, but if the customer base does not generate revenue, are they really worth having? The idea of “making it up in volume” or “ad revenue” is a design for slowly going broke. Intuit is no Google in regards to PPC revenue sources.

I came across a review of Quicken Online and Mint.com on ARS.  This is worth a read and made me think about if I am going to upgrade my local Quicken installation or move to a free online product.

Online financial organization have just grown more robust as Mint.com and offline incumbent Quicken both introduced new features to their web-based products. Since Mint.com and Quicken Online have similar purposes and functionality in mind, we thought it was time to take a comparative look at how a company from the new social media realm stacks up against a desktop software giant when it comes to online money management.

Both retail and business consumers are expecting more for less, and sooner or later this will bring the downfall of many smaller companies.

I have been a huge fan of VMWare. This company sold its Virtual Server software (called GSX at the time) for over a thousand dollars per license. Microsoft reduced its product to free, and VMware had to respond in kind. Now they have moved the ante up again with VMWare giving away one of their enterprise solutions.

I do not know if the model of giving software away free and making it up in service or complementary sales will survive. I feel this trend is terrible for the long-term health of the software industry. We may end up with Microsoft and a few other huge corporations, as the small developers will be priced out of existence.  Venture capital will only last for so long before the small companies will have to find a way to make a profit or discontinue operations.

Hold on to you hats boys and girls, the ride is not over yet

Hold on to you hats boys and girls, the ride is not over yet

The bailout finally passed last week, but has a several week lead-in time before the money starts flowing. The DOW is below 10,000 and still falling.  All is not well with the financial system.

I heard a clip from Jim Cramer who stated that if you need the money that is in market during the next five years, it is time to get it out with all due haste. This is some sage advice.

I regret not taking action sixty days ago when I wrote myself a note to move all assets into bond funds and out of the markets. But I failed to do so for fear of missing a rebound. What did my fear/greed cost me? An additional 30% of my holdings are now wiped out. The market has me stressed, and I am just a tiny little investor with a small portfolio, actually must smaller now.

I have not given up on the markets, just moved into something safe until this blows over. I will watch the markets and each night I will look for the best opportunities.  All I can do is start trudging my way back to break-even, then focus on the future.

Sirius & XM: Merger approved but not the market reaction I expected!

Sirius & XM: Merger approved but not the market reaction I expected!

Talk about getting blown out of the water today! I expected Sirus (SIRI) and XM (XMSR) to move today, now that the merger was finally approved, but certainly not to crater! I did not think that the market would have such a negative reaction to the needed refinancing – was I ever so wrong before?!?

I just finished reading a very good article by Jack Hough, of SmartMoney, that really struck me. I have gotten way to over confident in my abilities over the last couple of years and was due to get burned.

As reality starts to set in, nauseousness and all, I look for near term future catalysts that might get me out of this mess only to realize their really are none. This is an extremely painful lesson that I have hopefully learned. It will take a long, long, time to regain the losses both financially and to my self confidence.

– Oldest Purchase: $3.70 (-49.1%)
– Recent Purchase: $2.25 (-16.4%)
– Today’s Close: $1.88

…anyone have a tall building I could use for a short time?

SIRI and XMSR – ABOUT TIME FCC!

SIRI and XMSR – ABOUT TIME FCC!

I am so very pleased that the FCC has finally approved the XM and Sirius merger. I really hope the market reacts well to the official news next week and hope to see Sirius back in the $4-$5 range very soon, but I have no idea what Monday will bring.

Thursday and Friday were down days for Sirius but I think that was just profit taking. It was on larger then normal volume and looks like some funds exited their positions. This definitely put downward pressure on the stock and the fact that the market is struggling as a whole does not help matters.

This last year has not been good one for these two companies and now that this road block has finally been cleared, I hope it is time for some good improvements. Sirius will release it subscriber numbers and Q2 earning at the end of the month. We will see and hope for the best.

The suspense is killing me…

The suspense is killing me…

FCC – is the XM and Sirius merger approved or what???

I am one of many stressed out investors wanting you to get off the stick and make up your mind! Weigh the public interest of a Satellite monopoly verses the possibility of two bankrupt companies…

Monopoly, I find that funny. We have AM, FM, HD Radio, MP3 players, and Cd/DVD players all in cars and mobile devices. Add various streaming technologies, digital radio via cable, and computers as stationary media players and we are suffering from media overload!

The DoJ took a few months to decide it was OK for them to proceed, but the FCC has been deciding for a year and half. I understand it is a “complicated” issue, not really but I will give them the benefit of the doubt, but it is time to let these companies move forward with the merger or go their separate ways.

Oh Crap, things are just getting worse

Oh Crap, things are just getting worse

Banks and lenders are continuing to have rough times and things seem to be getting worse. Was it not last week that spokes people for Fannie and Freddie said that they were able to deal with their troubles and were adequately capitalized??? What the heck happened over the weekend? Someone finally got around to balancing the corporate checkbooks? (I know it is not that simple)

White House, Fed will rescue Fannie, Freddie
Government-sponsored lenders are too global to go under, Paulson says

These two company’s stock (FNM FRE) have cratered – seriously. I wounder how much longer before the bargain hunters come out to give it some support? (An opportunity? No clue and I am staying out of this mess.) Friday afternoon showed support but now that the bailout news is “official”, well, it will be interesting to see how the market reacts on Monday.

Oh, when did the Treasury get into the stock purchasing business? What the heck is the federal government doing by authorizing the purchase or publicly traded shares? I can understand they don’t want these institutions to have asset “fire sales” as that would put massive pressure on the broader markets, but authorizing the purchase of shares to stabilize these companies stock prices? Huh? Let the stocks crash and bailout the companies capital situation to protect the economy as a whole – not the shareholders!

At times all systems breakdown, and when that occurs we should fix them, however, sometimes the best fix is to let them die a natural death.

We cannot reward (or cover for) incompetent or lackadaisical management. Let the “Free Market” be “Free” and punish the hell out of these companies stock price. I know, I am commenting from the cheap seats but you have to admit, this sucks. The Taxpayers are going to get stuck with this bill and heads should roll.

More pain and less gain

More pain and less gain

I am not a “serious” or “big time” investor. I am more active them most individual investors and I do almost all of my own research. I trade long in both stock and options. I occasionally short positions, but usually only to hedge long positions during a down cycle. I monitor fundamentals, and some technicals, for all of my positions. I dedicate two hours per weekend and no more then one hour Monday, Wednesday, and Friday for following company events and reading reports. I invest only in companies that I understand (or believe that I understand). This has worked very well for me…but I really hate times like these…

The DOW is down 18.45% for the last 12 months. I do well in an up cycle, like most investors, but can only break even during a down market. For the last 12 months, I am up 5.32% in my personal trading account and down 6.08% in my 401K. My higher risk account (managed by a Pro) has realized a 20+% gain but we are sitting in a large, for me, SIRI position that is down – it could be a multi-year killer. I may have Lots and Lots of losses to “offset future gains” if the merger deal with XM does not get approved or the market does not react well to the news.

I should be happy, I know. If I was in an index DOW fund, I would be down 18% for the last 12 months and I am not. That does not help much. I have three girls and who want wedding and college educations paid for…one of the very few times it sucks being “the dad”.

Oil was good to me but I scaled out when it started to flirt with $140 a barrel. I am stuck and waiting like most investors. The market is worried and so am I. A very large bank was just taken over by the FedIran has a mad man running the country…I am not sure if the world is going to hell or not.

Go cash or safe bond fund? May not be a bad a idea until the election is decided, oil drops a bit or GDP has a nice gain. Do I spend a couple of weeks trying to learn the basic strategies of making money in a down market or do I sit out the next X number of months? I do not know which will be the right answer but this weekend I have to decide on a plan.

The Big Question: Protect what I have or try to use the market fears to my benefit?