Motley Fool on Disney
Posted by Eddy Elfenbein on January 24th, 2019 at 12:02 pm

Interesting discussion:

Morning News: January 24, 2019
Posted by Eddy Elfenbein on January 24th, 2019 at 7:10 am

World Leaders at Davos Call for Global Rules on Tech

Saudis to Davos: Move on from Khashoggi, Let’s Do Business

Two Venezuelan Presidents Raises Questions About OPEC Leadership

What Makes This Standoff Worse Than Other Government Shutdowns

The New Hedge Fund Manager Flies Economy and Stays in Hostels

Corporate Chiefs Look Past Economic Risks and Pin Hopes on Trump for Trade Deal

Why Ford’s Operating Profit Dropped 28% in 2018

Amazon’s Self-Driving Scout Starts Deliveries

Microsoft Bing Blocked in China as Tensions, Crackdown Intensify

Hedge Fund Prepares Proxy Fight to Oust Board at Embattled PG&E

Verizon To Lay Off 7% of Media Group Staff

Carlos Ghosn Leaves Renault as It Tries to Heal Rift With Nissan

Ben Carlson: The Long-Term in International Stocks & Animal Spirits: Stay the Course

Michael Batnick: Tumultuous Times & In or Out

Roger Nusbaum: What Are You Doing To Enhance Your Optionality?

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Raymond James Lowers Wallboard Stocks
Posted by Eddy Elfenbein on January 23rd, 2019 at 2:28 pm

I don’t follow other analysts very closely, but an analyst at Raymond James lowered his outlook on some wallboard stocks, and that’s hurting shares of Continental Building Products (CBPX):

Continental Building Products (NYSE:CBPX) was downgraded by investment analysts at Raymond James to a “market perform” rating in a research report issued to clients and investors on Wednesday, The Fly reports.

CBPX hasn’t said yet when it will report its earnings, but my guess is that it will be around February 21. Not all companies are very good at conveying this information to the public.

I’m not too concerned about a negative report. I prefer to wait until we can see the facts in the earnings report.

Morning News: January 23, 2019
Posted by Eddy Elfenbein on January 23rd, 2019 at 7:16 am

China’s Plan for Tech Dominance Is Advancing, Business Groups Say

Despite Bitcoin’s Dive, a Former Soviet Republic Is Still Betting Big on It

Blank-Check Company IPOs Moving Ahead Despite Government Shutdown

Trump Won’t Soften Hardline on China to Make Trade Deal

Trade Concerns Rise on Report of Canceled Meeting

Fed’s Jumbled Talk Leaves Balance-Sheet Message in ‘Disarray’

Legendary Billionaire Ray Dalio Told a Crowd at Davos That the Next Economic Meltdown Scares Him More Than Anything

Fed to Probe Deutsche Bank Over Suspicious Danske Cash

Another Reason to Worry About Johnson & Johnson

IBM Soars as Morgan Stanley Hails ‘Cleanest Quarter in Years’

How Huawei Wooed Europe With Sponsorships, Investments and Promises

Comcast Revenue Beats on Lower-Than-Expected Video Losses

Nick Maggiulli: Fickle Fortune

Lawrence Hamtil: Is Risk A Function of Sector or Size?

Howard Lindzon: Momentum Monday – I Had a Nightmare…

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Fortune’s Most Admired Companies
Posted by Eddy Elfenbein on January 22nd, 2019 at 9:10 pm

Fortune just came out with its list of the World’s Most Admired Companies. I’m happy to report that eight of our Buy List stocks made the list, including Disney (DIS) at #4. The other seven are AFLAC (AFL), Becton Dickinson (BDX), Broadridge (BR), Danaher (DHR), Fiserv (FISV), Raytheon (RTN) and Stryker (SYK).

Check out the whole list.

Motley Fool on Fiserv/First Data
Posted by Eddy Elfenbein on January 22nd, 2019 at 9:41 am

The Motley Fool takes a deep dive on the merger:

The new Fiserv

Management of the two companies expects the acquisition to lead to $900 million in cost savings and $500 million in revenue synergies over a five-year period, and generate $4 billion in free cash flow by 2022. Let’s tackle these issues in order:

Cost savings. In the conference call with analysts following the deal’s announcement, Yabuki said, “We spent significant time and diligence validating these assumptions and expect the savings to come from a number of areas, including the elimination of duplicative overhead, streamlined and enhanced technology infrastructure, increased operational efficiencies, process improvements, and global footprint optimization.” However, when questioned by an analyst, he clarified that the “substantial majority” of cost savings would not be coming from platform consolidation, but from the “duplicative structures” that are inevitably present when any two large companies combine.

The more significant cost saving, though it is not included in the $900 million figure, will come from the refinancing of First Data’s debt. Fiserv has said it expects to refinance First Data’s approximate $17 billion debt immediately upon the deal’s closing. While that is still a lot of debt, the combined entity will be able to swallow that bitter pill a bit more easily than First Data alone. For the first two years after the acquisition, Fiserv will suspend its share buyback program to prioritize paying down that mountain of debt.

Revenue synergies.

In the conference call, Yabuki said, “Our revenue synergies will be driven by a focus on additional client value in areas such as bank Merchant Services and Clover, credit processing, expanded biller and payment services, along with many additional opportunities to innovate across our network.” Nearly $100 million of revenue will be seen in the first year alone, and Yabuki expects the deal to increase earnings per share about 20% in the first year.

While there is not a direct overlap between much of the two companies’ services, that doesn’t mean they don’t exist. Take Clover, First Data’s cloud-based, mobile point-of-sale solution. In First Data’s third quarter, Clover processed about $17.5 billion in payment volume, a 45% increase year over year. Banks that subscribe to Fiserv’s platforms can now offer Clover as a default point-of-sale option to their business accounts. As Bisignano put it, the deal “massively changes the distribution capability of Clover.”

Not your father’s payments industry

While all of the synergies listed above seem plausible, this move was all about Fiserv and First Data playing defense, not offense. It wasn’t too long ago that the payment processing industry offered a largely commoditized service to merchants with established storefronts. The arrival of upstarts, such as Square (NYSE:SQ), began to change all of that.

Square first offered mobile point-of-sale solutions, then moved to other innovative solutions, including giving merchants immediate access to their money (for a fee), payment processing solutions tailored to specific industries, and a business micro-loan platform. With Clover becoming a part of Fiserv, banks will have the same access to sales data that Square has and be able to offer loans to merchants in much the same way Square does now. For financial institutions losing market share to Square, that is a compelling proposition.

Fiserv is also facing renewed competition from upstarts such as Q2 Holdings (NYSE:QTWO), which is growing revenue much faster by offering digital expertise and cloud-based platforms to small banks and local credit unions.

While this deal does not solve all of these problems, it increases both companies’ reach into sectors where they previously had no presence. The interesting combinations and larger distribution channels might be enough to recharge growth and stave off disruptive upstarts a bit longer. While I’m not rushing to buy shares of either company just yet, once the acquisition is complete, the more-robust Fiserv will bear close watching by investors.

Morning News: January 22, 2019
Posted by Eddy Elfenbein on January 22nd, 2019 at 7:17 am

Stocks Slide After the IMF Cut Its Forecast for Global Growth Amid Mounting Concerns About the US-China Trade War

Chilling Davos: A Bleak Warning on Global Division and Debt

The Stock Market’s On-Again, Off-Again Relationship With Trump

Powell’s Game Plan

CEOs Are Good at Predicting Economic Trends. Their Confidence in Growth Just Dropped Dramatically

BofA’s Moynihan Predicts Another Round of U.S. Bank Mergers

Foxconn Looks Beyond China to India for iPhone Assembly

Apple Supplier in Japan Looks to Taiwan for Bailout After iPhone XR Letdown

Canada Should Ban Huawei from 5G Networks, Says Former Spy Chief

UBS Warns of Headwinds After Clients Pull $13 Billion in Quarter

Tesla Denies Signing Agreement With Chinese Battery Company

Carlos Ghosn Is Denied Bail as Jail Stint Looks to Continue

Jeff Miller: The Real-Time Economic Lesson Continues

Joshua Brown: The Time Jack Bogle Set Me Straight

Jeff Carter: Hew the Middle If You Are a Business

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MLK: Street Sweeper Speech
Posted by Eddy Elfenbein on January 21st, 2019 at 11:06 am

Here’s one of MLK’s lesser-known speeches but I think it deserves a greater hearing:

Morning News: January 21, 2019
Posted by Eddy Elfenbein on January 21st, 2019 at 6:50 am

Eve-of-Davos Survey Shows People Place Trust in Companies Over Governments

Data Dependent? Five Questions for the ECB

China’s Slowdown Looms Just as the World Looks for Growth

China’s Economy, by the Numbers, Is Worse Than It Looks

U.S.-China Trade Talks Falling Short on Make-Or-Break IP Issues

Welcome to Jamaica, Home of the World’s Best-Performing Stock Market

Poor Earnings Season May Not Stop a Market Rally, JPMorgan Says

Amazon Knows What You Buy. And It’s Building a Big Ad Business From It.

European Power Firms Aim to Harness Electric Car Batteries

Nippon Life President Says Actively Exploring M&A in U.S.

France Pressures Vestager to Allow Siemens-Alstom Rail Deal

Toyota, Panasonic Setting Up EV Battery JV Amid Rising China Competition

Ben Carlson: How to Be Memorable

Michael Batnick: Bogle’s Big Mistake

Roger Nusbaum: Thoughts On Jack Bogle’s Life & Legacy

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WSJ on Raytheon’s Thomas Phillips
Posted by Eddy Elfenbein on January 19th, 2019 at 6:42 pm

The Wall Street Journal on Raytheon’s CEO Thomas Phillips:

He was born of Greek parents in Istanbul and originally named Athanasius Leonidas Philippides. His father died within a few years of the son’s birth. He, his sister and his mother left Turkey, lived in Greece and settled in Canada in 1929. In 1936, they moved to Boston, where his mother married a Greek-American who ran a cafe.

The young man won admission to the prestigious Boston Latin School, putting him on a college track. He enrolled at Northeastern University, where he played football and basketball, then was drafted into the Army in 1943 and sent to Virginia Polytechnic Institute. He was bound for duty in the Pacific when Japan surrendered in 1945. He returned to earn bachelor’s and master’s degrees in electrical engineering at Virginia Tech.

Raytheon hired him in 1948 and quickly gave him responsibility for overseeing missile-development programs and other projects. He became president in 1964 and CEO four years later. “He had an uncanny knack for not making mistakes,” Charles F. Adams, a former Raytheon chairman, recalled later.

In the 1960s, Raytheon was diversifying to reduce reliance on military orders. The company had developed microwave-cooking technology in the 1940s after a Raytheon engineer noticed that a candy bar in his breast pocket melted when he stood near a device generating microwaves. Raytheon sold its Radarange ovens to restaurants, but Mr. Phillips wanted to break into the home market. The company bought a home-appliance maker, Amana Refrigeration Inc., in 1965 and soon introduced a countertop microwave.

Mr. Phillips pursued Beech Aircraft Corp. for years, and the company finally agreed to buy it in 1979 for about $580 million. Raytheon tried to break into the word-processing market by purchasing Lexitron Corp. in 1978. That business flopped and was sold in 1984.

Mr. Phillips, who retired as chairman in 1991, remained on the company’s board until 2000. The company eventually sold Beech and the home-appliance business.