• Professor Bernanke
    Posted by on March 20th, 2012 at 6:55 pm

    Here’s Ben Bernanke’s college lecture given today at George Washington titled: The Federal Reserve and the Financial Crisis.

  • Oracle Earns 62 Cents Per Share
    Posted by on March 20th, 2012 at 4:08 pm

    Nice earnings. The Street was expecting 56 cents per share.

    Oracle Corporation today announced fiscal 2012 Q3 GAAP total revenues were up 3% to $9.0 billion, and non-GAAP total revenues were up 3% to $9.1 billion. Both GAAP and non-GAAP new software license revenues were up 7% to $2.4 billion. Both GAAP and non-GAAP software license updates and product support revenues were up 8% to $4.1 billion. Both GAAP and non-GAAP hardware systems products revenues were down 16% to $869 million. GAAP operating income was up 11% to $3.3 billion, and GAAP operating margin was 37%. Non-GAAP operating income was up 8% to $4.2 billion, and non-GAAP operating margin was 46%. GAAP net income was up 18% to $2.5 billion, while non-GAAP net income was up 13% to $3.1 billion. GAAP earnings per share were $0.49, up 20% compared to last year while non-GAAP earnings per share were up 15% to $0.62. GAAP operating cash flow on a trailing twelve-month basis was $13.5 billion.

    “Oracle is on track to deliver the highest operating margins in our history this year,” said Oracle President and CFO, Safra Catz. “Oracle can achieve these record margins as an integrated hardware and software company because we are focusing on high margin systems where hardware and software are engineered to work together.”

    I was wrong about the quarterly dividend. It’s still at six cents per share. The stock is up 2.8% after hours.

  • The Rising Yield Curve
    Posted by on March 20th, 2012 at 1:29 pm

    Here’s a graph which illustrates the point I’ve been making about the market’s changing mood. Over the last few weeks, Treasury interest rates along the yield curve have been rising. This is a reflection of the market leaving conservative assets in search of riskier ones.

    The increase in rates has been most prominent at the long end of the yield curve. From five years out to 30 years, interest rates have increased by roughly 50 basis points. Rates have climbed especially since March 6th.

  • Donaldson’s Amazing (But Dull) Run
    Posted by on March 20th, 2012 at 11:19 am

    As long-time readers know, I love finding dull stocks that have done extremely well over the years. If you take a step back, it’s kind of amazing that Wall Street focuses so heavily on high-glamour businesses while there are lots of great companies that get almost no attention.

    Just think: How many stocks do you recognize from the Top 10 performers of the last 20 years?

    One such outstanding dull stock is Donaldson ($DCI) who’s in the exciting business of…filtration systems! Check out the graph below. The stock was on my Buy List up through 2009 when I stupidly kicked it off. Over the last 27 years, Donaldson is up 9,700% to the S&P 500’s 695%. That doesn’t include the dividend which has been increased every year since 1996.

    Over the last three years, Donaldson’s earnings-per-share have grown from $1.67 to $2.19 to $2.87. Note the nice steady upward trend. That’s what we like to see.

    Their fiscal year ends in July so we already have two quarters under our belt. Donaldson’s public EPS forecast for this year is $3.25 to $3.45. Using my trusty abacus, I think they should be able to earn $3.40 per share this year and $3.72 per share next year. Give or take. Donaldson’s CEO recently said that their earnings for this fiscal year would constitute the 21st record year in the last 23 years.

    As much as I like Donaldson, the shares seem very pricey here. Of course, that’s what I thought in late 2009 when I decided to take it off the Buy List.

    One final note: Donaldson’s stock will split 2-for-1 next week.

  • Happy Birthday Vera Lynn
    Posted by on March 20th, 2012 at 8:17 am

    95 years old

  • Morning News: March 20, 2012
    Posted by on March 20th, 2012 at 5:09 am

    In Greek Crisis, a Little-Known Adviser With Outsize Influence

    Swiss Secrecy Besieged Makes Banks Fret World Money Lure Fading

    Glencore to Resume Philippine Copper Ops by Mid-year

    Behind the Blood Money

    Europe’s Economy Tolerant of Oil’s Gradual Rise

    Geithner Warns EU Against Hasty Budget Measures

    Senate Seeks to Toughen a Bill Aimed at Start-Ups

    U.S. Made Profit on Mortgage Debt

    Apple to Pay Dividend, Buy Back Stock to Return Some of Cash

    Amazon Acquires Kiva Systems in Second-Biggest Takeover

    Facebook Is Said to Plan Paying 1.1 Percent Fee to Banks

    Adobe Net Drops 21% Amid Shift

    Citigroup Sells Stake in Shanghai Pudong Development Bank

    Berkshire Investor Suit Over Sokol’s Stock Claims Tossed

    Wendy’s Tops Burger King as Second-Largest U.S. Burger Chain

    Stone Street: Newsflash: Chinese Co’s are Being Forced to Falsify Data

    Howard Lindzon: Boo Apple…The Great Utility Company…Let the Double Taxation Begin!

    Be sure to follow me on Twitter.

  • Volatility Has Biggest Decline in 78 Years
    Posted by on March 19th, 2012 at 1:03 pm

    From Bloomberg:

    Daily price changes in the S&P 500 are decreasing the most in eight decades, shrinking to the smallest since 1995 when investors abandoned stocks just before the biggest rally ever.

    The benchmark gauge for U.S. equities has gained or lost an average 0.46 percent a day this year, compared with 1.04 percent in 2011, the biggest reduction since 1934, during the Great Depression, according to data compiled by Bloomberg. Swings are diminishing after valuations fell 40 percent and correlation among shares weakened the most in at least three decades.

    At the same time, trading on the New York Stock Exchange has slumped to the lowest rate in 13 years, spurring concern about the biggest first-quarter rally since 1998. Bulls say the decline in trading and daily swings signal fear is dissipating after one of the most volatile years on record. Bears say falling volume is a warning gains will reverse should economic reports and earnings fail to match expectations.

  • Sprint May Declare Bankruptcy Soon
    Posted by on March 19th, 2012 at 12:30 pm

    A year ago, I said that Sprint Nextel ($S) was “a financial black hole.” The company had been losing money, is losing money and by all accounts, is going to continue losing money.

    Today a Bernstein analyst said that a bankruptcy filing is “a very legitimate risk.”

    In late 1999, the stock (which was just Sprint before it merged with Nextel) was trading at $71. Today it’s down to $2.75. This is another good example of the a merger that never should have been.

  • Target Eyes $3 Dividend By 2017
    Posted by on March 19th, 2012 at 10:36 am

    By the way, the big dividend news today isn’t Apple (AAPL) — it’s Target ($TGT).

    Target didn’t increase its dividend today. The next dividend increase will probably be announced in June, and that will be the 41st-straight annual dividend increase.

    But Target did say today that it plans to get its dividend to $3 per share by 2017, assuming it reaches its EPS goal of $8 per share.

    Let’s look at the numbers: A $3 per share annual dividend is 75 cents per share per quarter. Last year’s dividend increase was from 25 cents to 30 cents per share. For Target to hit 75 cents per share in 2017, that would mean a dividend growth rate of 16.5%.

    That’s a bold forecast. Target could certainly hit $3 per share by 2017 but it will be hard to achieve it without raising their payout ratio.

    If Target is able to hits its (um) Target, then the shares are a great buy here at $58 per share. For me, I don’t trust forecasts made that far out into the future.

  • Apple to Initiate Dividend
    Posted by on March 19th, 2012 at 9:52 am

    Last week, I took a look at Apple’s ($AAPL) valuation. I noted the company has a gigantic cash horde but I said that I doubted a dividend would be coming soon.

    Shows what I know! Apple announced today that it will start paying a dividend of $2.65 each quarter. That works out to $10.60 per year. Based on Friday’s closing price of $585.57, that works out to a yield of 1.81%. Apple also said it will buy back up to $10 billion of its own stock.

    I’m impressed when a company gives its profits to its shareholders who, after all, are the owners of the company. When companies get too much money, problems can happen. Investment manager Peter Lynch referred to this as the Bladder Theory of corporate finance. For some reason, too many CEOs see the need to merge and acquire. Too much cash is a certain catalyst for a bad acquisition idea. You can never go wrong with giving the cash to the owners.

    If you had bought shares of Apple three years ago, you’d now be yielding 10.4% from your purchase price. If you had bought Apple nine years ago today, the dividend yields would be 141.9%.

    Apple’s annual dividend works out to roughly 1.09 points on the S&P 500. To put that in context, last year the index paid out 26.425 in dividends.

    On Thursday, by the way, Apple got as high as $600.01 per share. Last week, I had said that the fair price was $600.36.