The Barnard Observer
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Home Picks Figures Great Investors Vault Contact c2003-04 Thomas Barnard
The Product and Services Watch
William O'Neil of Investors Business Daily stated in January 2004 on CNBC with the publication of its IBD 100 that two things make for great stocks - terrific products and services, and excellent earnings. We believe it is important to keep an eye on new products and services.
Aircraft
Both Airbus with its super-huge A380 and Boeing with its new-technology aircraft the 787 Dreamliner have huge bets. The A380 has already announced it will not come in on time. Boeing is experiencing delays testing the new technologies. At the moment Boeing appears to be in the front because of the energy savings of the Dreamliner. Boeing has already seen good gains. A little late. 6/25/06
BPL (Broadband Over Power Lines)
The idea behind this service is that the internet can travel over power lines. This is not very far along at all, and it’s not clear that it is commercially viable because of interference problems, among others. But if you could just plug into your power socket instead of devoted cable lines, then you have something very interesting. Keep an eye out. No recommendations at this time. 4/25/06
VOIP (Voice Over Internet Protocol)
This is something to watch. I don’t know if there are any great plays here yet. Vonage, which has leadership with a checkered past, is very interesting, but losing money. I am using the service to check it out. Sometimes I lose connections when my internet service fails me (Comcast); otherwise, it is interesting. It is very likely that one of the Bells will buy this out to jump start their VOIP business. Right now the network makers might be the greatest beneficiary as the networks ramp (Cisco) up their capacity for VOIP. 4/25/06
Search (over Internet)
Google - great service, but with a PE of 85, it doesn't feel like much of a bargain. Its price is doing the 1990s thing. Momentum players only. Parenthetical: I find Google annoying from time to time. I tried to look up a company recently, and all I got were references to the company, but not the company’s website proper. This embedded advertisers first model has serious drawbacks. The best result was obtained from MSN Search, who at least gave me directions to the company’s offices, and a phone number. 4/25/06
Nanotechnology
This is something to watch. I’ve owned Nanophase Technologies without much luck. I’m not sure that it’s enough to make powders, but if you make the right powder, and you have a patent... They had one big customer, and when times turned sour, they turned off the spigot. I’ve also owned Altair, which The Motley Fool thinks smells a bit foul, but I’d keep an eye on it. 4/29/06.
Consumer Products
ipod - great product/service, but it's not longer new. Apple has had a great run from 20 to 86, but now it’s dropped back to 66 and sports a PE of 35. Momentum players only. 4/25/06
Semiconductor Chips
Athlon 64 - AMD's 32/64 bit chip we thought would be a winner. No one is going to be able to just-like-that rewrite all its software for a 64 bit I Itanium. PE at 47 looks like it has shown up in the price. You needed to be brave and buy it when it was losing money back in the single digits. Now it’s far higher than the single digits when we first noted this new product. Momentum players only. 4/25/06
Subscription Radio (aka Satellite Radio)
It seems to us that Satellite Radio could have quite a bit of competition as Internet Radio comes of age via newer networks such as WIMAX. 100 channels are nice, but the internet theoretically could offer millions of channels. I’m a little skittish. 4/25/06
XM radio - I made money with this one when I bought in the single digits. But as it gets closer to real earnings it also gets closer to a day of reckoning. Remember, if times turn hard, customers will turn off the service. Momentum players only. 4/25/06
Sirius radio - Made money on this one, also. Ditto XM. I bought under a buck, and I’m out a long time now. But it is much further from the money. Hopefully, Howard Stern will help some day. Reckless momentum players only. 4/25/06