Anyone who thinks EA and Blizzard don't have 'barriers to entry' in their industry is wildly distorting the meaning of the phrase, or kidding themselves.
It's like saying Coke has no moat because you can brew your own cola [and sell it!]

You can pirate MS software also, they got a pretty friggin' big moat from where I sit.

I agree w/ there being barriers to entry for graphic intensive games for ps3/xbox360/etc. i think heiko covers the points pretty well.

but as I stated before, I believe they are nonexistent for tablet/smartphone games. heck, even someone on this forum posted that him and his father make games for the tablet/smartphone and do somewhat well. if i read correctly, more smartphones are selling than pc's.

The ease with which a programmer can write and upload something to the android app store that could legitamately get me to spend my time/money on it instead of on a blizzard activision game is much.....easier (im a bad writer) than for someone making their own cola getting them on the shelves of my local Albertson's and having me buy them instead of coke.

I think?

I got in at $1.20 ... so far so good.

Thanks for the write-up

yeah I would argue that due to the rising popularity of facebook and facebook gaming and smartphones the moat that the big gaming companies have is a lot weaker than it used to be.

But the big gaming companies are still who attract the best design talent (and getting the people who come up with the best games is still everything). So if zygna just gets added as one more company that happens to operate on a different platform it doesnt change things, but if companies like zygna start popping up overnight and then fading away again it does

really?? I don't think facebook or social gaming is a problem for gaming companies at all. The big gaming companies are becoming more and more dependent on their hits -- their business is becoming very much like movie studios. It becomes increasingly difficult to successfully develop smaller niche games.

Do a little research and see just how much of ATVI's profits are being driven by their top 5 games (COD and WoW in particular). Zynga or any other social gaming company are not going to impact these games. ATVI is increasingly trying to figure out ways to not only grow their audiences for their very best games , but also to squeeze additional profits out of these players. It's debatable if this is a good long term strategy for them.

yea social gaming is a totally new and separate market from the one that the major titles target.

I launched my blog today that is focussed on value investing, and the first write-up I have published is about ASFI. Let know what you think about the idea (and what you think about the blog), you can find it @ http://alphavulture.com/

I only think a few games have competitive advantages. But my statement before that specialist knowledge and big budgets are not competitive advantages is true. Specialists can be hired away and a lot of companies can access the capital required to launch a game. Also, just curious if anyone has done any research on the ROI of some games and if they could share that info here.


I wrote my thoughts earlier so obviously I agree.

Hey Doom@all_caps, didn't even notice that you posted a long case for ASFI in this thread. Think you are extremely conservative in your analysis, but don't think that's bad (your analysis seems to be out of date though, they did file two quarterly reports since the latest 10-K).

Help me answer a noobish question on GRVY and selling smallcap shares in general.

Yahoo finance puts avg daily volume at 45k/shares a day. With shares around 1.20, wouldn't this be hard to liquidate a decent position (5k+ shares) without bumping the price down? Or is this a position that takes weeks to liquidate?

I don't thik you need to worry about that at 1/9th avg volume size position.

It depends a bit if you want to pay the bid/ask spread or not, if you are willing to pay it it should be very easy to liquidate your position without influencing the price. If you enter a price between the bid/ask you might need some patience, but shouldn't a real problem.

And a little bit of promotion for my blog: just posted a write-up on Allan International Holdings @ http://alphavulture.com/2011/11/24/a...mited-0684-hk/

The company has a PE of just 2.6x if you adjust for the cash on the balance sheet, and while there are some risks, there is nothing that seems to warrant such a low valuation. The company seems to be growing and generates a healty profit. Biggest risk is imo that I'm missing something, so if someone has a good argument why the stock should be cheap I'm listening.

gl heiko. i'll probably read up from time to time

What is your long term opinion of MSFT?

MSFT has been a long term holding of mine (bought 2004 and 2008) and it has not really been that great. However, in the last few years they've been raising the dividend a bit more (25% this year), which is an encouraging trend.

They have plenty of cash and cashflow and can afford to both invest in their business and return money to shareholders.

I don't expect to sell the holding anytime soon.

I think MSFT is a good example of value investing. A reasonably cheap investment in a stable company that the market doesn't particularly like for some reason.

The only issue I see in the near-term is that Gates keeps putting his stake on the market (increasing float), but they are buying back more than he gives away. In the long-term, maybe people will move away from their Office line, but that seems about as probable as us starting to use Dvorak keyboards...

I think MSFT is a pretty solid company to own at todays prices (I'm long). Don't think the cashflow generating abilities from Windows and Office are going to end anytime soon, but at the same time it's sometimes a bit questionable what gets done with that cash...

Interesting quote I stumbled on from Ben Graham that may apply today

“I think the future of equities will be roughly the same as their past; in particular, common-stock purchases will prove satisfactory when made at appropriate price levels. It may be objected that it is far too cursory and superficial a conclusion; that it fails to take into account the new factors and problems that have entered the economic picture in recent years — especially those of the movement toward less consumption and zero growth. Perhaps I should add to the my list the widespread public mistrust of Wall Street as a whole, engendered by its well-night scandalous behavior during recent years in the areas of ethics, financial practices of all sorts, and plain business sense.” — Benjamin Graham, June 1974 (source: Financial Analyst Journal of Sept./Oct. ’74, via Longleaf 3Q11 letter)

ha! the more things change the more they stay the same.

Note that he wrote this during a time in which the markets were getting slammed (almost a 50% drop in the S&P 500).

Your point being what exactly Brian?

10 years over 13% CAGR earning per share growth, has done nothing in said time while offering what I would estimate paid less in dividend less than treasuries did when averaged over 10 years. In the 10 years they have cash and cash eqv. CAGR of around 5.5% while the market cap shrinks. I don't think they know what else to do aside from continuing to expand the business globally, which may or may not provide high margins. I have held MSFT before, but I can't think this is some great value outside of the fact that it is a. a consumer monopoly and b. floating above support at $24.

You need the next Microsoft oc, the value has been sucked out of this company imo.

That he has been consistently right. Buying when the market is cheap should be a no brainer, despite the fact that people are generally incapable of doing so.

Blood in the streets, even (especially!) if it is your blood*, is a reason to buy. This is the heart and soul of longer term value investing.

Doesn't work for specific stocks (GMCR, NFLX, DMND, etc. etc.) though.

When to sell is more difficult.

*Keeping a few pints of blood on the side is probably key.

I think that's the wrong way to value a company. It's not relevant how good of a buy MSFT was 10 years ago. The fact that the company has been able to grow intrinsic value and increased the dividend yield while the share price hasn't done much is exactly the reason why today it might be good value.