Archive for 2007

• Home Prices Show Year-Over-Year Decline
  Eddy Elfenbein, March 27th, 2007 at 2:10 pm

  From Bloomberg:

  U.S. home prices fell in January for the first time in at least six years, a private report showed today.
  A measure of home values in 20 metropolitan areas dropped 0.2 percent from the same month last year, according to the S&P/Case-Shiller home-price index. The decrease was the first since the group started keeping year-over-year records in January 2001.
  The numbers follow a report yesterday that showed new-home sales at the lowest level in almost seven years as builders struggled with a glut of unsold dwellings. Falling prices make it harder for owners to borrow against home equity and may make lenders even more wary as delinquencies climb.
  Today’s data “are a good indicator of the dire state of the U.S. residential real estate market,” said Robert Shiller, chief economist at MacroMarkets LLC and a professor at Yale University.

  I got the data off S&P’s Web site. Here’s what the index looks like:
  

• The Nasdaq 100 Seven Years On
  Eddy Elfenbein, March 27th, 2007 at 8:36 am

  The Nasdaq Composite (^IXIC) peaked on March 10, 2000 at 5,048.62, but the Nasdaq 100 (^NDX) reached its peak seven years ago today, March 27, 2000, at 4,704.73. That index, and its ETF (QQQQ), probably best represented the new age of limitless technology profits.
  In those seven years, the Nasdaq 100 has lost 61.7%. But that’s not the worst of it. At one point, in October 2002, the index was 82.9% below its 2000 high. As odd as it may sound, going from an 82.9% loss to a 61.7% loss is a great move–a 124% profit. (Woo!)
  The index has been largely dominated by five stocks, Microsoft (MSFT), Intel (INTC), Cisco (CSCO), Dell (DELL) and Oracle (ORCL). There are bigger stocks in the index, like Amgen, but these five were the meat that tech investing was all about. Even today, these five stocks still comprise over 30% of the Nasdaq 100’s total market value. However, they make up just 5.4% of the S&P 500.
  So how have they done? Since the Nasdaq 100 peaked seven years ago, Microsoft is down 45.8%, Intel is down 73%, Cisco is down 67.1%, Dell is off 59.2% and Oracle is down 58.4%.

• Coke Punk’d Its Own Lawyers
  Eddy Elfenbein, March 26th, 2007 at 3:27 pm

  Coca-Cola (KO) hired two actors to portray brand managers who ask Coke’s real lawyers if they could sue the company because Coke Zero is too similar to regular Coke. Everyone is in on it but the lawyers.
  
  Here are two more ads. They’re cute. Ironically, I wonder if The Office could sue Coke for humor style infringement.

• Citigroup to 15,000 Jobs
  Eddy Elfenbein, March 26th, 2007 at 12:02 pm

  Chuck Prince is in India, and the New York Times tagged along:

  Mr. Prince’s stop in India comes just weeks before Citigroup will announce a broad restructuring plan that could involve the elimination or relocation of as many as 15,000 high-cost jobs from areas including New York, London and Hong Kong, several executives briefed on the matter say. The net job loss could be 10,000 to 12,000, some through attrition.
  Citi’s consumer operations will be hardest hit, with front line and back office operations affected, they say. The corporate and investment banking businesses may be hard hit, with several thousand jobs lost, they say.
  Managers in these units have been asked to review highly paid employees and look for places to cut fat, particularly just below managing director level.

  Shouldn’t managers always be looking for places to cut the fat? Over the last three years, Citi’s stock is basically flat while the market is up around 30%.
  I wonder if there’s any message to read BREAK in between IT the lines UP.

• Warren Watches His Buddy LeBron
  Eddy Elfenbein, March 26th, 2007 at 7:12 am

  

  LeBron James invited a buddy who has even more money than he does to watch him play. Billions and billions more.
  Philanthropist and businessman Warren Buffett, wearing a black T-shirt with “Witness” glittering on the front, sat courtside as a guest of James on Sunday night for the Cleveland Cavaliers’ game against the Denver Nuggets.
  Though an unlikely pair, Cleveland’s All-Star forward and Buffett are friends and mutual admirers. They first met a few months ago over a lunch of cheeseburgers in Omaha, Neb.
  “He wanted a few tips on basketball and I wanted a little advice on money,” joked Buffett, estimated by Forbes Magazine to be worth $52 billion. “We switch. He tells me what socks to buy and I tell him what stocks to pick.”

• A Stock, a Plan, a Short: Yahoo
  Eddy Elfenbein, March 24th, 2007 at 7:46 pm

  Now that Yahoo’s Panama is showing early signs of success, Valleywag asks if it’s time to stop bashing the company:

  It’s surely the best news for Yahoo in a while, and we’d love, in principle, to find another big company to prod. But it doesn’t change the basics: Yahoo makes less than half what Google produces in revenue for every search query; it needs much more than a one-off 10% lift in clickthroughs if it is to challenge Google’s strengthening grip on the search market.
  The narrative remains the same. Yahoo wasted time schmoozing in Hollywood while allowing two Stanford students to build a better search engine. Google has eclipsed Yahoo. Terry Semel’s failure is not absolute: Yahoo is growing much more strongly than most media companies. But it is relative. Yahoo, not Google, should have owned the internet.

  Ouch. But it’s true. I don’t get how Yahoo is a $31 stock. I wouldn’t touch it for half that. Yahoo is going for 43 times 2008’s earnings; Google, just 25.

• Myths About the Developing World
  Eddy Elfenbein, March 24th, 2007 at 9:14 am

  Fascinating presentation by Hans Rosling.

• The Buy List So Far
  Eddy Elfenbein, March 23rd, 2007 at 4:43 pm

  With a week to go in the first quarter, the Buy List is up 2.39% compared with 1.26% for the S&P 500 (this doesn’t include dividends). The Buy List is a tiny bit less volatile than the S&P 500 (average daily swing of 0.781% compared with 0.785%).
  Here’s the chart:
  
  Here’s the stock-by-stock breakdown:
  Jos. A Bank Clothiers (JOSB)……………………………………….21.12%
  FactSet Research Systems (FDS)………………………………..16.22%
  Respironics (RESP)…………………………………………………….10.94%
  Bed Bath & Beyond (BBBY)………………………………………….8.14%
  Amphenol (APH)…………………………………………………………6.68%
  UnitedHealth Group (UNH)………………………………………….5.17%
  Donaldson (DCI)………………………………………………………..4.18%
  AFLAC (AFL)………………………………………………………………3.57%
  Graco (GGG) ……………………………………………………………..2.88%
  Biomet (BMET)……………………………………………………………2.74%
  Fiserv (FISV)……………………………………………………………..2.04%
  Nicholas Financial (NICK)…………………………………………..1.78%
  Varian Medical Systems (VAR)……………………………………1.26%
  SEI Investments (SEIC)……………………………………………..1.23%
  Danaher (DHR)…………………………………………………………-0.23%
  WR Berkley (BER)…………………………………………………….-4.38%
  Fair Isaac (FIC)…………………………………………………………-5.31%
  Medtronic (MDT)………………………………………………………..-6.71%
  Sysco (SYY) …………………………………………………………….-10.34%
  Harley-Davidson (HOG)…………………………………………….-13.15%

• Bon Voyonage
  Eddy Elfenbein, March 23rd, 2007 at 2:11 pm

  Last year I wrote about Vonage‘s (VG) impending IPO:

  The offering is oversubscribed. But the price of voice-over-Internet protocol (VoIP) is plunging. And so will Vonage’s share price.

  I was right. In ten months, the shares are down about 80%. As an experienced market professional, I know how to judge a company’s future profit potential. For example, if the company says that it may never be profitable, that’s usually a good sign. Meaning, a bad sign. Either way, that’s about the only thing Vonage has gotten right.
  Now the company has been slapped with an injuction. It’s barred from using a patented technology from Verizon (VZ). One Wall Street firm just put a $1 target price on the shares. Why so optimistic?
  

• Blogroll
  Eddy Elfenbein, March 23rd, 2007 at 10:22 am

  If you haven’t had a chance, please check out my blogroll. I’ve added some new names in the past few weeks like Bill Rempel, Matthew Ash, Brett Steenbarger, Yaser Anwar and Maoxian.