Archive for September 12th, 2007
Filed under: Products and services, Launches, Microsoft (MSFT), Best Buy (BBY)
 Once Microsoft Inc.’s (NASDAQ: MSFT) Halo 3 game is launched in September 25th, much of the nation will see some retail madness as old and new gamers line up (and sleep) in those long lines just to get a crack at buying the newest, best game for the Xbox 360 gaming console. Naturally, Best Buy Co. (NYSE: BBY) locations will roll out the game with a considerable fanfare.
Will the nation’s largest consumer electronics retailer take advantage of the hoopla? I hope so.
In fact, some locations will be holding midnight parties the night of September 24th, similar to recent kickoff for the Sony PlayStation 3 and 2005’s launch of Halo 2. Best Buy generally provides some kind of ’surprise’ and freebie to go along with events like this.
In terms of marketing strategy, certain gaming titles (and consoles) and the Apple, Inc. (NASDAQ: AAPL) iPhone are about the only consumer electronics items that generate this kind of fervor. In this instance, Best Buy should milk it for all its worth by providing “20% off new titles” coupons to those that attend the launch party and buy the new Halo 3 game when it is released in a few weeks. The company can afford this kind of promotion to keep the fishing hook in the mouth of as many gaming title purchasers as possible.
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Filed under: Newsletters, Chevron Corp (CVX), Bargain stocks, Commodities, Oil, Stocks to Buy
Chevron (NYSE: CVX) is a buy based on the proprietary screening model used by Dow Theory Forecasts; the stock scores a 96 (out of 100), based on top ratings for quality and performance.
Editor Richard Moroney notes, “measured by proved reserves, Chevron is the fourth-largest oil company in the world. Refining and marketing assets include 20 refineries and about 20,500 retail sites in nearly 90 countries.”
He explains, “High oil and gas prices and strong refining margins continue to drive Chevron’s results. The company is working to improve its portfolio of production assets through acquisitions and international exploration, which should boost reserve replacement and production capacity.”
With production slowing at its mature North American and North Sea assets, he points out that Chevron has been working to expand its portfolio in promising growth areas. (For example, in 2005, he observes, Chevron purchased Unocal for nearly $17.3 billion.)
Continue reading Chevron (CVX): ‘Quality and performance’
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Filed under: Analyst upgrades and downgrades, Microsoft (MSFT), Yahoo! (YHOO), Time Warner (TWX), Time Warner Cable (TWC)
Time Warner Inc. (NYSE: TWX) is seeing a small gain today because of bullish comments in a research note from Lehman Brothers, which reinitiated coverage of the stock with an Overweight rating.
Lehman Brothers sees numerous catalysts that could raise the stock beyond its current valuation. It also addresses Time Warner’s potential break-up value. Lehman thinks that the logical moves could include complete separation of Time Warner Cable (NYSE: TWC), or a tax free sale or spinoff of its publishing assets. Another option is to publicly float a minority stake in AOL, or perhaps the internet unit may merge with another leading Internet player like Yahoo! (NASDAQ: YHOO) or even Microsoft’s (NASDAQ: MSFT) MSN, Lehman says.
Anyone who has read much on Time Warner in BloggingStocks, is quite familiar with analysts call to set AOL as its own public company, or have a minority interest to be traded, like the old ‘tracking stock’ model. TWX shares are up 14 cents, or 0.77%, to $18.14 in early afternon trading.
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Filed under: Earnings reports, Intel (INTC), Texas Instruments (TXN)
.gif) Looking back at recent company statements regarding earnings and guidance, there seems to be a big disparity in the type of companies reporting above average numbers to those reporting below average numbers.
Beating
In Line
Missing
If legendary mutual fund manager Peter Lynch’s adage that higher stock prices follow higher earnings still holds true, then it is time to take a closer look at technology stocks.
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Filed under: Competitive strategy, Berkshire Hathaway (BRK.A), Huaneng Power Intl ADS (HNP), Serious Money, Intuitive Surgical Inc (ISRG), Burlington Northern Santa Fe (BNI), Norfolk Southern Corp. (NSC), Union Pacific Corporation (UNP)
 Given investors anxiousness about the economy and hearing more gloom and doom than I think is warranted, I thought I would get back to basics with “my pal,” Warren, and add to the series I started several months ago. I decided to write the series after receiving encouragement from friends and associates that read With Warren Buffett by my side ….
Today, I am writing about the concept of Durable Competitive Advantage, which is the ability to get ahead and stay ahead with a high level of certainty. It is also referred to as Sustainable Competitive Advantage.
To achieve a Durable Competitive Advantage, several factors have to be present. One is a big moat (Buffett expression) surrounding the enterprise. This usually means businesses that sell commodities where price is the primary factor in determining opportunity, have no moat as price takers. Their profit margins are not easily defendable. Another factor is barrier to entry. How easy would it be for someone to enter the same business and compete? The T-shirt business is a good example, of something without a Durable Competitive Advantage. Anyone could enter this business in one day, and they do. So unless the business has some unique concept, it does not have the promise of relatively predictable and sustainable profit margins in the future.
Continue reading Serious Money: The page on Buffett IV: Durable Competitve Advantage
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Filed under: Cisco Systems (CSCO), International Business Machines (IBM), Morgan Stanley (MS), Oracle Corp (ORCL), Lehman Br Holdings (LEH), Initial public offerings
 It seems like a breach of a company’s internal systems, such as customer databases, is a daily occurrence. This makes it a lucrative market for security software vendors. According to a report from IDC, the market is expected to be nearly $1 billion this year - and could reach $2.2 billion by 2011.
A leader in the space is ArcSight, which has recently filed for an IPO.
Think of the company’s software as a “mission control center” that manages critical information in real-time. If there are some vulnerabilities detected, ArcSight will send out alerts and recommend action.
The company has more than 350 customers and an extensive network of partners, such as Cisco (NASDAQ: CSCO), IBM (NYSE: IBM) and Oracle (NASDAQ: ORCL)
Over the past year, ArcSight increased revenues from $39.4 million to $69.8 million. However, there was a hefty net loss of $16.7 million.
The lead underwriters on the IPO include Morgan Stanley (NYSE: MS) and Lehman Brothers (NYSE: LEH). The proposed ticker symbol is “ARST.”
You can find the prospectus at the SEC website. Also, if you want to check out more IPOs, click here.
Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements .
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Filed under: Products and services, Entrepreneurs, Small business
 While mobile is a large business, it’s not easy for start-ups. Just look at Amp’d Mobile. Despite raising $360 million, the company went bust.
But that’s not stopping Daniel Neal. He is a veteran of the tech world and has been thinking about creating a new-fangled mobile service since the mid-1990s. His idea is to create a cell service to meet the needs of kids.
Well, he has come a long way since then. Now, he is the CEO of fast-growing kajeet. The company recently snagged $36.8 million in venture capital. The investors include heavyweights like Draper Fisher Jurvetson Growth Fund, Bessemer Venture Partners, Fidelity Ventures, Gabriel Venture Partners and InterWest Partners.
Basically, kajeet has a pay-as-you-go cell service for kids. “People fail to realize that kids are very smart,” said Neal, in a BloggingStocks.com interview. “Kids often know more about the options on a cell phone then their parents.”
Continue reading Cell phones for kids: kajeet raises $36.8 million
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Filed under: Analyst reports, Bad news, Management, Citigroup Inc. (C), Options, Technical Analysis
 CNBC’s Jim Cramer is appalled at Citigroup’s (NYSE: C) latest hedge fund move, and calls the current leaders “the worst management team [he has] ever seen.” Cramer believes Citigroup now has more exposure to all bad karma in the financial world than any other bank, and he blames the board for falling asleep on the job, or just plain not caring. If you are inclined to agree, then it could be a good time to get into a bearish hedged trade on Citigroup.
After hitting a one-year high of $57.00 in December, the stock has struggled lately, dropping sharply in July and August. This morning, C opened at $45.89. So far today the stock has hit a low of $45.50 and a high of $46.20. As of 11:05, C is trading at $45.70, down $0.31 (0.7%). The chart for C bearish but improving, while S&P gives the stock a very positive 5 STARS (out of 5) strong buy rating.
If you agree with Cramer, then for a bearish hedged trade, I would consider a December bear-call credit spread above the $55 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn’t do what you think but still leverages nice returns. For this particular trade, we will make a 5.3% return in less than 4 months as long as C is below $55 at December expiration. Citigroup would have to rise by more than 20% before we would start to lose money.
Continue reading Cramer talks tough on Citigroup (C), but is he right?
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Filed under: Products and services, Consumer experience, Competitive strategy, Marketing and advertising, AT and T (T)
 Age-old telecom company and brand AT&T, Inc. (NYSE: T) is launching a new advertising campaign to convince younger customers that the company is hip. Naturally, the new ads will be edgier and flashier, which apparently everyone in the 18-34 age bracket responds to according to most marketing mavens. But can a company just put some pizazz in their marketing and instantly gain younger customers, or are those customers smarter than these companies realize? Maybe a little of both, right?
Truth is that marketing is what makes most economies go ’round, and AT&T glitzing it up in this department is a testament to that claim. AT&T’s purchase of the Cingular brand (and company, heh) earlier in 2007 meant that the company sees the future coming from wireless services and other areas instead of landline telephones and older technology that 10 years from now younger customers won’t even know existed.
In a move back to the power of the Cingular brand (which AT&T dumped unceremoniously), the color orange will also be used as the company’s primary corporate color instead of blue. The blue AT&T ‘world swirl’ logo has been around for decades in one form or another, and in addition to changing the color, will AT&T change the corporate logo as well? Maybe it is time to make this move, since many youngsters connect the current AT&T logo with the Death Star from Star Wars. That’s not a good thing to have in mind when you’re buying a phone.
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Filed under: Earnings reports, Good news, Bad news, Products and services
 Dollar Financial Corporation (NASDAQ: DLLR) provides check cashing services, money transfer and personal loans to those the company describes as “under-banked consumers.” (Is that code for illegal aliens who do not have the paperwork necessary to open a checking account and need to send money back home?) Whatever its customer base, Dollar Financial posted record revenue in 4Q 2007. These numbers would be much more impressive if at least some of the increase in revenue came due to organic growth. All of Dollar Financial’s growth seems to come from acquisitions, which the company finances through debt spending. But there is a limit to how big a debt load the company can take on and just how large a loan loss percentage it can withstand. Currently the consolidated loan loss stands at 21%.
Dollar Financial operates in Canada, United Kingdom and the United States. International revenues increased 39%, which helped to offset an 8% drop in US operations. Total revenues in 4Q were $109 million, and FY 2007 revenues were $400 million. Diluted EPS for 4Q were $0.42, more than 4X EPS of $0.10 in 4Q 2006. Dollar Financial acquired 115 locations during FY 2007 and opened 52 new stores. The company is presently completing the acquisition of 45 locations in the Midwest and Hawaii. In addition to more locations, Dollar Financial is also offering new products to its customers, including the test launch of an Internet payday loan in California. If the loan loss rate is low enough in California, CEO Jeff Weiss stated the company will expand the geographic market for this product.
That’s the positive spin on Dollar Financial and its business model. The negative side is that companies like Dollar Financial have recently garnered lots of negative publicity for the outrageously high fees “under-banked consumers” must pay to cash checks and borrow against their next paycheck. Recently, the US Congress investigated companies offering exorbitant interest-rate payday loans to members of the US military. Provincial governments in Canada have opened similar investigations and are moving to cap the rates and fees companies may charge for payday loans.
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