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« April 2007 | Main | June 2007 » May 31, 2007Dell's Earnings After the bell, Dell (DELL) reported earnings of 34 cents a share. Here's a look at Dell's quarterly results for the last 10 year. These stats, however, may change. The company hasn't filed an earnings report in nearly a year. Quarter.....Sales....Oper. Income.....EPS With Dell, the important number to watch is operating margin. That came in at 6.48%, which is improvement. In the late 1990s, Dell's operating margins were often over 10% or 11%. In other words, the same amount of sales does nearly half the work. Last quarter, sales increased by 2.86% which is roughly in line with inflation. Posted by edelfenbein at 11:20 PM The Buy List So Far Now that the first five months of 2007 are down, let's look at how our Buy List is doing:
The red line is the Crossing Wall Street Buy List. The black line is the S&P 500. The 20 stocks on the Buy List are up an average of 4.43% so far. That's behind the S&P 500 which is up 7.92%. Neither figure includes dividends. The daily volatility of the Buy List is a tiny bit more than the S&P 500 (just 0.48%). The Buy List was actually leading the S&P 500 up through early April. But the market's big kick after that left the Buy List in the dust. The good news is that we've closed the gap a little in the past two weeks. Posted by edelfenbein at 9:55 PM Wachovia to buy A.G. Edwards Fresh from buying Golden West Financial, Wachovia (WB) is now buying A.G. Edwards (AGE) for $6.8 billion in cash and stock. This will create the second-largest U.S. retail brokerage. In September 1974, you could have picked up shares of AGE for less than nine cents a share--after factoring many, many stock splits. The stock is currently trading around $87. That's a gain of nearly 100,000%. Not bad.
Posted by edelfenbein at 11:52 AM Gates and Jobs Joint Appearance I noticed this sentence in the San Jose Mercury's story on yesterday's joint appearance by Bill Gates and Steve Jobs: On a personal level, Jobs and Gates were good enough friends in the 1980s to double date occasionally and for Gates to leave friendly prank calls on Jobs' answering machine. Am I the only one who wants to hear the girls' account of the evening? Posted by edelfenbein at 10:41 AM Surowiecki on Chrysler In the latest New Yorker, James Surowiecki looks at Cerebus' purchase of Chrysler. He says that "legacy costs" are a problem, but not the only problem. A 2006 report by the Harbour-Felax Group, a well-respected automotive-industry analyst, concluded that in 2005 Chrysler’s health-care costs were about eleven hundred dollars more per vehicle than Toyota’s. But even if that gap were closed Chrysler and other U.S. automakers would be far less profitable and would be growing more slowly than their foreign competitors. Ultimately, American manufacturers sell too few cars for too little money, and have to offer too many incentives—thousands in cash back or low-interest financing—on the vehicles they do manage to sell. That same Harbour-Felax report found that, on average, Japanese automakers' profits for 2005 were twenty-nine hundred dollars more per vehicle sold in the U.S. than those of American automakers. And most of that profit comes not from lower production costs but from the Japanese automakers' being able to charge more, because their cars are better designed and more reliable, and because their mix of products is smarter. Honda's revenue per vehicle, for instance, was twenty-six hundred dollars more than Chrysler's. Posted by edelfenbein at 10:34 AM Q1 GDP grew by 0.6% The government reported today that the economy grew by 0.6% (annualized) in the first three months of this year. Actually, if you want to be precise, it was 0.6496%, which nearly rounds to 0.7%. In any event, this is a sharp downward revision from the initial estimate of 1.3% growth. Bloomberg reports: Today's revisions reflected a bigger trade deficit and fewer inventories than the government estimated last month. The trade deficit widened to an annual pace of $611.8 billion, subtracting 1 percentage point from GDP, twice as much as previously estimated. Over the last four quarters, the economy has grown by just 1.9%. The economy tends to be very trend like, meaning a weak quarter is usually followed by another weak quarter. We've now had four straight quarters of below-trend growth. But don't count the economy out just yet. The Fed may start to lower rates soon. The weak dollar helps as well. Posted by edelfenbein at 10:11 AM May 30, 2007New High on the S&P 500 It finally happened! The S&P 500 closed today at 1530.23, a new all-time high. It took seven years and two months to break the old high.
Posted by edelfenbein at 4:42 PM ISS votes Thumbs Down to Biomet Buyout Great news this morning. Institutional Shareholder Services, the highly influential shareholder-advisory service, recommends voting against the Biomet (BMET) buyout offer. It's about time someone spoke out against this deal. I wrote an open letter against the offer back in December. Considering what a strong company Biomet is, the private equity offer of $44 a share is way too low. The important thing to remember is that shareholders have the right to overrule management, especially in important decisions like this. To be approved, the vote needs 75% support. Posted by edelfenbein at 10:00 AM May 29, 2007Cramer: "Why does everybody hate me?" From New York magazine: God knows why, but there seems to be a market for this kind of idiocy. In that first year, the ratings took off; the network put the show in not one, not two, but three time slots; I made the cover of Business Week; and less than a year later, I was improbably filling college halls with cheering student fans (for some reason, college kids are an especially eager audience for my show). But sometimes it feels like for every person who likes what I do, there are a dozen who hate me for it. Mad Money has spawned legions of haters, people who write about the show and my character in really negative, sometimes pretty nasty ways. These people accuse me of being a clown or an idiot. Usually, I agree with them. When people ask for my autograph, I instantly hate myself. Half the time I don’t believe I even deserve a television show, and the other half I spend believing that no one is more deserving of a show. Slap me and I’ll change my mind like Faye Dunaway in Chinatown. People also accuse me of being irresponsible or giving bad advice. I don’t agree with that. Some of them have even questioned my integrity recently. That I find absurd. Posted by edelfenbein at 3:01 PM UnitedHealth Braces for Annual Meeting UnitedHealth Group (UNH) is holding its annual meeting today in Minneapolis. The company said that it's reformed, and I think the market may agree. The AP notes that: Shareholder advisory firm Institutional Shareholder Services rates UnitedHealth's corporate governance practices above 91 percent of other large companies, up from 19 percent a year ago. The company has also received a favorable report from Standard & Poor's. UnitedHealth's financial results have been excellent and the stock is now going for less than 14 times next year's earnings. Posted by edelfenbein at 10:08 AM May 25, 2007I'm Outta Here I'm taking off for the long weekend so no posting today. I hope everyone has a great Memorial Day weekend! Posted by edelfenbein at 11:23 AM May 24, 200730-Year T-Bond Over 5% Yesterday, the yield on the 30-year Treasury bond closed over 5% for the first time in nine months. With the yield at the short-end falling, the yield curve is becoming normal again.
Posted by edelfenbein at 10:25 AM Microsoft Says No to Yahoo Deal Microsoft said Wednesday that it did not need to buy Yahoo to gain scale in online advertising, because it had "all the pieces" to build a successful ad business. Three weeks ago, I calculated the odds of a MSFT/YHOO deal: No. No way. Never. I was able to see where this story was going due to my detailed knowledge of the tech industry, my comprehensive understanding of corporate finance and not being totally retarded. Posted by edelfenbein at 9:26 AM May 23, 2007SEI Investments Announces Stock Split, Boosts Dividend Good news from SEI Investments (SEIC). The company announced a two-for-one stock split for next month. SEIC also raised its dividend from 12 cents a share to 14 cents a share. Posted by edelfenbein at 8:17 PM Medtronic's Earnings Medtronic (MDT) reported earnings of 66 cents a share for its fiscal fourth quarter.. This was four cents ahead of analysts' expectations. Some analysts, however, believe the higher earnings were due to a strong sales effort near the end of the quarter which will only hurt sales this quarter. The company said that it expects sales to rise in the low single digits next year, and EPS a little faster. I don't see why this stock has barely moved in four years. Here's a look at MDT's sales and earnings for the past few quarters: Quarter...........EPS.............Sales Posted by edelfenbein at 11:15 AM Refiner Stocks Here's a look at Valero Energy (VLO), Holly (HOC) and Frontier Oil (FTO) since October 2002. The flattish gold line at the bottom is the S&P 500 (in other words, the bull market).
Posted by edelfenbein at 10:36 AM Shanghai Bubble Watch When I used to be a sales assistant, I remember one day telling a client that her stock was up just one day after she bought it. She asked me, "how often do they change the price?" At first, I wasn't sure what to say. I mean, in capitalism "they" change the price nearly every second. Maybe she thought that some guys simply adjusted the price a few times a day. It's amazing how many people don't get the markets on any level. The AP reports that many Chinese investors have little idea what their stock market is about: Respondents to the survey were mainly office workers, 60 percent of whom had monthly salaries of 3,000 yuan ($390) or less, the firm said. Posted by edelfenbein at 10:23 AM Department of Irony The new head of the U.N. Commission on Sustainable Development is.... Zimbabwe is suffering its worst economic crisis since independence in 1980, with acute shortages of food, hard currency, gasoline, medicines and most other basic goods. Official inflation is running at about 2,200 percent annually, the highest in the world. Posted by edelfenbein at 9:42 AM May 22, 2007Guess This Stock Here's a blatant ripoff of a feature at the Kirk Report: Can you guess what stock this is?
Here are some clues: It's up nearly 100-fold in the last 19 years (plus another seven-fold with dividends). The stock currently pays a 4% dividend. It's based in the U.S., but half the company is owned by a French company. Give up? The answer is... ...AllianceBernstein (AB) Posted by edelfenbein at 2:04 PM The Science of Central Banking Here’s a very odd story. The Bank of China recently raised interest rates by 18 basis points and its one-year deposit rate by 27 basis points. Strange that both numbers are divisible by nine. Strange, but no accident. You see, in China, all interest rates set to multiples of nine. Would you believe it has to do with the abacus? Posted by edelfenbein at 12:12 PM Putin Wants Oil Revenue for Stock Market Here's an unpleasant headline: Putin wants oil revenue to go into Russian stock market It could be worse. The last time Russia had surging revenue from the high price of oil, the country put it to work. In Afghanistan. Posted by edelfenbein at 10:45 AM Earnings Since 2000 Here's the S&P 500, along with its earnings, since 2000. The earnings line is in gold and it follows the right scale. The left and right scales are at 15-to-1, so when the lines cross, the market's P/E ratio is 15. Since the market peaked seven years ago, earnings are up 70%.
Posted by edelfenbein at 9:37 AM It's Official: CBS Snags Wallstrip Posted by edelfenbein at 9:36 AM May 21, 2007The Hottest Billionaire Heiresses Forbes looks at the Hottest Billionaire Heiresses. (Wait a sec. Doesn't Steve Forbes have five daughters?) Posted by edelfenbein at 4:17 PM Close, but No The S&P 500 closed today at 1525.10, just shy of the record close of 1527.46. (Hey, we've been waiting seven years. What's a few more days?) Posted by edelfenbein at 4:03 PM The Nasdaq Goes Fibonacci Brace yourself: The Nasdaq Composite is currently stuck at 2,584. Why is that important? Because it's a Fibonacci number! (Shaking You Furiously) OK, so why's that important? Er, I have no clue. But other people seem to think it's important so I'm running with it. Here's a look at the Nasdaq with Fibonacci Numbers in blue.
If the you divide a Fibonacci Number by the one directly below it, you get the Golden Ratio. (Seriously, did that just blow your fucking mind??) Posted by edelfenbein at 1:22 PM Shanghai Update Speaking of the Chinese market. Remember how everyone panicked where the Shangai market plunged? Measuring from the 9% correction on February 27, the Shangai Composite is up 45%. I think we all know how this story ends. Posted by edelfenbein at 1:16 PM The Stock and Bond Market Part Ways As the stock market keeps chugging higher, the bond market is starting to leave it behind. As a very general rule, the bond market leads the stock market by a few months. In the chart below, I'm using the BTTRX mutual fund as my bond proxy. Note how the bond market (the gold line) started fall behind the stock market before the Shanghai Surprise in February.
Posted by edelfenbein at 1:09 PM The Blackstone IPO More details are out about the Blackstone IPO. We already know they snagged BX for a ticker symbol (Eddy's coolness rating = 8). The company plans to offer the shares in the range of $29 to $31 (coolness rating = 6; $18 to $20 is tops). At $31, it would value the company at $33.6 billion, that's about three times larger than Fortress (coolness rating = 4). Also, Blackstone is buddying up with the Commies: Blackstone announced the IPO terms one day after saying China would take a $3 billion stake at a 4.5 percent discount. Beijing would hold its stake at least four years. Yes, it's always good to have the Communists on your side. Especially if you're planning any more hostile takeovers. Taiwan, for example. Posted by edelfenbein at 9:54 AM May 18, 2007The New High Countdown The S&P 500 is now within spitting distance of its 2000 high. The index’s closing high was 1,527.46 on March 24, 2000, just 0.11 points higher than the day before. Around 2:20 this afternoon, the index got to 1,522.68. We’re getting very close. Don’t let anyone tell you that this rally isn’t for real. And especially, ignore all the phony comparisons (to gold, to euros, to inflation, to Swedish kronor). Who cares? I don’t use euros anyway. Why not compare it to bandwidth? I use lots of that. Anyone can use clever comparisons to show what they want. Posted by edelfenbein at 2:59 PM Looking At the Chrysler Deal Business Week looks at the math of the Cerberus/Chrysler deal: In fact, Cerberus could conceivably fetch a fat return on its money by doing very little. Consider Cerberus' low purchase price of $7.4 billion. Lehman Brothers (LEH) analyst Brian Johnson said in a research note that at most $2.2 billion of the purchase price was for Chrysler's carmaking operations. The other $5.2 billion or so bought Chrysler Financial Services, which made about $720 million last year and remains solidly in the black, according to Johnson. Posted by edelfenbein at 10:31 AM May 17, 2007Illinois Tool Works Here's another boring stock with a great long-term track record. Even the name is dull, Illinois Tool Works. But in the last 30 year, Illinois Tool Works (ITW) is up about 60-fold, including 13% this year. The shares are going for less than 14 times next year's earnings.
Posted by edelfenbein at 11:00 AM May 16, 2007Sign of a Top? There's an old saying, "they don't ring a bell at the top." A local man who lost his leg in a car accident has become so skilled as a stock market trader that he has managed to pay off almost all of his medical bills. Posted by edelfenbein at 1:12 PM The Ron Paul Portfolio
Posted by edelfenbein at 12:38 PM AFL-CIO Wants SEC to Make BG's IPO DOA It's official: Private Equity is the new bad boy. A major U.S. labor group on Wednesday asked market regulators to force changes to an initial stock offering by Blackstone Group, one of the first major U.S. private equity firms to go public. Posted by edelfenbein at 12:31 PM May 15, 2007Citigroup's Management Committee Here's a look at Citigroup's Management Committee. By my count, there are 110 members. This is essentially Citigroup's College of Cardinals. I have no idea how 110 people get together to run a company. Many companies aren't that big. Nicholas Financial (NICK) only has about 200 employees total. But 110 just for a Management Committee? Where do you put all the chairs? Interestingly, the most recent papal conclave had 115 members. Posted by edelfenbein at 9:57 AM May 14, 2007The Bond Market Wants a Cut
The spread between the 90-day T-bill rate and the Fed Funds rate is now at 55 basis points, which is the widest its been since the days immediately after 9/11. The message is clear: The bond market wants a rate cut. Posted by edelfenbein at 3:31 PM DaimlerChrysler Chronology The AP ran this helpful chronology of the DaimlerChrysler takeover: April 12, 1995: Kirk Kerkorian's Tracinda Corp. makes offer for Chrysler Corp. valuing company at $22.8 billion. Posted by edelfenbein at 12:50 PM Felix Salmon Smacks Down Ben Stein What does Stein mean, for instance, by this?If oil, for example, becomes denominated in euros, the price in dollars rises -- perhaps significantly. Posted by edelfenbein at 12:43 PM Wall Strip Sold for $5 Million Jossip is reporting that CBS is buying Wall Strip for $5 million (via Tech Dirt). Congrats to Howard, Lindsay and everyone on the Wall Strip team. Now please don't go all corporate on us.... Here's today's show on American Standard: Posted by edelfenbein at 11:00 AM RM + WSJ: Let's Do The Math Howard Kurtz in today's Washington Post makes some interesting points about Rupert Murdoch's bid for Dow Jones: The newspaper business is battered these days, with rich folks buying up properties at fire-sale prices and proceeding to slash costs. Avista Capital Partners just cut 50 newsroom jobs at the Minneapolis Star Tribune. Philadelphia public relations executive Brian Tierney laid off 71 at the Philadelphia Inquirer. Chicago real-estate mogul Sam Zell hasn't taken a wrecking ball to the Tribune papers yet, but the chain's jewel, the Los Angeles Times, announced plans to eliminate another 150 editorial jobs. And none of these new owners had a previous day of newspaper experience. The Financial Times reports that some Bancrofts are ready to meet with Murdoch. Posted by edelfenbein at 10:03 AM May 11, 2007One-In-Three Chance Greenspan Is Making Sense Alan Greenspan is in the news again. The former Fed chair now thinks there’s a 1-in-3 chance of a recession. Or more specifically, he said: At the moment, I still say as I said before, by algebraic implications, the odds are 2 to 1 we won't have a recession. Oh dear lord. He can’t even deliver a simple declarative sentence. I think half the battle of making everyone think you’re a genius is simply being convoluted. Also, start dropping phrases like "algebraic implications." So, let’s take a closer look at what Greenspan is really saying. I looked at the data from the last 20 years. Of the last 80 quarters, real GDP declined for five quarters and growth came in below 2% for 22 quarters. This means that economy is close to recession levels for one-quarter of the time. (I'm being pretty liberal in my definition, but you get the point.) Despite his algebraic implications, Greenspan is hardly making a bold prediction. This is almost like saying that there’s a 1-in-5 chance that any given day is Saturday. Why is this news? Posted by edelfenbein at 10:36 AM May 10, 2007Whole Foods Bombs I’ve been a bear on Whole Foods Market (WFMI) for some time so today’s earnings dud doesn’t come as a surprise. I first warned about the stock in December 2005 when it was at $76 a share. Thanks to today’s sell-off, the shares are down to $41. But! It could be a good buy soon. I’d consider paying $35 for WFMI. Posted by edelfenbein at 2:54 PM JoS. A. Bank Clothiers Sales Rise Joe Bank (JOSB) is up 6% today. Here's the story from AP: Men's clothing retailer JoS. A. Bank Clothiers Inc. said Thursday its same-store sales climbed 7.3 percent in April, easily topping Wall Street's expectations for a 0.7 percent increase. Posted by edelfenbein at 11:13 AM May 9, 2007The Fed Stays on Hold For the seventh straight meeting, the Federal Resserve has left interest rates alone: The Federal Open Market Committee decided today to keep its target for the federal funds rate at 5-1/4 percent. This is almost an exact replica of the March statement. Posted by edelfenbein at 2:15 PM Are Cyclicals Leaving Orbit?
I’ve written about the surge in cyclical stocks before, but now the trend is starting to leave orbit. The Morgan Stanley Cyclical Index (^CYC) is up for 15 of the last 19 trading sessions. Not only that, it’s beaten the S&P 500 for the last six sessions, and 13 of the last 14. As I write this, the index is up again today while the S&P 500 is down. The ratio of the CYC against the S&P 500 is at its highest in 30 years of data. As a general rule, cyclical stocks outperform the market when long-term interest rates rise. But lately, that hasn’t been the case. The yield on the 30-year T-bond (^TYX) is down a bit over the past few weeks, and it’s been locked between 4.5% and 5% for nearly nine months. Posted by edelfenbein at 11:06 AM May 8, 2007The Blair Market Later this week, Tony Blair will pack his bags and leave 10 Downing Street after 10 years in office. It's worth reflecting on how much Blair has changed Britain. He had the Labor Party drop its controversial Clause IV, which called for the "common ownership of the means of production." I don't think you could get elected dogcatcher in America if you believed that. So how has the British Dow, the FTSE 100 (^FTSE), done under Blair? May 2, 1997: 4,455.60 May 4, 2007: 6,603.70 (the British market was closed yesterday) That's 48% in 10 years, although the FTSE gained 37% in his first ten months in office. Since April 6, 1998, the British market is up just 8.2%. In that same time, the British pound has increased from $1.62 to $1.99. Posted by edelfenbein at 10:01 AM Hewlett Packard Hikes 2Q Outlook I didn't see this coming. The company now expects second-quarter net income of 64 cents to 65 cents per share -- or 69 cents to 70 cents excluding amortization costs. That's great news, but why are they announcing it now? HP said it decided to update its guidance after an internal e-mail with financial details of the quarter was accidentally sent to someone outside the company. Oh. Posted by edelfenbein at 9:43 AM May 7, 2007Investing in Intellectual Property The Washington Post has an interesting article on the Ocean Tomo 300 patent index, which tracks the leading stocks of the "knowledge economy." There's even an ETF. Posted by edelfenbein at 2:57 PM eBay from its High I'm always curious what exactly constitutes an investment bubble. Even though shares of eBay (EBAY) got a super-atomic wedgie following its March 2000 high, the stock has still slightly outperformed the S&P 500. True, it wasn't a smooth path getting there, but it did do it.
Posted by edelfenbein at 2:51 PM May 6, 2007Economist of the Empire Angus Burgin reviews Prophet of Innovation, Thomas McCraw's biography of Joseph Schumpeter: As with many such stories, Schumpeter's begins with a rapid ascent. Born into a bourgeois family that had resided in the Moravian hamlet of Triesch for four centuries, he gained entrance — via his mother's remarriage to a much older three-star general — into Viennese society and the most prestigious schools in the empire. His precocious academic abilities led him through the two great centers of economic thought in continental Europe: the University of Vienna, home to the great second generation of the Austrian School; and Berlin, the academic center of the Austrians' bitter rivals, Gustav von Schmoller and the German historical economists. Through a combination of work and fortune, he became the youngest tenured professor of political economy in the empire at age 28, secretary of state for finance in Austria's First Republic at 36, and a prosperous bank chairman four years later. Posted by edelfenbein at 5:12 PM May 4, 2007Friday Night Jazz: Artie Shaw
This week, Barry Ritholtz let me sit in with him at TBP's Friday Night Jazz. Thanks Barry! Here's my take on the great Artie Shaw. Artie Shaw was cool. Not Elvis cool or Sinatra cool, but a darker, more subdued cool. What Shaw did was make things look easy. Check out this clip and notice how, even after six decades, his music hasn’t aged a bit. It’s still fresh and smooth. It’s just...cool. (You gotta love Shaw’s reply to the compliments: “Yeah, yeah. Glass of water.” Pure cool.) Artie Shaw was the very last of the big bandleaders. He died a year ago at age 94 and fifty years after his last performance. He wound up outliving all the greats—Goodman, Herman, Miller. Those names may loom larger today, but back then, Shaw's star was the brightest. He was making $60,000 a week—not bad for the Depression. With America poised to enter World War II, Time magazine reported that Germans' vision of America was "skyscrapers, Clark Gable and Artie Shaw." Fascists, apparently, have issues with tall buildings. When Shaw hired Billie Holiday, he became the first white bandleader to hire a full-time black singer. But Shaw detested the limelight. In fact, Shaw hated the words "jazz" and "swing." No, he considered himself a musician. He hated the audience. He hated the singers. He hated the dancers. He hated other bandleaders ("Benny Goodman played clarinet. I played music.") By 1951, Shaw walked away from music altogether and became—what else?—a dairy farmer. Crazy, maybe, but cool in its own way. Duke Ellington told him, "Man, you got more guts than any of us." So what did Shaw like? Women. Lots and lots of them. He was married eight times. He nabbed Betty Grable which would have pleased most men. Not Shaw. While they were engaged, he ran off with Lana Turner. (Whoa, Duke was right!) Shaw had an affair with Rita Hayworth. He dumped Judy Garland. He married Ava Gardner before Sinatra. How in earth did he have time enough time for music? Ah, the music. Brilliant. Here’s an example: In 1938, Shaw took an obscure and forgotten Cole Porter song and made it a jazz classic. Have a listen to “Begin the Beguine.” If you’re keeping score, that’s a Jewish bandleader playing Negro music written by a homosexual. Exceedingly trivial trivia: "Begin the Beguine”"has been performed a gazillion times since. In the movie, The Rocketeer, it’s performed by Melora Hardin, who’s better known as Jan in The Office. (Told you it was trivial.) If you’ve never heard of Shaw and want to get your feet wet, I’d recommend: The Very Best of Artie Shaw. That pretty much has it all. Personally, I love "Star Dust" and "Deep Purple." Wonderful stuff. Two others you might enjoy are: The Complete Gramercy Five Sessions (all the big band guys made smaller bands after the war); and Last Recordings: Rare and Unreleased. Barry adds: "There is a terrific recording of Shaw at NPR: Performance by Shaw of Shaw's 1940 Concerto for Clarinet." This post can also be found at Barry's blog, "The Big Picture." Posted by edelfenbein at 9:25 PM Nicholas Financial's Earnings Nicholas Financial (NICK) just reported earnings of 29 cents a share versus 28 cents a year ago. Revenue dropped 1% to $12,044,000. The March quarter is the company's fiscal fourth quarter, so NICK just wrapped up its 18th straight record year for sales and earnings. Overall, I think this was a decent earnings report. Not terrific, but decent. Posted by edelfenbein at 1:28 PM The Stock Market in Euros In July 2002, the dollar and the euro reached parity. But today, the euro is 35% higher. Here's what the Wilshire 5000 Total Return Index (^DWCT) looks like in dollars (red line) and adjusted for euros (black line).
Posted by edelfenbein at 12:46 PM Microsoft to Buy Yahoo? Stung by the loss of Internet advertising firm DoubleClick to Google last month, Microsoft has intensified its pursuit of a deal with Yahoo!, asking the company to re-enter formal negotiations, The Post has learned. Fifty billion?? No. No way. Never. By my math, that's $36 a share, eight bucks above yesterday's close. It's eight times next year's sales and 52 times earnings. If Google went for that much, it would be a $1,000 stock. Posted by edelfenbein at 8:10 AM May 3, 2007The Magazine Cover Indicator In August 1979, BusinessWeek ran its famous “Death of Equities” cover. The bull market began three years later (to the day). Now three finance professors have looked at the impact of magazine covers on stock prices. As you might guess, it’s a contrary indicator: A recent article in The Financial Analysts Journal by Thomas Arnold, John H. Earl Jr. and David S. North, all finance professors at the University of Richmond, called “Are Cover Stories Effective Contrarian Indicators?” offers an intriguing finding. Posted by edelfenbein at 10:33 AM Productivity Growth Slows The Labor Department reported that productivity growth slowed to 1.7% in the first quarter. That's not a very good number, and productivity has been a bit sluggish in the past three years. Still, today's report marks an important milestone. The "American Productivity Miracle" began exactly ten years ago. This reversed a 24-year slide in productivity. Despite weaker numbers in recent years, productivity has grown by an annual rate of 2.77% for the last ten years. To put that in perspective, in the ten years prior to that, productivity grew by just 1.56% a year. And in the ten years before that, it grew by just 1.23% a year. It's hard to overstate the importance of improved productivity. It allows workers to do more with less. Inflation is also kept down due to higher productivity, and by extension, interest rates are lowered. Posted by edelfenbein at 9:51 AM The Subprime Fallout hits GM How’s this for subprime fallout? Profits at GM (GM) dropped 90% from last year due to bad loans at its GMAC unit. This is sad because GM was improving so nicely. Last year, the company only lost $2 billion compared with the $10 billion it lost in 2005. But now the subprime mess has caught up with GM. Last year, GMAC’s Residential Capital earned $201 million. This year, it lost $905 million. GM had recently sold 49% of its stake in GMAC to Cerberus Capital Management. Bloomberg noted that the yield on GM bonds due in 2033 fell to 9.2%. Posted by edelfenbein at 9:14 AM May 2, 2007Dual-Class Share Structure Just a quick note on Murdoch’s bid for Dow Jones (DJ). I can’t think of a better argument against dual-class shares than the Bancroft family’s public rift over the offer. The family’s super shares have ten times the voting power of the Class A shares (by the way, the same thing exists at many other companies like Google). There are at least 35 family members with super shares. A Bancroft family representative said that “slightly more than 50%” of DJ’s voting power is against the deal. Breaking out the math, that means that about 80% of the family’s 64% is voting “No.” But still, we now know that some in family are for it, and “some” is all we need to make a point. The idea of super shares is so families can maintain control, but families don’t act as a single unit. The idea of family control is turning back on itself. Couldn’t it be said that the family members in favor of the deal are speaking in the family’s interest? I certainly think so. Dear lord, it’s a 67% premium for a stock that hasn’t moved in eons. Before the offer, the stock was lower than where it was 24 years before while the Dow is up more than 10-fold. How much more evidence do we need that something needs to be done. The family can’t hold back change forever. The company will have to be revamped, and hopefully it will happen before the Dow Jones Murdoch Industrial Average goes up another 10-fold. Posted by edelfenbein at 1:09 PM May 1, 2007"They were able to manage through that fantastically." It's hard to avoid: If a firm's costs go up, its profits go down. Posted by edelfenbein at 8:44 PM No Comment Posted by edelfenbein at 4:37 PM The Portfolio Pile On Conde Nast's Portfolio has not gotten off to a great start. Now Dan Gross calls Tom Wolfe's piece about hedge funders "astonishingly lame." When Wolfe does give us a name, the piece reads like a clip job. He introduces us to Thomas Hudson's Pirate Capital and Daniel Loeb's acid pen—both nicely described in Steve Fishman's New York piece three years ago. As BusinessWeek did four years ago, Wolfe describes Stevie Cohen's mammoth house: "32,000-square-foot clubhouse and 14 acres of grounds! Next to Stevie's art collection—which is nothing less than a world class museum!—Stevie's indoor basketball court, year-round swimming pool under glass, his gym, his spa facility, his theatre for movies and every other electronic medium, his hair salon, two putting greens complete with sand traps and a fairway in between, and, as the piece de resistance, an ice rink the size of Rockefeller Center's with a 36-by-24-foot rink house for the Zamboni!" This is like a Wolfe parody, a laundry list punctuated by exclamation points!! Posted by edelfenbein at 10:54 AM Great Business, Bad Stock Despite great business results, Google's (GOOG) stock hasn't been such a winner. Since the beginning of last year, the stock is trailing the S&P 500, although there have been better entry points along the way.
Posted by edelfenbein at 10:25 AM Chase Throws Away Customers' Info Scary. Posted by edelfenbein at 9:50 AM |
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