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geodan85

geodan85
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  • Will Nokia Recover Or Be Bought? [View article]
    Marcap

    Time will tell, but I agree ultimately consumer acceptance, or rejection, will determine what products succeed. However, the future is in mobile communications and MSFT knows this. They do have their problems, but they will not give up since that will mean deserting this continuing growth market.

    NOK being bought anywhere at $5.00 or less only helps them if they fail on halting the cash burn. However, by only producing WP they are already acting like an operating arm of MSFT, so a takeover, in essence, changes the financial structure and relieves the current financial pressure.

    The current MSFT financial support/partnership is needed by NOK during this transition and likely impossible for NOK to walk away from. Therefore, this prevents them from producing android phones as some have suggested, which would be helpful for NOK since the platform is strong/accepted and NOK would just need to provide a quality product priced attractively to gain incremental sales.
    Jun 25 01:06 PM | 1 Like Like |Link to Comment
  • Will Nokia Recover Or Be Bought? [View article]
    MSFT doesn't benefit by NOK going under. NOK's production of WP8 is critical for MSFT to achieve global distribution and a manufacturing platform. I have read comments from executives at other mobile phone manufacturers that they are all watching NOK as the main supplier of WP8 and that the success, or lack of, will help determine their commitment to producing WP8. Also, MSFT waiting for NOK to fail after committing to WP sends the wrong message to other potential WP manufacturers about aligning with MSFT.
    Jun 25 11:50 AM | 7 Likes Like |Link to Comment
  • Will Nokia Recover Or Be Bought? [View article]
    Below is my take on Nokia, I responded to an article on Seeking Alpha last week which discussed the recent MSFT announcement (and the lack of mentioning Nokia prominently during the presentation other than using Nokia Maps and pureview/ both indicating cooperation) on their tablet and rumor they may make their own WP8.

    If MSFT is considering buying NOK, I doubt they would be issuing statements that would help drive up the price. If they are in current negotiations to buy NOK they would be restricted in what they can say publicly.

    MSFT buying NOK would be a classic buy vs build decision for entry onto a global platform giving them critical mass immediately to compete with AAPL and Samsung. MFST clearly has staying power and brand recognition, a new Microsoft/Nokia brand in mobile phones would be a strong competitor.

    If MSFT bid $5.0 per share for NOK (~$18.5bil) they get ~$13.0bil in cash/liquid investments, assume ~$6.25bil debt (which they service and call as soon as possible to retire or refinance at their credit rating) and the patent portfolio's cash flow of ~$625mil per year. Therefore, the bid will cost MSFT ~$5.5bil cash net (actually less if you consider the $1.0bil they are paying NOK under the current partnership and patent portfolio income which could be viewed, in essence, as financing the acquisition), less than 10% of their cash position and probabaly be further reduced if they sold patents they didn’t view as necessary or desirable.

    NOK's restructuring to stop the cash burn only makes the company more attractive to MSFT, although the price they would need to pay will rise once the cash burn is halted.

    The recent announcement that they will produce their own tablet shows they will be more involved wth hardware production, therefore how can they not be looking at this as an alternative?
    Jun 25 11:17 AM | 12 Likes Like |Link to Comment
  • Microsoft Needs To Put Its Weight Behind Nokia [View article]
    If MSFT is considering buying NOK, I doubt they would be issuing statements that would help drive up the price. If they are in current negotiations to buy NOK they would be restrcted in what they can say publicly.

    MSFT buying NOK would be a classic buy vs build decision for entry onto a global platform giving them critical mass immediately to compete with AAPL and Samsung. MFST clearly has staying power and brand recognition, a new Microsoft/Nokia brand in mobile phones would be a strong competitor.

    If MSFT bid $5.0 per share for NOK (~$18.5bil) they get ~$13.0bil in cash/liquid investments, assume ~$6.25bil debt (which they service and call as soon as possible to retire or refinace at their credit rating) and the patent portfolio's cash flow of ~$625mil per year. Therefore, the bid will cost MSFT ~$5.5bil cash net (actually less if you consider the $1.0bil they are paying NOK under the current partnership and patent portfolio income which could be viewed, in essence, as financing the acquisition), less than 10% of their cash position and probabaly be further reduced if they sold patents they didn/t view as necessary or desireable.

    NOK's restructuring to stop the cash burn only makes the company more attractive to MSFT, although the price they would need to pay will rise once the cash burn is halted.

    The recent announcement that they will produce their own tablet shows they will be more involved wth hardware production, therefore how can they not be looking at this as an alternative?
    Jun 22 10:52 AM | Likes Like |Link to Comment
  • Last week's OPEC decision to maintain its quota of 30M bbl/day had the added effect of emboldening tanker operators to raise shipping rates for very-large crude carriers, as Bloomberg calculates Q3 rates will average $18K/day vs. a low of nearly half as much in Q2. Stocks poised to benefit after painful declines: FRO, SFL, NAT, OSG, TNK, TNP.  [View news story]
    What OPEC says and what they do are quite different. The quota is always ignored, they will ship more oil if the demand is there.
    Jun 20 04:05 PM | Likes Like |Link to Comment
  • Nokia: Terrible Bets Come Back To Haunt Them [View article]
    It is rare to see a stock so hammered in one direction by shorts/bears without any significant rally. Recent NOK rallies (few and far between) have been sharply reversed after one day. Given the current price level, it seems shorts may now have second thoughts establishing new positions with the potential for MSFT to bid (if they do and at too low a level imagine the lawsuits given Elop's former affiliation) given the break up value is clearly greater than the currrent share price.

    Today's warning, while lowering the previous forecast from same as Q1 or slightly lower to now say lower really isn't that surprising given the transition to WP only began in Q2 and is ultimately a second half story when WP8 arrives. The bar is now set very low for the Q2 report and news flow in the second half on WP8 along with continued sales data may not be as bad as anticipated since Nokia still makes quality phones.

    I recently switched to the Lumia 900 (from an LG phone) and find the basic phone operations (voice clarity, sound etc..) far superior. Many years ago I had a Nokia phone and had forgotten how durable and well they worked, I believe other users could be of the same mind. The apps on the phone are more than enough for what I need/use, although I don't claim to be a tech addict/heavy user.

    Finally, I find it hard to believe they are headed toward insolvency, although if management starts selling off core assets, I may have to reconsider since the proceeds won't be going to shareholders.
    Jun 15 12:06 AM | 1 Like Like |Link to Comment
  • 'Priced To Fail' And Primed To Succeed: A Contrarian Take On Bank Of America [View article]
    I hope you are right, but two points to make. Warren Buffet bought pref shares and got warrants for free, which could have enabled him to profitably hedge his whole pref position down to zero. Second, BAC is TBTF, but given the change in regulations (resolution/living wills / still to be worked out) the equity is potentailly at more risk than prior to the crisis in 2008. BAC still needs to put Countrywide and lawsuits in the rearview mirror, unfortunately that is still going to take time.
    Jun 12 11:31 AM | 4 Likes Like |Link to Comment
  • Nokia (NOK) jumps 5% premarket on an unconfirmed rumor it could be a takeover target for Samsung.  [View news story]
    Silly rumors always seem to come out on Friday's in the summer as well.
    Jun 8 10:54 AM | Likes Like |Link to Comment
  • Nokia (NOK) jumps 5% premarket on an unconfirmed rumor it could be a takeover target for Samsung.  [View news story]
    If there was any truth to this rumor, the shares would be higher then +$.11 cents. Nokia is still way too low, but lacks catalysts to break the bearish sentiment engulfing the stock.
    Jun 8 09:42 AM | Likes Like |Link to Comment
  • Report Highlights Impact Of Coal Plant Retirements On Coal Producers [View article]
    I would say that the impact of less coal demand in the U.S. is being discounted in the current share prices. In another report, it has been estimated much of the switching by utlilites has already occurred and the natgas/coal price differentials have come back in line. Also, what happens when new natgas plants by utilities required large rate increases? Or increased domestic demand for natgas and exports raise natgas prices? I believe that coal will look attractive again if it offers lower rates. Finally, a change of government in the U.S. this November (likely IMHO) will be bullish for coal and energy companies in general. Also, BTU's Port of Seattle expansion (currently shelved by company) should proceed as exports to the rest of the world where the EPA doesn't exist will continue since coal is still viewed as an abundant reliable cheap input for power generation. Granted, there are no real catalysts for the sector in the short term, but BTU in the mid $20s seems like a decent short and long term buy despite all the bearish sentiment.
    Jun 7 02:16 PM | 6 Likes Like |Link to Comment
  • Bank Of America Could Tumble 30% This Year [View article]
    This article seems about a year late. Also, if you expect the overall market to appreciate 5% to 15%, I doubt BAC will drop 30% if at all. Market appreciation will reflect economic growth (albeit slow) and economic growth will likely continue a housing recovery, critical for BAC. Finally, Countrywide's liability is still believed to be capped with BAC keeping it as a an independent sub for legal reasons (unlike Merrill which has been integrated to the BAC platform) giving them potential options if liability proves greater then what they provisioned.
    Jun 7 09:53 AM | Likes Like |Link to Comment
  • Duke Energy Corp: A Good Long-Term Investment? [View article]
    DUK is a great company and I have owned it at times over the last ten years and did well along with other regulated utilities such as XEL, DTE, PGN and SRE to name a few. However, I believe it is currently expensive at near 16x forward earnings as are most regulated utilities. Obviously, they are moving high as investors chase yield and look for defensive names, but the time to buy these names, is when no one cares and they are underowned. I see many questions for the regulated names going forward that potentially could hurt earnings growth such as rising cap-ex driven by need and regulation as well as low natgas and coal prices pressuring rates or at best allowing very slight increases. Paying current premium p/e multiples for this sector seems likely to disappoint long term investors when the inevitable correction comes. The worries over favorable 15% tax treatment for qualified dividends could be the trigger for the correction.
    Jun 5 10:23 AM | Likes Like |Link to Comment
  • With a record of poor shareholder returns, why do the TBTF banks (JPM, C, BAC) even exist, writes Sheila Bair. Capital markets certainly wouldn't finance such "unstable behemoths" if it weren't for their de facto government backstop. Jamie Dimon can provide a better return to shareholders by recognizing his bank is worth more in smaller pieces.  [View news story]
    Tomas

    Agreed, it is the Federal government that is TBTF and despite the fact that Fed is supposely independent the two are very much linked. With the Fed's balance sheet near $3.0 trillion with treasuries and agency paper, the question is what happens if they hold all the paper to maturity (likely) and the Treasury pays/prints the dollars to the Fed? The Fed has already injected these dollars into the system, hence the potential inflation worries, although I believe the banks are using much of this liquidity to reserve and write off bad loans/mortgages which should reduce the concern over a hyper inflation cycle. However, once the Fed has cash from redeemed bonds/notes on their balance sheet, what do they do? The Fed by law remitts any profits they make to the Treasury every year, do they send the cash back to the Treasury? Is national debt reduced? Clearly, further so called reinvesting of the matured paper (either directly to Treasury or from the market) will be viewed as very inflationary and the dollar will suffer, although so far the world seems ok with the dollar and the Fed's POMO injection to the money supply. Sorry, to get off topic here, but to me this is the $3.0 trillion question.
    May 25 07:04 PM | 1 Like Like |Link to Comment
  • With a record of poor shareholder returns, why do the TBTF banks (JPM, C, BAC) even exist, writes Sheila Bair. Capital markets certainly wouldn't finance such "unstable behemoths" if it weren't for their de facto government backstop. Jamie Dimon can provide a better return to shareholders by recognizing his bank is worth more in smaller pieces.  [View news story]
    The ultimate TBTF bank is now Federal Reserve since Bernake has made the central bank into a quasi investment bank as an active bond market player for treasuries and agency debt while still being the lender of last resort (or maybe first).

    As stated above BAC provided a huge assist to the government with the Merrill (good for BAC) and the Countrywide (very bad for BAC) acquisitions. For those good deeds, BAC is now essentially an operating subsiidiary of the Fed with no real leeway to do anything not approved by HQ in Washington (despite paying back all TARP money with interest as well as warrants). In case anyone doubts this, just look how BAC has reduced their size under the heading "New BAC" which is an ongoing effort to reduce the size of the bank and make them less problematic for the parent.

    JPM had more leeway given their reputation and Dimon's image as the best of breed CEO of a large money center bank. Now that has changed, and JPM will likely be told to shrink the size of their presence in many derivative markets by HQ down in Washington ultimately impacting liquidity in the markets where they were the dominant player and furthering the de-leveraging trend by banks globally.

    Finally, it should be noted that taxpayers MADE MONEY on the TARP funds to the TBTF banks and taxpayer money being spent outside the financial sector should now be the focus and an important issue for this year's election.
    May 25 02:26 PM | 2 Likes Like |Link to Comment
  • With a record of poor shareholder returns, why do the TBTF banks (JPM, C, BAC) even exist, writes Sheila Bair. Capital markets certainly wouldn't finance such "unstable behemoths" if it weren't for their de facto government backstop. Jamie Dimon can provide a better return to shareholders by recognizing his bank is worth more in smaller pieces.  [View news story]
    Very accurate points on other countries global universal banks, which are TBTF as well. Let us not forget foreign state owned or controlled banks (read China) that are also growing global players influencing markets. Our government is the problem, not the solution, and the forcing of Fannie and Freddie to lower lending standards over twenty years ago is a primary reason for the current real estate bust. The S&L bust in the 1980s was also government driven by deregulating what the S&Ls could invest in while keeping the deposit insurance in place.

    The TBTF banks also were under governemnt pressure to make more loans to the less than prime borrowers. However, it grew out of control due to securitization of these loans with many banks utilizing this procedure to remove the weaker credits off their books via the bond market and believing the risk was gone while the fee income machine will go on forever minting what seemed like risk free income. This also led to loans being made on inflated values that the banks likely knew were moving too high too fast, but if they weren't going to hold the loan then if wasn't their problem.

    I am reminded of the saying " I am from the government and I am here to help" as being a phrase that many misunderstand since the last word help really needs to be followed by "myself".
    May 25 11:29 AM | 3 Likes Like |Link to Comment
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