Replies to post #5423 on The Rising Influence of Rising Affluence

[ghmm]

Thanks again, I appreciate the information and analysis!

With companies like this I tend to concede I'll have just a basic understanding and want to be comfortable with the overall business/management. Since I tend to hold long-term I (try to) look at the longer term/bigger picture.

Do you (or anyone else) know of a good site for seeing historic (long term) iron-ore and coal prices?

[DewDiligence]

CLF—An important timing question (i.e. should one purchase CLF stock before or after the CC) relates to whether or not my expectation for reduced guidance is already priced into the stock. In April CLF stock was priced at about $70/share... It is now at about $45/share.

A cut in CLF’s 2012 guidance roughly equivalent to your projection in #msg-77633656 is already baked into the share price, IMHO. This is consistent with what I posted in #msg-77595866—i.e. that the shares could rally if the reduction in 2012 guidance is relatively mild.

[Democritus_of_Abdera]

Re: CLF FY2012 Q2 earnings release...

Two items caught my attention in CLF’s earnings release.... (see: http://finance.yahoo.com/news/cliffs-natural-resources-inc-reports-210000453.html )

Due to the year-to-date spot price for 62% Fe seaborne iron ore averaging $142 per ton, Cliffs is modestly decreasing its average full-year 2012 seaborne iron ore spot price expectation to approximately $145 per ton (C.F.R. China) from its previous expectation of $150 per ton.

This is either a very bullish expectation, or an overly optimistic one (the latter in my opinion).... The average spot price for July likely to be approximately $130/MT. That means that the average price over the next 5 months will need to be approximately $153/MT (using CLF’s stated average for the first 6 months of $142/MT).

Due to the Company's revised outlook, Cliffs is decreasing its full-year 2012 cash flow from operations expectation to approximately $1.3 billion, from its previous expectation of $1.7 billion.

Cliffs is maintaining its previously disclosed 2012 capital expenditures budget of approximately $1 billion, comprised of approximately $300 million in sustaining capital and $700 million in growth and productivity-improvement capital.

This expectation will allow cash flow to exactly cover the anticipated FY2012 dividend expenses (i.e. $300M) after CapEx is subtracted.... What I find notable is that the dividend is not mentioned in the PR.... I have been expecting the dividend to form a floor for the stock price. If the commitment to the dividend wavers, the risk of stock ownership increases, even from the current approximate $41/share (in my opinion).

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I am anxiously awaiting to see how the market reacts tomorrow... the after hours quotes suggest a modest uptick in prices (so far).