Would not be surprised if this is a pure software company in ~5 years (~60% today with recent divestitures)
Adding fmr $DHR CEO to the board is a fantastic move who will help on new acquisitions & also brings spinoffs to the table
How the Board operates in $ROP
$ROP on software valuations, what they look for and what they will be paying.
~18x EBITDA is a good deal for a very high quality business (equiv to low 20s fcf)
They just sold ~$3B of industrial companies for 20x EBITDA (more capex, wc intensive, cyclical and lower growth)
Per Bloomberg $ROP now considering selling the whole Process Technologies segment (pumps, valves, flow control, instrumentation) Would imply 19x EBITDA for a business going through cyclical strength.
Is it “cheap”? Yes, by many measures. It’s an incredible business, one of the best in the world.
But I disagree with most adjustments people make (cash, core/ex blah earnings, WA, growth capex)
I don’t value it that way. Why?
1/n 🧵
As a shareholder you either want cash flows back quickly and in size, or be very patient and get a big payday down the line in return.
Even though you can slice the numbers to make $FB look really cheap, you’re not seeing many of those earnings returned to you
Let’s take a look
It trades at a ~3% (30x) ‘22 FCF yield — cash flow, minus guided capex, adj for SBC; which is roughly equal to buyback minus SBC. Call it ~$30b (75-31-12)
As a shareholder that’s the only cash you’re seeing TODAY. You can’t buy it for that reason, you have to expect a big payday
$FB revenues up a cool 35% y/y
Total expenses up 39%
EBIT 36% vs 37% y/y
New reporting segments
FoA: Family of Apps (fb/ig/wa)
FRL: Facebook Reality Labs (ar/vr software, hardware, content)
Getting serious about the Metaverse.
Let’s try to put all these tech buybacks in context by netting out SBC please.
$FB
$50B buyback announced
$10B SBC
$40B adjusted buyback (~4% of s/o)
How is it that $FB plans to spend $30+B in Capex in 2022 from a ~$140B revenue base when $GOOG spent $22B last year on $183B of revenues? I’d think FB was lower given they’re not a hyperscale cloud provider
A few highlights from a Global Music Report by @MusicAlly
Mexico:
-Over 60% of all Mexican label revenue came directly from Spotify
-The World’s streaming mecca, according to Spotify
-20mm people use a streaming service, while 80mm people own a smartphone (& quickly growing)
Brazil:
Amazon Music passed Deezer to become the second DSP in number of subscribers, behind Spotify, which
has 61% of total subscribers and contributed 45% of all Brazilian recorded music revenues in 2019.
Don’t have a very big Apple hardware user base in the country
Brazil (cont.)
Paid streaming accounted for almost three quarters of recorded music revenues in the region
Overall, Brazilians became more aware of the benefits of music streaming services, and started adopting and using it more.