More Greenie, Soros, Couric, WOW
– No George, it is government meddling on the market that cause bubbles… it was government that pushed home ownership on those who clearly were not ready for it..
– If this ever happened to my daughter these kids parents would be in hiding for their own protection………
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More Greenie, Soros, Couric, WOW
– No George, it is government meddling on the market that cause bubbles… it was government that pushed home ownership on those who clearly were not ready for it..
– If this ever happened to my daughter these kids parents would be in hiding for their own protection………
Visit the ValuePlays Bookstore for Great Investing Books
This work is licensed under a Creative Commons Attribution 2.5 License.
So, GE(GE) disappointed and shares are getting pummeled, down 11%. Is it a buying opportunity? I guess I am wondering why one would want to own it anyway?
First the numbers:
Profit from continuing operations dropped to $4.36 billion, or 44 cents a share, from $4.93 billion, or 48 cents, a year earlier. Revenue rose 8 percent to $42.2 billion, less than GE’s prediction of about $44 billion. GE was expected to earn 51 cents a share.
CEO Jeffrey Immelt cut also the annual forecast he had once told investors was “in the bag” for 2008 and did so again on March 13. He says capital markets seized up just days later, forcing GE to slash the value of some securities in the last two weeks of the quarter and blocking some asset sales. The new EPS forecast is $2.20 to $2.30 a share, down from the previous forecast of “at least $2.42”.
So,should you pick up shares? Not me. Even with the sell off today GE still trades at 15 times the new earnings but does sport a 3.8% yield.
For all its diverse businesses GE is essentially s financial services company with 40% of earnings coming from that division. Immelt said today finance units may have a profit decline of 5% to 10% this year and that will offset a non-financial units increase 10% to 15%. The other main driver is it infrastructure business which grew EPS 17%.
All that being said, when you have a business as large and diverse as GE, the value to shareholders comes down to the man at the top. Look at Berkshire Hathaway (BRK.A). A huge business that is basically an insurance business that, like GE, has its other businesses in industry. The difference is that with Berkshire, you have Warren Buffett, perhaps the greatest capital allocator ever at the helm. Through that, he can drive results. Immelt is good, but he is no Warren.
There comes a point where conglomerates simply become to large for shareholders to truly benefit from the performance of the diverse businesses. What happens is a mean reversion to mediocrity in the multiple people will pay for shares. This is why for the last 7 years GE has traded between $30 and $40 a share with only a brief drop below in 2002.
GE’s financial services and health care divisions are now a drag on the high flyer like infrastructure. By itself, it would command a PE of at least 20 based on its growth rate and prospects. GE as a whole now trades at 15.
What GE should do is an Altrai (MO) like spin of the infrastructure business to the shareholders. Without that business, the multiple left on what is left on GE would shrink and then you would have a potential value opportunity there with a nice fat dividend yield. Value inclined investors would likely pick up shares, support the price. This would be offset for current shareholders by the PE expansion on the infrastructure business.
This would allow shareholders to fully benefit from the current strong growth in the infrastructure business while at the same time allowing them to participate in the rebound in financial services and health care.
Likely? No. Would work though..
Disclosure (“none” means no position):Long MO,None
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So, GE(GE) disappointed and shares are getting pummeled, down 11%. Is it a buying opportunity? I guess I am wondering why one would want to own it anyway?
First the numbers:
Profit from continuing operations dropped to $4.36 billion, or 44 cents a share, from $4.93 billion, or 48 cents, a year earlier. Revenue rose 8 percent to $42.2 billion, less than GE’s prediction of about $44 billion. GE was expected to earn 51 cents a share.
CEO Jeffrey Immelt cut also the annual forecast he had once told investors was “in the bag” for 2008 and did so again on March 13. He says capital markets seized up just days later, forcing GE to slash the value of some securities in the last two weeks of the quarter and blocking some asset sales. The new EPS forecast is $2.20 to $2.30 a share, down from the previous forecast of “at least $2.42”.
So,should you pick up shares? Not me. Even with the sell off today GE still trades at 15 times the new earnings but does sport a 3.8% yield.
For all its diverse businesses GE is essentially s financial services company with 40% of earnings coming from that division. Immelt said today finance units may have a profit decline of 5% to 10% this year and that will offset a non-financial units increase 10% to 15%. The other main driver is it infrastructure business which grew EPS 17%.
All that being said, when you have a business as large and diverse as GE, the value to shareholders comes down to the man at the top. Look at Berkshire Hathaway (BRK.A). A huge business that is basically an insurance business that, like GE, has its other businesses in industry. The difference is that with Berkshire, you have Warren Buffett, perhaps the greatest capital allocator ever at the helm. Through that, he can drive results. Immelt is good, but he is no Warren.
There comes a point where conglomerates simply become to large for shareholders to truly benefit from the performance of the diverse businesses. What happens is a mean reversion to mediocrity in the multiple people will pay for shares. This is why for the last 7 years GE has traded between $30 and $40 a share with only a brief drop below in 2002.
GE’s financial services and health care divisions are now a drag on the high flyer like infrastructure. By itself, it would command a PE of at least 20 based on its growth rate and prospects. GE as a whole now trades at 15.
What GE should do is an Altrai (MO) like spin of the infrastructure business to the shareholders. Without that business, the multiple left on what is left on GE would shrink and then you would have a potential value opportunity there with a nice fat dividend yield. Value inclined investors would likely pick up shares, support the price. This would be offset for current shareholders by the PE expansion on the infrastructure business.
This would allow shareholders to fully benefit from the current strong growth in the infrastructure business while at the same time allowing them to participate in the rebound in financial services and health care.
Likely? No. Would work though..
Disclosure (“none” means no position):Long MO,None
Visit the ValuePlays Bookstore for Great Investing Books
This work is licensed under a Creative Commons Attribution 2.5 License.
Friday’s Picks
Jeff Macke recommends Wal-Mart (WMT) $54.66 on a dip.
Guy Adami prefers Cephalon (CEPH) $64.89.
Tim Seymour likes ConocoPhillips (COP) $79.32
Jon Najarian thinks Cameco (CCJ) $37.42 is a buy.
Thursday’s Results
Jeff Macke likes Boeing (BA) $78.6. Close $78.43 LOSS
Guy Adami recommends AMR Corp. (AMR) $9.17 for a short covering rally.Close $9.87 GAIN
Pete Najarian thinks investors should buy puts in Pilgrim’s Pride (PPC) $19.40 Close $19.60 LOSS
Tim Seymour prefers shorting Mechel (MTL) $142.88 and buying it back at $130. $151.50 LOSS
2008 Records:
Brian Schaeffer= 0-1
Carter Worth= 0-1
Jon Najarian= 4-1
Jeff Macke= 25-20-1
Tim Seymore= 14-9
Guy Adami= 25-23
Pete Najarian= 27-22
Karen Finerman= 20-24-1
Joe Terrenova= 1-1
2007 Results (Since 6/21):
Guy Adami= 58-46 = 56%
Jeff Macke= 60-40 = 60%
Pete Najarian= 49-41 = 54%
Disclosure (“none” means no position):
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Upgrades
KON Office (IKN)- Cross Research Hold » Buy
Aruba Networks (ARUN)- Brean Murray Hold » Buy
Nationwide (NFS)- UBS Neutral » Buy
ADC Telecom (ADCT)- Deutsche Securities Hold » Buy
Analog Devices (ADI)- Banc of America Sec Neutral » Buy
National Semi (NSM)- Banc of America Sec Sell » Neutral
PMC-Sierra (PMCS)- Banc of America Sec Sell » Neutral
Power Integrations (POWI)- Banc of America Sec Neutral » Buy
LSI Logic (LSI)- Banc of America Sec Sell » Neutral
Semtech (SMTC)- Banc of America Sec Neutral » Buy
Intel (INTC)- Banc of America Sec Neutral » Buy
Downgrades
Owens-Illinois (OI)- Longbow Buy » Neutral
Ventas (VTR)- Stifel Nicolaus Buy » Hold
Methanex (MEOH)- UBS Buy » Neutral
AmerisourceBergen (ABC)- Citigroup Buy » Hold
Cardinal Health (CAH)- Citigroup Buy » Hold
McKesson (MCK)- Citigroup Buy » Hold
Virgin Media (VMED)- Jefferies & Co Buy » Hold
Cirrus Logic (CRUS)- Oppenheimer Outperform » Perform
Mannkind (MNKD)- Piper Jaffray Buy » Neutral
Hain Celestial (HAIN)- JP Morgan Overweight » Underweight
Ralcorp Holdings (RAH)- JP Morgan Neutral » Underweight
Pantry (PTRY)- Friedman Billings Outperform » Mkt Perform
Dentsply (XRAY)- Robert W. Baird Outperform » Neutral
Patterson Companies (PDCO) Robert W. Baird Outperform » Neutral
Lennox Intl (LII)- JP Morgan Overweight » Neutral
Cheniere Energy (LNG)- Lehman Brothers Overweight » Equal-weight
Watsco (WSO)- JP Morgan Overweight » Neutral
PetroChina (PTR)- Citigroup Hold » Sell
Disclosure (“none” means no position):
Visit the ValuePlays Bookstore for Great Investing Books
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Upgrades
KON Office (IKN)- Cross Research Hold » Buy
Aruba Networks (ARUN)- Brean Murray Hold » Buy
Nationwide (NFS)- UBS Neutral » Buy
ADC Telecom (ADCT)- Deutsche Securities Hold » Buy
Analog Devices (ADI)- Banc of America Sec Neutral » Buy
National Semi (NSM)- Banc of America Sec Sell » Neutral
PMC-Sierra (PMCS)- Banc of America Sec Sell » Neutral
Power Integrations (POWI)- Banc of America Sec Neutral » Buy
LSI Logic (LSI)- Banc of America Sec Sell » Neutral
Semtech (SMTC)- Banc of America Sec Neutral » Buy
Intel (INTC)- Banc of America Sec Neutral » Buy
Downgrades
Owens-Illinois (OI)- Longbow Buy » Neutral
Ventas (VTR)- Stifel Nicolaus Buy » Hold
Methanex (MEOH)- UBS Buy » Neutral
AmerisourceBergen (ABC)- Citigroup Buy » Hold
Cardinal Health (CAH)- Citigroup Buy » Hold
McKesson (MCK)- Citigroup Buy » Hold
Virgin Media (VMED)- Jefferies & Co Buy » Hold
Cirrus Logic (CRUS)- Oppenheimer Outperform » Perform
Mannkind (MNKD)- Piper Jaffray Buy » Neutral
Hain Celestial (HAIN)- JP Morgan Overweight » Underweight
Ralcorp Holdings (RAH)- JP Morgan Neutral » Underweight
Pantry (PTRY)- Friedman Billings Outperform » Mkt Perform
Dentsply (XRAY)- Robert W. Baird Outperform » Neutral
Patterson Companies (PDCO) Robert W. Baird Outperform » Neutral
Lennox Intl (LII)- JP Morgan Overweight » Neutral
Cheniere Energy (LNG)- Lehman Brothers Overweight » Equal-weight
Watsco (WSO)- JP Morgan Overweight » Neutral
PetroChina (PTR)- Citigroup Hold » Sell
Disclosure (“none” means no position):
Visit the ValuePlays Bookstore for Great Investing Books
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In an SEC filing moments ago, Sears Holdings (SHLD) Chairman Eddie Lampert disclosed he purchased an additional 239,000 shares of AutoZone at prices of $113 to $116 a share between 4/8 and 4/9.
Lampert and affiliates now own 22.3 million shares or 36% of the total
Disclosure (“none” means no position):None
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If people are shopping at Wal-Mart (WMT) because of their “wealth evaporation” then it will be years before the trend reverses..
Wal-Mart said first-quarter earnings would come in higher than the company previously expected. They now see its first-quarter earnings between 74 cents and 76 cents per share, compared to its previous estimate 70 cents to 74 cents per share.
Now a common refrain out there is that people are trading down to Wal-Mart from Target (TGT). I happen to disagree. While I think some people are indeed trading down, the changes the company has made to scores of locations, it online dominance and its new “Save More, Live Better” ad campaign have more to do with it. But, for arguments sake, lets go with “trading down”.
The wealth loss in the US is due to one thing, housing. People still have jobs as the unemployment rate is low and wages are actually rising. It is the value of their homes, their largest expense, and the fear that illicits are creating the current environment.
Now, since housing prices have fallen at the fastest rate in almost 100 years, this wealth deficit has been dramatic. It also means that a recovery to pre-bubble levels will take years, maybe decades. People who bought homes in the last 3 years have a negative equity or, now not enough to tap for loans. Sensing this, they will spend accordingly.
If this is the reason people are running to Wal-Mart rather than the other retailers, one can only assume this trend will be in effect for the foreseeable future.
For shareholders of Wal-Mart, that is indeed good news. For holders of Target (TGT), JC Penny (JCP) and others, it means rapidly shrinking margins and the necessity to redefine themselves.
Disclosure (“none” means no position):Long WMT
Visit the ValuePlays Bookstore for Great Investing Books
This work is licensed under a Creative Commons Attribution 2.5 License.
If people are shopping at Wal-Mart (WMT) because of their “wealth evaporation” then it will be years before the trend reverses..
Wal-Mart said first-quarter earnings would come in higher than the company previously expected. They now see its first-quarter earnings between 74 cents and 76 cents per share, compared to its previous estimate 70 cents to 74 cents per share.
Now a common refrain out there is that people are trading down to Wal-Mart from Target (TGT). I happen to disagree. While I think some people are indeed trading down, the changes the company has made to scores of locations, it online dominance and its new “Save More, Live Better” ad campaign have more to do with it. But, for arguments sake, lets go with “trading down”.
The wealth loss in the US is due to one thing, housing. People still have jobs as the unemployment rate is low and wages are actually rising. It is the value of their homes, their largest expense, and the fear that illicits are creating the current environment.
Now, since housing prices have fallen at the fastest rate in almost 100 years, this wealth deficit has been dramatic. It also means that a recovery to pre-bubble levels will take years, maybe decades. People who bought homes in the last 3 years have a negative equity or, now not enough to tap for loans. Sensing this, they will spend accordingly.
If this is the reason people are running to Wal-Mart rather than the other retailers, one can only assume this trend will be in effect for the foreseeable future.
For shareholders of Wal-Mart, that is indeed good news. For holders of Target (TGT), JC Penny (JCP) and others, it means rapidly shrinking margins and the necessity to redefine themselves.
Disclosure (“none” means no position):Long WMT
Visit the ValuePlays Bookstore for Great Investing Books
This work is licensed under a Creative Commons Attribution 2.5 License.
Who will be right?, Greenspan, Tiger, Movies
– This is important. Both companies look at the same information but have polar opposite expectations.
– This is good….although I think I liked Don better in overhauls…purer
– Just hard work…
– A great list from Disney
Visit the ValuePlays Bookstore for Great Investing Books
This work is licensed under a Creative Commons Attribution 2.5 License.
Who will be right?, Greenspan, Tiger, Movies
– This is important. Both companies look at the same information but have polar opposite expectations.
– This is good….although I think I liked Don better in overhauls…purer
– Just hard work…
– A great list from Disney
Visit the ValuePlays Bookstore for Great Investing Books
This work is licensed under a Creative Commons Attribution 2.5 License.
In the Q&A following his speech today Bernanke said mark to market accounting caused additional stress as it “forced sales into very illiquid markets lead to reductions in prices of assets which lead to more write-downs which then lead to more fire sales”
Mark to market accounting he said requires “assets to be valued at their market price in orderly markets”.. he went on to say that mark to market accounting did not envision situations where otherwise normally marketable assets would not have markets or that the only sales would be under very extreme or distressed conditions”.
Although he said a return to the previous method would not happen he did say that he envisioned changed to the current mark to market method to compensate for situations like the one we are in.
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Blockbuster may finally be trying to compete with Netflix (NFLX).
Blockbuster (BBI), is finally it seems working on a set-top device for streaming films directly to TV sets. This comes months after a similar announcement from Netflix (NFLX) LG Electronics at CES and word they may embed the technology in Micrsoft’s (MSFT) Xbox consoles. The device is expected to utilize Blockbuster’s access to Movielink’s 6,000 strong Movie catalog just as soon as the content is migrated to Blockbuster.com (sometime before June).
Does this make shares a buy? No.
In March Blockbuster announced that for fiscal 2008, it expects to deliver adjusted EBITDA in the range of $290-$310 million, which corresponds to GAAP financial measures of operating income (EBIT) in the range of $113-$133 million and net income in the range of $5-$25 million. Even at the high end of the range that equates to EPS of only $.13 cents a share which means shares currently trade at 25 times the top end of estimates and 108 times the low end. Either way, too expensive.
Here is the thing. The box top game is a race. The first out with an affordable offering wins. This isn’t something I envision people swapping in and out of. The set-top they buy initially will be the one they use for quite some time. I am still mystified at the apparent blase’ attitude by Blockbuster with this.
From mail rentals, to online rental, and now the box set they have consistently been behind the competition. This is the right move to make, they just should have made it maybe in May last year?
Disclosure (“none” means no position):None
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If you are an employer in NY, MA or CT looking for someone to hire, I have a highly endorsed candidate for you.
Recent Work History:
Welch Allyn Inc
1989-1998 – Positions: Procurement Analyst, Sr. Procurement Analyst, Procurement Manager for Data Collections Division (now Hand Held Products). Departmental budgeting, team management, supplier sourcing, cost reduction, inventory turns, lead time reduction, Sub contractor selection and management, new product support, MRP
PPC Production Products
1998-2000 – Procurement Manager: sourcing, cost reduction, lead time reduction, team management, supply chain development.
Current
2000- Present – Manage people and processes related to delivery of hardware and services to the clients. These areas have included Receiving, Order entry, Desktop Delivery/Support, Service Level Agreement reporting, and Workflow. Active role in transition of additional sites into the contract. Participated in consolidation of several areas to provide both cost savings to compnay and improved, uniform services to clients. Familiar with both ACE, Six Sigma and ITL quality approaches.
Education: Syracuse University BS Business Administration 1993
This person has extensive experience telecommuting and will do contract work for those interested in that.
Please email me if interested and I will provide contact information.
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