consider the source's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/165870/comments http://seekingalpha.com/article/77843-texas-instruments-a-better-pick-than-intel-citi?source=feed#comment-170059 170059 Mon, 19 May 2008 12:23:49 -0400 http://seekingalpha.com/article/68781-warning-signs-of-a-modern-depression-see-1990-japan?source=feed#comment-128954 128954
first, greed is good. you state "The problems in the financial markets are almost entirely because of greed." i agree; indeed they are. but that also is the same greed that helped your and the rest of America's 401ks return strong performance in so many other years. i believe it's inconsistent to state in the same sentence "we must eliminate greed" and "...we can return to being leaders in the world." we became leaders of the world in no small part because of greed. sure there are many other factors, but without incentive we don't excel in innovation and don't strive for greater efficiencies. bright minds from around the world come to study and work in the US because of the prospects for success, often measured in monetary terms.

second, when we remove financial and building company stocks all else is not fine. i agree that dividends and stock buybacks have been strong, but that was then. stocks price in what is to be, and not what was. we already earned the buybacks and dividends of 2007 with the stock appreciation seen over the prior 4 years (DOW up 86% from trough in 2003 to peak in 2007).

in discussing what is to be, it's inappropriate to dissociate what's happening in financial firms and homebuilders from the rest of the economy. people used home equity loans to buy boats, cars and pay off credit cards. it's fair to even say that some of the health you cite for other industries was on borrowed money, driven by unsustainable gains and confidence derived elsewhere. when that goes away, and you throw in layoffs, missed mortgage payments and inflation, it's easy to see how iphone sales might weaken a tad.

i agree with most of your comments about government, as well as financial stock losses being born by shareholders, but i don't think government is to blame for lending practices. i do think that lenders were greedy and shortsighted in their loose practices, but consumers were just the same. people made conscious decisions to buy homes they couldn't afford because they were silly enough to think that real estate only goes up. shame on them. of course i feel sorry for the family that's put on the street, but if you can't afford to own something you shouldn't be buying it. i don't subscribe to the excuse that homeowners didn't understand that their teaser rate went away in a year and all of the sudden their payments jump up. it's all there in the payment schedule; they saw it (okay fine, there were probably a relatively small # out there that didn't read their docs). people just expected there would be appreciation and a refinancing, neither of which ended up being the case.

the government doesn't bail out the public from doing countless other self-destructive and downright dumb actions, so why should this be different? when things go up too fast, it's healthy and right for them to come down some as well. ]]> Wed, 19 Mar 2008 15:39:55 -0400
first, greed is good. you state "The problems in the financial markets are almost entirely because of greed." i agree; indeed they are. but that also is the same greed that helped your and the rest of America's 401ks return strong performance in so many other years. i believe it's inconsistent to state in the same sentence "we must eliminate greed" and "...we can return to being leaders in the world." we became leaders of the world in no small part because of greed. sure there are many other factors, but without incentive we don't excel in innovation and don't strive for greater efficiencies. bright minds from around the world come to study and work in the US because of the prospects for success, often measured in monetary terms.

second, when we remove financial and building company stocks all else is not fine. i agree that dividends and stock buybacks have been strong, but that was then. stocks price in what is to be, and not what was. we already earned the buybacks and dividends of 2007 with the stock appreciation seen over the prior 4 years (DOW up 86% from trough in 2003 to peak in 2007).

in discussing what is to be, it's inappropriate to dissociate what's happening in financial firms and homebuilders from the rest of the economy. people used home equity loans to buy boats, cars and pay off credit cards. it's fair to even say that some of the health you cite for other industries was on borrowed money, driven by unsustainable gains and confidence derived elsewhere. when that goes away, and you throw in layoffs, missed mortgage payments and inflation, it's easy to see how iphone sales might weaken a tad.

i agree with most of your comments about government, as well as financial stock losses being born by shareholders, but i don't think government is to blame for lending practices. i do think that lenders were greedy and shortsighted in their loose practices, but consumers were just the same. people made conscious decisions to buy homes they couldn't afford because they were silly enough to think that real estate only goes up. shame on them. of course i feel sorry for the family that's put on the street, but if you can't afford to own something you shouldn't be buying it. i don't subscribe to the excuse that homeowners didn't understand that their teaser rate went away in a year and all of the sudden their payments jump up. it's all there in the payment schedule; they saw it (okay fine, there were probably a relatively small # out there that didn't read their docs). people just expected there would be appreciation and a refinancing, neither of which ended up being the case.

the government doesn't bail out the public from doing countless other self-destructive and downright dumb actions, so why should this be different? when things go up too fast, it's healthy and right for them to come down some as well. ]]> http://seekingalpha.com/article/68068-the-spansion-expansion?source=feed#comment-128929 128929
let's do some simple math...
1Q08E:
EBITDA 70
Cash interest -30
Capex -250
Cash taxes? 0
FCF -210
Cash 12/31 416
Cash 3/31 206

uh oh, they need $200mn cash to run this business. fast forward through the next few quarters, when the mandatory 17mn/qtr spansion japan loan amortization kicks in and things get tight quick. sure capex is coming down dramatically, but i'm afraid that won't be enough. they'll be tapping their revolver by mid-year, an event that doesn't usually signal an equity rally. and if the bleeding continues beyond that? let's see, their credit facility is only 175mn, they can't issue more debt (secured notes issued just last year already trading at 70) and I don't need to say what the effectiveness of issuing stock at $2 would be.

semi industry success takes more than wafer size increases and node shrinkage. it also takes being in the right market at the right time with the right product and right capital structure. they might have a good product, but their market sucks, the timing sucks and their capital structure is not suitable. 1 out of 4 doesn't get my money.

with so many companies out there to invest in, how on earth somebody singles this one out as a great idea is beyond me. if you really want to own spansion equity, you should buy the bonds and clip the 11.25% coupon until they file for bankruptcy - your bonds will end up being exchanged for new equity after it gets restructured anyway...]]> Wed, 19 Mar 2008 14:54:59 -0400
let's do some simple math...
1Q08E:
EBITDA 70
Cash interest -30
Capex -250
Cash taxes? 0
FCF -210
Cash 12/31 416
Cash 3/31 206

uh oh, they need $200mn cash to run this business. fast forward through the next few quarters, when the mandatory 17mn/qtr spansion japan loan amortization kicks in and things get tight quick. sure capex is coming down dramatically, but i'm afraid that won't be enough. they'll be tapping their revolver by mid-year, an event that doesn't usually signal an equity rally. and if the bleeding continues beyond that? let's see, their credit facility is only 175mn, they can't issue more debt (secured notes issued just last year already trading at 70) and I don't need to say what the effectiveness of issuing stock at $2 would be.

semi industry success takes more than wafer size increases and node shrinkage. it also takes being in the right market at the right time with the right product and right capital structure. they might have a good product, but their market sucks, the timing sucks and their capital structure is not suitable. 1 out of 4 doesn't get my money.

with so many companies out there to invest in, how on earth somebody singles this one out as a great idea is beyond me. if you really want to own spansion equity, you should buy the bonds and clip the 11.25% coupon until they file for bankruptcy - your bonds will end up being exchanged for new equity after it gets restructured anyway...]]>