Pj568

Why Hoarding Cash Can Destroy Shareholder Value

Seems like a legitimate reason exists to hoard cash

A quote from CFO.com article "Living with a Scarlet Audit Letter" www.cfo.com/article.cf...

"Last year, 21% of companies registered with the Securities and Exchange Commission had their going-concern status questioned — the highest proportion of companies this decade, according to research firm Audit Analytics. Moreover, the number of businesses filing for Chapter 11 increased 113% in the first half of this year, compared to the same period in 2008.

Experts predict a similar percentage of going-concern opinions will be filed for 2009 10-Ks. "Companies that got a going-concern opinion last year — if they're still around — probably have not worked their way out [of their current condition]," says Rick Ueltschy, managing executive of accounting firm Crowe Horwath's audit and financial advisory group. "And we'll see more companies that have continued to have financial conditions deteriorate over the year added to the list," he says

Indeed, the prospect has finance executives biting their nails. Nearly one quarter of 846 CFOs and controllers surveyed by Grant Thornton said they were more worried about the ability of their companies to continue as a going concern than they were a year ago."

Add in the liquidity turmoil and that the depressed prices present an excellent growth opportunity for the prudent and the great waste from the previous years leverage buy backs and it seems like a good move.

E*Trade: A Solid, Deep Value Stock

The cash number has no meaning for any year so any change between years is also meaningless.

One possible approach - The FDIC report for June 30 shows E*Trade Bank with cash of 5.8B. They don't have unlimited access to this as E-Trade transactions with its Bank are restricted so how does their cash have any meaning except for banking operations.

One guess as to cash available would be to take total cash of 6.7B (10-Q) minus Bank cash 5.8 to arrive at 900M (although the parent would probably have some cash at the bank nor do we know what restricted cash is held at other banks). This answer may not even be close but I would think it more accurate than 6.7B

E-Trade could disclose if they wanted to be transparent as to the issue.

E*Trade: A Solid, Deep Value Stock

Customer deposits at 12/31/04 totaled 12B they're now 26B. Banks also borrow from the Fed so cash without debt and equity is meaningless.

Parent Co only cash at 12/31/08 was 183M.

E*Trade: A Solid, Deep Value Stock

Any discussion of cash is absurd since they're a bank. Citi has 535B of cash at June 30th but what does that mean.

E*Trade: A Solid, Deep Value Stock

A quick review - back in 06 (near peak) ETFC earned 1.50 with 400 mil shares outstanding sold for 25 , a pe of 17.

Today with the diluted 2.8B shares (greater by 7x) and keeping the same 17 pe earnings would be around 30cents if selling at 5 or 60cents if selling at 10. Therefore we're talking net income of 840M or 1.68B.

The most money TD Ameritrade (AMTD) ever made was 803M. So realistically how can ETFC get to even 5.

Who Owns the Derivatives Market?

Open Questions:

Is it correct that the problems are only (mainly) in the naked CDS positions ?

If CDS accounts for 15% of the total derivative contracts then that is the maximum naked positions on a notional basis. What then is the net positions? If unknown then what is the estimated net?

Since this has been prime news since 2007 what has been the progress,if any, by the fed or accountants in ascertaining net positions, recognition of losses and making adequate disclosure?

Time to Take the 'L' Out of LBO

An attention grabbing headline but what's being advocated is already happening in the market place. The entire world is now aware of the down side of leverage and the markets are adjusting.

Today capital requirements are being revised for banks, tougher covenants issued, revised loan standards, non consolidated SPE's being brought back onto the balance sheet, downward adjusted market valuations for high leveraged firms, liquidity concerns, fair market adjustments, and attention to ROI's and ROA's as opposed to gross earnings are all having their effect on the ability of lenders to issue loans and entities to use a high degree of leverage.

Huron Consulting: Getting Too Close to Its Roots

You have to wonder how low it'll go or how long Huron will exist after it establishes legal reserves and writes down goodwill now that the total market cap is just a little above current assets value.

Can We Get Back to Stock Picking Now?

Ryan,

"And sure, let's just get rid of GAAP and start using EBITDA instead"

You missed my sarcasm. BSX is already half way there as they adjust earnings for standard amortization.

Can We Get Back to Stock Picking Now?

Wondering why a decrease of 28M in operating earnings is considered a "strong quarter"? Their increase in actual earnings was due to less "other inc/exp" recorded of 82M. On a GAAP basis they did make 10 cents which was up from 7 cents.

Writers don't even know what earnings are being adjusted for and don't care if its proper or not. The 20 cents/share referred to is due to BSX adding back 7 cents of standard amortization exp. The next step could be to start reporting EBITDA and forget GAAP altogether.

Boston Scientific Poised to Attain Investment Grade Rating

This reminds me of a recent internet posting (that used humor)

"Obama to meet with small businesses - GE, Pfizer, Chrysler, Citigroup and GM to discuss the Stimulus Package."

A Plea for Better Balance (Sheets)

Can't buy into your premise that all intangibles are worthless.

Sure intangibles reflect acquisition activity but not all acquisitions are bad. Those with recent acquisitions are more at risk than older one, especially if they purchased financial assets during the last three or four years.

One should first consider it as a fixed asset cost and analyze from there. Yes, investment in fixed assets has an affect on firm structure and intangibles are subject to write downs. There are big differences in structure between service companies, banks and manufacturers. Liquidity, profitability and leverage are more the issue today.

How E*Trade Is Trying to Survive in the TARP Era

With all the capital restructuring going on it makes me wonder if there is a future big hit on the horizon.

Does anyone know the tax area well enough to comment on whether they might be required to establish large tax valuation account to reduce the 1B in deferred tax assets now carried on the balance sheet?

Analysts Will Soon Upgrade E-Trade

Improved ratios come at a high cost.

So with the new share issued and with full conversion on the new convertible debt the number of shares increase from 600M to 2B.

Citadel now has around a 20% interest and after the new issue and conversion will have a 40-45% interest.

Banks' Loss Reserves Can't Keep Pace with Troubled Loans

One needs to exercise care with the terminology when reading articles in this industry. My read of the FDIC report is the increase in prime mortgage defaults is primarily driven by the Adjustable Rate Mortgage products as opposed to the prime fixed term mortgages.

Isn't this pretty much what we've been told was going to happen as those resets come due?