The old consumer of media was happy to remain at home or on a commuter train with a copy of the New York Times or a TV set with a cable box, and perhaps a TiVo machine. According to studies from Nielsen and other research groups, these people spent as much as six hours in front of their TVs. Some listened to drive-time radio and had a subscription to Time magazine. They were passive consumers of media. Information and entertainment flowed to them inbound. The most outbound activity they might display was a letter to the editor.

The digital omnivore is an expert at two-way communication. Video games are set up on the internet so that many gamers can play against one another in real time. People with smartphones can talk to one another, text or share observations and opinions with one another on Facebook and Twitter. They can watch movies and vote on whether they like them, even scene by scene.

It is important for markets to study the new class of digital omnivores. Comscore points out:

Understanding today’s multi-device consumer, or what is known as the “Digital Omnivore,” will be increasingly important for advertisers and publishers in 2012 with an eye on the two critical factors to building effective digital strategies: the incremental effect and platform cannibalization.

What has not been proven is whether advertisers will get any more in terms of purchasing activity and returns on their investments from new-age consumers, compared to what they got from a consumer who is stationary in his living room. Omnivores may eschew marketing messages because they can. The omnivore can watch video without commercials, or can skip over them. TV viewers cannot without a lot of effort. Neither can newspaper readers. Whether they read the advertisements or not, the messages are there on most pages.

Omnivores also consume media that have no advertisements at all. One of the criticisms of Facebook is that mobile versions carry no ads. Many videos on YouTube also do not run commercials. Twitter has not found a highly effective way to embed marketing messages in tweets. Omnivores may spend six, seven or eight hours on their devices. Their new habits, and the change in the way that marketers try to take advantage of those habits, may not help sell products and services any better than old media did. As a matter of fact, consumer choices in media are now spread across so many platforms that the consumer may be extremely hard to reach, at least effectively.

Markets were better off with the couch potato. He was not a moving target.

Douglas A. McIntyre

Hiring solutions sales were up 136% to $84.9 million, marketing solutions rose 77% to $49.5 million, and premium subscriptions were up 87% to $33.3 million of the total sales. U.S. revenue was $112 million, or about 67% of total revenues.

The company is putting its first quarter of 2012 sales at $170 to $175 million against estimates of $170.79 million.

For 2012, the social network for professionals is projecting $840 million to $860 million versus about $828.2 million expected.  It also sees full 2012 adjusted EBITDA of $155 million to $165 million (versus $98.7 million for 2011).

The headlines appear to have caused a head-fake.  The stock initially fell on the $0.06 EPS headline, but the shares are up over 4% at $79.87 currently in the after-hours.  Until we see more report data, we will hold off on casting a final verdict.

Since the IPO last summer it has traded in a range of $55.98 to $122.70.  It also claims more than 150 million users now.

JON C. OGG

As far as earnings, SIRIUS XM made over $71 million for the quarter, or $0.01 EPS.  Sales were up 6.5% at $over $783 million.  Estimates from Thomson Reuters were $0.01 EPS and $785.49 million in revenues.  Revenues were projected to be about $3.3 billion against estimates of almost $3.4 billion.

In short, it was mostly in-line.  SIRIUS XM shares have recovered so much from the lows that it has to beat estimates to keep everyone happy.

The law of large numbers catches up to every company in time.  SIRIUS XM added 542,996 subscribers in the quarter and about 1.7 million in whole year of 2011.  For 2012, that projection is to add 1.3 million, which some price increases may increase churn modestly.

The notion that Sirius XM was started with new coverage at Underweight by Barclays earlier this week is only one more item showing concern.

The positive case: If we are really going to get an explosive auto market later on in 2012, SIRIUS XM stands to win.  Analysts still have a price target consensus of about $2.36 on this stock.  Seeking Alpha has a story titled “Buyback And Takeover Chatter For Sirius; CBS Looks Solid” and that might lure more bulls to tout the stock without even reading the article.

The reality is SIRIUS XM is worth over $8 billion today even after the drop, about 4-times Pandora’s $2.2 billion value.  Pandora is also only expected to report almost $420 million in sales for the year ended January 2013.

With almost 4 billion shares, it is too bad that a reverse stock split would only attract short sellers.  Imagine if SIRIUS XM was able to report earnings of $0.10 ot $0.15 per quarter rather than just a penny each quarter.  It would be a psychological boost.  The short sellers would attack it and the company knows that.  There were already 305 million shares in the short interest as of mid-January and that was the highest short interest reading since last May.

SIRIUS XM is trading down almost 2% at $2.15 against a 52-week range of $1.27 to $2.44.  We have already seen 63 million shares trade hands against an average of 55 million shares a day.  If SIRIUS XM is going to trade down on valuation, perhaps Pandora needs some caution as well unless it can score a massive swing higher in paying subscribers.  Pandora shares are trading down almost 3% at $13.51 versus a post-IPO range of $9.15 to $26.00 and versus a $16.00 IPO price.

As a reminder, investors do have stock options that can be used to hedge this one if they want to stick with it for the long haul.

JON C. OGG

The move will allow Coinstar to look a bit more like Netflix as far as a physical video rental and a streaming video model.  This supposedly comes with all of the convenience, simplicity and value of Redbox.

A subscription service will launch in the second half of 2012 and the brand and product information will be revealed in the coming months.

The offerings will be instantly available online and mobile content with immediate access to physical media through rental kiosks.  The joint venture is a limited liability company with Verizon holding a 65 percent ownership share and Redbox holding a 35 percent ownership share at the outset.

Coinstar shares are up 6.5% at $53.00 against a 52-week range of $37.43 to $60.71; Netflix is down 3.4% at $122.10 against a 52-week range of $74.25 to $304.79.

JON C. OGG

Hulu is a relatively small premium content site that is owned by Walt Disney (NYSE: DIS), Providence Equity Partners, News Corp. (NYSE: NWS) and the NBCUniversal unit of Comcast (NASDAQ: CMCSA). Hulu says it will press into the paid content business as well. Hulu’s CEO, Jason Kilar, said at a recent AllThingsD conference that, “It is important that we deliver great content and stories that aren’t being told right now. And that serves two purposes. One, consumers are asking for it. And second, it does build up healthy differentiation versus other services.” What stories and what differentiation?

The major internet content and traditional VOD services have most of what consumers want. Otherwise, they would have no chance at success in the industry. It is important to have Saving Private Ryan in inventory. It is not important to have a French period piece from the 1930s — particularly if it does not have English subtitles. Kilar knows that. His chances of success are tiny.

No one will entirely elbow aside the cable box on the top of most TVs, whether that box is from a cable company, satellite company or telecom operator. Netflix forced its way into the home through its initial DVD business. No other competitor had that early advantage, least of all Hulu.

Hulu also has to compete with several extremely well-financed businesses that nonetheless are likely to fail because they are late to market. First among these is the largest video site in the world — Google’s (NASDAQ: GOOG) YouTube. Despite its size and the size of Google’s balance sheet, Hollywood studios have been wary of YouTube’s hundreds of millions of amateur clips and its reputation as a site on which premium content is sometimes found without the permission of the owner.

Hulu is among of the last premium video companies to try to bring content to the living room. Even if it was not too late, it is too small and has no competitive advantages.

Douglas A. McIntyre

Thomson Reuters has estimates of $0.19 EPS and $18.21 billion.  Keep in mind that this is the “money quarter” because of the holidays.  Amazon offers guidance usually and the estimates for the current quarter ahead ar $0.33 EPS on $13.41 billion in sales.  For all of 2012, the consensus target is $1.83 EPS and $65.42 billion in sales.

The big question we have is ultimately on margins, but we are more focused than just that tease.  The Kindles are reportedly sold at losses or razor-thin margins.  It is a “given the razor free and sell them lots of razor blades” model.  With millions of units now sold, we just have to wait and see what comes from Mr. Bezos.  The other issue is the endless costs of mail and packages. For the die-hard customers, Amazon often loses money on its mailing and UPS rates.

Amazon’s chart is at a critical juncture.  The key 200-day moving is higher at $202.30 while the 50-day moving average is lower at $185.81. With shares close to $192.00 today, the 52-week trading range is $160.59 to $246.71.

Analysts still have average price targets which are higher and the consensus mean target from Thomson Reuters is “Buy” oriented with a $233.90 target.

Options traders appear to be braced for a move of $11 to $12.50 ahead of earnings if you use the monthly options prices in puts and calls rather than the weekly expirations. Frankly, it seems as though the options traders may not be pricing in enough of a move because this quarter has the huge Kindle wild card associated with it.

JON C. OGG

The analysis of display advertising market share rarely mentions the tier of sites below the largest ones by audience. Those most likely to be hurt badly, if they have not already been, are the online sites of old-line media companies. The New York Times (NYSE: NYT) has had trouble with its very modest online ad growth. Among sites measure by Comscore, it had 76.4 million unique visitors in December to Facebook’s 152.5 million. And Facebook’s audience continues to grow quickly. The New York Times’ does not. Gannett (NYSE: GCI), which announced earnings yesterday, has confronted the same challenge. Its increase in internet ad revenue last quarter was depressing and hardly enough to offset drops in traditional print advertising. It had 44.1 million unique visitors in December, despite the fact that it owns the giant national newspaper USA Today. Scripps Networks (NYSE: SNI) and the Washington Post (NYSE: WPO) are in a position that is just as difficult.

Facebook has not only started to squeeze out the major portals. It takes an ongoing piece of a market that has thousands of websites in it. This display advertising market, which appeared so promising just a few years ago, is hardly promising at all.

Douglas A. McIntyre

Our take is that Mark Zuckerberg has been holding out to achieve a $100 billion market valuation for the IPO.  Even if Facebook does not deliver on its IPO paperwork next week, the IPO is coming soon.  The company is going to have to disclose its financials sooner or later due to its large base of shareholders.

GSV Capital Corporation (NASDAQ: GSVC) already owns shares of Facebook and its share have popped by 3% to $15.60 on this news.  As a reminder, Microsoft Corporation (NASDAQ: MSFT) invested in this and now should have exponential implied valuation gains on what sounded silly at the time.

Don’t forget about iShares KLD 400 Social Index Fund (NYSE: DSI).  It will end up being a holder as well and this should increase the trading volume of that ETF whether it is up or down in share prices.

Facebook is ONE OF OUR TOP 17 IPOs FOR 2012

Until an SEC filing hits the tape, we are treating this as a rumor.  One of many rumors.  Supposedly the Facebook IPO will create over 1,000 new millionaires.

JON C. OGG

Streaming membership grew by 220,000 to 21.67 million from 21.5 million in the third quarter due to better than expected subscriber growth in December with fewer streaming cancellations. 

The company is increasing its first quarter contribution target to 11% after exceeding its 8% target in the fourth quarter.  The company also expects to increase the domestic streaming contribution margin throughout they year and it sees expansion of about 100 basis ponts per quarter.

As far as guidance, Netflix sees paid subscriptions in the 21.5 to 22.3 million subscribers. It is also targeting a loss of -0.16 to -$0.49 EPS on sequentially flat revenues.

Unfortunately, the year over year content spending is increasing by more than double in the first quarter.  It sees content costs rising in each quarter sequentially but not by the same huge bump. The remaining Starz movie catalog will come off of the domestic service at the end of February.

Because of a short squeeze and because this was less-bad it has shares up 11% around $104.85 in the after-hours.  Our argument is less constructive for the bulls because we are still very concerned that Netflix will have a hard time transitioning its story from an earnings growth story to a story of EBITDA growth that is now going to lose money and have a change of content with higher content costs coming.

The 50-day moving average was $78.39 and the 200-day moving average was $177.76 going into the closing bell.  There were more than 9.1 million shares short at the last short interest date.  Stock options trading indicated a move of up to about $10.00 in either direction for after this news.

JON C. OGG

The endless rumors are currently just not feasibly real buyers.  There are too many investors who are buried in ‘long and wrong’ investments here at share prices of $200, $250, and even $300… Through time that will change.  Apple Inc. (NASDAQ: AAPL) would be a natural fit here, as would Amazon.com, Inc. (NASDAQ: AMZN) in second place.  Google Inc. (NASDAQ: GOOG) could totally transform its YouTube efforts with a Netflix buyout, but the thought of Google managing so many retail accounts might not be what Larry and Sergey want for a model.

We have not measured these side by side in some time, but CoinStar, Inc. (NASDAQ: CSTR) now is a true physical competitor with its drop-box Redbox video rental service kiosks.

Thomson Reuters has estimates for Netflix of $0.55 EPS and $857.9 million in revenues.  What is interesting is that the range (due to very wide guidance) is extremely wide.  With a consensus estimate of $4.07 EPS for 2011 the 23-times earnings multiple sounds ok.

Long-term trouble is coming to Netflix if things go according to current expectations. The 2012 consensus earnings estimate is -$0.02 EPS from Thomson Reuters.  The range of -$0.75 EPS to $0.96 EPS is so wide that it feels like bobbing for apples.  Going from a great earnings and revenue growth into a story selling the EBITDA story is going to be a very tough road to travel.

The third quarter’s numbers showed 21.5 million streaming customers, but the total was put at 24.8 million unique domestic subscribers.  With such a pricing change, the big question should be how much Netflix can hold on to rather than how much they will grow this quarter. Then it boils down to what they can hold on to in 2012 and how much growth they can milk through time.  Content costs are going to rise, and the video rental giant is losing some content as well.

The chart for Netflix is a precarious one.  Now shares are well above the 50-day moving average of $78.39.  Still, this 200-day moving average of $177.76 shows just how bad things have been. The yearly high being north of $304.00 makes it even more representative.

It should also be considered that there were more than 9.1 million shares short at the last short interest date, but that is not out of the ordinary any longer.  Netflix is truly a battleground stock.

Stock options trading could create another aspect of wild trading.  There are weekly options, but it is the monthly expiration options that many investors still use. The monthly February contracts are pricing in a move of up to about $10.00 in either direction.  A 10% move would not be out of the ordinary.

One last consideration is the analyst community.  We have a consensus (mean target) from Thomson Reuters of almost $82.00, indicating a loss is coming to investors at the current prices IF the analyst community is correct.

One thing seems rather certain in such a controversial battleground stock… Netflix is likely to be trading substantially higher or substantially lower on Thursday.  As a reminder, Netflix has the venue of dropping the news on its investor relations website (as though it needs the website page views).

If you did not notice, no real mention has been made of the Reed Hastings blunders.  Those speak for themselves based upon a 70% drop in the shares.  International operations remain a great opportunity, but the growth there may take years to come to fruition.

One last note… Some of these figures may change even as the day progresses.

JON C. OGG