Archive for November, 2006

• CNBC Is a No-Fly Zone for WSJ Reporters
  Eddy Elfenbein, November 16th, 2006 at 3:45 pm

  In a brave defense of symbolism, reporters at the Wall Street Journal have stopped making unpaid appearances on CNBC. They’re doing this to protest the Journal‘s position in its contract talks.
  Fight the power, fellas!
  According to the AP:

  Browning, who has worked at the paper for 27 years, said the company told union negotiators that they were unwilling to discuss any of the proposals made by the union.
  “To go into a meeting and be told there’s not a single proposal they’re willing to discuss is a pretty nasty way to start negotiations,” Browning said.
  In addition to suspending unpaid appearances on CNBC by Journal reporters, Browning also said union members would no longer do podcasts or Webcast interviews for the newspaper’s Web site.

  I’m not sure if this has already taken effect, or maybe it’s up to each reporter to decide. Already today, Gregory Zuckerman, Bob O’Brien, David Wessel and Vauhini Vara have been on CNBC. Perhaps they’re getting paid. Hmmm…will CNBC turn to bloggers?
  Charlie Gasparino has already stood up for the working class. He hasn’t updated SquawkBlog in over three months. OK, that was mean.

• Home Depot Raises Dividend
  Eddy Elfenbein, November 16th, 2006 at 3:17 pm

  Home Depot (HD) increases its dividend by 50%. This is the second 50% increase this year.

• S&P 500: 1400!
  Eddy Elfenbein, November 16th, 2006 at 2:30 pm

  The market hit another new high today, and oil is having its biggest fall of the year.
  

• Milton Friedman 1912-2006
  Eddy Elfenbein, November 16th, 2006 at 12:37 pm

  
  Here’s his autobiography from the Nobel Prize Web site.
  In 1980, Friedman made the series Free to Choose on PBS (note irony). Here are some clips from YouTube.
  Free to Choose Volume 1
  Free to Choose Volume 2
  Free to Choose Volume 3
  Free to Choose Volume 4
  Free to Choose Volume 5
  Free to Choose Volume 6
  Free to Choose Volume 7
  Free to Choose Volume 8
  Free to Choose Volume 9
  Free to Choose Volume 10
  Today Alan Greenspan said of Friedman:

  He had been a fixture in my life both professionally and personally for a half century. My world will not be the same.

  Here’s Ben Bernanke on Friedman’s 90th birthday:

  Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You’re right, we did it. We’re very sorry. But thanks to you, we won’t do it again.

• Today’s CPI Report
  Eddy Elfenbein, November 16th, 2006 at 11:41 am

  The good news is that consumer inflation fell for the second straight month. Headline inflation dropped by 0.5%. The core rate, which excludes food and energy, rose 0.1%. Still, the core rate is running a bit high for my tastes.
  

• Doesn’t Anyone Want to Be a Stock Anymore
  Eddy Elfenbein, November 16th, 2006 at 11:02 am

  Clear Channel is the latest to go private equity. Think $18.7 billion.
  Here’s a chart you don’t see everyday.
  

• The News This Morning
  Eddy Elfenbein, November 16th, 2006 at 10:24 am

  Here are some interesting stories that caught my eye this morning.
  Google’s has put aside $200 million in reserve for lawsuits from YouTube. That’s probably a smart move.
  How the mighty have fallen: KLA-Tencor gets delisting notice.
  Don’t tell Lou Dobbs, but since 1990, one in every four venture-backed companies that have completed initial public offerings had at least one immigrant founder.
  Some investors are suing major private equity firms claiming they rigged stock purchases.
  The housing bubble slowly deflates.

• Cisco’s Stock Buybacks
  Eddy Elfenbein, November 16th, 2006 at 10:09 am

  Seriously, it’s time we had an intervention for Cisco (CSCO). This company needs to STOP buying back its stock. It’s getting out of control. They just announced another $7 billion buyback. For the love of god, someone make them stop.
  This company is sitting on a mountain of cash (nearly $20 billion) and it’s getting thrown away. What’s wrong with a nice little dividend? Too much cash is not a good thing for a company. This is what I like to call the Bladder Theory of Corporate Finance. Cisco has wasted billions of dollars on buying back a stock that has gone nowhere.
  We need to plan it for the evening when Cisco gets back from the office. He’ll open the door, and all of us will be standing there. Then someone needs to say, “Dude, we need to talk.” At first, he’ll be all nervous, “Hey, what’s everyone doing here.” But deep down, he knows exactly why we’re there.
  I’m sorry but it needs to happen.

• Dell Delays Earnings Report
  Eddy Elfenbein, November 16th, 2006 at 9:52 am

  Ugh.

  Dell Inc. on Wednesday delayed its earnings report as the U.S. Securities and Exchange Commission stepped up a probe into the computer maker’s accounting, and its shares fell nearly 3 percent.
  Dell said the delay of the earnings report, originally scheduled for Thursday, was not related to the SEC’s decision to elevate its investigation to formal from informal status.
  But the postponement reflects “the level of complexity the company is facing in the preparation of its preliminary results,” related to the SEC investigation and its own inquiry into accounting and financial reporting matters, Dell said.
  Dell plans to announce preliminary fiscal third-quarter results in a news release “by the end of this month,” but will not hold a conference call for analysts as it has in the past.

• Cognizant Technology Solutions
  Eddy Elfenbein, November 15th, 2006 at 1:51 pm

  One of the more fascinating companies in the world today is Cognizant Technology Solutions (CTSH). The company, along with Wipro and Inforsys, is one of the foremost names associated with IT outsourcing, particularly to India.
  While Cognizant is officially based in lovely Teaneck, NJ, its heart truly lies in the subcontinent. The company currently has over two dozen development centers in India. The growth in this business is simply astounding. The IT/outsourcing sector of the Indian economy is expected to grow from $17.2 billion in 2004, to $50 billion by 2009.
  For any company looking to cut costs and have someone else handle their IT problems, Cognizant is great place to go. Half of their business is clients in the financial services sector. In fact, JP MorganChase, one of the scions of Wall Street, is a major client. Another 20% of Cognizant’s business comes from health care companies like UnitedHealth.
  Cognizant was spun off from Dun & Bradstreet a few years ago and it hasn’t looked back since. As someone who pores over lots of financial statements, I can tell you that Cognizant’s results are extremely impressive. The company has consistently been able to grow its earnings over 50% a year. That’s no easy trick. Also, the company has a solid balance sheet and its operating margins are often around 20%.
  The shares have soared from $12 four years ago to $80 today. In fact, the stock just made a new all-time high. The big news recently is that it was added to the S&P 500. Two weeks ago, Cognizant reported third-quarter earnings of 40 cents a share, two cents more than Wall Street was expecting.
  For the current quarter, Cognizant expects earnings of 42 cents a share, and that will bring 2006’s total to $1.51 a share (the results are a bit skewed due to the FASB 123R jazz).
  What about next year? The Street is all over the place. The consensus is currently looking for $2.04 a share, which means that Cognizant is going for about 40 times forward earnings. That’s even pricier than Google.
  Here’s a spreadsheet with all of Cognizant’s stats from its income statement going back a few years. If you’re new to investing, this might be worth looking over. I know it might appear as a jumble of numbers, but as far as income statements go, it doesn’t get much better.
  Here’s a stock chart of CTSH with its earnings in the gold line (right scale). When the lines cross, that means the trailing p/e ratio is 50.
  
  In early 2002, Cognizant’s p/e ratio was roughly the same as the S&P 500. Today. it’s over three times the S&P 500.