Archive for September, 2006

  • The Cost of the Back-Dating Scandal
    , September 6th, 2006 at 11:00 am

    From today’s New York Times:

    Three researchers at the University of Michigan estimated that backdating stock options between 2000 and 2004 helped sweeten the average executive’s pay by more than 1.25 percent, or about $600,000. But the fallout from the recent options investigations has caused those executives’ companies to fall in market value by an average of 8 percent, or $500 million each.
    “For about $600,000 a year to the executives, shareholders are being put at risk to the tune of $500 million,” the study concludes.

    This scandal isn’t going to go away. Christopher Cox will be testifying today on Capitol Hill about back-dating.

  • Donaldson Does It Again
    , September 5th, 2006 at 5:43 pm

    I’ve learned never to say “I love a stock,” but I’m in serious like with Donaldson (DCI). The company just had another fantastic earnings report. The company has now increased its earnings for 17 straight years.
    For the fourth quarter, DCI earned 43 cents a share, three cents more than the Street was expecting. The stock is up 10% after-hours.
    For the year, Donaldson earned $1.55 a share on sales of $1.694 billion. Here are the results going back to 1990:
    Year………….Sales……………..EPS
    1990…………$422.9……………$0.19
    1991…………$457.7……………$0.21
    1992…………$482.1……………$0.23
    1993…………$533.3……………$0.26
    1994…………$593.5……………$0.30
    1995…………$704.0……………$0.37
    1996…………$758.6……………$0.42
    1997…………$833.3……………$0.50
    1998…………$940.4……………$0.57
    1999…………$944.1……………$0.66
    2000…………$1,092.3…………$0.76
    2001…………$1,137.0…………$0.83
    2002…………$1,126.0…………$0.95
    2003…………$1,218.3…………$1.05
    2004…………$1,415.0…………$1.18
    2005…………$1,595.7…………$1.27
    2006…………$1,694.0…………$1.55
    Donaldson sees 2007 EPS coming in at $1.72 to $1.82 a share, which is above Wall Street’s forecast.

  • What’s That Hissing Sound?
    , September 5th, 2006 at 12:58 pm

    danville.jpg
    It could be a housing bubble coming to an end. Today we learn that home price appreciation had its sharpest pullback EVER. (Well, the records only go back to 1975, but still….)

    New evidence of a housing market slowdown emerged Tuesday – growth in the price of a single family home was just 1.17 percent in the second quarter, a decline of more than one percentage point from the prior quarter when prices grew 2.20 percent.
    The Office of Federal Housing Enterprise Oversight (OFHEO), which released the report, said it was the slowest quarterly increase since the fourth quarter of 1999 and was the sharpest quarter-to-quarter pullback since OFHEO began the index in 1975.
    The year-over-year price gain was 10.06 percent.
    OFHEO’s numbers are generally regarded as the most accurate gauge of housing prices. Instead of measuring the average sale prices of homes, it compares repeat sale prices of the same single family homes.

    Here’s how home prices are doing in 151 markets.
    Danville, IL is listed as the lowest-priced housing market. Sooo…I’d thought I’d help out the good folks there. Here’s a listing for a five-bedroom waterfront crib in Danville. That’s it in the picture above. It can all be yours for $599,000.

  • Inco Break Merger Agreement with Phelps Dodge
    , September 5th, 2006 at 10:01 am

    As everyone knows, the national sport of Brazil is soccer. Even though America always gets creamed in the World Cup, we know that it’s better that we excel at our national sport, business.
    Well, that may be changing. Phelps Dodge (PD) offered to buy Inco, a Canadian nickel miner, for $17.4 billion. Nickel, if you haven’t noticed, has been soaring to NASDAQian heights (Googlesque?). Today, Inco said that the deal is off, and they’re looking at a rival bid from Brazil’s Companhia Valo de Rio Dolce (or CVRD).
    The interesting thing is that both bids are for $17.4 billion. The difference is that PD’s is cash and stock, CVRD’s is all cash. Now Inco has a pay PD a termination fee.
    What’s next? The U.S. will lose an international basketball tournament?

  • New York Farm a Front in Foie Gras Fight
    , September 1st, 2006 at 2:28 pm

    From the AP:

    Three times a day, workers at the Hudson Valley Foie Gras farm wade into duck pens, grab birds one at a time and slide a 15-inch metal tube inside the animals’ long necks. The force feeding fattens the ducks’ livers, which is sold as foie gras.
    This sprawling farm northwest of New York City is the nation’s No. 1 producer of the velvety delicacy — and a target for force feeding opponents trying to build on recent successes in Chicago and California.
    The farm faces a series of legal complaints from the Humane Society of the United States that, if successful, would cripple business. Operators of the farm are fighting back and trying to show that the feeding process is not the animal torture portrayed by foes.
    “It’s not harmful to catch the ducks. They’re not going crazy,” said operations manager Marcus Henley. “There’s no pain evidenced when I watched it.”
    These are difficult days for foie gras (fwah-GRAH), French for “fat liver.” High-wattage celebrities like Paul McCartney oppose it. California is banning force-fed foie gras starting in 2012 and Chicago in August banned foie gras sales. Similar bans are proposed in other states and cities.

    Yep, it’s a slow news day.