Filed under: Google (GOOG), Apple Inc (AAPL), Merrill Lynch (MER), Goldman Sachs Group (GS)

Last month at the Sundance Film Festival, I saw some great movies, partied it up a bit and schmoozed with celebrities. Perhaps it’s the pseudo-celebrity status that came with my TV show or the $300,000+ personal loss I took on an investment I truly believed in, but I never get starstruck anymore. Not with celebrities and definitely not with companies. And as an investor, you can learn from this. I’ll explain.

While at the festival, I bumped into “celebrity” Maria Bello, and my ability to have a casual conversation with her led to an interesting encounter highlighted by some flirting and several great pictures (see them all HERE).

Ms. Bello barely gave starstruck, incredibly crazed, fans the time of day; after all, nobody — celebrity or not — can really take anybody who’s screaming and crying in awe of their presence very seriously. So, while it was a fun moment for me, I couldn’t help but think how this related to the stock market.

And, it hit me. Too many investors buy stocks because they are starstruck by the companies themselves. Superstar companies like Apple (NASDAQ: AAPL), Google (NASDAQ: GOOG), Merrill Lynch (NYSE: MER) and Goldman Sachs (NYSE: GS) simply have too many groupies. Don’t be one of them. They can head south just easily as lesser quality companies, sometimes even faster!

Want some examples? Sure, my pleasure! Thanks to my cynicism, back at $200, many starstruck investors criticized me for this article in which I basically said Apple was not worth screaming and crying over. The Google groupies weren’t too happy with this video, when I advised shorting the stock at $700.

Perhaps a better comparison would be to solar stocks like First Solar (NASDAQ: FSLR), Sunpower (NASDAQ: SPWR), JA Solar (NASDAQ: JASO) and Solarfun Power (NASDAQ: SOLF) as at the peak of their runups last year, investors truly were screaming and crying to buy shares at any price. Now those investor groupies are just crying.

What’s my point here? Simple-when the volume of crying and screaming groupie investors reaches unbearable levels, that’s the time to sell, and for aggressive investors, to short.

Timothy Sykes writes the blog timothysykes.com, is a former hedge fund manager, star of the TV show Wall Street Warriors and author of the book, An American Hedge Fund: How I Made $2 Million as a Stock Operator & Created a Hedge Fund

Permalink | Email this | Linking Blogs | Comments

Share This

Filed under: Deals, Competitive strategy, Google (GOOG), Microsoft (MSFT), Yahoo! (YHOO), China, Japan

Yahoo! (NASDAQ: YHOO) may have a better foothold in Asia than any other large internet company. This is driven by its holdings in Yahoo! Japan and Chinese e-commerce company Alibaba. According to The Wall Street Journal, “Depending on how their value is calculated, the stakes account for $9 billion to $14 billion of Yahoo’s value.”

The valuations are old news. What is not so old is that it is dawning on Microsoft (NASDAQ: MSFT) that having Asian allies may help the company fight off Google (NASDAQ: GOOG) in the fast-growing markets of the Far East. It is something that the world’s largest software company does not have now.

The Yahoo! board has a unique opportunity to talk up the strategic value of these holdings with shareholders in public and with Microsoft in private. The prevailing wisdom is that Yahoo! has no alternative other than to sell to Redmond, and that the price is the issue. Yahoo! management should be saying that the Microsoft bid does not take into account the value of having powerful partners in Japan and China and that these are worth several more dollars a share.

It is an argument that has the benefit of being true.

Douglas A. McIntyre is an editor at 27wallst.com.

Read | Permalink | Email this | Linking Blogs | Comments

Share This

Filed under: General Electric (GE), Walt Disney (DIS), Viacom (VIA), CBS Corp ‘B’ (CBS)

I estimate General Electric Company (NYSE: GE)’s NBC Universal is worth between $36.5 billion and $42.5 billion — that’s down 13.7% at the low end — from the $42.3 billion to $52.7 billion valuation range I calculated last July.

NBC Universal did poorly in 2007. Revenues declined 5%, or $0.8 billion, in 2007, primarily from the lack of current-year counterparts to the 2006 Olympic Games broadcasts ($0.7 billion) and 2006 sale of television stations ($0.2 billion), lower revenues in its broadcast network and television stations as a result of lower advertising sales ($0.5 billion) and lower motion picture revenues ($0.1 billion), partially offset by higher revenues for cable ($0.4 billion) and television production and distribution ($0.3 billion).

Segment profit improved though — it rose 6%, or $0.2 billion, in 2007 as improvements in cable ($0.2 billion), television production and distribution ($0.2 billion), motion pictures ($0.1 billion) and the absence of Olympic broadcasts in 2007 ($0.1 billion) were partially offset by the lack of a current-year counterpart to the 2006 sale of four television stations ($0.2 billion) and lower earnings from its broadcast network and television stations ($0.2 billion).

Continue reading Valuing GE’s NBC Universal

Permalink | Email this | Comments

Share This

Filed under: General Electric (GE)

General Electric Company (NYSE: GE)’s Industrial segment is worth between $13.1 billion and $16.1 billion down 35.1% at the low end since July when I estimated it was worth $20.2 billion and $21.7 billion.

GE Industrial sells products including consumer appliances, industrial equipment and plastics, and related services. It also provides asset management services for the transportation industry. Industrial revenues were about the same in 2007 compared with 2006 as lower volume ($0.5 billion) was offset by the effects of the weaker U.S. dollar ($0.3 billion) and higher prices ($0.2 billion).

Based on GE Industrial profit of $1.41 billion, here are the range of valuations based on the Price/Earnings ratios of the following peer companies — which declined substantially since last July:

• Whirlpool Corp. (NYSE: WHR) P/E: 11.4 (July: 16.2): $13.1 billion
• Electrolux AB (ADR) (OTC: ELUXY) P/E: 9.3. (July: 15.2): $16.1 billion

Permalink | Email this | Comments

Share This

Filed under: General Electric (GE)

General Electric Company (NYSE: GE)’s Healthcare segment is worth between $18.5 billion and $23.0 billion down 30% at the low end from the July value of $24.1 billion and $59.1 billion, according to my calculations.

GE Healthcare manufactures, sells and services medical equipment including equipment for magnetic resonance (MR), computed tomography (CT), positron emission tomography (PET) imaging, x-ray, patient monitoring, diagnostic cardiology, nuclear imaging, ultrasound, bone densitometry, anesthesiology and oxygen therapy, neonatal and critical care, and therapy.

GE Healthcare had a fair 2007. Its revenues rose 3% to $17.0 billion in 2007 as the effects of the weaker U.S. dollar ($0.5 billion) and higher volume ($0.4 billion) more than offset lower prices ($0.5 billion). Increased sales in the international diagnostic imaging, clinical systems and life sciences businesses were partially offset by price pressures on U.S. equipment sales and lower sales of surgical imaging equipment resulting from regulatory suspensions of equipment shipments.

Continue reading Valuing GE Healthcare

Permalink | Email this | Comments

Share This

Filed under: General Electric (GE), American Express (AXP), Bank of America (BAC)

I estimate that General Electric Company (NYSE: GE)’s GE Money segment is worth between $46 billion and $48.9 billion — down 10.6% at the high end — compared to last July’s range of $29.6 billion to $54.7 billion.

GE Money provides financial services to consumers and retailers in 50 countries. GE Money offers private-label credit cards; personal loans; bank cards; auto loans and leases; mortgages; corporate travel and purchasing cards; debt consolidation; home equity loans; deposit and other savings products, and credit insurance.

GE Money had a great 2007. Its 2007 revenues and net earnings increased 26% and 31%, respectively, compared with 2006. Revenues in 2007 included $0.4 billion from acquisitions. Revenues in 2007 also increased $4.8 billion as a result of organic revenue growth ($3.5 billion) and the weaker U.S. dollar ($1.4 billion).

Continue reading Valuing GE Money

Permalink | Email this | Comments

Share This

Filed under: General Electric (GE), Citigroup Inc. (C), JPMorgan Chase (JPM), CIT Group (CIT)

I estimate that General Electric Company (NYSE: GE)’s Commercial Finance segment is worth between $33.3 billion and $49.8 billion — 23.4% below last July at the low end — when compared to $43.5 billion and $64.1 billion.

GE’s Commercial Finance offers loans, leases, and other financial services to manufacturers, distributors, and end-users for a variety of equipment and major capital assets. These assets include industrial-related facilities and equipment; commercial and residential real estate; vehicles; corporate aircraft; and equipment used in the construction, manufacturing, telecommunications, and health care industries.

GE Commercial Finance had a strong 2007. Its revenues and net earnings increased 11% and 14%, respectively, compared with 2006. Revenues in 2007 and 2006 included $2.4 billion and $0.1 billion from acquisitions, respectively, and in 2007 were reduced by $2.7 billion as a result of dispositions. Revenues in 2007 also increased $3.7 billion as a result of organic revenue growth ($2.7 billion) and the weaker U.S. dollar ($1.0 billion).

Continue reading Valuing GE Commercial Finance

Permalink | Email this | Comments

Share This

Filed under: General Electric (GE), United Technologies (UTX)

I estimate that General Electric Company (NYSE: GE)’s Infrastructure segment is worth $153.7 billion, roughly the same as last July’s $154.6 billion.

GE’s Infrastructure segment produces, sells, finances and services equipment for the air transportation and energy generation industries. It also produces, sells, and services equipment for the rail transportation and water treatment industries.

GE Infrastructure is GE’s crown jewel at the moment. Its revenues rose 23%, or $11.0 billion, in 2007 on higher volume ($7.9 billion), higher prices ($1.1 billion) and the effects of the weaker U.S. dollar ($0.8 billion) at the industrial businesses in the segment. The increase in volume reflected the effects of acquisitions at Aviation and Oil & Gas and increased sales of commercial engines and services at Aviation, thermal and wind equipment at Energy, and equipment and services at Oil & Gas and Transportation.

Continue reading Valuing GE’s Infrastructure segment

Permalink | Email this | Comments

Share This

Filed under: General Electric (GE)

Last July I met with General Electric Company (NYSE: GE) CFO Keith Sherin to discuss GE’s performance and prospects. After an extensive analysis, I concluded that GE was not grossly undervalued in the stock market relative to my estimate of the breakup value of its component parts. Seven months later, I’ve reached a different conclusion — if one were to break up GE now, its pieces would fetch less than its current market value.

In the last seven months, GE’s market capitalization has fallen 15% from $399 billion to $339 billion. But GE made more money than I thought it would. When I estimated how much profit its business units would earn for 2007 in July, I had half a year’s segment profit and I guessed that the year’s total would be $21.6 billion. But the actual 2007 segment profit total was $24.1 billion — which I calculated by assuming each segment paid a 17% tax rate on its profit.

Meanwhile the market has decided to assign lower values to GE’s various businesses. I calculated that the weighted average Price/Earnings (PE) ratio of GE’s business last July was 19.92 and now it’s down to 17.62. This leads me to a range of breakup values for GE which are between 11.1% and 1.5% less below GE’s current market capitalization. At the high end, I estimated that GE’s businesses could be worth $334 billion and at the low end — $301.3 billion. How did I get there?

Continue reading Is GE trading above its breakup value?

Permalink | Email this | Comments

Share This

Filed under: Bad news, Consumer experience, Rants and raves, Money and Finance Today, Personal finance, Federal Reserve, Recession

Federal reserve chairman Ben Bernanke continues to float his raft of economic strategies upon a wad of fake money. His song and dance has provided us with no real relief. Someone at some point must have convinced him that lowering interest rates is fun and exciting. He believed those lies and now it’s his hobby. Has it provided any positive benefit of any real consequence in terms of the long term picture? I think not.

Today and tomorrow, the Federal Reserve Chairman shall be addressing congress. He’s expected to tell them about how he has our economy under control. The fact is that it’s near completely out of his hands. The one possible exception is that he’s handily turned our dollars into wads of toilet paper. His major concern seems to be avoiding recession, which is an admirable goal, but someone forgot to wake the dear man to tell him recession is already here, aided by the fake dollars Bernanke keeps spewing upon the ground.

Continue reading Ben Bernanke: Staying afloat or floundering around?

Permalink | Email this | Comments

Share This