Archive for 2007

  • Today’s GDP Report
    , October 31st, 2007 at 10:02 am

    Today’s report on GDP growth for the third-quarter was a surprisingly strong 3.9%. This is nearly identical to the 3.8% for the second quarter. My only warning is that these numbers are subject to endless revisions.
    image541.png
    It’s very likely that nominal GDP for 2007 will be over 25% more than 2003.
    Update: BR calls BS.

  • Fair Isaac’s Earnings
    , October 31st, 2007 at 9:46 am

    It’s no secret that Fair Isaac (FIC) has been a disappointment this year. Yesterday’s earnings report appears to be a small bright spot.

    Fair Isaac Corp.’s profit climbed 28 percent in the fiscal fourth quarter, as the business advisory reserved much less to pay taxes, the company said Tuesday.
    Fair Isaac earned $28.2 million, or 52 cents per share, in the quarter ended Sept. 30, compared with profit of $22.1 million, or 35 cents per share, in the fourth quarter last year.
    Analysts polled by Thomson Financial forecast profit of 41 cents per share.
    Revenue was roughly flat at $207.2 million, versus analysts’ expectations for $201 million.
    Fair Isaac sells financial advice and business analysis. The primary difference between the fourth quarter and the comparable period a year earlier was the provision for income taxes. That provision was $2.8 million in the fourth quarter, compared with $11 million in the fourth quarter last year.

    The stock is doing well this morning, but it still has a long way to go to make up for its poor performance this year.

  • Will the 90s Ever End?
    , October 30th, 2007 at 4:47 pm

    Cool!

    March 14, 2007: BigBand Networks Announces Pricing of Initial Public Offering

    Wow!

    May 3, 2007: BigBand Networks Reports First Quarter 2007 Financial Results with 62% Increase in Year over Year Revenues and Expanding Gross Margins

    Um…

    Sept. 27, 2007:
    BigBand Networks Announces Revised Revenue Outlook for Third Quarter of 2007

    Oh.

    October 30, 2007: BigBand reports Q3 loss, to cut workforce by 15 pct

    No fair. I’m suing!!

  • Becky and Dylan on Wing Women
    , October 30th, 2007 at 3:52 pm

  • Gender Differences and Mutual Fund Managers
    , October 30th, 2007 at 1:35 pm

    What I’m saying is – and this is not a come-on in any way, shape, or form – is that men and women can’t be friends, because the sex part always gets in the way.
    – When Harry Met Sally…

    academic study has found that the gender of a mutual fund manager might have an impact on its returns.
    Not that men are better or worse managers than women. Instead, an all-male or all-female team might be better than a mixed gender team.
    Perhaps Harry was right.

  • Management Matters
    , October 30th, 2007 at 11:36 am

    Some numbers to consider:
    Both Merrill Lynch (MER) and Bear Stearns (BSC) are 33% below their 52-week high.
    Lehman Brothers (LEH) is 28% off its high.
    Goldman Sachs (GS) made a new high today. The stock is up over $46 a share this year.
    Of those 4,600 pennies, Lloyd Blankfein’s pay last year was $53.4 million or about 13 cents a share.
    Remember that next time someone complains about executive compensation.

  • Wall Strip on Agrium
    , October 30th, 2007 at 10:56 am

    Howard and Lindsay hit the links to talk Agrium (AGU):

  • ADP’s Earnings
    , October 30th, 2007 at 10:28 am

    Last month, I highlighted Automatic Data Processing (ADP):

    ADP is starting to catch my eye as a good contrarian stock. (The first step, however, is to ignore their notoriously inaccurate monthly employment reports.)
    The stock is down to $44 from $50 in early June. I’m not claiming any great insight on its business, but it’s simply a good stock at a good price. In the last three years, earnings are up 56%. Gross margins are around 50% and the company has a solid balance sheet.
    The company also raised guidance for FY 08. ADP is now looking for 12% sales growth and profit growth of 18% to 21%. I like those numbers.

    The company reported earnings today of 45 cents a share, two cents more than expectations. Last year, ADP earned 39 cents a share. Revenues were up 13.5%% to $1.99 billion.
    The company also nudged up its guidance for next year. ADP sees earnings coming in at the high end of its earlier forecast of $2.12 to $2.18 a share. Sales growth is now projected at 12%-13% instead of just 12%.
    The stock is up about 3% this morning to $48.64.
    As with many contrarian picks, ADP does face some serious problems. Scott Rothbort, my colleague at Real Money, summarized the headwinds facing ADP:

    First is the slowing growth in payrolls. While employment growth remains positive, the rate of growth has declined over the last year. Second are declining interest rates. ADP makes a considerable amount of money on the float, which is due to the timing between the employer payment of payrolls to ADP and the clearing of the individual employee checks. Furthermore, with more people opting for direct debit, ADP’s float base is also declining.

  • O’Neal Writedown Erased 20% of Shareholder Equity
    , October 30th, 2007 at 10:08 am

    These numbers surrounding the losses at Merrill Lynch (MER) are staggering:

    The real damage to shareholders came with Merrill’s $8.4 billion writedown. It is the biggest in the history of Wall Street and wiped out four quarters of growth in shareholders’ equity, according to Merrill’s published figures. The charge, mostly for collateralized debt obligations and subprime mortgages, left the New York-based company with $38.8 billion of assets minus liabilities.
    Losing “20 percent of shareholders’ equity in one fell swoop is a serious blow,” said Robert Willens, the accounting analyst at Lehman Brothers Holdings Inc. in New York. “It might take them two to three years to earn that capital back.”
    The writedown, which has ruined O’Neal’s 21-year career at Merrill, is more than the world’s biggest brokerage earned before taxes from fixed-income sales and trading in the past three years, according to estimates by Sanford C. Bernstein & Co. The decline may weigh on Merrill shares, this year’s second- worst performer among the five biggest U.S. securities firms, because many investors use book value to price the stock.

  • Least Mature Post of the Day
    , October 29th, 2007 at 2:08 pm

    I think this is why they invented pseudonyms.
    20071026hough.gif
    (Via Luskin)