Filed under: After the bell, Major movement, Earnings reports, Forecasts, Consumer experience, Rants and raves, Google (GOOG), Apple Inc (AAPL), Amazon.com (AMZN)

Yes, I remain deaf, dumb, and blind. I am not impressed with the Amazon.com (NASDAQ: AMZN) earnings report. I am sure the amazonian shareholders will confirm my ignorance. What is all the excitement about? So what if it almost quadrupled it’s earnings. That is not hard to do when you barely have any. Nineteen cents a share — oh my gosh!

So now if they can keep it up and earn perhaps $1.00 in the next 12 months Amazon only has a forward P/E of 100. Are you kidding me, 100? Are we to believe that a dollar invested in Amazon is worth 3 times what Google is worth? I don’t think this makes any sense at all. There must be a few folks out there that are equally unimpressed. After Google Inc. (NASDAQ: GOOG) and Apple Inc. (NASDAQ: AAPL) reported earnings both stocks shot up. Amazon on the other hand is off over 10% in after market trading.

Maybe I’ll feel different in the morning after further thought or the enlightened commentary of one of our readers. In the mean time I’m left thinking, is this all there is?

To find potential opportunities and verify my track record, read Chasing Value or Serious Money.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm.

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Filed under: Competitive strategy, CVS Corp (CVS)

Continuing with our defensive stock series, with the markets in a choppy / consolidation mode (or perhaps worse), the drug store chain sector has appeal as a defensive strategy, and CVS Caremark (NYSE: CVS) is a superior performer in the aforementioned sector.

CVS has used acquisition (1,100 Eckerd drugs stores acquired in 2004, 700 Albertson’s drugs stores acquired in 2006) and a super-rigorous, systematic store opening plan to create the drug store world’s equivalent of a lien, mean, fighting machine: more than 6,200 stores in 43 states.

CVS has the resources, economies of scale, and, arguably, most importantly, the store site selection experience to continue to drive impressive revenue/EPS gains. Further, recent improvements in inventory processes and cost management support the above, and the acquisition of Caremark should add new clients/customers. True, back-store (pharmacy) margins may be pressured by generic competitors, but the front-store (everything else) should make up for it in 2007-2009. CVS’s shares closed Tuesday up 39 cents to $40.11.

Continue reading CVS (CVS): methodical and efficient, if not idyllic

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You have to admire the courage of senior management teams who agree to present at financial conferences, especially when the president of the company is unloading stock, and the best spin the CFO can put on the numbers is that they aren’t as bad as they used to be. Such is the case with G-III Apparel Group, Ltd. (Nasdaq: GIII), which manufactures and distributes higher end coats and jackets under label for Calvin Klein, Guess?, Tommy Hilfiger and others, as well as licensed sportswear. G-III licenses jackets for the NHL, NBA, MLB, and dozens of major colleges and universities. They control a brand portfolio to envy. So why is it that the best the company can do is not lose as much money as quickly?

To its credit, G-III has narrowed its losses in 3Q 2007 by almost 60%, down to about $0.05 per share, compared with $0.14 per share a year ago. Net sales for the recent quarter were up 21% to $84 million. CEO Morris Goldfarb was so pleased with the posted loss that was well below what was expected that he has raised FY2007 guidance to $0.90-$0.95 per diluted share based on a $10 million increase in sales to $510 million.

This positive spin does not at all address the problems facing G-III. Are its costs not yet under control? Are its licensing deals structured in such a way that it is difficult to turn a profit? It manufactures team jackets for most major American sports leagues. Surely some of them must be widely popular with sports fans. Yet even CEO Goldfarb admits that sportswear is not yet a “meaningful” contributor to the bottom line. Investors should hope he accelerates his search for meaning and soon.

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Filed under: China, Initial public offerings

As wealth surges in China, there’s also been a spike in luxury spending. For example, the country’s jewelry industry was $14 billion in 2005 and is expected to be the largest - in the world - in about two years.

Riding the wave is Fuqi International (NASDAQ: FUQO — quote not available on AOL yet), one of the top jewelry makers in China. In fact, the company has gone public today, with the stock rising 16% to $10.47 (this is after the stock priced at the high end of its $7-$9 range).

The company has an extensive set of luxury products, which count more than 20,000. What’s more, Fuqi has a vertically integration operation, which includes development, sales, marketing, order fulfillment and delivery.

No doubt, it’s a high margin business. In fact, Fuqi marks up its products by over 40% on average.

So far, the growth has been particularly strong. From 2002 to 2006, revenues increased an average of 57% per annum (to $92.4 million).

With the proceeds from its public offering, Fuqi will have the resources to continue ramping growth. For example, the company plans to have eight to ten retail stores by next year.

Also visit DealProfiles.com if you want to get more information on recent IPO activity.

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: Newspapers

Yesterday I wrote about the popularity of dumpster diving in Germany, and also told you alll a little about my less-than-glorious foray into the world of snagging other people’s cast-offs.

Today’s New York Times reports on one woman’s extremely lucrative trash-picking adventure. Elizabeth Gibson was on her way to get coffee when she pulled a 38×51 inch painting out of someone else’s trash. It turned out to be a piece by Rufino Tamayo that had been stolen 20 years ago, valued at about $1 million.

Amazingly, the widow of the man who purchased the painting has elected to put it up for sale and given Ms. Gibson a reward of just $15 thousand. Sotheby’s, the auction house that will be selling the painting, is also paying her a small finder’s fee.

While $15 thousand is hardly chump change, it looks like Gibson will mostly be gaining a great story to tell her grandchildren. You’d think the widow could have been more generous, given that the painting was 20 minutes away from landing at the dump.

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CHC Helicopter Corporation ( NYSE: FLI) just inked multi-year contracts worth in excess of $180,000,000 Canadian over the next 5 years to provide flight service as well as maintenance in places as far flung as Namibia, Kazakhstan, Baku, and the Philippines. CHC Helicopter is the world’s largest helicopter services supplier to the offshore oil and gas industry, and is working hard at getting bigger. CHC recently released 1Q FY 2008 results. The company is flying high. Revenue in all operating segments increased, in some cases significantly. Total revenue increased 21% to $320 million for the quarter and net income tripled from $0.19 per diluted share to $0.61.

The problem with CHC Helicopter is that it is growing revenue at the expense of profit. The company is expanding its fleet of helicopters and trading in older models for newer. While necessary, such expansion also means that the company’s debt load has increased, as have its leasing expenses and its interest expenses. Taken together, these additional expenses caused operating income to decrease by 16%. The company refinanced to give itself $100 million additional borrowing capacity in multiple currencies. With 70 copters on order over the next 5 years, it may need every penny of that capacity to fund its growth.

CHC Helicopter already operates a higher-risk business in risky areas. Investors will need strong nerves to hold on to this stock as it grows itself through debt financing and refinancing.

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Filed under: Deals, Rumors, Products and services, Apple Inc (AAPL), Amazon.com (AMZN)

According to the New York Times, Radiohead is set to leave the major record labels out of the loop again with a deal to release their new album In Rainbows on CD with a indie label (the band already self-released the album digitally). The band is apparently set to sign a deal with the British label XL Recordings to distribute the album in international markets and with ATO Records in the United States. The band has had some positive dealings with indies before, especially XL, when front man Thom Yorke’s solo album The Eraser was released last year.

The newspaper reports “under the proposed deal, Radiohead would license the album for a specified period of time but retain ownership of the recording.” That proposal is not surprising, but one has to wonder whether the deal will also add the album to other digital stores, namely Apple Inc. (NASDAQ: AAPL)’s iTunes Store, or the new Amazon.com, Inc. (NASDAQ: AMZN) MP3 store. With the success and continued availability of Radiohead’s own store for the album, that seems unlikely, but the indie labels do seem to have more healthy relationships with the digital stores than their major counterparts.

Although the details and confirmation of the reported deal are unavailable to the New York Times, the prospect that Radiohead will leave the majors behind is quite in keeping with the band’s moves thus far. Even before the album’s release was announced, it had been speculated that Warner Music Group Corp. (NYSE: WMG), whose sister publishing firm manages the band’s composition rights, would be interested. Another rumor sparked was that Starbucks’ (NASDAQ: SBUX) Hear Music would take an interest, after the company’s coup with Paul McCartney.

In any case, Radiohead’s move away from major labels is no surprise, but could such a “free” deal have been made with a major or are the independent label’s distribution networks that formidable. Hopefully when the details are officially announced the answers will be provided.

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Filed under: Law, Newspapers, Scandals

According to The Wall Street Journal (subscription required), “The New Hampshire Bureau of Securities Regulation filed an administrative complaint against Ameriprise Financial Inc., accusing the company of forgery, document tampering, and of failing to deliver nearly 500 financial plans to customers that paid for them.”

The bureau is seeking a $10 million fine. The company denies the allegations, saying that the bureau’s characterization of the issue as a “broad-based compliance issue” is unfair. New Hampshire accuses the company of forging clients signatures to make it appear that they had received the detailed personal financial plans in book form that the company had promised them.

Shares of Ameriprise Financial (NYSE: AMP) were up more than 3% today, as investors in the $15.4 billion company shrugged off the possibility of a $10 million fine.

But the cost to the company’s reputation could be more important. In addition to The Wall Street Journal story, numerous other outlets have picked up the story. Anyone who happens to have read it, which is bound to be hundreds of thousands of people, will likely think twice before working with the company.

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Filed under: Bad news, Rants and raves, Economic data, Personal finance

My husband and I don’t yet have children, don’t know if we want any, but I am sure of one thing: college funds for these hypothetical offspring need to be opened immediately.

The College Board said this week that the yearly cost of in-state tuition for a four-year public college jumped 6.6% from the 2006-2007 school year hitting $6,185. This follows a 5.7% increase last year from the 2005-2006 period. Private universities saw the annual tally for tuition and fees rise 5.5% to $16,640. The most affordable education can still be found at public two-year institutions, where costs rose just 4.2% from last year to $2,351 per year.

And that’s just tuition and various fees. For students who live on campus (40% at public schools; 64% at private), the cost of room and board jumped 5.9% at public schools to $13,589. To live, eat, and learn on a private-school campus, it will cost $32,307 per year, also a 5.9% increase from last year.

Continue reading Tuition rising faster than financial aid: what’s a student to do?

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Filed under: Management, Law, Scandals

Honest and ethical management is a sine qua non of a good stock, and investors should always be on the lookout for red flags that might raise questions about that.

So the fact that MPhase Technologies (OTC BB: XDSL) CEO Ronald Durando just settled charges with the SEC related to an alleged pump and dump scheme involving shares of a company called PacketPort might raise some questions for investors. According to the SEC’s litigation release, Durando was ordered to disgorge $150,000 as part of the settlement.

What’s even more disconcerting is that there appear to be points of similarity between Durando’s conduct at PacketPort and the way the MPhase has been run. Back in February, I wrote about MPhase’s PR campaign that consisted of posting videos on YouTube touting its stock. Mr. Durando and MPhase also have ties with Jonathan Lebed, a notorious penny stock promoter who settled charges of stock manipulation with the SEC at the tender age of 15. From an email that Mr. Lebed sent to subscribers to his newsletter:

My firm Lebed Biz LLC has been compensated by XDSL 400,000 restricted shares for a one-year investor relations contract. XDSL has agreed to register these shares in their next registration statement. We were previously compensated by XDSL a total of 450,000 restricted shares, $55,000 cash, and 175,000 warrants to purchase shares at $0.35 for past investor relations contracts which have since expired. We already sold all of the previously compensated restricted shares but still hold all of our warrants. Never invest into a stock we discuss unless you can afford to lose your entire investment. For our full disclaimer go to: www.lebed.biz/disclaimer.htm

To date, MPhase’s primary product appears to the the press release. The company had sales of just $154 thousand in 2007.

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