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Z,
It is not so much that dividends are taxed twice, but that corporate income is taxed twice. S-corporations and LLC's are taxed only once - when income flows through to the owners. Why should publicly traded coporations be treated any differently? Yes, raise corporate rates to individual rates (and get rid of the deductions), but then eliminate all taxes on dividends and capital gains. Or raise dividend and capital gains rates to individual rates, but then eliminate all corporate taxes. The double taxation on corporate income is a great impediment to capital formation, and the fact that other countries do the same is no excuse.
On payroll taxes, somebody published a piece here within the past few days that shows that corporations really do not pay these taxes - workers do. Supposedly shifting the burden more toward companies will not accomplish anything.
On returning surpluses to taxpayers, fine. But what makes you optimistic that this will happen? As Milton Friedman said, government will spend as much as we send them in taxes, plus as much more as they can get away with. Surpluses only occur when the money rolls in faster than Congress can figure out how to spend it...and they always manage to solve this "problem" pretty quickly. I fear higher taxes will never eliminate deficits.
BTW, congrats on the amazing turnips' calls.
ardent
Fred,
Martha wasn't even charged (much less convicted) of insider trading or stock manipulation. Her crime was lying to the Feds about some inconsequential matter. Okay, she did it, but who cares? This trial was a total waste of taxpayer money. Her real "crime" is that she is some rich fat cat that many would love to see get the shaft. Ever serve on a jury in a criminal trial? It is an eye opening experience. There is no shortage of people who want to see someone get sent up to chokey for the stupidest things, on the flimsiest of evidence. It's scary.
JCOM: Forbes' "Stock of the Week"
Michael Markowski, editor of The OPS Newsletter and StockDiagnostics, recommends buying shares of J2 Global Communications (JCOM), the Los Angeles-based provider of integrated fax, e-mail, and voice messaging systems. JCOM is a fallen momentum stock -- down 54% from its October 9 high of $47.91 -- but still up 83% in the last 12 months, trading as low as $10.70 last March. Revenues of $71 million in 2003 were up 45%, and net income grew 150% to $35.8 million. JCOM's Friday close of $21.96 is 15.6 times 2003 earnings of $1.40 per share, and seven times sales.
Markowski's method of stock analysis is to compare a company's earnings per share with what he calls "operational cash flow per share" (OPS), calculated by dividing a company's cash flow from operations by the number of shares outstanding. EPS includes a number of non-cash items such as receivables, proceeds from one-time sales of assets, as well as depreciation of goodwill and other intangibles. OPS is a measure of the cash a business generates from its core operations. JCOM has grown its operational cash flow every quarter except one since cash flow turned positive in the third quarter of 2001, and last year generated $28.9 million of cash on sales of $71 million (40%).
On December 1, 2003, Forbes Wireless Stock Watch editor Nikhil Hutheesing recommended LCC International (LCCI) as Stock of the Week when it traded for $4.90. LCCI shares reached as high as $9.81 on January 21 -- 100% higher than Hutheesing's recommended buy price. For the complete Wireless Buy List, please click here.
Markowski gives JCOM shares his highest OPS ranking of 1 (the lowest is 8). Given the stability of the business at growing its cash flow, he believes the shares are undervalued at current levels. The company has virtually no debt and has no problem paying its bills with a current ratio of 7.6. Analysts are forecasting 40% revenue growth for 2004 and earnings per share of $1.09 -- down from estimates three months ago of $1.19.
One thing to be aware of: both institutions and insiders were big sellers of JCOM shares in the past six months at prices slightly above current market price. Markowski believes that momentum investors will find JCOM again, as long as the company continues to generate increasing amounts of cash from its operations.
He discounted at SNDK's weighted average cost of capital, which he pegged at 11.7%
SNDK
Just to clear up some confusion...
The Goldman comments were published Friday morning prior to the market open, so presumably they are already in the stock.
What Goldman said about royalties is the following: SNDK royalties should grow from $153mm in 2004 to $369mm in 2009. This is based on a tripling of the total NAND flash market during this period to $15b. As a sanity check, they note that TI had DRAM royalties in 2003 of $370mm when the DRAM market was $16.7b - comparable to the assumptions of both SNDK's royalties and the projected NAND market size - so this is very possible. Also, I don't believe that Micron pays TXN any royalties as a result of their purchase of TXN's DRAM operations a few years ago, so TXN's royalties "should" be even higher.
Six consecutive Nasdaq down weeks is a fairly rare occurence, and it has usually been good news, at least during the last 14 years. I took a quick look on stockcharts, whose data goes back to 1990. As far as I can see, the last time ended right at the Oct. 02 low. The time before (actually 7 weeks) was near the Apr. 01 "low" (market bounced sharply, but then proceeded to fall further). The only other time was near the Sept. 90 major low, right before a humongous bull. It would be interesting to check some of the major bear markets prior to 1990.
LUV
http://stockcharts.com/def/servlet/SC.web?c=LUV,uu[h,a]waclyyay[pb50!b200!f][vc60][iUb14!Lp14,3,3!Ll...
ADX looking near a peak and +DI under 10 make this an excellent candidate for a bounce, IMO. I too am watching, but prefer to buy when the ADX begins to roll over (trend reversing).
Oh, and fundamentals look good too: high quality company selling for 26x forward eps for 46% growth on consensus numbers.
Lousy sentiment and trade deficit numbers, and what is the reaction? The dollar rallies and gold crumbles. It is a "funny" world we live in <g/ng>
Dan, any thoughts on the BGO Kupol update released last night? TIA.
CSCO
This from a major sellside firm this morning, on CSCO's disappointing book-to-bill:
"Our detailed estimated order mix analysis demonstrates that the seasonally weak order pattern seen in the US Government and US telecom carrier segments makes the order book look weaker than actual underlying demand at this point in the spending recovery cycle - excluding these factors, book-to-bill would be higher."
lol...what does this mean??? Are they saying if orders had been stronger, the B/B would have been better, so don't worry? Yeah...I guess.
NEM:
Goldman had estimated 89.4 at $325/oz, so this should be a positive surprise.
12:45PM INCO Limited earnings color (N) 35.80 -0.95: --Update -- Reuters Research is indicating that, excluding items, the actual of a $0.57 is comparable to the $0.30 consensus... see 12:02 update for full earnings comment.
Stock has not moved on the news. Nickel fundamentals are extremely strong (like other metals), and stock looks cheap here.
Lots of things tonight pointing to a bounce. VXN and VXO had nice shooting stars at the top of their BB's
http://stockcharts.com/def/servlet/SC.web?c=$VXN,uu[h,a]dacayyay[dc][pd20,2][vc60][iub14!lp14,3,3!ll...
COMP and NDX have inverted hammers, with the NDX a big black one. COMP new highs and highs/lows at levels that have reliably produced bounces. The typical 50% retrace of the 3 black crows looks tempting, but of course this all looks too "neat", and the market will probably be down tomorrow <ng>. I hope not...my guess is new recovery highs within a few weeks.
Zeev, the SPY and DIA have dividend yields that are slightly less than the rate of the underlying stocks. I think the difference is about 10-20 basis points (the number is available in the prospectus, ask you broker). This is equivalent to the cost to "manage" these passive instruments. I don't see a yield for the QQQ either, but it would not surprise me if there is no yield, since the yield on the Nasdaq 100 is so small anyway. The "creator" of the ETF pays dividends quarterly, but collects slightly greater dividends as they are due from the companies that comprise the index.
BTW, this feature makes ETF's an attractive hedging vehicle, since a short gets a slight edge equal to the yield differential...a true free lunch.
SNDK...missed the whisper number ($400 mm), but it certainly is ridiculous. I'm long at 64.75.
Both SPX and COMP closed above their 200-week SMA for the first time in a long time.
http://stockcharts.com/def/servlet/SC.web?c=$COMPQ,uu[h,a]waclyyay[pb50!b200!f][vc60][iUb14!Lp14,3,3...
http://stockcharts.com/def/servlet/SC.web?c=$spx,uu[h,a]waclyyay[pb50!b200!f][vc60][iUb14!Lp14,3,3!L...
Z, 2650 is the 38.2% retracement of the decline from the all time high to the Oct. 2002 bottom. If we are going "well above 2300", this would be a logical target, no?
TER posted blowout numbers with net orders up 45%
http://www.marketwatch.com/news/yhoo/story.asp?source=blq/yhoo&siteid=yhoo&dist=yhoo&gui...
somewhat lost in INTC's shadow. Similar good news coming from other equipment makers, I think.
Yup, market definitely doesn't seem to like it. Questions on the call seem to be zeroing in on no big upside in guidance for Q1.
I don't think the relative cost of an INTC processor affects the cost of a box sold in Europe. It's only 10% of the total cost to the end consumer. And INTC has no foreign competitors for microprocessors, so no competitive advantage there.
INTC
I believe they sell their products in dollars, so they are unaffected by currency, except that some of their costs are non-dollar...so dollar weakness actually has a negative but very small effect on them.
It looks to me like they beat by $0.02 apples to apples, with slight revenue upside. Maybe this was not enough for the market? Maybe some are disappointed with the margin guidance - but I think this is a non-issue, because INTC's margins are always down sequentially in Q1, and also because there are likely some fab ramp expenses bundled into Q1. Moderate capex guidance for next year looks very bullish to me, because it implies that margins are still on an upward trajectory.
This looks like a strong report to me, and I think the analyst reaction tomorrow will reflect this.
aj, a key to watch here is the SPX 200-day sma, currently at 1129.14 and falling. For some, this is the litmus test for defining a bull market.
http://stockcharts.com/def/servlet/SC.web?c=$spx,uu[h,a]wacayyay[pb50!b200][vc60][iUb14!Lp14,3,3!Ll1...
This week is prime earnings pre-announcement season. We have seen very few warnings so far, and time is running out. They may end up selling the news, but earnings this quarter will be very strong.
iSCSI, may be an interesting tech theme for 2004
http://www.byteandswitch.com/document.asp?doc_id=44459
iSCSI has always had definite advantages in low end networks over Fibre Channel - it is IP-based, lower cost, easier to manage, and less limited by distance. It has been slow to take off, but now Microsoft is pushing the technology hard. This may be the year it gets traction.
One interesting play is ADPT, which has positioned itself as a leader in iSCSI. It's still a small part of their business, and the management of ADPT has not exactly distinguished themselves on the execution front (in fact, they very nearly extinguished themselves <g>). Just an idea though, and I plan to do some more work. If there are any storage experts here on iSCSI, and ADPT's or NTAP's position here, I would be grateful for any thoughts. TIA.
The 1000 is the largest cap names. The 2000 is the smallest cap names. There is no overlap between the two. Together, the 1000 and 2000 make up the 3000. The performance of the 3000 is dominated by the performance of the 1000 (because of the cap effect). So it is quite possible for the 2000 to be down, while the 3000 is up almost as much as the 1000. I hope this makes sense.
lee,
I think you are in the Boston area? I am in Andover. Not much here under $750k. Given the weather, I have no idea why anyone would want to live here <g>.
Steve,
These are capitalization weighted indices, so the bulk of the R3000 performance (something like 80-90%, from memory) comes from the R1000.
Options are a ripoff, but not for the reason some here think. It is because transactions costs are much too high.
It doesn't matter what percentage expire worthless, because of the asymmetrical payoff of options. Options are like insurance policies, which have a similiar payoff structure. Most insurance policies "expire worthless", but for the few that "hit", the average payoff is much greater than the average loss of those that expire.
Commissions on options are greater as a percent of value than for the underlying cash instruments, and the spread is generally too wide. The second of these is the bigger problem. Options markets are not as liquid as the cash markets, but this does not explain the problem. Fifteen year ago, the spread on Nasdaq stocks was also very wide (even on very liquid stocks like INTC), and it was only pressure from customers and regulators that forced these to narrow. Da Boyz are just very greedy, and will take whatever we allow them to take.
Options are not intrinsically a bad deal for the buyers in my experience, i.e. they are not generally mispriced in favor of the sellers. If they were, we'd all be writing options and making a fortune, and this opportunity would be quickly arbitraged away. Rather, options are a bad deal for both buyers and sellers because of high transaction costs.
Airline traffic and RASM numbers reported last night better than expected.
From a JP Morgan note this morning:
Our checks in the channel along with data gathered by our Asia research team
indicate that 4Q03 and 1Q04 expected QoQ growth in shipments from Taiwanese
motherboard and notebook vendors could be at or below normal seasonality. This
has us slightly concerned given our expectation of above-seasonal growth for
INTC revenues in 4Q03 and 1Q04.
Ever hear of a Renault Fuego? This car was beyond bad, it was positively evil. It would do things like spontaneously lock the brakes while I was doing 60 on the highway. BTW, I was unfortunate enough to have also owned a Vega...not even close.
Semi biz in Asia has rolled over. After a huge October, November was down and December so far has been worse. My guess is that this is seasonal and short-term, but we shall see.
op,
No, I own it too and have for awhile. I sold half of a large position at 86 (wish I hadn't), and getting ready to sell the rest. The fundamentals are strong, and are likely to exceed expectations, but the stock looks fully priced at 18x forward eps for 11% growth. Sentiment is also very positive...lots of buy recs and a low short interest. Just this morning, more positive comments from Pru and Lehman.
On the plus side, UTX is a good deal less expensive than MMM, which I think is a good comparable longer term. Also, one potential catalyst is the elimination of the unfunded pension overhang, due to strong stock market performance. I think this is a done deal, and there is only a question of when the company decides to upgrade their assumptions. Another catalyst is the guidance the company will provide in January - it is certain to be positive (but conservative, in typical UTX fashion). The chart also looks great, of course. So I'm sort of looking at this as a source of cash...not really sure what I'll do.
Continued good luck with your holding.
PH, I have a few shorts in the semi space (BRKS, NVLS, QCOM), but these are small positions and well hedged...overall very long. I would probably reduce exposure by selling longs rather than initiating new shorts, as I am basically bullish and think shorting is dangerous here.
Great news on Saddam. More of our brave soldiers will be around to celebrate the holidays, and some relief for the long suffering Iraqi people. Peace and freedom, onward and upward.
State of the semi business
FWIW, I thought I'd share some of my thoughts on the semi space. This is based on proprietary (i.e. non-Wall Street) and very recent inputs from Asia and elsewhere. To my suprise, these inputs indicate some general slowing of orders and inventory buildup. I still think the overall trajectory is up, but I'm now expecting some cautious commentary when Q4 results are announced, and I do not think Q1 will be a barnburner. Of course, I could be wrong, or the situation may change, or I could be right and the stocks could go up anyway...so use your own judgement. This is simply one more data point you may or may not use.
My own inclination is to maintain my currently aggressive long position, but to sell into strength (if we get it) leading up to Q4 earnings announcements, probably ending at a slightly long position around mid-January. I should also mention that my orientation is about 75% fundamental / 25% technical, and much longer-term than most on this board (average holding period of 6-12 months). I also change my mind as conditions warrant <g>.
I hope this information is useful to some, and best of luck to everyone, and happy holidays.
lol. You have to admit - her ability to nail local market tops every time she opens her mouth has been impressive <g>. She has had quite a run, but like all runs, one day it will stop...I just wish I knew when.
Abby says S&P fair value is 1250 at end of 2004. She is on a conference call now. Also raised her S&P earnings estimate.
MM, re:SNDK
Just a couple of caveats on SNDK. First, most of the sell-side models already assumed FY revenues of $1 billion or more, and of course the whispers were above even this, so the upping of guidance is not really news to anyone. Second, NAND flash pricing has definitely weakened the past 2 weeks. This is not the end of the world, as prices are still up 40% from the summer, and 30-40% annual price declines are normal here, as with most semi products. Demand is still strong, but there is a lot of supply coming on within the next 6-12 months also. FWIW, I personaly think the pricing outlook is healthier for NOR flash (which would benefit the likes of INTC, AMD, STM, and ATML), and even DRAM (since pricing has been bad, not too much incremental investment, and some capacity being shifted to flash and other products).
AJD
intc update is tomorrow night. It will be very bullish.
I assume it's the new one, whatever $VXN is on Stockcharts. As far as I can tell, the last time it happened was in Sept. 2001...the Nasdaq then proceeded to rally 50% is 3 1/2 months. Obviously, the situations then and now are completely different. For one thing, the VXN absolute level then was very high, now it is low. And the market then was at the end of a sharp downturn, now the situation is the opposite. But it is interesting, and indicates to me that complacency is not as high as some seem to think.