What Kind of Economic Recovery?
March 12, 2010
For the third month in a row the index of leading economic indicators rose. This is the first time this has occurred since 2004. And, it gives us some sign that maybe the economic recession that we have been in since December 2007 is reaching its climax. James W. Paulson, chief investment strategist at Wells Capital Management, is quoted in the Wall Street Journal as saying “We’ve got tons of information telling us we’ve turned the corner.” Ataman Ozyildirim, an economist at the Conference Board which produces the report, states that “The process of coming out of the recession, although still fragile, may be starting.”
Financial Well-Being and Regulation: the Obama Effort
March 8, 2010
Financial well-being is, in many ways, analogous to our physical well-being. We need periodic check ups and doctoral oversight, but in general true health is dependent upon the discipline and persistence and care that we bring to our own daily lives. However in other ways financial well-being in not the same. Our physical existence is limited to our natural selves: there are limits to how humans can grow and change. This is not true of the financial system.
In the world of finance we can innovate and change and find ways to get around regulation. This has been the modus operandi of the financial system during my entire professional career. Consequently, the financial system of today in substantially different than the financial world that existed in the 1960s. I have called the last fifty years or so the age of financial innovation. Regulation and oversight of the financial system does have to change. But, we need to be careful about the change in regulation and oversight that results and not just give in to populist calls to “put a stop to the greed on Wall Street”.
Amdocs Downgraded
March 2, 2010
Amdocs (NYSE:DOX) provides software and service for communications, media and entertainment industry service providers. It develops, implements, and manages software and services associated with the business support systems (BSS) and operational support systems (OSS). Its software systems cover the range of revenue management, customer management, service and resource management, digital commerce and service delivery, and information management. The Company’s services portfolio includes consulting and systems integration services, managed services, delivery services and product support services.
The Bargin Bin: Cisco Systems
February 1, 2010
Times have surely changed, if we can ask the questions, “Is Cisco Systems CSCO in the bargain bin?” “Is Cisco now a ‘value” stock?” Is it a “value” trap?
Sales for the most recent quarter (MRQ) vs the quarter one ago are down from $9,831 billion to $9,089 billion or 7.5%. Sales, on a trailing twelve month (TTM) basis, are up about 5.2%. Standard and Poors projects a sales decrease of 9% in FY 09 reflecting the weak global economy.
The Long and the Short of it All
July 15, 2009
We are presenting a list of companies which we believe are currently mispriced, based on our estimate of fair value, by the market. We develop our fair value ranges by projected free cash flow out one year and estimating an appropriate FCF multiple based on our assessment of risk and the strength of the balance sheet.
Cisco Systems [CSCO: 20.405, +0.145 (+0.72%)] Recent Price $17.04 Value Range 21.86 – $38.41
Cisco Systems, Inc. designs, manufactures and sells Internet protocol (IP)-based networking and other products related to the communications and information technology (IT) industry, and provides services associated with these products and their use. Read more
China Mobile: The Foreign Giant
July 12, 2009
When most investors think of the telecom sector and wireless providers, Verizon [VZ: 29.95, -0.31 (-1.02%)] and AT&T [T: 27.2793, -0.0707 (-0.26%)] come to mind first. These two companies form a duopoly of the domestic market. Market penetration is nearing 90% in the US, so growth is limited, as these two companies are forced to compete for existing clients to survive as well as continue to steal market share from Sprint-Nextel [S: 4.30, +0.16 (+3.86%)] and T-Mobile. They are also attempting to jump into uniq
ue markets everyday in hopes of adding revenue and improving margins. For instance, VZ and T have been rolling out fiber optic backbones for even faster internet speeds and enhanced TV picture quality. Read more
Is Cisco Spreading Itself Too Thin?
June 28, 2009
Through the 90’s, Cisco Systems [CSCO: 20.405, +0.145 (+0.72%)] was known as one of the “4 Horsemen of IT” and was even the largest company by market cap ($500 B) at the peak of the tech bubble in early 2000. The web is the driver of all information worldwide over the past two decades, thus all recent tech trends revolve around the internet: mobilization, cloud computing, virtualization, social networking and much more. Consequently enough, Cisco is the dominant provider of the networking gear that runs the internet. More specifially, Cisco’s bread and butter has been the ethernet switches and overall routers markets with approximately 70% and 50% of the market share, respectively. To sustain revenue growth, companies like CSCO must adapt to tech trends and enter new markets outside of its core business.
4 Innovative Leaders for a Mobile World
June 23, 2009
Over and over again, I’ve reiterated the fact that the world is shifting to a mobile realm for on-demand information. The four companies listed below are IT leaders in INNOVATION, the key driver of all tech companies, for the increasingly mobile world. For instance, netbooks are riding the same wave smartphones did just a few years ago. Apple has yet to jump into the field, QUALCOMM is developing the chips and Google provides the Android operating system. Keep in mind, tech remains HOT in this bear market rally; the IT SPDR [XLK: 21.331, +0.111 (+0.52%)] is up 18.20% YTD, outperforming the S&P 500 by 16.21% (as of 6/21/09). Throughout this article, I have embedded many links to read further on these revolutionary technologies.
Short ALERT: Why Netflix Will Fall
June 11, 2009
A month ago, when Netflix was trading at $39.60 a share (now just over $39), I initiated a short position on Netflix [NFLX: 138.38, +3.465 (+2.57%)]. The total amount shorted was for a 1/2 position out of a full position, accounting for about 15% of my portfolio.
I am instituting a stop limit order to curtail losses if I am wrong, at about a 7-10% loss, or around $42.50 – $43.50 and I advise you do the same. If I am wrong and the stock pokes through its 50 day moving average on the upside (which will present resistance on the way up) then you need to take your losses and get out. If, however, the stock nudges through that level on weak volume on an up day in the market, you might want to look at keeping or adding to your short position, with an even tighter stop. Read more
Secular Semiconductor Growth in QUALCOMM
June 7, 2009
The NASDAQ has finished up 11 of the last 12 weeks, proving that TECH IS HOT in this market rally. It’s no hidden secret that semiconductors are cyclical and should rebound with the economy. However, timing the market to buy at the bottom is a difficult task for any investor. QUALCOMM, Inc. [QCOM: 39.90, +0.3025 (+0.76%)] is a great semiconductor play on the secular growth of smartphones and wireless network upgrades from 2G to 3G, and eventually to 4G. QCOM manufactures code-division multiple access (CDMA) based integrated circuits and system software used in mobile phones, data cards and infrastructure equipment. They also license over 10,100 U.S. granted and pending patents for CDMA and related wireless technology to more than 150 third party wireless equipment and cell phone makers. Read more
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