My summary on ADBL pros:
[I just bought in at 6 3/16. I'll accumulate as much as my cash position allows at those levels.]
The reasons I'm in this stock is:
1) They have name brand. They will be a audio format like MP3 and featured by 3rd party hardware providers like Diamond Multimedia with their Rio 500.
2) They have a technological advantage. Spoken audio can be more economically transmitted and stored using Audible's format. I'm still working over the due diligence, but as far as I can tell, they are not using MP3. MP3 encoding only gives you 4 hours of spoken audio for 64 MB. Audible will give you more like 32 hours for the same amount of RAM. I'll post when I know more.
3) They are locking up some content via exclusive digital distribution contracts. The more they can lock up, the better things look. Because once you reach a critical mass of exclusive content, you become a one-stop shop for both exclusive and non-exclusive content because nobody wants to deal with too many audio formats and middle men.
4) Good content, good prices, and a good web site that can hopefully be made better.
5) Spoken audio is almost ideal for electronic distribution via the internet. You can't do it with video right now ... requires too much bandwidth. It's tougher to do with music, since that requires more bandwidth as well. [Music can be compressed much less than spoken audio and still retain high quality] Spoken audio is even better than software distribution since software packages are usually much larger than a 4 hour Audible file, esp. if the software has video help.
6) In keeping with #5, audible.com's business plan is great. It's much better than Amazon since AMZN has to worry about expanding physical inventory space and must deliver via third party. And audible.com has focus. They focus on spoken audio and that's where they shine.
7) The market for spoken audio is nascent IMHO. If people had large selection, good prices, and easy access, spoken audio would be consumed much more than today where it's tough to get a good selection at a convenient store.
8) Moore's law also favors audible.com's business strategy. What does an audible player need: (1) the decoding done in real-time, (2) RAM, (3) a preferably fast internet connection. Both #1 and #2 will improve dramatically as memory/processor speeds increase while their price drops. That means the mechanism for Audible's content will get better and cheaper with time. As for fast internet connections... well it's a given that in time, practically everyone will be wired with slowly escalating bandwidth.
9) We are at a good discount to the IPO price where all the supposed "experts" valued the company. Since I really suck at figuring out valuations for internet stocks, I've decided to pick the best ones and try to get them at relatively reasonable prices... hence I will accumulate ADBL at this price level. |
