WaveNet Pharma

How the iPhone and Poor Management Contribute to Apple's Downfall

This article misses the point ENTIRELY !

The reason for subscription method of accounting has nothing to do with the CFO's preference and everything to do with the service revenue share arrangement with AT&T as it reflects the lock-up of the subscriber over a 24 month period to pay for the subsidized handset. Only RIMM has a similar arrangement with the mobile operators while Nokia is keen in copying that model with its new PDA handets.

Apple is brilliant for having switched to that method and it has done nothing to affect its business fundamentally. The company is still a strong contender for dominance of the market-segment they are in.

Accountants should know their place. Trying to explain business or product strategy choices without understanding the rationale is an exercise in futility.

Share Buybacks and Dividends: The Missing Fine Print

This is a very interesting article providing a fresh insight on a very questionable practice : share buybacks.

The smarter and more responsible companies simply dividend out their excess cash to their shareholders, spend it on R&D and new business development or, if it makes sense, indulge in M&A. Microsoft, Intel and Pfizer are just recent examples of all three, in that order.

Unfortunately too many companies which are run as if they were "hedge funds" ( thanks to our dysfunctional corporate governance system) attempt to manipulate their share price with buybacks. Don't believe for a second that share buybacks improve EPS ; because if you were to look over a longer period ( over 2 years) all companies engaged in buybacks had weaker earnings to show !!! Thinking that "by buying back their shares they will be putting a floor against downward selling pressure", is their untold rationale. The EPS improvement argument is the dumbest thing told to shareholders since buybacks have been legalized.

Any company that does not know anything better to do with its excess cash than buying its own shares is comparable to a person who doesn't know how to save and spends the money on self gratification. Just like the average consumer in America. Sounds familiar ??

Note to Regulators: It's About Capitalization, Not Compensation

This is completely flawed logic!
As long as the Government ( & the taxpayer) has the responsibility to keep national banks from imploding, it also has the duty to control the factors behind that implosion.
These banks went onto gambling as gigantic hedge funds with their shareholders money with the tacit understanding that if they run out, there would be more given to them by the government to continue gambling. It almost wrecked the foundation of capitalism and should be reined in.
A bank is not a casino and should never have been allowed to become one. Imagine where Vegas would be if all casino employees were compensated without limits on the profits they make : it would cease existence as excessive risk-taking would sweep them away.
No, all financial institutions that pose a systemic risk should have caps on the returns they are allowed to make. That would indirectly cap their compensation and control irresponsible risk taking.

Short Health Insurers, Wal-Mart on ObamaCare's Public Option

This article is all about hypothesizing negatives instead of understanding that the US health care system must and will change for the sake of the nation. We cannot get there from here by killing all HMO's. This government organization to run health insurance for the rest of us does not exist yet ...and will not be built overnight. Public/private health plan coexistence is more likely.

Will HMO's sustain their profits on the back of employers,patients and doctors? Don't bet on it.

Will there be caps on the level of their profits? More likely. Much like the phone companies when they were considered "public utilities" and were regulated on their ROE.

That being said, HMO's are not going away tomorrow !!

Why the U.S. Needs a Cultural Reset

Great article pointing to some harsh but overlooked realities.

Just Nationalize the Big Banks

These are shallow and arguments. Nationalizing the largest banks will carry a penalty which our society cannot easily accept.

Sacrificing the purveyors of equity capital – on whom banking depends, more so than in any other business category – violates the raison d’être of banks and horrifies an already upset investment community. What makes you assume that it will be easier to attract new private capital for the new banks vs. the established ones ?? Today, nothing prevents new investors to start with a "clean sheet" bank : how many of those have you seen lately ??

The place to start is finding more satisfying ways to calm existing investors, not to scare away potential new ones. And all that with greater management humility -- the example of Citi's CEO cutting his salary to $1 and forgo all bonuses until profitable, is the one to follow.

Merck, Schering-Plough: Confessions of a Vytorin Patient

Dr. Bob -- sorry you missed completely my point.
The differentiator in Vytorin is Zetia -- everyone, including the ACC panel which managed to masquarade this botched-up analysis as "scientific" agrees : because of Zetia, LDL is lower for everyone tested without causing the unwanted liver complications of higher-dose statins.

Now, the economics... I've just told you facts in hand that generic Zocor+Zetia is MORE expensive than its equivalent Vytorin. One must ask : if premium gas is cheaper than regular, which do you put in your car ????

Signs of Stability at AIG

From the way it is going, the most money to be made with AIG is likely their new CEO and not the shareholders. (i.e. 80%, US taxpayers).

I am still amazed that the folks who costed the US Government $180 Billion have not been found guilty of criminal neglect. By comparison,the captain of Amoco Cadiz was villified and jailed for polluting ocean shores that no one inhabits; in AIG's case, the reckless financial "pollution" is globally toxic and has affected everyone.

What the Citi Conversion Might Really Mean

Amazed to see a disconnected conclusion from an otherwise promising introduction.

The Fed is now doing a fine job. As to Citi, I hope you realize that if it were to be subjected to the abdication that Lehman went through, November would look like the "good times" back then ...

Boston Fed Head: Ditch the Bad Assets So Banks Can Focus on Future Prospects

This opinion is plain silly !!

I would try to UNDERSTAND the Boston Fed's view first, instead of dismissing it. Obviously, the author has missed the point.

From an accounting standpoint,all our banks ( including JPM) would be insolvent if they were to purge their troubled assets and declare their losses.

Don't Buy Into Share Buybacks

The rationale for buybacks is to improve earnings per share (EPS). That goal is only meaningful to the extent that a company can sustain its profitability. In our current environment how many do ?

Even with companies having an unassailable market position with essential products and services, buybacks send 2 signals to shareholders :
a) we have excess cash which we have decided NOT to share directly with you in the form of dividends ( because your BoD knows better than you the shareholder how to use these funds.)
b) we think that of all the uses of cash we can make , buying our own shares is the best approach ( if that is not arrogant and self-centered what is it ?)

The truth is that buybacks are really a protective mechanism to put a floor on a plummeting share price. It seldom does. If that is the case, why do companies do it ? More importantly, because it is paramount to manipulating a stock's price ,why is it legal to do ??

The Blame Game, Part I: The Short-Seller Witch Hunt

Short selling is an instrument of greed and speculation whose value is questionable at best.

Consider real-estate as an asset class and contrast it with stocks :
Can somebody else than the original owner allowed to sell it ? No!
Will any owner lend a building to somebody else whose intent is to sell it in anticipation of a price erosion ? No way !

Why is it then it is a lawful instrument with financial assets? Do you know any investors who cherish the idea of somebody else destroying the value of what they own and hence will lend their stock to them ?

Spansion Inc. Q2 2008 Earnings Call Transcript

Better to have some minutes than none at all.

However, Siphon is really Saifun ( the Israeli company they've acquired ) and a lot of the transcription from the CEO is wrong : i.e. extracting information from the market has been transcribed as instructing etc...

Would be a lot more useful if the person transcribing had deeper understanding of the company and the subject matter.

The Outlook for Apple's iPod Business

That the iPhone will cannibalize a sizable amount of iPod sales is more likely than the reverse. That being said, the assumption that a touch-screen interface and a larger display will continue to propel iPhone into unimaginable heights needs revisiting. Most corporate users do NOT want to have the imprecise touch- screen input and every mobile unit manufacturer has larger-screen models available.
The exclusive relationships that Apple has obtained to launch iPhone might well end-up being an obstacle to growth over time. At this moment it is still unclear that iPhone is poised for unimpeded growth until and unless the market outside the US shows real traction.

The Worst Is Over Day I

Your National City comments are insightful as you provide solid analytical observations to back them.
Your Lehman comments are not : what you call fools are people who oversubscribed by almost 4x to the $4B capital infusion. Of all the financial companeis which raised capital in 2008 to strenghten their balance sheets, Lehman had the least shareholder dilution. Doesn't that tell you something ?