Seeking Alpha


Send Message
View as an RSS Feed
View jstratt's Comments BY TICKER:
Latest  |  Highest rated
  • IBM Is A Poster Child For The Value-Destroying Relationship Between Corporate America And The Federal Reserve [View article]
    I appreciate the opportunity to consider the authors perspective.

    Clearly share buybacks dont replace functioning as a business that grows value and maintains its viability.

    IBM has horrible disgusting leadership that immediately began to deteriorate the Systems and Technology group. In the latest quarter it became apparent that the Services group was deteriorating and the software group is showing signs of falling into decline.

    Meanwhile adding $12 billion in debt this year alone didnt help IBM use resources to turn around business. That said they wouldnt have known how to properly use the cash anyway by the looks of things.

    I feel sorry for the people who have to work in a continually negative environment. By the looks of things IBM with different leadership could turn things around. However they probably need something on the order of 100,000 less employees. Rometty was so proud that they had an in house meteorologist last year as an example.

    The point remains that IBM can right size the business. They probably need someone on the BOD that is young enough to not use an abacus and a CEO that is not ridiculously incompetent.
    Oct 22 08:23 PM | Likes Like |Link to Comment
  • Update: IBM Misses On Earnings But Is Still A Buy [View article]
    I just wanted to add that earlier this year the CFO stated in an earnings call that the debt was all financing and IBM was not borrowing to buy back stock which was a ridiculous statement given the Cash Flow Statement.

    Reading the earnings release and listening to the 3Q call the non financing debt is now stated as $17 billion. So I would just make the statement that IBM purchases of stock must slow while they make a difficult transition.

    A severe drop in cash flow along with increased debt does reduce flexibility. Burning through another $17 billion in about 6 months isnt an option moving forward.
    Oct 22 05:40 PM | Likes Like |Link to Comment
  • It's Still Time To Sell Verizon [View article]
    I was happy with VZ revenue, EPS and customer additions as reported.

    VZ will face a little competition but historically they have been able to fend off minor competitors. T is not in as good a position as VZ and a quick read of their results confirms that view.

    I will take an excellent dividend yield in a company that is growing its usage per customer and both its wireline (FIOS) and its wireless customers. It also bought back the other 45% of its wireless business accretive to 2015 earnings.

    For the record I have just been getting back into VZ after being out of it for several years. As the rest of the market has soared VZ is now a much better value with its 10 PE valuation.
    Oct 22 05:20 PM | Likes Like |Link to Comment
  • Disney Is A Great Long-Term Investment [View article]
    As a DIS shareholder I have been very happy with the results and the leadership.

    I would point out that DIS has excellent projected 5 year growth of 16.30% after growing at 19.36% for the past 5 years. At the same time the PE is reasonable for that growth at 20.92 and a 18.52 forward PE.

    On the other side DIS has hit on all cylinders with every movie seemingly a hit and huge ESPN and broadcast growth. Higher sports programming costs are pressuring the ESPN forward earnings. On the toys and licensing side the hits like Frozen should continue to drive increased earnings in that unit.

    DIS is a great company and is a fair value even if the growth doesnt hit the projected 16.30% rate. Looking at history I wouldnt dispute DIS growth rate but pragmatically an investment would be a hit on much lower levels of growth.
    Oct 22 04:22 PM | Likes Like |Link to Comment
  • Update: Honeywell Q3 '14 Earnings Update [View article]
    Thanks for another excellent article!

    HON is one of the best managed companies in the world. It has provided excellent returns for my portfolio. For anyone interested, some positive attributes for investors include

    - a low PE 17.5 trailing ttm, 15.04 fwd PE
    - 10.3% EPS 5 year growth projected after growing 17.58% over the past 5 years
    - 2% dividend yield with 8% annual growth rate
    - a history of innovation

    So a relative low PE for a diversified company offering solid growth. After another increase in EPS projections HON has the wind at its back. As we probably move away from expanding PE multiples growth could become more valuable and HON is one of the few companies with growth.
    Oct 22 03:55 PM | Likes Like |Link to Comment
  • Gilead Sciences: Pricing, Politics And Profits [View article]
    Thanks for an excellent article!

    Harvoni is priced significantly below Sovaldi combinations and it is a large savings over allowing Hep C to progress and destroy a persons liver. I suspect total care costs for Liver transplant and care exceed $1MM when Livers are available. Death is probably less costly!

    Right now investors are investing in an easily administered, low risk in terms of side effects, cure for a major disease.

    A close inspection of competitive threats is just as bullish with less effective, more side effects and more difficult to administer regimens.
    Oct 22 09:25 AM | Likes Like |Link to Comment
  • Is Coca-Cola Still A Tasty Investment After Poor Q3 Results? [View article]
    I have some KO shares and was surprised to see it rise to where it was. I kind of thought it was worth about $40 sh.

    For a company with minimal growth why would you pay 23 PE? Secondly if you want to trade you surely can find a better company to trade.
    Oct 21 08:02 PM | 1 Like Like |Link to Comment
  • Gilead Sciences: Clear The Dockets And Settle With Merck Already [View article]
    Thanks for an interesting article!

    I am no expert but as an investor one needs to allocate an investment in GILD knowing that legal claims or an adverse side effect may develop in Harvoni. Risks are always present.

    Were I to be asked I would say defend the claims vigorously and let the parties get their rightful rewards. A part of the decision should consider that GILD and only GILD brought into the world a cure for a major disease saving many lives.

    I could sue tomorrow saying that I was the first to identify and use the word Harvoni several years ago. All in all I am comfortable with the risk I have taken in purchasing GILD.

    I just hope I am that comfortable after earnings next week.
    Oct 21 04:10 PM | Likes Like |Link to Comment
  • Update: IBM Q3 Earnings - I Was Wrong About Earnings Quality [View article]
    Colorado I am with you. I was such as fool to invest in IBM.

    It isnt that I lost a lot of money I didnt as I was just starting to get back into IBM. It is that I violated several rules that I dont normally violate, chiefly that I dont invest in a company when I dont think the CEO is very good.

    I am more angry because a Rometty led management had to go further and say we hit a wall on orders in September and saw a severe drop off in orders. Further we haven’t done much thinking about it we are going to withdraw our $20 share guidance and we will update you in January.

    What kind of a management goes out of their way to panic investors? Who is supposed to buy when the CEO says we are staring over a cliff and not sure how far down it is. I will get back to you in 3 months!

    So since I am angry I want to ask some other questions

    1) Does IBM treat their customers like they treat their shareholders?
    2) Is the BOD a who's who from 1985 that wonders where their Newsweek and Life magazines are going?
    3) Are their any more game shows IBM can win on the 2nd try after the answers are loaded into the machine?
    4) Is it even a sale if you have to pay someone $1.5 billion to take a business? and who is the buyer in that transaction?
    5) Arent more buzzwords needed to say business was increased by 50% in XXX without any amounts?

    I would have kicked Rometty's butt out the door long before yesterday. I may be a fool but I am not alone!
    Oct 21 03:17 PM | 5 Likes Like |Link to Comment
  • GE - Solid Dividend Play, No Great Potential For Capital Gains [View article]
    Thanks for an intelligent article on GE rather than an agenda based article!

    Just wanted to offer what I see as some opportunities and risks with GE. Currently I see it as a fair value with dividend and some share price appreciation.

    - GE has been growing slowly the past few years as it has been burdened with restoring capital to proper levels. They now appear properly capitalized.

    - Synchrony will be the driver of value for GE in the next year. If in the next 15 months we have a financial downturn GE being a financial company will suffer. If markets are good SYF should be set up to deliver GE a boost.

    - GE will have to manage earnings in the future without having a GE Capital contribution that assures EPS targets will be met. We will begin to find out how well they are at managing industrial businesses.

    - My guess is GE share price gives a market level return + the dividend. If so it will be one of GEs better years in the past 2 decades.
    Oct 21 11:57 AM | Likes Like |Link to Comment
  • IBM Is In Decline: Don't Buy [View article]
    Sometimes investors make mistakes and I must admit I made a mistake in IBM. I had just started investing in IBM after selling my shares a couple years ago as Rometty began delivering terrible results. I sold 50% of my shares yesterday. Here are my takeaways as an investor.

    - This ranks as one of the worst quarters delivered by a company I have invested in.

    - I invested because hardware problems were driving the view of IBM and the stable Software and Services combined with buybacks was driving earnings per share. This quarter showed that the entire company is in decline on a product basis with services now a major concern.

    - Virginia Rometty is a complete disaster as a CEO and a danger to the company and its investors. The decline started with her tenure and is continuing to increase in scope and impact.

    - On a larger scale I am reducing my investment allocation to technology in general.

    - Buying back stock in a company in decline no longer makes sense as it is like buying .80c for a dollar. IBM hasnt yet come to grips with that.

    - IBM still makes money and has significant FCF so it has value but that value is in question.

    - IBM did a good job of scaring investors by talking about hitting a wall in late September leading one to believe that 4Q could be a disaster as well.

    - In fairness IBM is not going to drop off the map like a DEC or other old time tech company. Delivering a horrible quarter brings out foolish negative statements like "IBM isnt even a tech company"

    IBM is not likely to make a proper transition until a new CEO is selected and a frank discussion of how to proceed in the future can occur with open acknowledgement of mistakes and defeats. Until then fine tuning with workforce adjustments, and hardware type mishaps will occur where the pieces are disposed after they are worth less than nothing.

    Oct 21 11:26 AM | 3 Likes Like |Link to Comment
  • IBM - Sell-Off Is Warranted As Business Model Is Under Serious Threat [View article]
    A few comments about IBM share price

    Concern #1

    Really a terrible quarter in every way. I was prepared for Hardware problems as that was old news. It is the degradation in Software and Services that was unexpected and more troubling.

    Concern #2

    The statement that September orders dropped off in dramatic fashion late in the quarter stops investors from buying into IBM. After new earnings guidance IBM may still be more expensive on a forward PE basis.

    Concern #3

    The stock purchase concept doesnt work in a company with a declining business model. Borrowing money to fund buybacks will likely end and declining cash flow is needed to stabilize the business.

    Concern #4

    Ginny Rometty has presided over consistent decline since she started. Investors will never again consider her competent whether that is fair or unfair. The comments I have read suggest that employees consider her incompetent as well. Is Palmisano available to come back as an interim CEO?
    Oct 20 01:11 PM | 2 Likes Like |Link to Comment
  • IBM tumbles 8% after disappointing results [View news story]
    Ouch! I started buying back into IBM a couple months ago after selling out for a few years. What to do now?

    I think I will try to get a sense of forward prospects before taking action. I was prepared for the negative hardware news. The decline in services and software was very troubling.

    Some important questions I will be focusing on include

    - What is a new 2015 EPS est?
    - How much of a decline in OCF and FCF occurred?
    - What to make of the September dropoff mentioned?

    It hurts to make a mistake with a minor position in IBM. This is one of the worst performance reports I can recall. The mention of a September drop off would only be mentioned to prepare shareholders for 4Q.
    Oct 20 11:19 AM | Likes Like |Link to Comment
  • General Electric: Bears Proved Wrong Again [View article]
    I caution investors regarding the regularly scheduled "GE take over the world" article. The reality is GE hasnt had a transformative innovation in the past 20 years.

    The Author can be proud of the 1% increase in revenues and the .02c increase in quarterly earnings. The key to investing in GE is to eliminate the huge amount of information that deceives investors which I call GESpeak.

    GE trumpets orders which historically is irrelevant. Last year in the 3Q IBM announced orders had increased near 20%, helping them achieve a 1% increase in revenue. So when GE states large order growth give that the weighting that it deserves given that GE has had huge order growth for 20 years and if they didnt buy businesses they would probably have declined in revenue.

    Another way GE investors get deceived is GE takes major themes like the Internet of Things and with large PR fanfare declares they are ahead of everyone else with huge, huge, huge, mega really really super huge supersonic stock liftoff capability. Over the past decade perhaps 100 of these PR thrusts have resulted in lower performance.

    Investors also get deceived by headline shaping. In the latest quarter GE wrote the headlines they send to news media about "GE Industrial Growth". In reality GE Capital wrote a dividend check to GE of $2.2 billion up 10% from last year $2 billion. Long term investors are aware that GE usually meets EPS guidance by writing a GE Capital check for the difference between EPS Est - Industrial EPS.

    For the record I have owned GE for longer than I can remember. Long enough to know that the share price is about where it first reached in 1996. I have learned how to understand GESpeak over the years.
    Oct 20 10:37 AM | 9 Likes Like |Link to Comment
  • Cuban buys into Netflix, sees a takeover candidate [View news story]
    Looks to me like he was able to pump NFLX up by $15 today.

    Why is it I doubt the SEC would even bother to check whether he is trading?
    Oct 17 10:31 PM | Likes Like |Link to Comment