SharkJumping

The other shoe inevitably dropped this week in Cablevision's attempt to roll out the "Network DVR" discussed in this previous post.  3 movie studios and the 3 big television networks sued Cablevision (NYT article here), stating that the company didn't have the right to store their programs for use at a later time without obtaining a license first.  It's a big fight since the other cable companies will roll out similar functionality if Cablevision wins the case, possibly diminishing some of the copyrights of the programmers, so expect a long battle.  Cablevision's stock dropped 2% on the news.

As another update of earlier posts, the Xero Mobile - Son of Gizmondo (XRMB.PK) post created one of the most amusing set of flaming comments I have seen, which shows no signs of slowing down.  The stock is currently down 25% from its initial reverse-merger price, but isn't really worth following since there is so little trading that it spikes up and down on a daily basis, probably not helped by Gizmondo investigative articles like this one from the Times Online.  Xero's latest corporate press release hyped that fact that users could get free air time in return for recycling their old phones - looks like their stated goal of $1.8B in revenues in 3 years is just around the corner...

I posted about the IPO of Digital Music Group (DMGI) here and the reverse merger public offering of Handheld Entertainment (HNDH.OB) here a few months ago, making the point that the initial market valuations were insane by any rational measurement, and that realistically, neither company should actually even be public.  The good news is that the reality of their respective market positions has begun to sink in to the general investor community, driving down their share prices and market valuations, and restoring some of my faith in the free market.  The bad news is I wasn't able to short either company, but hopefully others were able to do so.

DMGI went public in February 2006 at $8.50 and quickly spiked above $10.  The company had revenue of $721K in Q1, with a loss of $414K, and it's growing quickly, although there is still no reason for it to be public since it's tiny and not even a market leader in its own segment.  The stock is now around $5.75 a share, and should realistically settle in about $3-4 a share, with the only reason there is even that floor is due to the amount of cash raised in the IPO.  The amusing thing is that the only analyst to cover the stock comes from FTN Midwest, the bank that took DMGI public, and even he has a HOLD recommendation on the stock.

Handheld Entertainment reverse-merged into a public shell in early March 2006. (couldn't they do a deal with DMGI's investment banks?)  The stock started trading day 1 at $7 a share even though the private investors had literally just bought stock at $2 right before the offering.  The stock has gone as low as $3.10, but is now hovering around $4.25.  A quick look at the numbers - Q1 was a $584K revenue quarter, at a negative GROSS margin of 3%, with 97% of revenue coming from Wal-Mart, and that the 10QSB states that "it's reasonably possible we will not be able to obtain sufficient financing to continue operations".  I'd say there is no possible floor on this stock since they have only 2 quarters of cash on hand at current burn - going to zero or fire sale.

Legal Disclaimer - I am a terrible personal investor, not a legally qualified analyst and this is a blog, not a research report, so don't blindly follow my advice - do your own research :)

I have been swamped at work on Meez, so I haven't been blogging at all, but I was recently on a long business trip, so I thought it was the perfect time to try out the Starz Vongo video service again to see if it had improved since my previous attempt in January.

The short answer is that is has not improved in any meaningful way, still consigning it to a niche category not attractive to most users, even media junkies like myself.  The quality of the downloads is still too low in today's much higher resolution environment.   The quality of the video catalog is still really erratic, meaning that I had to stretch a bit to find 4 titles to watch out of the 1,000+ that were available, but that was a stretch (e.g. Stealth is a simply terrible movie, but it's the #2 movie behind the always memorable Bewitched).  The non-PC devices you can move the content to aren't yet widely held enough to be meaningful, which is not Vongo's fault, but is still an issue.  The best part of Vongo is its customer service - although they make you call to cancel, they quickly answer the phone, they're knowledgeable and polite, and they understand when you cancel.

Vongo is a good platform - with an increase in resolution and an expansion of the type of content available (why can't they add TV shows?), as well as the inevitable expansion in compatible non-PC devices, it may become an attractive service, but it's not there right now.