Archive for 2007

  • How Much Would You Pay?
    , August 29th, 2007 at 11:03 am

    Let’s say some kids in your neighborhood have a lemonade stand. You’re impressed by their entrepreneurial spirit so you order a glass and ask them how business is going.
    “Great! We sold $20 worth of lemonade.”
    “Wow! That’s really good. How much profit did you make?”
    “Well, our costs were $17 so we made a $3 profit.”
    You come back in a year (let’s suspend reality for a bit) and you want to see how the biz is going.
    “We had a great year! We sold $55 worth of lemonade and our cost was just $35, so we made $20.”
    This impresses you a lot. After a lengthy discussion of just-in-time inventory, first-mover advantage and Nassim Taleb’s latest, you decide to make the kids an offer for the lemonade stand.
    How much would you pay? Say, $400?
    Remember, it’s growing fast. How about $700? Maybe $1,000??
    Well, it turns out, the kids have hired Goldman and they inform you that the price of the stand is $3,500 and not one penny less.
    That’s about the current valuation for Baidu.com.

  • ‘Subprime Chuck’ Schumer Plays the Fool
    , August 29th, 2007 at 9:36 am

    The subprime mess has ushered in a new level of clueless political grandstanding. Naturally, Chuck Schumer is around to take first prize.

    The chairman of Congress’s Joint Economic Committee then called on the firms to “assist this country’s mortgage crisis” and “urge your clients to do their part to keep our housing markets afloat, by modifying subprime loans that are at risk of default.”
    In so doing, Subprime Chuck made a blithering fool of himself, though he probably doesn’t realize why. So far, none of the four firms — PricewaterhouseCoopers, Deloitte & Touche, Ernst & Young, and KPMG — has responded publicly to his plea for lobbying help.
    You see, management’s job is to manage, and the auditor’s job is to audit. There’s also the decades-old requirement under U.S. securities laws that accounting firms must be independent of the companies they audit, both in appearance and in fact.
    Under the Securities and Exchange Commission’s rules, that means the auditors, among other things, “must act in an unbiased and objective manner.” Lobbying audit clients to change their business practices is the mark of a biased auditor, not a disinterested one.

  • Major Investment Banks
    , August 29th, 2007 at 9:31 am

    Here’s a look at how the major investment banks have fared:
    Top%20Brokers.gif

  • Great Moments In Aviation History
    , August 29th, 2007 at 9:16 am

    Two passengers on Spirit Airlines wrote the company to complain about their delayed flight which caused them to miss a concert.

    Baldanza (Spirit’s CEO) supposedly told one of his staff in an email to handle the complaint and said, “we owe him nothing as far as I’m concerned. Let him tell the world how bad we are. He’s never flown us before anyway and will be back when we save him a penny.”

    He then hit “reply to all” which included the couple’s email address as well.

  • Wallstrip Does Checkpoint Systems
    , August 29th, 2007 at 9:08 am

  • Dow Drops 280 Points
    , August 28th, 2007 at 4:48 pm

    The Dow lost 280 points today. There’s something odd about the 280-point level. This is the sixth time in the past seven weeks that the Dow has moved by 280 or more. That includes gains of 283 and 286 and a loss of 281 and today’s loss of 280.28. Before February’s drop of 416 points, the previous +/-280 day came in March 2003.
    Although T-Bills are kinda back to normal, the yield on the 10-year T-Bond got down to a five-month low today.

  • Yahoo Update
    , August 28th, 2007 at 4:23 pm

    Five months ago, when Yahoo (YHOO) was at $31 a share, I wrote that I wouldn’t touch it for half that price.
    The market is starting to agree.
    image518.png
    That big spike in early May was due to that crazy story that Microsoft was looking to buy Yahoo for $50 billion.
    Here’s what I had to say:

    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.

    Yahoo’s market cap is now down to $30 billion.

  • Knight Capital May Return Hedge Fund Fees
    , August 28th, 2007 at 4:04 pm

    Here’s a new one. Knight Capital (NITE) may return $68 million in fees of its hedge funds due to lousy returns.

    The Jersey City, N.J.-based said in a regulatory filing that it would return all or a portion of the fees related to managing its Deephaven Funds. All three major funds in the Deephaven group, which have $4.2 billion under management, have suffered losses during the first six months of the year, according to a report by Sandler O’Neill & Partners. The Deephaven Event fund is down 12.6%, while the Market Neutral fund is down 5.6%. The small Credit Opportunities fund is down 0.7%.
    If these funds continue to loss as much during the rest of the year, Knight could suffer a hit of 16-cents per share. Based on “clawback” clause, Knight could return at least a portion of the incentive fees if the Deephaven Funds suffer a loss in the second half of the year.

    The stock is down about 10% today.

  • Market Talk from 1996
    , August 28th, 2007 at 2:18 pm

    Here’s a video of Jim Cramer (with hair!), Gail Dudack and the Motley Fool brothers on the Charlie Rose show from October 1996. The market segment is for the first 17 minutes. Cramer was correctly bullish.

  • Cox for AG?
    , August 28th, 2007 at 10:02 am

    Gonzales is out, the NYT lists some possible successors:

    Among the candidates, they said, were Michael Chertoff, the secretary of homeland security and a former federal appeals court judge and top Justice Department official; Christopher Cox, the chairman of the Securities and Exchange Commission; George J. Terwilliger III, a deputy attorney general under the first President Bush; Laurence H. Silberman, a court of appeals judge in Washington; and Larry D. Thompson, a former deputy attorney general who is now senior vice president and general counsel of PepsiCo.