« October 2003 | Main | October 2006 »
Got three bucks? That and a nickel will buy you a coffee drink at Starbucks . Starbucks Corp. said Thursday that it planned to raise prices of its lattes, cappuccinos, drip coffee and other drinks by 5 cents, or an average of 1.9 percent.
Home sales in Southern California continued at their slowest pace in nine years as price levels appeared to be nearing a plateau.
A total of 25,628 new and resale homes sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was up 12.8% from 22,712 in July, and down 25.3 percent from 34,292 for August a year ago, according to DataQuick Information Systems.
| All Homes; | No Sold Aug-05 |
No Sold Aug-06 |
Pct. Chg |
Median Aug-05 |
Median Aug-06 |
Pct. Chg |
| Los Angeles | 11,653 | 9,193 | -21.1% | $494K | $517K | 4.7% |
| Orange County | 4,708 | 3,203 | -32.0% | $617K | $633K | 2.6% |
| San Diego | 5,379 | 3,666 | -31.8% | $493K | $482K | -2.2% |
| Riverside | 6,452 | 4,879 | -24.4% | $388K | $415K | 7.0% |
| San Bernardino | 4,522 | 3,611 | -20.1% | $344K | $365K | 6.1% |
| Ventura | 1,578 | 1,076 | -31.8% | $592K | $598K | 1.0% |
| So. California | 34,292 | 25,628 | -25.3% | $476K | $489K | 2.7% |
Like I've said before, I've seen as much so-called wisdom over the years that I've eventually learned to hold as inviolate truth, as that which should be thrown out with yesterday's garbage. Yet why does the eventual accumulation of pertinent knowledge translate so slowly into one's trading results? If we are capable of weeding out the good stuff from the bad, why doesn't the good stuff just take over and guide us directly towards success?
Eyes Wide Shut / via: tradingthoughts.blogspot.com
Continue reading "Why does it take so long for a trader to learn?" »
Does the federal deficit matter? Oceans of ink track and report this monster tally (current estimates for fiscal year 2006 stand at $260 billion), yet Jerry Green of Harvard Business School and Laurence J. Kotlikoff of Boston University contend that the deficit and related fiscal measures are arbitrary terms with no intrinsic meaning, a lesson that even economists have not learned.
"On the General Relativity of Fiscal Language," a working paper for the National Bureau of Economic Research, provides a mathematical proof that the deficit, taxes, and transfer payments are no more than labeling conventions—representing, in the words of the authors, "an exercise in linguistics, not economics." Like Einstein's General Theory of Relativity, which concluded that concepts like time and distance depend on one's reference point, current fiscal language "represent numbers in search of concepts that provide the illusion of meaning where none exists."
Continue reading "When Words Get in the Way: The Failure of Fiscal Language" »
The U.S. current-account deficit--the combined balances on trade in goods and services, income, and net unilateral current transfers--increased to $218.4 billion (preliminary) in the second quarter of 2006 from $213.2 billion (revised) in the first quarter. The increase was mostly accounted for by increases in the deficits on goods and on income. Net unilateral current transfers to foreigners also increased, and the surplus on services was virtually unchanged.
How social computing and P2P activity are changing financial research and lending
Do not dismiss the power of consumers in the internet. To some, social computing and P2P (peer-to-peer) activity appear to be just more irrelevant remnants of the dot com era. This view ignores the sheer volume of information, opinion and services transmitted directly between ordinary consumers over the internet. Each day, for instance, volunteers create close to 10,000 articles for the online encyclopaedia Wikipedia.
Blogs propagate information and opinion. Close to 40% of US internet users read blogs, user-written online diaries on a variety of topics. This illustrates how easy it is for consumers to follow the experiences of many other users (accurately presented or not) before taking decisions. see chart 2 Social computing can augment to commercial success. Some of the best-performing internet firms rely on user-created content to enrich their services. Customers love to share their views on products they own. Amazon, an internet retailer, publishes such comments to inform undecided shoppers. Other ventures take the idea even further.
http://www.dbresearch.com/PROD/DBR_INTERNET_EN-PROD/PROD0000000000201284.pdf
BT, BT Group plc, has broken out to new highs on the stock chart. I like the big volume on today’s gap up.
BT Group plc, through its subsidiaries, provides communications solutions and services to business, residential, and wholesale customers in Europe, the Americas, and the Asia-Pacific. It principally offers networked IT services; local, national, and international telecommunications services; and broadband and Internet products and services.
U.S. Information Services sector revenue for the first quarter of 2006, not adjusted for seasonal variation, holiday or trading-day differences, or price changes, was $249.2 billion, a decrease of 3.8 percent from the fourth quarter of 2005.
Some truly apocalyptic comments from Don Tomnitz, CEO of homebuilder D.R. Horton, at the Credit Suisse Homebuilders Symposium today. He is expecting 2007 to be worse than 2006, and maybe stabilization by 2008:
"We have never seen housing prices and demand slow as quickly as they have during this downcycle," said the CEO of the nation's largest home builder when measured by 2005 deliveries. "Demand has evaporated to the extent of about 20% to 30% for the industry, and in a tighter timeframe than we've seen before."
The Nation's international deficit in goods and services decreased to $64.8 billion in June from $65.0 billion (revised) in May, as exports increased more than imports.
June 2006: -64.8 $ billion
May 2006: -65.0 $ billion
Sales of new one-family houses in July 2006 were at a seasonally adjusted annual rate of 1,072,000. This is 4.3% below the revised June 2006 figure of 1,120,000.
July 2006: -4.3 % change
June 2006: -0.9 % change
Total construction activity for July 2006 ($1,200.0 billion) was 1.2 percent below the revised June 2006 ($1,214.2 billion).
July 2006: -1.2 % change
June 2006: 0.4 % change
Personal income growth was slower in 2005 than in 2004 in most of the nation's metropolitan statistical areas (MSAs), according to estimates released today by the U.S. Bureau of Economic Analysis. Despite the slowdown, 2005 per capita income grew faster than inflation (2.9 percent as measured by the national price index for personal consumption expenditure) in nearly three-fourths of the MSAs. The estimates for 2005 are based on a methodology developed by BEA to speed up the release of MSA personal income by seven months-one of BEA's major goals in its strategic plan.
Title: Personal Income for Metropolitan Areas, 2005
Link: http://www.bea.gov/bea/newsrel/MPINewsRelease.htm
Personal income increased $60.2 billion, or 0.5 percent, and disposable personal income (DPI) increased $63.9 billion, or 0.7 percent, in July, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $78.7 billion, or 0.8 percent. In June, personal income increased $60.0 billion, or 0.6 percent, DPI increased $47.8 billion, or 0.5 percent, and PCE increased $36.6 billion, or 0.4 percent, based on revised estimates.
Title: Personal Income and Outlays, July 2006
Link: http://www.bea.gov/bea/newsrelarchive/2006/pi0706.htm
The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that total June exports of $120.7 billion and imports of $185.5 billion resulted in a goods and services deficit of $64.8 billion, $0.2 billion less than the $65.0 billion in May, revised. June exports were $2.4 billion more than May exports of $118.4 billion. June imports were $2.2 billion more than May imports of $183.4 billion.
Title: U.S. International Trade in Goods and Services June 2006
Link: http://www.bea.gov/bea/newsrel/trad0606.htm
US and Canadian online research and application activity continued to increase in 2005. Consumers in the online sales process prefer to use a mix of channels as they move from researching to applying, then to fulfilling their product choice. Financial firms need to first dissect overall sales processes, then understand consumers' preferred channels for each step of the process. Armed with this information, channels can be best aligned to meet consumer's sales expectations.
Title: How Consumers Buy Banking Products
Link: http://www.forrester.com/go?docid=40012
Money is earned to be invested; and mutual funds are one of the best investment options available today. This is because a mutual fund is a fund that permits a group of people to pool their money to invest in a single fund. A fund manager is the person in charge of investing the money that is collected into the specific mutual funds. So by investing on a mutual fund, you will actually be buying shares of the mutual funds and thus become a shareholder of the mutual fund.
Mutual funds are a wise choice for investment as they are cost-efficient and easy for investment. Its biggest advantage is its diversification. You can store money for emergencies, savings or a safe place for storing large sums of money. These types of mutual funds are called money market funds and are short term investments offering double the interest rates banks offer. The specialty of money market funds is that you can issue checks on your account with its great liquidity.
Another type of mutual bond is the bond fund which is basically riskier than money market funds. They are usually used to produce income on retirement and to stabilize a portfolio. These bond funds are further divided into municipal bond funds, corporate bond funds, US Government bond funds, and mortgage backed security funds. Another classification of bond funds is by its maturity. It is then termed as short-term bonds, intermediate term bonds, and long term bonds. The third type of mutual fund is the stock fund where it is riskier than bond funds, but great for growing of money. They perform much better than money market funds and bond funds over long periods of time.
The main benefit of using mutual funds in a portfolio is to achieve maximum diversification in your investments. Another reason people use mutual funds in a portfolio is to target a particular asset class to invest, without having to invest and without buying of any securities of that class. When investing in mutual funds in your portfolio, make sure to choose the right mutual bonds with the help of the mutual fund manager.
Mutual funds are again divided into open end and closed end funds, where most of the funds are open ended. An open ended mutual fund is one where there is no limit to the number of new shares that can be issued by it. Shareholders - both new and existing ones - can add money to their fund, to have new shares issued to them. Open ended funds are redeemable; and to determine the values of a share, you just have to use the Net Asset Value.
As the name implies, closed end funds are more like stocks and issue only a limited number of shares during a public offering. These funds are not obligated to issue new shares and its price is determined by market demand. This is why they are sometimes sold either at a discount or a premium of the net asset value. This is a better choice for the experienced investor, and can easily be bought through a broker.
News Feed Source
Home Page: http://www.thebulltrader.com
Last week, telecom-equipment provider Ciena (CIEN-$4.01) announced a one-for-seven reverse stock split. According to the Board of Directors, the purposes of the reverse split were to increase (proportionately) the per share trading price of Cienas Common Stock, thereby appealing to a broader range of investors (like institutional investors that are unwilling to invest, and in some cases, have internal policies prohibiting them from investing in lower priced stocks); and to provide investors with more meaningful information of operational results, particularly related to period-to-period comparisons of per share earnings (Ed. note. enhance EPS visibility).
The 10Q Detective took a look at companies that have engineered reverse splits in the last eighteen months, and found that the intent of most splitsdespite some exceptionswere engineered to (i) broaden the investor base; (ii) help the company regain compliance with Nasdaqs $1.00 minimum bid price listing requirement; and, (iii) enhance EPS visibility (by reducing the aggregate common stock issued and outstanding on an as is conversion basis).
Despite some exceptions, the legitimacy of these reverse splits seemed disingenuous at best. These splits did nothing to reverse the ugly stock price trends at the reviewed companies (due to erratic quarterly financial performance). Identified trend reversals ran parallel with underlying improvements in financial health.
Chipmaker Agere Systems (AGR), telecom-equipment provider Oplink Communications(OPLK), sales & marketing provider Rainmaker Services (RMKR), and network services software provider Internap (IIP), which showed share gains of 20.3%, 63.4%, 127.4%, and 21.2%, respectively, also reported material turnarounds in operating profitability.
Cienas products allow network operators such as phone companies to handle more traffic at lower costs. Last Thursday, the Company reported for the three months ended July 31, 2006, a net loss of $4.3 million, or a penny per share, down from its year-ago loss of $51 million, or 9 cents a share.
Revenue rose 38% to $152.5 million from $110.5 million.
On an adjusted basis, Ciena had been expected to earn a penny a share on revenue of $143 million, according to the consensus of analysts surveyed by Thomson First Call.
As sales are on an upswing, management believes that by affecting a reverse stock split [the price of Cienas store price will increase seven-fold to approximately $28.00 per share], the higher trading price of its Common Stock will be viewed more favorably by potential investors.
A 1:7 reverse stock split would lead to a corresponding reduction in Cienas 980 million shares of authorized common stock and approximately 589.3 million shares outstanding to 140 million shares and 84.2 million shares, respectively.
A reverse stock split is no more than a bookkeeping entry. Cienas cosmetic ruse cannot hide fundamental weakness endemic to the Company. For the nine-months ended July 31, 2006, Free Cash Flow was a loss of $77.6 million. Going forward there are serious concerns as to managements ability to lower the firms relative cost structure enough for the Company to be competitive (and profitable) in its networking space.
Albeit 4Q:06 revenue should grow sequentially 5%, corporate has guided EPS lower, citing lower than previously expected gross margins and higher operating expenses. The current consensus calls for share-net estimate of $0.01 on revenue of $160 million (not adjusted for pending reverse stock split).
Gross margin was 47.0% in the third quarter of fiscal 2006 and 45.8% for the first nine months of fiscal 2006. Gross margin during the third quarter of fiscal 2006 remained strong, primarily due to sales of higher margin channel line cards for Cienas core transport systems.
Management cautions, however, that its gross margin remains susceptible to fluctuation from period to period as a result of product mix, competitive pressure on pricing and other factors. In recent quarters, the Company cautions, it has witnessed a growing interest among telecommunications service providers in building more economical, next-generation core and metro transport networks. In other words, costing advantages (from larger, incumbent companies and low-cost networking equipment producers in China), coupled with the increasing purchasing power of larger customerspressure gross margins going forward.
During the third quarter of fiscal 2006, three repeat customers represented 51.6% of revenue, and for the first nine months of fiscal 2006, these three customers accounted for 40.4% of revenue.
To reduce operating expenses, management is embracing product convergence and functionality crossover. This strategy calls for the reorganization of prior operating segments and the consolidation of multiple technologies and functionalities on a single platform. In an effort to address this convergence and improve operational efficiency, management has eliminated former business units and no longer has operating segment general managers. As a consequence, Ciena has eliminated the Transport and Switching Group (TSG), Data Networking Group (DNG), Broadband Access Group (BBG) and Global Network Services (GNS) operating segments and will report results as a single business segment.
For the nine-months ended July 31, 2006, operating expenses (OpEx) improved 315 basis points to 54.5% of total revenue (year-over-year), due to reductions in R&D and the amortization of intangible assets costs (offset by a 30.7% increase in year-over-year sales).
New product initiatives and rising G&A expenses will test managements commitment to execution in the coming quarters.
On a trailing twelve-month basis, Cienas return on capital is (5.1)% with a cost of capital of 11.4 percent. Given managements ineffective use of shareholder capital, the 10Q Detective fails to see how raising the trading price of the Common Stock will be viewed more favorably by potential investors?
If anything, at a new share price of $28.00, the stock of Ciena will probably be viewed more favorably by short-sellers. (due to increased revenue concentration caused by recent mergers among telecommunications carriers)
HemoSense, Inc. (HEM-$7.65) / $3.80 / 50.33%
SOLD SHORT. Despite a 86% rise in 3Q:06 revenue as compared to last year, this maker of handheld blood coagulation monitoring systems (for use by patients and healthcare professionals in the management of warfarin medication) reported a net loss for 3Q:06 of $3.1 million, up from a net loss of $2.9 million for the FY 2005 third quarter. CLOSEOUT POSITION.
Rent-Way (RWY-$6.40) is one of the nations largest rental-purchase operators of branded merchandise. We would not rush out to buy these shares. SEC filings indicate that Rent-Way has pledged substantially all of its assets as collateral on existing debt. So much for "hidden" value. This is one stock that we would definitely not rent-to-own! On August 8, 2006, the Common Stock rose more than 25% after Rent-A-Center Inc. (RCII) agreed to acquire it for $10.65 a share, for a total of $567 million. Obviously its competitor saw value in making this deal.
PhytoMedical Tech. (PYTO.OB-$1.06) / $0.36 / 66.04%
SOLD SHORT. The Company is working to isolate potentially active pharmacological elements in plant-derived compounds. PhytoMedical has had limited revenues since inception. In the last 2 -½ years, management reported zero revenues. CLOSEOUT POSITION.
AutoNation, Inc. (AN-$21.82) / $19.49 / 10.68%
As expected, same store new vehicle unit volume declined as compared to the prior year period. The decrease was consistent with industry trends. Discontinued.
Sonic Automotive (SAH-$26.86) / $21.18 / 21.15%
SOLD SHORT. Blaming lease cancellations and higher expenses, Sonic Automotive Inc., one of the nation's largest car dealership groups, recently reported that 2Q:06 profit fell by more than half. Earnings dropped to $12.2 million, or 29 cents per share, from $27 million, or 62 cents per share during the same period a year ago. CLOSEOUT POSITION.
Lifetime Brands ($29.10) / $20.11 / 30.89%
SOLD SHORT. In late June, the share price of this maker of kitchen goods and cookware broke to the downside after guiding 2Q:06 share-net lower (blaming stock option expenses and acquisition costs). CLOSEOUT POSITION.
Bed Bath & Beyond ($35.22) / $34.25 / (2.75)%
BUY. Disposable income and (company-specific) margin erosion concerns have us rethinking our recent talking points on this home-accessories retailer: In our opinion, now may be a good time to start accumulating shares in Bed Bath & Beyond. The stock price has already discounted any potential retail slowdown, while the forward P/E of 14 times 2007 consensus estimates of $2.49 is near the stocks historic trough. Any sales or EPS guidance nudged upward by management will serve as the necessary catalyst to expand the P/E multiple and push the stock to a target value of $45.00 per share. We prefer to move to the sidelines and sell into this rallying market. CLOSEOUT POSITION.
Raser Tech. (RZ-$14.45) / $4.47 / 69.07%
SOLD SHORT. Geothermal power generator company, Amp Resources, LLC., terminated its acquisition agreement with Raser, closing the door on nearly $1 billion in energy sales over a 20-year period from four (existing) projects. CLOSEOUT POSITION.
Abraxis BioScience (ABBI-$21.45) / $25.46 / 18.69%
BUY. The stock price of this maker of ABRAXANE, a novel tumor-targeting chemo drug, rose on higher-than expected 2Q:06 share-net of 17 cents (as compared to the consensus estimate of 14 cents a share, excluding any exceptional items). Albeit we still embrace the long-term potential of ABRAXANE, we believe that booking profits (for now) is the prudent action. Although it does not trouble investors, it does concern us that management has revised guidance for ABRAXANE and now anticipates sales in 2006 to be in the range of $170 to $190 million versus the previously announced guidance of $200 (+) million. CLOSEOUT POSITION.
Recent Comments