Motley Fool Hidden Gems Investing - Motley Fool Money: 12.17.2010

Episode Date: December 17, 2010

Is Facebook Founder Mark Zuckerberg a good choice for Time’s Person of the Year?  What’s been the most undercovered story of the year? What’s been the biggest surprise of the year? And will it be a happy new year for 2010 high-fliers Chipotle and Netflix? In this installment of Motley Fool Money, we answer those questions and talk tech with Forbes Magazine San Francisco Bureau Chief Eric Savitz. Learn more about your ad choices. Visit megaphone.fm/adchoices

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Do I have to do everything myself? You want more? I'll give you more! Mobland, new season hits September 18th on Paramount+. everybody needs money that's why they call it money from fool global headquarters this is motley fool money welcome to motley fool money thanks for being here i'm your host chris hill and i'm joined by motley fool senior analyst seth jason James Early and Tim Hanson. Guys, good to see you. Good to see you, Chris. On today's show, we will wrap up 2010 by reviewing some of the major business stories, the companies in the news,

and we'll look at how some of the big-name stocks did. We'll also talk tech companies and Silicon Valley with Forbes magazine editor Eric Sabitz, plus, as always, a few stocks on our radar. But guys, we will begin this week with Time magazine. Facebook founder Mark Zuckerberg was named as Time's Person of the Year earlier this week. Last year, Ben Bernanke. This year, Mark Zuckerberg. Tim Hanson, I'll start with you. What did you think?

Well, you know, it's a reasonable choice given what the Person of the Year award is supposed to recognize, which is just someone that was influential and may have done something good and or bad, but on a large scale during the year. And Facebook is certainly on a large scale at this point. I thought it was a reasonable choice. The only other candidate I could think of might have been Jean-Claude Trichet,

who's the ECB president over in Europe who is trying to move heaven and earth to save the Euro. But Mark Zuckerberg is a lot more fun. Not Jean-Claude Van Damme. No. Although, you know, I would rather see him. How did it merit back in the day?

Absolutely. James, what did you think? I think he's a jerk. I wouldn't have given him Person of the Year. That's pretty much my take. That's not a criteria, though, is it? That's not a criteria. Yeah, but he's a jerk.

I mean, that's just... He is a jerk. That's pretty well proven. But he's a very popular jerk, or at least journalists love to talk about him. See, here's Time Magazine pretty much saying, hey, here's the guy we talked about most during the year. This is kind of worse than a popularity contest. The thing about Facebook that's weird is I come from a place where people open a lot of bars, even in failed locations.

The next guy comes along and he thinks, if I put the name, you know, Jose's on that bar, then everybody will show up there. Well, Zuckerberg did what had already been done before a hundred times. He created this online community. And he just sort of got lucky in that it became the place that everybody went to and sort of abandoned most of the others. I'm not sure that that makes you person of the year, but Time Magazine thinks otherwise. Am I the only one here who's not on Facebook? I actually recently signed up to see if we could experiment with it for corporate purposes.

We were going to try to run our—you know how we do those Global Games trips every once in a while? We're going to try to post the pictures and notes and things on Facebook in the hopes of when people, if they enjoy it, they'll actually share it with somebody else. So we did sign up. And I've got to say, it's not awful. To Tim's point, being a jerk is certainly not part of the criteria. I mean, again, past winners include Hitler, Stalin, the Ayatollah Khomeini. Us?

We all? 2006. Every one of us. Oh, really? We are jerks. That's weak. All of us. I mean, you know.

I wonder why Time Magazine and the rest of journalism are just really on the edge financially. It's almost hard to believe. I don't even know if Time is actually. I'm just assuming. That's a haymaker. So, James, you wouldn't pick Zuckerberg. Who would you pick? I would go, actually, with Bill Gates. You know, don't underestimate the power a few really rich, elite people can have on the world.

And for his call for billionaires to give half their wealth to charity is something that, frankly, makes me more attracted to him in a platonic way. But I like him. I think it's a good call. And see, Zuckerberg signed on to give some of his magic beans as part of this. Exactly. He doesn't have any cash. Here's some shares. I mean, what's he going to give them? He'll give you Snoopy money or something. Yeah. He's given them a bunch of IOUs. All right, Seth, who would you pick? I went small. I just went with a CEO who has, in the first nine months of the year,

increased his company's net sales 30%, which is about the same as our friends at Netflix. Net income up 129%. The stock is up 160%. And for doing this, he, well, at least last year, he got paid, and probably this year as well, the grand total of zero. He refuses all compensation because he's one of the founders of the company. He's one of the early people. And this is Kostak Kartsotis, Fossil's CEO. And he's just done a great job with this business,

but because he's not popular and his name is hard to pronounce, I probably slaughtered it, nobody's paying any attention to him or the stock, even though his results are better than the majority of any of the other stocks out there. You're listening to Motley Fool Money. We're talking about some of the major business stories of 2010. Guys, as we look back over the years, certainly at least a couple of the stories that stand out from the first half of the year, the BP oil spill. Was that this year? That seems like so long ago.

We also had the story earlier in the year where Google was hacked in China. And if you believe the reports coming out of WikiLeaks. Not by the Chinese government. It may have been from the Chinese government. No truth to that. Well, we'll see. But when you think about the major business stories of the year, Tim Hanson, what stands out for you? Well, I thought one in the recent months has been the positive reporting about jobs and retail numbers.

We've gotten all a titter about these numbers going into the holiday season, and the fact is they're not very good still. I mean, yes, they're up year over year, but they're still in the johns, so to speak. I think it's a totally over-reported story and one that's really not worth taking seriously right now, but it's getting a lot of play. James, I mean, on Tim's point, is there a story that stands out to you as being that just got way too much coverage or way too little coverage? I've got an underreported story. I mean, sometimes stories are underreported for a reason. This one's kind of boring. In 2009, the FASB, the Accounting Bureau, rolled back an accounting rule requiring mark-to-market.

Why would you think a story about accounting would be boring? I don't know. It's a mystery to me, Chris. But it caused the banks in 2010 to extend and pretend big time. In other words, reduce the minimum payments on these loans so that the borrower, who could barely make them, would still be considered in good standing and the banks didn't have to write these loans down. And this is actually huge financially because they're carrying all these values on their books, inflated values, so the government doesn't have to bail them out when they might have needed one. And it allowed them to report better earnings than they otherwise would have. It allowed them to make their capital structure look better than it otherwise would have.

But America, we like to pretend in America. We like to pretend everything is fine. Well, that's just not America, Seth. Come on. Seth Jason, what about you? Oh, boy. I'm overreported. Can we just get over Facebook and Twitter?

Facebook, I think, at least has a little bit of use. Twitter is so dead. I just don't see it. Let me throw another one out at you. Please, I hope they IPO and crash so that we can stop talking about them. $3.7 billion reportedly was their reason round of funding valuation, Twitter. This is Twitter's valuation as a private company? Yes.

Keep in mind that that's money given to them by people who can afford to lose every penny. As we look back over 2010, is Toyota an over-reported story? Because lately we're seeing reports that earlier in the year, all of these recalls, all of these problems about the gas pedal or the brake sticking and crashes, now we're starting to see stories that maybe it was actually user error. Oh, I always thought a large degree of it was probably user error because the alternative— No, the types of people who drive praises. A large degree? The alternative makes a lot less sense.

It was sort of an Occam's razor situation that the most likely thing is that people are standing on the gas and that they don't realize it. But, you know, the other thing about that is that there are thousands and thousands of car recalls all the time, and the press rarely reports on them. And so what happened with Toyota is, yeah, they had a couple of big recalls. There were a few problems, perhaps, and unfortunately, some people were killed, hurt, and otherwise. But at that point, if they recalled a Prius because the lighter didn't work, I don't even know if they have lighters, but it made news after that. Prius owners don't smoke, so no, never. So you had the recency effect. You had people, just a lot of screaming and hand-wringing, and that just made it seem like a much bigger story than it was.

Ditto Johnson & Johnson. I was going to say, corporate recalls are generally over-reported stories, and that creates buying opportunities for investors. Because, you know, whether it's the BP story, which you could argue may or may not impair that company for the long term, or the Johnson & Johnson thing, or the Tylenol thing many years ago, you know, usually these companies bounce back and doomsayers are just proven wrong. When you think about the year, was there anything in particular that surprised you? And that could be, you know, either for a company, a business leader, a stock. You know, Seth, we were talking about Twitter and the possibility of them IPO-ing. maybe that would be a surprise if the IPO I was surprised a couple weeks ago when

those Groupon people told Google to go pound sand because it seems like a business model that's fairly easily replicable. They've got a great name and they may have a first mover. I don't even know $6 billion of Google's money wasn't enough for Groupon? Yeah, I mean that seems to me like the case where you do the

Costanza and you say thank you very much and you take it and you walk out the door and then you've got that kind of money that lets you do whatever you want. James, what about you you know i was surprised that the ipad was not a flop uh to me it was like the car truck or the you know the el camino of computing it's neither neither a small little pat a little phone type thing nor a laptop it's kind of in between but hey to apple's credit it worked but i was actually more surprised by one thing chris that something we learned here that that uh steve

broida's toes are fused together yeah totally underreported you cannot deny it it is true And you should see the guy swim. Yeah, I mean, does that help you when you're swimming? It's a very subtle thing. Most people would never know. It's just two of the little fellas are stuck together. Wow. It does not help me swim.

It does not help me with the ladies. Do you have any superpowers of any kind? Are you able to communicate with fish like Aquaman? Not at all. So those really trendy sneakers that some people, that actually, James, you have a pair of. Those trendy sneakers that are actually shaped like gloves for your feet. Unless we buy Steve some scissors, he's not for discrimination. Tim Hanson, what surprised you this year?

I was totally surprised by the fact that, as of the most recent report, the TARP, remember the TARP? The TARP stands now to only cost U.S. taxpayers $30 billion, which, relative to its original price tag. What was the original price tag? More than $700 billion. And now with AIG getting ready to pay money back, the GM IPO going through, this thing actually seems to have worked. And for a U.S. government that has had many things not work in the recent past, this is a total surprise and a pleasant one. Of course, the cost of that is a bit bogus and BS, right? Because the government has pumped in a ton of other economic stimulus that had the effect probably of making.

What are you, an economist? It's a pleasant surprise, Seth. Come on. I don't know if it is, but it's only a pleasant surprise. If you don't count, it's all the other stuff we've done. So you say it didn't cost as much. Well, you paid all this other money over here that didn't get accounted for. So that's why I'd be skeptical of that. Now we're getting into chaos theory.

It's just simple accounting. If you don't count all your costs, then your profits look a lot better. So, Tim Hanson, based on the return of the TARP money, do you think that Uncle Sam should start a hedge fund? He'd be doing probably better than 70% of the managers out there, But that doesn't mean he should start ahead. No, I think hopefully this will end up being a footnote in the annals of history and that the government will never again have to intervene in such a magnitude way.

But, again, you know, I thought that money was all going to get lit on fire, regardless of the associated costs that might have been used to prop it up. So the fact that any of it came back at all, I think, is an interesting story. And unfortunately, history shows that in another 10 to 40 years, we will have to do something very similar. It's just the way it goes. It'll probably be the Chinese by then. And the United States will maybe potentially also be a footnote in the annals of history. A wholly owned subsidiary of the People's Republic.

All right, coming up, one major bank's employees are about to start looking a whole lot more attractive. We'll explain why right after this. This is Motley Fool Money. If you do like I ask you, stop me right on Christmas night. Try me, try me. Try me on that money. Just try me, honey. Welcome back to Motley Fool Money.

For investing commentary and analysis 24-7, go to The Motley Fool's website, fool.com. You can also drop us an email, radio at fool.com. Ask us questions about stocks, and by all means, let us know if any of your toes are fused together. Chris Hill here in the studio with Seth Jason, James Early, and Tim Hanson. All right, guys, let's go over a few of the big stocks for 2010. These numbers are, as of this taping, let's start with Chipotle, a company that's certainly very popular with our members here at The Motley Fool. The stock's up more than 150% for the year.

When we think about Chipotle, what is the challenge for this company? Is it simply how do they manage growth? Well, you know, challenges and opportunities often go hand in hand. And for Chipotle, I think the answer to both at this point is where are they going to be able to expand next? I think they have two options. One is to take the Chipotle concept overseas, which I think will be very, very difficult. And the other would be to grow this new Asian-themed restaurant concept here in the United States, which, I don't know, this is anecdotal, but I feel like Mexican food in the United States is more popular than Asian food.

So a lot of growth is priced into Chipotle, and both avenues, whether they decide to choose one, the other, or both, are going to be pretty difficult for the company, I think. James? Chris, the Chipotle opened down the street from me a couple of months ago, and it's the only one I've been in. It's never crowded. So I think saturation in established markets might actually start to become a little bit of an issue like Starbucks. But I think the stealth growth thing for Chipotle could actually be Hispanic markets. I actually see lots and lots of Hispanic people there eating burritos, even though they could certainly go to other places.

So south of the border, I wouldn't discount their growth opportunity there. What about Baidu? This is the leading search engine in China. The stock's up 160% for the year. Tim Hanson, you're our Global Gains guy. What's the biggest challenge and opportunity for Baidu? Well, this is crazy for Baidu at this point. As we alluded to earlier in the show, those WikiLeaks cables revealed that Baidu and the PRC government

had actively sort of concocted a plan to sabotage Google in China. Allegedly. Allegedly. Allegedly acted together in concert. Don't shoot us, anybody. The reason this is crazy is because Baidu's search engine is not very good from a technological standpoint. point, Google's is better. And Baidu bulls have long said that the reason why Baidu is succeeding in China with its 70, 80% market share is because they know the local population better and because

Chinese people are more likely to use a homegrown brand in a form. I mean, that's- Is that bogus? Are they just cheating? I mean, look at Nike. Adidas. Western brands in China are hugely popular. And so the reason I think Baidu has succeeded thus far is because basically the Chinese government has sabotaged Google's website and made it a lot slower. And in search, speed matters. So that's the challenge is as the Chinese government opens up a little bit, maybe Google comes back in. They've got some brand cachet. They're going to be a much more effective competitor. In terms of the opportunity, it's obvious, you know, there are 400 million people online in China today, and that's only one third

of the population. So you can triple the size of the market. James? No, I didn't have any substantial. It's more of a tangent. But do you guys see the matchmaking love profile of the WikiLeaks guy from a couple of years ago? It's now on the internet. How is that even a tangent? That's pretty tangential. Somebody said WikiLeaks. Yeah, WikiLeaks. I don't want to know what James thinks of all day at his computer. I'm going to put a screen cap video thing on James' computer

just to see what he's looking at all day. RadioAtFool.com. Keep those emails coming. It's not all accounting rules. I'm pretty sure of that. Let's wrap up with Netflix. Certainly a stock that we've talked about in this room before. We never talk about Netflix.

We've only talked about it how many times today? Seth Jason stocks up more than 200% for the year. No luck involved. Hard to argue with that kind of success. All completely because of smart investing. Netflix, they've got a couple of challenges. One of them is that I think their costs, I've talked about this before, are going to go way up because right now a lot of their growth is coming from streaming video. And the deals that got them their streaming video were sort of ridiculously cheap.

And now all of the big studios, all the content providers are just not going to let Netflix get that content so cheap in the future. At the same time, they're coming up with their own solutions. Some of them are doing end runs around Netflix. They're producing their own apps. You can, you know, for TVs or for the Xbox, you can get ESPN on your Xbox. You don't need Netflix. Hulu might deliver something like that. So that is a huge challenge for Netflix.

The biggest opportunity is just to continue to sign people up and continue to use expanding bandwidth on the Internet to deliver this video. Now, the problem is you need somebody else to pay to expand that bandwidth, and Netflix is not in a position to make that happen. So you're not expecting us to be sitting here a year from now talking about how Netflix, once again, is up 200%? Oh, stocks can just keep going up for no reason, but I'm pretty sure there's a big day of reckoning coming for Netflix shareholders, and I don't think a lot of people are paying attention to that possibility. And finally, the Wall Street Journal reported this week that Swiss bank UBS AG is sending its Swiss retail banking staff a 43-page memo dispensing advice on how to impress customers with a better appearance. Do's and don'ts for men and women, including this gem from the article, and I'm quoting here, UBS's advice for men even extends to underwear, which should be of good quality and easily washable, but still remain undetectable.

What? What is undetectable? Does smell count? I think it's just keep wearing it underneath your pants, not over your pants. Oh, I draw the line there. I'm glad I don't work there. Tim Hanson. Really cheap, detectable.

Any fashion advice? Any fashion tips? That I learned in 2010? Sure. I did learn one important fashion nugget this year, which is that if you have a newborn, you should not, by any means, wear clothes that need to be dry-cleaning. Our dry-cleaning bill was high in October and November.

and now we have now learned that lesson. It took you that long to learn? Well, we're slow learners, man. I mean, you should know that. Nothing but sweatpants when you've got a baby. People love it when you lose. They love dirty laundry. Coming up, are Google's best days behind it?

We'll talk all things Silicon Valley with Forbes magazine editor Eric Savitz. You're listening to Motley Fool Money. welcome back to motley fool money i'm chris hill for more than 25 years eric savitz has been writing about technology and investing after writing for outlets like smart money magazine and barron's he is now the san francisco bureau chief for forbes magazine and he joins me now eric thanks for being here hey my pleasure uh let's start uh because san francisco is silicon valley to to investors and Silicon Valley was certainly in the news earlier this week

with Time Magazine announcing their Person of the Year, Mark Zuckerberg, from Facebook. What was your reaction when you heard the news? Wow, well, you know, I think it was kind of a win for Silicon Valley, right? Here you have 26-year-old Mark Zuckerberg, who's already had a year in which a potentially Oscar-winning movie was made about him and Facebook, but now there he is, man of the year. I think it's a fair representation of the fact that this kind of is a year when the Valley kind of is on a comeback.

You're seeing lots of interesting new startups, and a lot of them have to do with the web, and none have had more impact than Facebook with its 500 million users and just huge amounts of time that people are spending on that site. It's really changing the way people use and look at the Internet. One of the rivalries that seems to have really grown in the past year is the rivalry between Facebook and Google. There have been reports like Google is giving people bonuses

if they don't leave to go to Facebook, that sort of thing. I mean, how much of that is true, and how real do you think that rivalry is? Well, I think it's actually pretty real. I think there's a couple of reasons for that. But as you're suggesting, there is kind of a war for talent right now in the Valley, particularly for talented software engineers. And you did see, you know, Google announced a 10% raise for everyone in the company from the top on down. And you are seeing people leave for Facebook.

And Google essentially has become, ironically, kind of the incumbent. You know, they're the old man in the story here. They've had their startup to IPO extravaganza. They've got a huge market cap, and it's now a big company. Now, the other thing, by the way, is that Facebook and Google are competing in a whole other way, which is really for control of your time on the web. Facebook is becoming the place that some people kind of start their computing experience, whether it's the place that they get messages from their friends

or the place they post their pictures or watch videos or play games, all those kinds of things. And in some ways, it's sort of replacing Google has had trouble in the social networking space trying to compete with them directly there, and certainly Facebook is really not a search engine. But when you think about what's at the heart of your experience on the web, these two companies are very much in competition. One of the stories we talked about recently on the show, speaking of Google, was the story that was reported by Bloomberg that Groupon, the Daily Deal website, turned down an offer of $6 billion from Google.

That's stunning, isn't it? I was just going to ask you your reaction, but it sounds like your reaction was very similar to mine. Well, yeah, you know, my reaction was, wow, you better be sure. I mean, $6 billion for Groupon. Groupon, of course, is sort of the kind of local buying, couponing kind of site. you know deal of the day they'll give you a discount on restaurants or other kind of local services and it's been a spectacular success you know Groupon has really caught the imagination of bargain hunters on the web but remember there's you know there's nothing proprietary about what

Groupon is doing I mean there are you know a hundred or more other services that do the same thing. Now, remember, at the time that Google bought, say, for example, YouTube, they spent a billion and six, I think, something in that vicinity to buy YouTube. And at the time, there were a whole host of online web video sites, and people sort of were saying the same thing, that they must be insane. But I think in this case, while Groupon is a thriving young company, super fast-growing. I believe it was the fastest company to hit a billion

dollars in sales. There's really nothing proprietary about the model, and I don't know. If I were Groupon, I'm not sure that I would have said no to Google $6 billion in cash. We'll see over time whether it turns out to be true, but there are lots of examples

in the recent past of companies slightly exaggerating their own value and maybe regretting it later on. You're listening to Motley Fool Money. We're talking with Eric Savitz, the San Francisco Bureau Chief for Forbes magazine. Eric, I want to switch gears to Netflix now. Shares of Netflix have tripled this year. And despite that amazing run that the stock has had, we're starting to see some pessimism about the company's future. A report in the New York Times that costs are likely to rise next year, in some cases drastically.

depending on which part of the company you're looking at. What is the perception of Netflix in Silicon Valley? Well, you know, Netflix has been an amazing story this year. They have, as you mentioned, had a huge run, and it's really all about their streaming video business. There are two issues, I think, that people bring up with Netflix. One is that there's the threat that someone else is going to get into the streaming video business and perhaps threaten their really strong position there.

And it could be Amazon, or it could be Google, or Apple. There are lots of potential people to do that, but nobody has so far is offering what you can get from Netflix, which is basically unlimited streaming video over the web. Now, of course, for that to be a compelling service, you need content. You need something to stream. Yeah, you actually need all those movies. You actually need all the movies, you need all the content.

And what's happened is that Netflix has deliberately over the last few years, So I've been adding content to its collection. And one of the issues that keeps coming up is they have a relationship with Starz, the video cable channel that has rights to movies from Disney and Sony. And they have a very lucrative contract with Starz. I think they paid about $25 million to stream that content. And that contract is nearing completion. They will have to renew, and the expectations are it's going to cost them a lot more than they are currently paying.

They also get a lot of content from other sources, but there's been pushback. There was some pushback from Time Warner, who I believe said something along the lines of, Netflix is taking control of the movie industry, which is about as likely as the Albanian army conquering the world. But there is, there's fear. Netflix strikes fear into the hearts of the content business in some ways, and then the fears that they are in some ways eroding the value of the content by streaming it, you know, as much as you can eat for free. Now, there are two sides to the cost equation, though, on this streaming thing.

So on the one side, yes, you have content costs. They're very real and are likely to go up over time. On the other hand, as you shift people from DVDs, watching DVDs that they receive by mail and send back by mail, and streaming, streaming is way cheaper. I mean, you can stream a two-hour film for a few pennies. If I mail it back, though, they've got to pay postage, both directions. They may have to maintain a whole network of physical distribution points and pick people to work at them and sort through the DVDs as they come and go from the distribution points. So there's some cost savings as well.

There is this history with Netflix where they just go through periods where all of a sudden people go, this can't be as good as it seems. You're listening to Motley Fool Money. We're talking with Eric Savitz from Forbes magazine. All right, Eric, before we wrap up with buy, sell, or hold, and as we wrap up 2010, give me one prediction for 2011 out of Silicon Valley. And, you know, it could be a tech company that's not on anyone's radar that's going to be next year.

It could be a Facebook IPO. One prediction. Okay, so one thing I think will happen next year is, I think we're going to see the end of Yahoo as we currently know it. Yahoo's situation can't be sustained. Carol Bartz will not be running Yahoo in 12 months from now, barring some amazing, unforeseen something that I can't even think of. I think they're going to end up at least shedding major trunks of their assets.

It's possible that they get acquired. I just think Yahoo is in an untenable situation, and it's going to look a lot different a year from now than it is today. That's a big prediction. All right. Let's wrap up with buy, sell, or hold. And we'll start with buy, sell, or hold, the likelihood that Twitter will be acquired in the next year. Well, I think that's a tough call.

I'd say it's kind of a hold. Forbes actually wrote a – one of my colleagues wrote a post this week that pointed out that Steve Ballmer was actually seen in the Valley having lunch with the CEO of Twitter, which got the – to talk about something to Twitter about. And so I think it's possible that, you know, Microsoft or Google or, you know, who knows, even Facebook, someone will come in and try and make an offer for Twitter. I suspect Twitter will hold out and, you know, try and establish its revenue model more aggressively before they even think about an exit strategy. So I think it's a possibility, but I wouldn't bet big on it. You think Google will take that big check that they wrote to Groupon for $6 billion and just cross out Groupon's name and write Twitter in there? Yeah, I don't know if that would be enough to get to Twitter, but it might be a down payment.

Buy, sell, or hold the likelihood that SiriusXM will be a standalone company in five years? In five years. Well, I suspect in five years the ownership structure will be different for SiriusXM, And I think that's largely a reflection of the complicated ownership position held by Liberty Media, which, you know, kind of saved their behinds by financing them when they were kind of running out of money. There are, you know, Liberty Media, controlled by John Malone, the famous cable and cellular investor. John Malone is the most tax-sensitive and tax-focused investor you'll ever see. And there are reasons related to things like the applicability of taxable carry-forwards that Sirius is creating,

things like that, that affect the timing here. But I think in the long run, there will be a different ownership structure for SiriusXM, and I suspect someone will eventually buy it. Well, I think that the future of electric cars is probably a hold. I mean, I think that there is a future for electric cars, but I think we're beginning to see that there are limitations on electric cars that not everyone's going to like very much. So I think, you know, things like, you know, the ability to travel long distances on a single charge really matters to people.

And the need for long periods to recharge your car. If you had sort of an instant, you know, instant recharge mechanism, pull into the Exxon charging station and juice up in, you know, five minutes. But that doesn't work that way. You know, it takes long periods to recharge these batteries. I still think it's a bit of a niche market, and I think people are going to be more partial to hybrids still than electric cars, at least for the near term. And finally, she was not Time Magazine's Person of the Year,

but she was on their list of people who mattered in 2010. Buy, sell, or hold Lady Gaga. Lady Gaga, wow. I think you'd buy Lady Gaga. Yeah. I think she's a long-term play. She's, you know, Madonna reincarnated. Yeah, I mean, I was going to say, we both have kids. Come on. You've got to buy Lady Gaga. I think you've got to, you know, she's on the radio all the time. You've got to buy her. I think she's a smart lady.

Eric Savitz is the San Francisco Bureau Chief for Forbes magazine. If you're interested in tech companies and tech stocks, you've got to get on the Forbes website and follow the stuff that Eric is writing about every day. Eric, thanks so much for being here. Oh, my pleasure. Coming up, we'll give you an inside look at the stocks on our radar. This is Motley Fool Money. As always, people on the program may have interest in the stocks they talk about. Don't buy or sell stocks based solely on what you hear. I'm Chris Hill, and back in the studio with me,

our trio of senior analysts, Seth Jason, James Early, and Tim Hanson. Guys, it's that time once again. It's our last time of the year for Stocks on Our Radar. Tim Hanson, we will start with you. If people have been paying attention recently, they may have seen a spate of recent IPOs from China, many of which are dot-coms. And as you might guess about a Chinese dot-com. Are they as good as the other ones? Oh, boy, they're better.

And the valuations are higher than ever before. So if I could get a present from Santa this year, it would be a liquid and active options chain on a little website called yoku.com, which is apparently the YouTube of China. I'm going to do that right now. It has, its ticker is Y-O-K-U, Last year, it did, over the 12-month period, it did $32 million in revenue and was negative, lost money on the gross profit line.

Lost money on the gross profit line. Does anybody want to guess its valuation? A billion dollars. $2 billion. $4 billion. Oh, wow. Well, look at it. You out there can't see it, but really, truly, it's stunning.

It looks like YouTube, but with Chinese characters. And it's fully censored, so there is no sort of fun, inappropriate video on it. So, Yoku.com, short it, buy puts, don't buy it, do anything but buy it, but that's the stock on my radar for maybe all the wrong reasons. Let's bring in our man Steve Broido from behind the glass. Steve, a question for Tim Hanson? Sure. I guess my question is, is investing in IPOs a bad idea if your investment turns out to be insanely profitable? We often talk around here about how investing in IPOs is not, you're generally not in a very favorable position,

but it seems like most of the IPOs I've heard of, people make a tremendous amount of money. I've heard of. Yes, there's the rub. Seth hit on that. So the successful ones, obviously, people talk about a lot, but most IPOs are going to be quite unsuccessful. Investing in a Chinese IPO in particular is a little bit risky because they have almost no operating track record and like Yoku, have very little in revenue despite a lofty valuation. So I'd steer clear of this one. James Erling, stock on your radar?

Chris, I kind of wish I had a crystal ball right now to look deeper into Philippine Long Distance Telecom. This is a double-rack, an income investor. It's something I own personally. It's done pretty well, but other companies now are starting to enter the marketplace, got new competitors. I'm wondering when the penetration, I guess, growth is going to die out. This has been an underpenetrated market, all wireless. It's a good company. I just don't know how much more growth is left and how the valuation plays into it, but it's definitely on my radar.

And what's the ticker? PHI, Chris. Steve, a question for James? Sure. What does the telecom industry look like, let's say, 20 years from now? That's a very difficult question. I would say, you know, obviously we're going to see sort of a blend of, you know, like Comcast or Verizon, you know, with fiber optics, with computers, with that. International might be different from domestic.

You have places like Philippines or Indonesia where there's never going to be any need to lay wireless. For telecom alone, you know, probably not even for computing, for broadband. So I don't know, I guess, is the honest answer to that question. But it's a utility. People think it's a growth stock. Telecom is a utility business, and that's fundamentally the essence. It's not a fast-growth business over time. I was going to say phones are going to be a lot cheaper in 20 years,

and using phones is going to be a lot cheaper, and the hope with a telecom would be that they can make it up on volume, which makes sense in markets like the Philippines, but which is why telecom in the U.S., I think, is a more dodgy proposition. You know what? And, James, you're right. That was a tough question from Steve. So, you know, if you want to ask Steve something, you go right ahead. You know, I'm going to go on a little tangent here.

Oh, boy. Chris, I read that a main man has auctioned off his back to be tattooed by some advertiser. I forgot what company. Maybe it was like $25,000. I'm so proud of my home state right now. My question for Steve is how much would an advertiser have to pay? I mean, presumably you do it for like $10 million, right? You'd auction off your back. Yes, I would.

What would be your lowest price to do that? Would you do it for $5? $5 million? Absolutely. $100,000? Maybe. Whoa, $100,000? I got news for you guys.

I'm married. My back is not exactly high demand by any means. The market will decide. Fair enough. Fair enough. Seth, Jason, a stock on your radar. Wow. Tim's already grinched it up over there, but I'm going to have to do it again.

Tesla Motors, T, ticker T-S. I was going to say, when we were talking about IPOs, didn't Tesla IPO earlier this year? Come on. I mean, oh, the guy who started PayPal runs it. Therefore, it's a different kind of car company, and they're making this electric sports car, and people want it, and now they're going to be a big hit with this very, very expensive electric sedan. Come on, everybody, please. First of all, the car business has always had lots and lots of players.

The vast majority of them have gone out of business or have been swallowed up. The ones that are left have lost investors a lot of money over time. And the guys at Tesla, I just think they've got an R&D deficit. They're right now kind of working from a base of ultra-cheap capital because of some government support and everything else. And I just think, in the end, competition kills them as it may kill some of the biggies. All right. Seth Jason, James Early, Tim Hanton.

Guys, thanks for being here. Thank you, Chris. Thanks to our special guest this week, Eric Savitz from Forbes magazine. Our engineers are Steve Roido and Gail Año Nuevo. Our producer is Matt Greer. I'm Chris Hill. On behalf of everyone at The Motley Fool, have a safe and happy holiday season. Thanks for listening, and we'll see you next week.