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  • A Calculated Bet on Cisco's Management [View article]

    I did consider the net cash (cash & equivalents - debt) as part of my analysis. The dcf based fair value includes that number.
    Apr 13, 2011. 11:29 AM | Likes Like |Link to Comment
  • Cisco's Stock Buybacks Not As Rosy As They Seem [View article]
    Hi Brad,

    Let me assure you that it was never my intention to make inaccurate statements. I apologize if you felt that I was willfully making erroneous statements.

    With that said, based on my limited knowledge of how companies deal with stock based compensation, looking at cash flow statements of the last three years, the company paid a total of $3.86 billion in SBC. During the same time period, company repurchased a total of $21.8 billion worth of stock. The net reduction though was only worth $10.1 billion. Thus, looking at the SBC and the total shares repurchased, SBC doesnt seem to be the critical component accounting for only 18% of the total stock buyback.

    Now, I am an amateur, especially when it comes to stock based compensation and its accounting methodologies, and you are clearly an expert. Please tell me what am I missing which makes my analysis and my statements inaccurate? I will appreciate your feedback in this matter.

    Apr 12, 2011. 12:42 AM | 2 Likes Like |Link to Comment
  • 4 Stocks Snapped Up by Insiders Ahead of Earnings This Week [View article]
    HOFT - 500 shares. wow, thats a huge pickup. At todays closing, thats 6500 bucks.
    Apr 11, 2011. 06:34 PM | Likes Like |Link to Comment
  • Cisco's Stock Buybacks Not As Rosy As They Seem [View article]
    Well, you are partially correct. Cisco has been on an acquisition spree and funds its acquisition using cash, stocks and sometimes debt. Over the past 10 years, if i had to guess (and I can go back and check), but most the dilution is actually due to CSCO issuing more shares than by simple dilution based on sbc
    Apr 11, 2011. 06:04 PM | Likes Like |Link to Comment
  • Cisco's Stock Buybacks Not As Rosy As They Seem [View article]

    The numbers are correct. This is just one instance where using shares outstanding (basic) would have been better. The diluted shares (which is what I like using for almost any purpose) decreased by 306 million, but the basic shares decreased only by 158 million. (5986 - 5828). Several million stock options must have expired during that period.
    Apr 11, 2011. 04:35 PM | Likes Like |Link to Comment
  • Cisco's Stock Buybacks Not As Rosy As They Seem [View article]

    The purpose of the article was not to say that the company retired only 26.6 billion worth of stock after spending 65 billion on buybacks. I apologize if thats what came across from my article. The purpose was to make it known that the 65 billion was deceptive. As an investor, I would want to not look at the 65 billion figure, but only at the 26.6 billion, as that is the actual return to the investors.
    Apr 11, 2011. 01:27 PM | 2 Likes Like |Link to Comment
  • Microsoft Repurchasing 2 Million Shares a Day: Implications for Investors [View article]
    Although the share count did drop 16%, the stock price dropped by 5% or $1.46 during the last 5 years (March 31, 2006 to March 28, 2011). Now you might argue that if the company had not bought back stock, MSFT would have been trading at a loss of 10 - 15% over the last 5 years. But, if the company was paying a significant dividend instead (something like a 60% payout in dividends, translating into a yield of roughly 4.5%), I doubt the stock would do any worse than what it is doing at the moment.

    The company can easily afford a payout of 60%. With an ROE of 40% and long term growth rate of 10%, the company does not need anything more than 25% to 35% of its net income.

    If the current share count was still 10.531 Billion (end of financial year 2006), the TTM earnings would have been 1.95 a share instead of 2.36. At 60% payout, as of today, the company would have paid a total of $5.11 in dividends as opposed to the $2.56 it paid. Thats an additional $2.55 which makes up for the decline in stock price of $1.46 even accounting for taxes paid on dividends.

    Disclosure: Long MSFT
    Mar 28, 2011. 02:31 PM | 2 Likes Like |Link to Comment
  • Joe Feshbach's Highest Conviction Position: A Regenerative Medicine 'Game Changer' [View article]
    Where did you see the FDA request for PMA applicaion? from the letter to the shareholders "After an extensive external analysis by our regulatory advisors and numerous discussions with the FDA, we are confident that the 510(K) pathway remains a viable approach to market clearance with limited claims for our tissue processing technology. As part of an integrated strategy, we have multiple FDA applications under review and in the process of being filed. These consist of a mix of 510(K) filings, an HDE for a congenital condition affecting the soft tissues, and a PMA trial for chronic myocardial ischemia as previously described." it appears that the 510(k) is still on target.
    Mar 16, 2011. 01:03 PM | Likes Like |Link to Comment
  • 5 Reasons Cisco Systems Will Stage a Comeback [View article]
    While I agree with most of your points, I disagree with CSCO's policy of stock buybacks. They are horrible at capital management and the buybacks have not helped the investors. Rather than buying back stock, CSCO should pay a decent dividend to attract the dividend investors. The 1-2% planned dividend is meaningless. The company can safely payout 40 to 50% of its earnings as dividends which would result in a yield of 3 to 4%. Tech companies in general have this weird fascination with huge stock buybacks with little or no dividends. It only works when the stock price rises as is the case with Apple. For companies such as MSFT and CSCO, paying a healthy dividend is a much better way to reward the shareholders.

    Disclosure: Long MSFT and CSCO
    Mar 9, 2011. 01:23 PM | 8 Likes Like |Link to Comment
  • My Top 10 Stocks for 2011 (Plus 7 Honorable Mentions) [View article]
    I think he meant book value!
    Jan 5, 2011. 03:46 AM | 1 Like Like |Link to Comment
  • Netflix: Revenue per Subscriber Steadily Declining, Free Subscribers Soaring [View article]
    Wow, what an idea. Except that the studios currently arent allowing NFLX to do that as they want to preserve the DVD model.
    Nov 1, 2010. 10:17 PM | Likes Like |Link to Comment
  • Cramer's Being Reckless About Netflix [View article]
    Regardless of the market, increasing the customer base from 17 million to 50 million itself is a big deal. Analysts predict a long term growth rate of 28% for NFLX and analysts are known to be over optimistic in long term forecasts. If they do hit 50 million, I am sure that several million of those 50 million will be from outside the US/Canada.

    I really doubt that 1 in every 6 Americans will be a netflix subscriber. Rather, I would not invest in a company that is currently valued based on the assumption that 1 in every 6 Americans will be using its service.
    Oct 27, 2010. 01:52 PM | 1 Like Like |Link to Comment
  • Cramer's Being Reckless About Netflix [View article]
    Why would the stock be trading at a P/E of 25 when it is near the end of its high growth period? If the company has 50 million subscribers, I would have to assume that the company is a mature company without significant avenues for growth (at least the North American markets). Google finance description of the company states that the NFLX has 12 million subscribers. So, at 50 million, you are talking abt a four fold growth.

    For a mature company, the valuation would not be greater than 15 times earning. Using your numbers (which I dont agree with to begin with), that translates into a market cap of 9 Billion. The current market cap is 9.24 Billion. So the stock is already overvalued even by your estimates. This does not even account for the discount rate. Assuming a very conservative discount rate of 8%, and a very aggressive high growth period of 5 years (i.e time taken by NFLX to reach 50 million subscribers), the current market cap should be about $6 Billion. The corresponding share price is $117.

    Oct 27, 2010. 01:24 PM | Likes Like |Link to Comment
  • Cramer's Being Reckless About Netflix [View article]
    That was one good article. I completely agree with you on NFLX. I like the company and would probably not short it, but its simply way to expensive at these levels. A P/E closer to 40 might be the upper limit in my book.
    Oct 26, 2010. 03:46 PM | 3 Likes Like |Link to Comment
  • Railroad Stocks: Determining Fair Value [View article]
    I did look at CSX (and UNP for that matter) as part of my relative valuation. I wanted to restrict myself to 3 companies and therefore, I had to drop CSX and UNP from the list . In case you are wondering, according to my model the fair value of CSX and UNP is $60.11 and $84.33, respectively. So, I dont think you paid too much, you just dint get a bargain. You should be fine in the long run.
    Oct 26, 2010. 11:19 AM | 1 Like Like |Link to Comment