William Trent_'s Comments

Motorola's Warning: Unmitigated Disaster

Fri, 23 Mar 2007 09:18:04 -0400

Well, to start off I'd say everything is a takeover target these days. Google would never want to bother with an "old" style manufacturing company, though. If they do phones they would do the design and contract out manufacturing. But at 6.4x EV/trailing EBITDA MOT easily fits the bill for a private equity buyer, assuming that buyer believes the EBITDA decline that will happen this year will be overcome.

At 11x 2006 free cash flow the enterprise value is implicitly assuming the company can grow at a modest rate (say 2-3% annually) going forward. It is not an outrageous assumption, but first a big decline will have to be recovered. That's where the sticky bit comes in - how long will it take to return to peak sales and EPS, and when they do will it just be another peak or will they be able to continue growing past it?

To me, MOT looks reasonably priced but not compelling. The private equity buyer argument does make sense, though, as they could instill the financial discipline the whole industry needs.

iPhone Versus the Rest: More Evidence Smartphone Makers Are in Trouble

Thu, 22 Mar 2007 20:56:10 -0400

Oh, I see... unit growth. Well, whoop-de-doo! They are selling more units because they lowered the price. Its revenue growth that is going to drive earnings growth, which will ultimately drive the stock. The way they are going they'll sell 2 million units, have declining revenue and negative earnings.

That sure contradicts my thesis. Not.

iPhone Versus the Rest: More Evidence Smartphone Makers Are in Trouble

Thu, 22 Mar 2007 20:54:02 -0400

What are you smoking? One year ago Palm did $388.5 million in sales, this year they did $410.5. That is 5.6% using my math. If you are talking sequential growth they did $392.9 million in the November quarter, so the sequential growth was only 4.5%. And the January quarter includes the holiday sales season and is presumably the strongest.

Maybe it was the guidance? $400-$410 marks a sequential decline and a midpoint growth rate of 0.5% over last year's $403.1 million. Oh, and the consensus estimate was $416.

If it weren't for buyout rumors there is no way they would be selling at 21x trailing earnings.

Intuit's Implausible Guidance Explanation Isn't Fooling the Street

Thu, 22 Mar 2007 15:52:02 -0400

Fair enough. Still, the implication is that there are an awful lot of tax returns in process.

Pinnacle Air's Business Model One of the Safest in the Industry

Mon, 19 Mar 2007 14:15:50 -0400

Whether jet or turboprop, I think the trend toward smaller regional point-to-point service is something to watch for. In some ways it will be tough for the regional carriers serving as feeder airlines to break the mold though.

Accredited Home Lenders Survives To See Another Day

Sun, 18 Mar 2007 12:39:20 -0400

Nobody is "bailing out" Accredited. They are selling their loan portfolio to a buyer aware of and willing to accept the associated risks.

Notice that I reference the LTCM case, which I say "only required intervention from the Federal Reserve because the managers were unwilling to take Warren Buffett’s offer." I disagree vehemently with the bailout they received. They should have been made to accept the highest private offer, which was Buffett's. Then the taxpayers would have been left free of it.

Seeking Alpha Stock Market Email Alerts FAQ

Fri, 16 Mar 2007 13:53:09 -0400

You could always turn to the author sites. For example, at Stock Market Beat I am still publishing my own full feed. Quite frankly I find it annoying that SeekingAlpha is publishing their own feed of all my content rather than a link to my feed anyway.

I can see feeds for individual stocks that are aggregating several authors, but an author feed is going a bit too far when the author already has one.

iPhone Versus the Rest: More Evidence Smartphone Makers Are in Trouble

Fri, 16 Mar 2007 11:36:36 -0400

The problem is, many people will at least want to wait to find out for themselves whether the iPhone interface is better. Some will find that it is, some will find that it isn't, but in the meantime the wait can freeze out sales of other models. And given Apple's track record in designing intuitive user interfaces, its a safer bet that it is incredible than that it isn't.

As far as the "wealth of phones that can play music and receive calls," well that is also indicative of the intense competition, which will mean a real hurting if consumer spending slows further.

Another Reason to Own Sears Holding: Lampert May Acquire BJ's Wholesale

Sat, 10 Mar 2007 21:11:35 -0500

I had the same speculation on Stock Market Beat back in July, and got some fairly negative comments about it. Hope you have better luck with the nabobs.

The View From Today's GDP Report

Wed, 28 Feb 2007 17:57:38 -0500

I would agree, but it has sure been lagging longer than many expected.

Intel Adds Insult To Injury With Latest Production Investment

Tue, 27 Feb 2007 19:43:18 -0500

I think a writedown is definitely in the cards, but there are a couple of different issues at play. One is what geometry the company needs to produce the next generation of chips as opposed to the geometry at which the company wants to produce them. The other is whether they have enough capacity already at that geometry.

Advanced Micro Devices: Will Somebody Please Stage an Intervention?

Thu, 22 Feb 2007 13:59:46 -0500

Not only can they not agree to fix prices, they cannot agree to limit their capacity, which would have the same effect. However, no law prevents them from separately limiting their capacity to the level that is appropriate given demand.

Advanced Micro Devices: Will Somebody Please Stage an Intervention?

Wed, 21 Feb 2007 14:28:54 -0500

It is more likely Intel and AMD that will be burning the inventory of older chips. They usually have price protection and obsolescence agreements built in to their supply contracts. And whether the solution being created is new or old there are a finite number of PCs for them to go into. You can put an old one in or a new one in, but they are essentially interchangeable. It is how many chips that can be made, not how new they are, that is the issue.

AMD and Intel should continue to innovate and produce chips, but they should do so only at the rate that customers demand them. Both companies are producing more chips to "gain share." They can't both gain share, but if they keep trying they can both lose profit, as they have been doing. And as to having more to lose, Intel can also afford to lose more - it can cut its profit until AMD is actually losing money and forced to throw in the towel - that is the game of chicken that is being played right now, and it is stupid and destructive for both companies.

Advanced Micro Devices: Will Somebody Please Stage an Intervention?

Wed, 21 Feb 2007 12:25:37 -0500

AMD is not short of customers now. They are long capacity. They will continue to innovate and produce more chips, as will Intel and all the other chipmakers. The problem is, the new chips will simply crowd out old chips - leaving more of them and resulting in further price cuts. Until new equipment orders slow down to a pace below that of end-sales for semiconductors this will not change even if AMD invents the most marvelous semiconductor of all time. It is a simple function of supply being greater than demand.

As to Vista, if its impact is underestimated, why is the rate of sales growth slowing down for both Ingram Micro (the biggest PC distributor) and Hewlett Packard (the biggest PC manufacturer?) If anything, it seems that Vista was overestimated.

Bad News For Semis: Equipment Orders Continue To Rise

Tue, 20 Feb 2007 09:35:21 -0500

Thanks.

Taiwan Semi's Founder Predicts Gloom and Doom For the Chip Industry

Tue, 13 Feb 2007 12:23:32 -0500

I'd rather have cycles and growth. Hard to trade around a flat line.

Expeditors' Earnings at Odds With Economic Data

Tue, 13 Feb 2007 12:21:21 -0500

Thanks. That's the benefit of a community - hopefully someone will catch the things we miss for us!

Tempur-Pedic Tries To Sneak Management Raises Past Investors

Mon, 12 Feb 2007 19:32:46 -0500

After all, there's a reason "analyst" begins the way it does.

Tempur-Pedic Tries To Sneak Management Raises Past Investors

Mon, 12 Feb 2007 19:17:39 -0500

And yours, too. It really is nit-picky to criticize anything at all in this case. Unfortunately, I'm a nit-picker.

Tempur-Pedic Tries To Sneak Management Raises Past Investors

Mon, 12 Feb 2007 17:34:07 -0500

As I said, "with that kind of performance the management deserves a raise, and should shout about it rather than try to sneak it into a Friday afternoon (1 day after the agreement) SEC Filing."

It is the means, not the end, that I was criticizing.

Did Starbucks' CEO Really Say That?

Thu, 08 Feb 2007 16:22:34 -0500

Yep, Chris Thomas hit the nail on the head. It's Dunkin that needs to worry about MCD, not SBUX.

Did Starbucks' CEO Really Say That?

Thu, 08 Feb 2007 11:50:48 -0500

Starbucks and McDonald's are not Ford and GM, nor are they WalMart and Target. The fact that each sells both food and coffee is irrelevant. Customers are either going to one or the other based on whether they want a hamburger (and possibly some coffee) or coffee (and possibly a sandwich.) They are going to Starbucks for atmosphere and quality, McDonalds for comfort food. You aren't going to see people with laptops hanging out at McDonalds to use the WiFi (though you may see homeless people hanging out there to use the bathroom.)

As to your preference for staying in car, Starbucks has drive-through service in some places as well, but I've found that I prefer going inside to get the cream and sugar just the way I like it. I don't see outsourcing that to McDonalds employees.

Airbus Should Get Cracking On a Regional Jet Program

Tue, 23 Jan 2007 10:14:22 -0500

It was a great call for Boeing, despite the negative press at the time.

The Decline of the PC: Computers No Longer a Growth Industry

Sat, 20 Jan 2007 17:32:27 -0500

Total shipments for the industry were up 7.4%, or slightly above nominal GDP. That is an "industry," not a "growth industry."

And as the pricing chart (from the Bureau of Labor Statistics industry PPI data) shows, prices have been falling by more than 10%. Therefore, 7.4% unit growth less 10% price declines means that revenue is falling, not growing at all.

It is important not to mix up prices and units when discussing the industry's growth or lack thereof.

The Decline of the PC: Computers No Longer a Growth Industry

Fri, 19 Jan 2007 09:59:57 -0500

I think it will drive sales even more than people are expecting, but not for a while. In the meantime, the time to invest will be when the Vista bulls throw in the towel. Look for MSM stories on the Vista failure, then buy.

The Decline of the PC: Computers No Longer a Growth Industry

Thu, 18 Jan 2007 21:54:09 -0500

3% of the industry growing at 30% contributes 1% to overall PC "industry" growth. While Apple is a growth company, that says nothing about the PC industry.

We'll see in the Fall whether PC companies can command any extra profits from Vista-ready PCs.

Buying Intuit Into Tax Season

Thu, 18 Jan 2007 12:15:43 -0500

Sorry.

Buying Intuit Into Tax Season

Thu, 18 Jan 2007 12:14:52 -0500

According to my research you should do just the opposite. See

Adobe Should Profit From iPhone; Apple Should From Cisco's Lawsuit

Thu, 18 Jan 2007 11:40:29 -0500

Thanks. To be fair, I did not interview those people myself. The article is a summary of worthwhile research I found from other sources.

The Energy Bear Case Is At Odds With Falling Inventories

Wed, 10 Jan 2007 12:37:51 -0500

I doubt it. Sideways oil prices would simply give consumers time to become comfortable with the price level. It will take a somewhat relentless upward price trend to force consumers out of their comfort zone enough to make significant changes to the status quo.