• Michael Strahan’s Mad Money Outtake
    Posted by on November 21st, 2007 at 12:39 pm

  • Your Guide to the Subprime Market
    Posted by on November 21st, 2007 at 10:43 am

    If you have no idea what the subprime market is, this paper is a pretty good guide. Even though it’s written by economists, much of it is in readable English. It runs 26 pages, but a lot is charts and graphs.

  • The 10-Year T-Bond Yield Plunges
    Posted by on November 21st, 2007 at 10:21 am

    Just five months ago, you could have locked in a 10-year T-Bond at 5.33%. Earlier today, it hit 4.003%.
    From Bloomberg:

    “What we’re seeing is a panic demand,” said David Ader, head of U.S. government bond strategy in Greenwich, Connecticut, at RBS Greenwich Capital. “Liquidity is a great problem.”

    image555.png

  • Computer Problems Delay Zimbabwe’s Inflation Report
    Posted by on November 20th, 2007 at 12:19 pm

    Experts believe inflation jumped from 8,000% in September to 15,000% in October.

    Zimbabwe’s Central Statistical Office (CSO) was due to issue the figures last week. CSO acting director Moffat Nyoni, however, told Reuters on Monday they were not ready because commodity shortages had affected the collection and calculation process.
    “I am afraid the figures are not yet ready, and they may not be available for a while,” Nyoni said.
    “We have some problems – a computing problem – in that we have to find a formula of measuring prices of goods, some of which are not available on the (formal) market and which are in short supply in the economy,” he said.

  • Medtronic’s Earnings
    Posted by on November 20th, 2007 at 10:35 am

    Shares are Medtronic (MDT) are much higher today. Actually, the stock is really gaining back much of what it lost over the past month. MDT got pounded one month ago with the company said that it would halt distribution of certain heart defibrillator wires.
    The good news is that the sales impact is less than what the company, and Wall Street, expected. Medtronic said that the Sprint Fidelis heart wire hurt second-quarter earnings by nine cents to 10 cents per share. For the quarter, Medtronic earned 58 cents a share which was a penny less than last year. Sales rose 1.5% to $3.12 billion.
    The AP reports:

    “This was a tough quarter,” President and CEO Bill Hawkins said. “We feel we have made solid progress over the past five weeks” since the recall was announced, “but clearly, much work still remains.”
    Medtronic reported $1.15 billion in revenue in its largest unit, Cardiac Rhythm Disease Management, which makes pacemakers and defibrillators. The recall hurt revenue in that unit by $130 million, and it also absorbed $31 million in costs to write off the Sprint Fidelis leads recalled during the quarter. Last month, Medtronic had predicted a $150 million to $250 million loss of second-quarter revenue and inventory write-off costs of $15 million to $20 million.
    When the Sprint Fidelis problems were discovered, Medtronic moved quickly to go back to its Sprint Quattro lead, including seeking regulatory approval to sell it in Japan. Hawkins said the company expects approval for Japanese sales by April.
    One Medtronic product has actually benefited from the recall: CareLink, Medtronic’s system for monitoring its implanted defibrillators. The potential to spot problems such as the broken Sprint Fidelis wires has prompted more interest in CareLink, said Pat Mackin, president of the Cardiac Rhythm Disease Management unit.
    “I can tell you that I’ve personally been to centers that were not interested in CareLink, and they want to put every single patient on it,” he said.
    Sales grew in other Medtronic units. Spinal revenue rose 10 percent to $660 million, and CardioVascular revenue (which includes stents) grew 8 percent to $490 million.
    Medtronic said revenue from outside the U.S. grew 12 percent to $1.17 billion, including $73 million from favorable currency exchange rates.
    Medtronic doesn’t give quarterly guidance, but Ellis said he would not be surprised if the consensus of analysts remained around $2.52 per share for the full year. Analysts polled by Thomson Financial were predicting full-year earnings of $2.54 per share. Ellis said revenue should accelerate in the second half of the year.

    Here’s a look at MDT’s sales and earnings for the past several 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
    Apr-07………..$0.66………..$3,280.00
    Jul-07…………$0.62………..$3.127.00
    Oct-07………..$0.58………..$3,124.00
    Here’s a chart of Medtronic’s stock and earnings-per-share. The stock is in blue and follows the left scale. The earnings are gold and follow the right scale. I scaled the lines at a ratio of 25-to-1, so when the lines cross, that’s a P/E ratio of 25. Even though earnings have climbed, the stock hasn’t.
    image554.png

  • Third-Quarter Earnings By Sector
    Posted by on November 19th, 2007 at 1:31 pm

    So far, it looks like earnings for the S&P 500 will decline about 8.5% from last year. The pain, however, is not being felt equally.
    Health Care………………………..14.80%
    Information Technology………..13.68%
    Consumer Staples……………….12.61%
    Industrials………………………….11.82%
    Materials…………………………….5.50%
    Telecommunication Services…..4.09%
    Utilities……………………………….0.73%
    S&P 500……………………………..-8.48%
    Energy……………………………….-9.92%
    Financials…………………………..-33.15%
    Consumer Discretionary………..-38.94%
    The lousy number for the Consumer Discretionary sector is due to the homebuilders.

  • America Finally Wins Vietnam War
    Posted by on November 19th, 2007 at 10:08 am

    It took awhile:

    HANOI — Hang around Vietnamese cafés long enough and you are likely to see an arresting sight: one person handing another a grocery bag stuffed with bank notes. Drug deal? Bribe?
    In fact, this is the way many Vietnamese buy stocks these days – not through a broker or the stock exchange but through the Internet, with payment made in cold cash. Finding each other through stock-trading chat rooms and websites, buyers and sellers strike a deal online and then close it by exchanging cash for stock certificates.
    It’s a vivid sign of the times in booming Vietnam. With the economy growing at its fastest clip in a decade, everyone wants to get in on the action. From taxi drivers to tycoons, Vietnamese are speculating wildly on anything that might go up – apartments, gold, land and, above all, stocks.
    Online trading is an easy way to play the game. Traders don’t need to open an account with a broker. They don’t even need a bank account. Unregulated, informal and private, the online market works something like Craigslist or eBay. But they’re not trading baseball caps or Dad’s stamp collection.
    Participants are trading stocks in privatized state companies that make everything from fertilizer to tractors.

  • A Look at Apple’s 10-K
    Posted by on November 19th, 2007 at 9:47 am

    Michelle Leder reads Apple’s 10-K so we don’t have to:

    When Apple (AAPL) came out with its Iphone at the end of June, there was a flurry of activity to take it apart. That’s kind of the way I feel about the 10-K they filed late yesterday. There were so many interesting disclosures in the 170-page filing, that it’s hard to know where to begin. The filing also included the compensation and perks information that’s more commonly found in the proxy.
    Yes, Steve Jobs still made a single buck last year, but that’s still more than Google (GOOG) CEO Eric Schmidt made for serving as a director at Apple. As the filing notes, “Upon his initial appointment to the Board on August 29, 2006, Dr. Schmidt declined the annual retainer fee and the automatic stock option grant to purchase 30,000 shares to which new directors are entitled under the Director Plan. Instead, Dr. Schmidt purchased 10,000 shares of the Company’s common stock on the open market.”
    Former Vice President Al Gore, who earlier this week became a partner at VC firm Kleiner Perkins, was the lowest paid director (next to Schmidt) but was the biggest beneficiary of the free computer equipment that Apple gives to its directors. Gore received $15,245 worth of Apple swag. Directors are eligible to receive two free computer systems a year, but clearly this includes some extra bells and whistles.
    One of Apple’s risk factors is its ties to a single carrier for the Iphone. In the US, that’s AT&T (T), which has faced criticism for its slow network, but the company also lists 02, T-Mobile and Orange as well. In that same risk factor, Apple notes that because these agreements “require each carrier to make revenue-generating payments” to Apple, the frenzy to unlock the Iphone “could have a material adverse effect on the Company’s future financial condition and operating results” which is why Apple keeps on coming up with new ways to prevent that from happening.
    Finally, there were some interesting details about the free Iphones, which Apple employees had been rumored to receive. According to the K, each of Apple’s 21,600 employees, including the named executives received a free Iphone, which the company then grossed-up for taxes. Judging by one of the footnotes to the summary comp chart, some employees received a $250 gross-up and others received a $379 gross-up, which presumably was the difference between the 4 and 8-gig models. The only employee who didn’t get the free Iphone appears to be Steve Jobs, who the filing notes did not get a gross up for the Iphone, or, for anything else.

  • A-Rod and W-Buf
    Posted by on November 19th, 2007 at 7:13 am

    It looks like A-Rod will re-sign with the Yankees. He’ll also win his third MVP award today. The Wall Street Journal reports that A-Rod got some help in his negotiations with the Yankees from none other than Warren Buffett:

    Mr. Rodriguez’s initial defection happened in late October, a tense period for the team during which its beloved manager Joe Torre was effectively ousted after the Yankees were eliminated in the playoffs. Hoping to net a richer contract elsewhere, Mr. Boras advised his client to exercise his opt-out clause, a move reported Oct. 29. The player reluctantly took his agent’s advice, say people familiar with his thinking, even though he and his wife Cynthia were eager to stay in New York and have him continue to play for the Yankees.
    Amid deafening criticism by sports writers and on talk radio, a worried Mr. Rodriguez called Mr. Buffett, say people familiar with the matter. The two had become friends a few years ago, after the slugger flew to Omaha to meet with the investing guru and rabid baseball fan. After that, the two met socially several more times, say the people familiar with the matter. Signifying their mutual admiration, an autographed Rodriguez jersey hangs at Berkshire Hathaway’s Omaha headquarters.
    Mr. Buffett’s advice was simple, says a person familiar with the matter: approach the Yankees solo, without Mr. Boras. “A-Rod really loves being a Yankee,” says Mr. Buffett. He declined to comment on the substance of any conversation with Mr. Rodriguez, saying he doesn’t discuss private talks.

    Of course, they’re not such an odd couple. A-Rod could be a billionaire before his career is up.

  • RIP: John Noble
    Posted by on November 17th, 2007 at 12:25 am

    Have a look at this amazing obituary of John Noble, an American who lived in Germany during the World War II. Although he was never charged with any crime, Noble was sent to Buchenwald.
    By the Soviets.