Archive for February, 2007

  • Damn It Feels Good to Be a Banker
    , February 21st, 2007 at 1:55 pm

    Goldman Sachs breaks down Blankfein’s pay:
    TALLY SHEET
    Components of 2006 Compensation, Benefits and Perquisites
    Lloyd C. Blankfein
    Cash Compensation
    Base Salary $600,000
    Cash Bonus (Includes $24,000 Qualified Money Purchase Pension Plan Contribution) $27,267,500
    Equity-Based Compensation
    Restricted Stock Units (RSUs) $ 15,679,500
    RSUs — 77,776
    Vested — 31,110
    Unvested — 46,666
    Stock Options $ 10,453,000
    Shares Underlying Options — 209,228
    Vested — 83,691
    Unvested — 125,537
    Exercise Price — $199.84
    Total Compensation $ 54,000,000
    Retirement and Welfare Benefits
    Life Insurance Premiums $12,211
    Firm Qualified Profit Sharing Plan Contribution $5,000
    Medical/Dental Benefit Premiums $40,571
    Long-Term Disability Insurance Premium $1,094
    Other Benefits and Perquisites
    Financial Planning Services $63,518
    Car and Driver $198,388
    Total Benefits and Perquisites $320,782
    Dividend Equivalents on All Prior Years’ Restricted Stock Units $402,582
    Total $54,723,364
    Do you think “Car and Driver” means the magazine? Me neither.

  • Worthwhile Canadian Initiative
    , February 21st, 2007 at 11:43 am

    Telus to offer wireless adult content
    We begin counting, now. One, two, thr…
    Telus halts porn downloads

  • The AFLAC Duck Is Not Dead
    , February 21st, 2007 at 11:02 am

    Despite what Regis and Kelly said, and the New York Post, the AFLAC (AFL) duck is not going away.

    “The company’s chief marketing officer tells adage.com he wants to focus less on the mascot and more on what Aflac does — supplemental insurance,” the CNN report stated. “He says many people recognize the duck’s squawk, but have no idea what product he’s selling.”
    From there, the story was picked up by radio stations as far away as Los Angeles.
    As the story spread, Herbert said he went from “from being annoyed to being concerned.”
    About 2 p.m., the company issued the news release stating the duck was still alive.

  • Investing Factoid of the Day
    , February 21st, 2007 at 10:25 am

    The Dow falls an average of 18.7% from one year’s high to the following year’s low.
    This is from Mark Hulbert’s article which takes a skeptical look at the idea that years ending in “seven” are bad for the market.

  • Cyclicals Are Soaring
    , February 21st, 2007 at 8:52 am

    Cyclical stocks have been red-hot lately. The Morgan Stanley Cyclical Index (^CYC) has beaten the S&P 500 for the last seven straight days, and 25 of the last 30. This may be a sign that the economy isn’t ready to throw in the towel just yet.
    The cyclical rally is notable because the sell-off last May and June fell disproportionately on cyclicals. Still, cyclicals have been the uncrowned kings of this bull market. In less than four years, the CYC is up over 150%, which is nearly twice as much as the S&P 500.
    I like to track the CYC/S&P ratio, which often gives us a better reading on the economy’s health than any government report. The ratio increases when cyclicals outperform, and decreases when cyclicals underperform. On May 10, the ratio got to 0.672, its highest point in 12 years. The correction brought it back below to 0.610, but now it’s closing in on the May high again. Yesterday, the ratio got to 0.665.
    The ratio’s high mark of 0.677 came on March 23, 1994 (my records date back to 1978), so we’re in striking distance of a new high. During previous economic recoveries, the ratio has usually petered out around 0.65. Currently, the ratio is in the top 1% of all readings. In other words, we’re near outlier territory.
    While cyclicals are surging now, history suggests that the end of the party may soon be near.
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  • That Was Fast
    , February 21st, 2007 at 7:18 am

    When the Altria Group announced in the fall that it was planning to spin off its Kraft Foods division, Wall Street cheered.

    New York Times, February 21

    Kraft Chief Outlines Turnaround Strategy

    New York Times, February 21

  • Medtronic Earns 61 Cents a Share
    , February 20th, 2007 at 4:09 pm

    Medtronic (MDT) just reported earnings of 61 cents a share, three cents more than exectations. Here are MDT’s results for the past few quarters:
    Quarter………..EPS………….Sales
    Jul-01…………$0.28………..$1,455.70
    Oct-01………..$0.29………..$1,571.00
    Jan-02………..$0.30………..$1,592.00
    Apr-02………..$0.34………..$1,792.00
    Jul-02…………$0.32………..$1,713.90
    Oct-02………..$0.34………..$1,891.00
    Jan-03………..$0.35………..$1,912.50
    Apr-03………..$0.40………..$2,148.00
    Jul-03…………$0.37………..$2,064.20
    Oct-03………..$0.39………..$2,163.80
    Jan-04………..$0.40………..$2,193.80
    Apr-04………..$0.48………..$2,665.40
    Jul-04…………$0.43………..$2,346.10
    Oct-04………..$0.44………..$2,399.80
    Jan-05………..$0.46………..$2,530.70
    Apr-05………..$0.53………..$2,778.00
    Jul-05…………$0.50………..$2,690.40
    Oct-05………..$0.54………..$2,765.40
    Jan-06………..$0.55………..$2,769.50
    Apr-06………..$0.62………..$3,066.70
    Jul-06…………$0.55………..$2,897.00
    Oct-06………..$0.59………..$3,075.00
    Jan-07………..$0.61………..$3,048.00

  • Wal-Mart: $1 Billion a Day
    , February 20th, 2007 at 11:21 am

    In 1955, General Motors (GM) became the first American company to make over $1 billion in a single year. Today Wal-Mart (WMT) reported its fourth-quarter earnings. The earnings aren’t that interesting (95 cents a share), but check out the sales number–$98.09 billion! That’s an average of $1.06 billion a day.
    For the record, ExxonMobil (XOM) already hit the $100 billion quarterly revenue mark in 2005, but that was due to soaring oil prices.

  • 10 Things You Might Not Know About the Sirius-XM Merger
    , February 20th, 2007 at 11:05 am

    From the Wired Blog:

    1. It’s being touted as a “merger of equals,” but in fact, Sirius is buying XM for nearly $4.6 billion in stock. (Source:Bloomberg)
    2. Sirius and XM’s receivers are incompatible: it won’t be elementary to combine the two services, and to get both, you’ll probably have to buy a new receiver. The companies have promised to merge channel lineups, however, letting customers pick and choose on an “a la carte” basis.
    3. Sirius offered one-time payments for a lifetime subscription, but tied it to a receiver. These users could be offered deals to add XM or upgrade their receiver, or could be told that one-time payment forever applies only to Sirius-branded content on the original box. What deal will the merged giant offer?
    4. The merger effectively creates a local monopoly in digital radio (excepting that provided through cable television services.) Under scrutiny from the Justice Department and FCC, Sirius and XM may claim to be competing not with each other, but with iTunes and other music download services. If they do, might it have consequences for XM’s claim that they aren’t a download service, in regard to an RIAA lawsuit? However it pans out, the phrase “regulatory hurdles” could haunt the deal for months.
    5. Channels will die. There’s a lot of duplicated content across the two networks. It’ll be interesting to see how closely culling is tied to earcount and ego.
    6. Though XM has more subscribers (XM has claimed 7.6 million to Sirius’s claimed 6 million) and had more than double Sirius’ revenue in 2005, Sirius recently boasted about its economic performance and climbing subscriber base. Both companies have been losing money hand-over-fist for years, however: Shares for both declined about 50 percent last year. Sirius is worth $5.2 billion, while XM was recently valued at $3.75 billion. (Compare the buyout price!)
    7. Sirius was originally called Dog Radio, and was founded in 1990. XM was originally called American Mobile Satellite Corp, and was founded in 1988.
    8. The elliptical orbit of Sirius’s satellites causes trouble for customers who receive their Musak-like business music service through stationary antennas. Sirius is launching a geostationary satellite just for them.
    9. Sirius’ and XM’s press release contained a boilerplate legal disclaimer about “Forward Looking Statements,” listing the words “anticipate,” “believe,” “plan,” “estimate,” “expect,” “intend,” “will,” “should,” “may,” as ones that predicate statements the reader should take with a pinch of salt.
    10. Worldstar serves satellite radio to Europe, Africa and the rest of the world. With about a hundredth of the merged giant’s revenues, it doesn’t compete in its home market, instead licensing a few select channels to XM.

  • News this Morning
    , February 20th, 2007 at 10:09 am

    Good morning. I hope everyone had a great three-day weekend. This is an important week for us. Two of our Buy List stocks will report earnings. First, Medtronic (MDT) reports after the close today. Wall Street is looking for 58 cents a share. Also, Donaldson (DCI) reports on Thursday. The Street is looking for 37 cents a share. I don’t expect any surprises here.
    The best news is that Harley-Davidson (HOG) has reached a tentative deal with its union. Hallelujah! The stock is up early this morning.
    Another big event will come tomorrow morning when the Consumer Price Index for January comes out. I’m expecting more good news on the inflation front.
    Finally, a word on JetBlue (JBLU). The stock is getting slammed this morning, and deservedly so. What I don’t get about JBLU is that in the five years since its IPO, the stock has split 3-for-2, three times. Yet the stock hasn’t gone anywhere. Splits are for high prices! On its first day of trading, JBLU soared from $27 to $45. Three 3-for-2 splits works out to one 3.375-to-1, so $45 is equal to $13.33 today. The shares are around $12.67 this morning.