I think that most people over the age 30 are familiar with Earthlink (ELNK), from the dotcom days. It was one of the big dial-up ISPs that boomed during the first wave of the internet adoption, but then crashed as people moved to faster DSL and cable access from the big providers.

However, it's been showing up on my value screens for several reasons: large cash hoard as a percentage of its enterprise value, high return on tangible assets, and very low EV/EBIT and P/E ratios. At first glance, it seems management has the right sense of running this company to maximize cash generation and not waste shareholder value on corporate adventures.

comScore has just released its US online video rankings for January 2010, and the results aren’t positive. Overall views dropped by around 2.5%, with 32.4 billion in January vs. 33.2 billion in December. And Hulu, which celebrated crossing the 1 billion view milestone for the first time in December, dipped back down to 903 milion views. The drop can’t be blamed entirely on seasonality, either, — January 2009’s overall video views were up 4% over December 2008.

Rankingwise, there weren’t many changes. Google Sites (which is essentially YouTube) is still the reigning champion, with Hulu and Microsoft Sites still rounding out the top three. Fox Interactive Media fell from 4th to 6th place as its views dropped from 550 million December to 293 million in January.

By David Russell

VeriSign (VRSN) has fought its way back to a key chart level, but traders apparently think that it will take a breather.

Online retail sales aren’t growing at the torrid pace they once were, but they continue to grow steadily. Forrester Research put out a new five-year forecast today predicting that e-commerce sales in the U.S. will keep growing at a 10 percent compound annual growth rate through 2014. It forecasts online retail sales in the U.S. will be nearly $250 billion, up from $155 billion in 2009. Last year, online retail sales were up 11 percent, compared to 2.5 percent for all retail sales.

Yahoo’s (YHOO) search partnership with Microsoft (MSFT) is expected to be a financial boon to the company and boost free cash flow by 20 percent in the years ahead, but there are multiple wild cards that could hamper the deal.

The Microsoft-Yahoo pact received regulatory approval last month. Under the 10 year deal, Microsoft will power Yahoo’s algorithm and paid search. Yahoo sells ads for the Microsoft’s search properties. Microsoft will hire Yahoo employees and the implementation will be complete in 24 months, or first quarter of 2012. Yahoo will get a $275 million boost to operating cash flow.

Cyber attacks against Google (GOOG) have recently been in the news. Yahoo (YHOO) and other companies have been attacked, as well. Microsoft (MSFT), in turn, has gone to court to attack a network of malicious botnets.

With all this activity in the cyber security arena, it is worth investigating which companies are at the forefront of the battle against hackers. With a wave of concern over hacking attempts, there should be some good investment candidates in the network security sector.

For hedge funds, Apple (AAPL) is the battleground of a broad market war. If they can move Apple up, the rest of the market will follow. If they can move Apple down, the rest of the market will follow. Since October this Apple slingshot action has happened six times; it's time to document a seventh.

On February 25th Apple was at $196 and it jumped $23 in the next six trading days. The slingshots move in approximately $20 increments. At economictiming.com we reinvested in our Apple/QQQQ slingshot trade on the morning of February 25th, and the Apple January 2011 $250 call options have gone from 8.55 to 13.95 (a gain of 63 percent). The QQQQ June 2010 $41 call options have gone from 3.95 to 5.89 (a 49 percent gain). Not bad for six trading days. So what should we do now?

This is the tale of two online travel companies – company A and company B.

Company A raked in $21.8 billion of gross travel bookings in 2009 and is by far the largest online travel company. It generated $3 billion in fees, or revenues, from those bookings. Those fees are expected to grow 17% in 2010, according to consensus. EBITDA is expected to reach nearly $950 million in 2010, up 12% YoY. Its market cap is $7 billion and the shares trade at an EV/EBITDA multiple of 6.7x. The company is levered at 1.1x debt to TTM EBITDA and pays a quarterly dividend of 7 cents a share, the only Internet company to do so. It also trades at a PE multiple of 14.7x 2010 EPS with a PEG of 1.1x and has a 10.5% free-cash-flow yield with FCF per share growing 16% in 2010.

Excerpts from John Mauldin's weekly newsletter published on March 7th:

We are in an era of accelerating change, moving toward a future that will be profoundly different from the past we grew up in. But what will the nature of that change be? What will the future look like?

While many content delivery vendors continue to add new services tied into the video ecosystem, the CDNs as a whole have been very slow to diversify their product portfolio outside of delivering video, software and small objects. For a long time, Akamai (AKAM) has been the only game in town for services tied to commerce and application acceleration and has dominated the market with very robust offerings.

Today, Akamai still has the vast share of the market for services outside of CDN that Akamai classifies as "value added services," of which application acceleration is one of those offerings. But over time, Akamai is going to start to see some competition for these services because the other CDNs know that services like application acceleration have very high margins, aren't being sold purely on price and will enable CDNs to diversify their revenue away from video.

Today (Friday, March 5th) a new TV series will air that just might cause more people to wonder about their family history.

The Federal Communications Commission (FCC) plans to spend lavishly on expanding broadband access in the U.S. The FCC’s forthcoming National Broadband Plan (NBP) will propose up to $25 billion in new federal spending to Congress to expand nationwide broadband lines and build a wireless Internet network.

The estimate includes $12 billion to $16 billion to be spent over the next 10 years to construct a wireless broadband network for police and firefighters (emergency public safety broadband system).

It is fairly rare that MagicDiligence has an unabashed negative opinion towards a Magic Formula stock. Joel Greenblatt's strategy is mechanically designed to find what should be good companies that are trading at cheap valuations. A number of provisions are made in the mechanical formulas to prevent poor stocks from making it in. For example, companies with a lot of debt and little cash are penalized by using enterprise value instead of market capitalization. While there are certainly bad stocks in MFI, the truth is that a solid majority of the stocks filtered by the official screen are "OK" to "great" potential investments.

That said, SuperMedia (SPMD) is just a bad Magic Formula stock. The company is the post Chapter 11 re-spawn of Idearc (formerly IAR), a stock so bad that it was one of the reasons for starting MagicDiligence in the first place. After reorganizing in bankruptcy court, SuperMedia's balance sheet is better - but still pretty ugly. Moreover, the business itself has basically not changed at all. Let's take a look.

Giant Interactive Group Inc. (GA)

Q4 2009 Earnings Call

March 4, 2010 8:00 pm ET

Google (GOOG) has had a rough 2010. While the NASDAQ is up 1% for the year, GOOG is down 10%. Buyers have finally flocked to GOOG in the past week as the stock hit oversold levels, and the stock has perked up for the first time in 2010. (GOOG was one of several stocks I picked for a “beginning of the month” trade that takes advantage of strong selling that ends the prior month).

The chart below shows the current bullish set-up. GOOG ended February oversold, punctuated with a bullish reversal hammer pattern. The subsequent bounce has featured strong buying volume, implying a high likelihood that a short-term bottom is in place.

The biggest IPO story since Google (GOOG) will continue to leave investors wondering. While the Facebook IPO will happen, there are still no imminent plans with founder Zuckerberg saying “we’re definitely in no rush,” according to a WSJ article today. He makes a good point in that the company is in the envious position of not requiring massive capital to build factories or even market the product, so the same motivations for going public quickly aren’t there. Adding to the delay may be the fact that Zuckerberg, as the WSJ points out, is a micro manager who may be having a tough time relinquishing some control of the company of which he owns 25% of and controls voting power.

However, an IPO will take place as investors and shareholders have been promised and the company has been taking measures to prepare for it. In 2008, the executive team was expanded, highlighted by the hiring of Google exec Sheryl Sandberg and adding Netscape founder Marc Andreessen to the board. Of course, the rumors, speculation and predictions are flying and many think the company will go public next year with a market cap of nearly $40 billion based on the current revenue numbers and applying a multiple similar to that of Google. The company apparently was cash flow positive last year and believes revenue could reach $2 billion this year.

Yahoo CEO Carol Bartz continued to talk about Yahoo’s (YHOO) regrouping strategy at an advertising industry conference earlier this week.

She touched on the topics we covered in our post last week, The Steady, Efficient Decline Of Yahoo. Specifically, she’s counting on an improvement in the economy to drive Yahoo growth, and she claims to have made significant advances in display advertising tools, targeting and analytics. “People still have to display their brand in a more descriptive way than just keywords,” she told Advertising Age.

When we first launched this blog, we pointed out there was some chatter around about a top-secret Amazon (AMZN) project code-named Vitamin C. Wednesday Amazon announced they are officially in beta and they revealed the name and more specifics about the offering on their services blog.

Late last year, we published a list of the top 10 IPO candidates of 2010. Leading that list was Facebook, which has grown to 400 million users and is finally starting to turn on the revenue pumps as it works toward its inevitable IPO. But Wednesday evening, the Wall Street Journal published an article penned by Jessica Vascellaro that may dash the hopes of anyone who thinks that will happen in the immediate future. The lengthy piece, which is well worth reading in its entirety, touches on quite a few issues related to Facebook’s history and its future, and largely revolves around CEO Mark Zuckerberg — who doesn’t sound all that keen to take his company public.

While the article covers a lot of familiar territory about Facebook’s past, there’s plenty of new information too. Of note, the article says that Facebook executives have “discussed how revenues for 2010 could hit between $1.2 to $2 billion” — figures that exceed even the $1.1 billion InsideFacebook’s Eric Eldon reported Tuesday (clearly, the number is looking big). The article also asserts that Facebook is working on a tool for sharing your physical location with Facebook (something that we’ve been hearing about for quite a while, and that I believe will be key in the future).

I cut some DragonWave (DRWI) yesterday as it broke below the 50-day moving average, and the stock continues to look sickly. I am going to dump most of the rest of the position here in the $11.30s and take it down to a 0.1% stake to keep it on the radar. This batch will be at a 9% loss, but entering today I only had about a 0.5% allocation.

The stock is now down 5 sessions in a row - and 8 of the past 9 - while the market has been up for almost all those days. This action might indicate someone "in the know" (a.k.a. the "smartest people in the room") have info I don't have ... perhaps Clearwire (CLWR) contracts are being spread around to new entrants. (Click to enlarge)