It's great to find ways to maximize savings, identify winning stocks and improve career prospects. But sometimes it is also important to consider the other side - how to avoid major mistakes that can cripple your financial future. In fact, some of the biggest mistakes that people can make are entirely in their control and completely avoidable. Here are five easily avoidable financial mistakes you may be making right now. (For related reading, also check out 6 Worst Financial Mistakes And Why You Made Them.)
1. Insurance - Too Little, Too Late
Having inadequate insurance is an easy way to ruin your financial life. Every year there are reports of significant catastrophic flooding in some part of the United States, and every year that means some homeowners are facing an economic wipeout. Standard homeowners insurance excludes flood damage, and many homeowners neglect to buy a flood policy.
If a guest injures themselves on your property and you are not adequately insured, you may be forced to pay out of pocket for their expenses. The same can be true for people you hire to work on your house and even trespassers.
To read the complete column, please click the link:
http://financialedge.investopedia.com/financial-edge/0511/5-Easy-Ways-To-Ruin-Your-Financial-Life.aspx
Tuesday, May 24, 2011
Investopedia: Intuit's Valuation A Sign Of The Times
Maybe Intuit (Nasdaq:INTU) is a good microcosm for the market and the economy. Business conditions are better, but not great, and that is especially true in the small business category. The market, though, has rewarded the rebound handsomely and so while the stock has been a very strong performer, it is now at a point where valuation, quality and future prospects seem balanced. In other words, the market has certainty caught up to the economy and it looks like there could be more risk than reward if valuations go much further.
Intuit's Third Quarter Wasn't Taxing
Intuit delivered respectable fiscal third-quarter results, largely on the back of a solid performance in the consumer tax business (the TurboTax franchise). Total revenue rose 15% in the period, fueled in large part by the 18% growth in consumer tax preparation. The company saw an 11% increase in TurboTax units through tax season, even though H&R Block (NYSE:HRB) held up a lot better than some had expected. Interestingly, for as much talk as there is about Intuit's opportunities in areas like software-as-a-service and mobile apps, the consumer tax business is still about one-third of the company's full-year revenue base.
Please click below for the full piece:
http://stocks.investopedia.
Intuit's Third Quarter Wasn't Taxing
Intuit delivered respectable fiscal third-quarter results, largely on the back of a solid performance in the consumer tax business (the TurboTax franchise). Total revenue rose 15% in the period, fueled in large part by the 18% growth in consumer tax preparation. The company saw an 11% increase in TurboTax units through tax season, even though H&R Block (NYSE:HRB) held up a lot better than some had expected. Interestingly, for as much talk as there is about Intuit's opportunities in areas like software-as-a-service and mobile apps, the consumer tax business is still about one-third of the company's full-year revenue base.
Please click below for the full piece:
http://stocks.investopedia.
Friday, May 20, 2011
FinancialEdge: The Death Of The Trading Floor
For many people, even just the words "stock exchange" invoke images of men clad in weird jackets frantically gesturing and yelling to each other while quickly scribbling on their pads. Albeit exaggerated and over-simplified, this is how a lot of exchanges (be they stock, options, or futures) used to function. Increasingly, though, the human floor trader is becoming a relic of the past as exchanges go virtual and traders handle business through impersonal computer terminals and phones.
With virtually all of the momentum on the side of electronic trading - there has been no major conversion from an electronic system back to the old method - is there much of a future left for human floor traders or human interaction?
Open Outcry - Previously the Only Game in Town
Given that stock and commodity trading predates the invention of the telegraph, telephone or computer by hundreds of years, it is fairly obvious that face-to-face human trading was the standard way of doing business for a long time. Some exchanges began as little more than informal gatherings of local businessmen with common interests (a grain buyer and a grain seller, for instance). Over time, though, the functions become more regular and specialized, and the people involved came up with common rules and policies. Ultimately, this culminated in the creation of open outcry markets for financial instruments like stocks, bonds, options and futures. Rules and procedures varied from exchange to exchange, but they all had a trading floor (sometimes called a "pit") where members conducted their business. (For more, see The Birth Of Stock Exchanges.)
To read the full column, please follow this link:
http://financialedge.investopedia.com/financial-edge/0511/The-Death-Of-The-Trading-Floor.aspx
With virtually all of the momentum on the side of electronic trading - there has been no major conversion from an electronic system back to the old method - is there much of a future left for human floor traders or human interaction?
Open Outcry - Previously the Only Game in Town
Given that stock and commodity trading predates the invention of the telegraph, telephone or computer by hundreds of years, it is fairly obvious that face-to-face human trading was the standard way of doing business for a long time. Some exchanges began as little more than informal gatherings of local businessmen with common interests (a grain buyer and a grain seller, for instance). Over time, though, the functions become more regular and specialized, and the people involved came up with common rules and policies. Ultimately, this culminated in the creation of open outcry markets for financial instruments like stocks, bonds, options and futures. Rules and procedures varied from exchange to exchange, but they all had a trading floor (sometimes called a "pit") where members conducted their business. (For more, see The Birth Of Stock Exchanges.)
To read the full column, please follow this link:
http://financialedge.investopedia.com/financial-edge/0511/The-Death-Of-The-Trading-Floor.aspx
Slight Interruption
Hey readers,
I'm sorry, but production will be down a bit owing to the fact I got selected for jury service. I'll be catching up relatively soon (I hope...), but there may be a slight lag in getting back up to the normal level of writing/publishing activity.
I'm sorry, but production will be down a bit owing to the fact I got selected for jury service. I'll be catching up relatively soon (I hope...), but there may be a slight lag in getting back up to the normal level of writing/publishing activity.
FinancialEdge: It's Not Illegal If The Government Does It
It's good to be king - and it always has been. Ever since the first government formed, there has been the idea that there are things a government can do that are illegal when done by private citizens. This power also extends into the world of commerce and business, where the government allows itself powers and latitude that private citizens and corporations simply do not get. Whether one wishes to argue that the government must do some of these things simply to keep the whole system running, it does not change the fact that the government does engage in behaviors that would be illegal for anyone else.
Taxes - Involuntary Commerce?
Governments are unique in their power to levy taxes; in fact, it is one of the defining traits of a government. Even allowing that citizens do get something back for their taxes (roads, police, courts, etc.), the fact remains that it is not a voluntary transaction. There is no company out there that can similarly compel financial transactions - a homeowner can choose to turn off the power if that is their choice (though perhaps the new health care law in the U.S. will make health insurance inescapable). (For more, see How To Owe Nothing On Your Federal Tax Return.)
To read the full column, please follow this link:
http://financialedge.investopedia.com/financial-edge/0511/Its-Not-Illegal-If-The-Government-Does-It.aspx
Taxes - Involuntary Commerce?
Governments are unique in their power to levy taxes; in fact, it is one of the defining traits of a government. Even allowing that citizens do get something back for their taxes (roads, police, courts, etc.), the fact remains that it is not a voluntary transaction. There is no company out there that can similarly compel financial transactions - a homeowner can choose to turn off the power if that is their choice (though perhaps the new health care law in the U.S. will make health insurance inescapable). (For more, see How To Owe Nothing On Your Federal Tax Return.)
To read the full column, please follow this link:
http://financialedge.investopedia.com/financial-edge/0511/Its-Not-Illegal-If-The-Government-Does-It.aspx
Thursday, May 19, 2011
Investopedia: Worries About Tomorrow Sink Hewlett-Packard Today
Hewlett-Packard (NYSE:HPQ) is another one of those large well-known tech companies that just cannot get much love anymore. Even though the growth outlook here is not very good, the valuation seems to assume a slide to irrelevance. That puts HP in the same crowd as companies like Dell (Nasdaq:DELL), Cisco (Nasdaq:CSCO), Microsoft (Nasdaq:MSFT) and Intel (Nasdaq:INTC) - companies that really have yet to convince the Street that there is a workable plan for growth and a reason to own the stock.
The Second Quarter Wasn't That Bad
The worries about HP's guidance will almost certainly overshadow a decent quarter for the company. Sales rose 3% (1% on a constant currency basis), and actually surpassed estimates. The enterprise, storage and networking segment grew 15%, software grew 17% and imaging and printing grew 5%. That helped to offset a sluggish result in services (up 2%) and a 5% decline in the PC business.
Profitability was also pretty solid in the fiscal second quarter. The gross margin rose 100 basis points, and while the company lost some of that momentum through the operating items, operating income still grew 3.8% and the company reported a small increase in margin. Not surprisingly, software, services and printing were margin leaders, while the PC business was a drag.
To read the full piece, please click below:
http://stocks.investopedia.
The Second Quarter Wasn't That Bad
The worries about HP's guidance will almost certainly overshadow a decent quarter for the company. Sales rose 3% (1% on a constant currency basis), and actually surpassed estimates. The enterprise, storage and networking segment grew 15%, software grew 17% and imaging and printing grew 5%. That helped to offset a sluggish result in services (up 2%) and a 5% decline in the PC business.
Profitability was also pretty solid in the fiscal second quarter. The gross margin rose 100 basis points, and while the company lost some of that momentum through the operating items, operating income still grew 3.8% and the company reported a small increase in margin. Not surprisingly, software, services and printing were margin leaders, while the PC business was a drag.
To read the full piece, please click below:
http://stocks.investopedia.
Wednesday, May 18, 2011
Investopedia: Mergers In Orthopedics Could Heat Up Stocks
Companies in the orthopedics space have had a rough go of it in the last few years. The federal government launched multiple investigations regarding the sales practices of these companies and prosecutors have managed to nail several skins to the wall. At the same time, hospitals and insurers have fought back on pricing and the growth rate for the sector has suffered. Making matters worse, the recession set in and many would-be patients decided to wait to undergo procedures.
Buyouts have added some energy to this space of late. Medtronic (NYSE:MDT) absorbed Osteotech late in 2010; Johnson & Johnson (NYSE:JNJ) announced its intention to acquire Swiss spine and trauma specialist Synthes in April of this year; and just the other day Stryker (NYSE:SYK) announced that it would acquire Orthovita (Nasdaq:VITA) in an all-cash deal. Given the benefits of scale, though, there may yet be more deals to come in this sector. (For background reading, check out Investing In Medical Equipment Companies.)
To read the full piece, click below:
http://stocks.investopedia.
Investopedia: Lowe's Still Seeing Only Slow Progress
Investors don't need to wait until Lowe's (NYSE:LOW) or Home Depot (NYSE:HD) report earnings to know that the housing and big-ticket consumer spending environments are tough. The news is still full of stories about the high rate of foreclosures, the low rates of housing starts and the ongoing discrepancy between the recovery that large corporations are seeing and the recovery that individual consumers are experiencing.
A Tough, Disappointing Start to the Year
Lowe's started the fiscal year by missing on both its top and bottom line numbers. Revenue dropped 1.6% this quarter, coming in about 3% lower than analysts expected and below even the lowest published estimate. Poor top line performance was fueled by disappointing comps - down 3.3% from last year's level. While weather certainly played a role, weather is a convenient excuse for retailers; funny how weather never seems to keep shoppers from places like Lululemon Athletica (Nasdaq:LULU).
Read the full piece at:
http://stocks.investopedia.
Investopedia: Petrobras And Brazil's Wall Of Worry
What happened to Brazil? Once one of the darlings of the international investment community, Brazil has not done so well of late. Beset by worries of inflation and increasing government interference, Brazil's markets have lost a little luster.
This is still a high-quality growth emerging market, though, and investors looking to play an eventual recovery in investor interest should give some thought to Petrobras (NYSE:PBR) - one of largest and best-known Brazilian companies.
A Strong Start to the Year
Petrobras got 2011 off to a good start. Net operating revenue rose 9% from last year (and 1% from the fourth quarter), helped by very strong price realizations in the E&P segment, as well as some modest production volume growth. Petrobras is still very much a Brazil play, as less than 10% of the company's oil and gas production comes from outside Brazil.
Gross profit rose 11% from last year, but operating income performance was flat (though up 26% sequentially). Operating income improved significantly in E&P, with 18% annual growth, but the refining business reversed to a loss due to the pressures of higher crude costs and frozen domestic pricing on refined products. The gas and electricity segment was also a strong performer (up 34% from last year), but is relatively small at less than 6% of total operating income. (For more, see Bargains In Brazil.)
To read the full piece, please click the link:
http://stocks.investopedia.
This is still a high-quality growth emerging market, though, and investors looking to play an eventual recovery in investor interest should give some thought to Petrobras (NYSE:PBR) - one of largest and best-known Brazilian companies.
A Strong Start to the Year
Petrobras got 2011 off to a good start. Net operating revenue rose 9% from last year (and 1% from the fourth quarter), helped by very strong price realizations in the E&P segment, as well as some modest production volume growth. Petrobras is still very much a Brazil play, as less than 10% of the company's oil and gas production comes from outside Brazil.
Gross profit rose 11% from last year, but operating income performance was flat (though up 26% sequentially). Operating income improved significantly in E&P, with 18% annual growth, but the refining business reversed to a loss due to the pressures of higher crude costs and frozen domestic pricing on refined products. The gas and electricity segment was also a strong performer (up 34% from last year), but is relatively small at less than 6% of total operating income. (For more, see Bargains In Brazil.)
To read the full piece, please click the link:
http://stocks.investopedia.
Tuesday, May 17, 2011
Investopedia: Joy Global Fills A Gap
With Caterpillar's (NYSE:CAT) acquisition of Bucyrus making it a soup-to-nuts provider of equipment to the mining industry, the question has lingered as to how Joy Global (Nasdaq:JOYG) would respond. Would Joy Global consider a merger with another global equipment company like Komatsu (Nasdaq:KMTUY.PK) or Atlas Copco, or would it try to buy or build its way closer to parity with Caterpillar's offerings?
Right now, it looks as though Joy Global is taking the second approach.
Making a Deal with Rowan
Joy Global and Rowan (NYSE:RDC) announced Monday morning that they had reached an agreement whereby Joy Global would acquire Rowan's LeTourneau Technologies business. Rowan had been looking to sell this business, and the purchase price of $1.1 billion is a reasonable premium to the $700 million to $900 million range that many analysts had applied to the business.
At $1.1 billion, Joy Global is paying about 10.5 times trailing EBTIDA and perhaps even less on a pro forma basis if Joy Global's assumptions about synergies prove accurate.
To read the complete text, please go to Investopedia:
http://stocks.investopedia.
Right now, it looks as though Joy Global is taking the second approach.
Making a Deal with Rowan
Joy Global and Rowan (NYSE:RDC) announced Monday morning that they had reached an agreement whereby Joy Global would acquire Rowan's LeTourneau Technologies business. Rowan had been looking to sell this business, and the purchase price of $1.1 billion is a reasonable premium to the $700 million to $900 million range that many analysts had applied to the business.
At $1.1 billion, Joy Global is paying about 10.5 times trailing EBTIDA and perhaps even less on a pro forma basis if Joy Global's assumptions about synergies prove accurate.
To read the complete text, please go to Investopedia:
http://stocks.investopedia.
Investopedia: Agilent Overshoots
It really was not so long ago that electronic measurement, chemical analysis and life sciences conglomerate Agilent (NYSE:A), was overlooked, under-followed and trading at a discount to its intrinsic worth. The market is always changing, though, and Agilent now trades much more like a popular growth company with multiple revenue drivers.
A Strong Second Quarter
Inherent to the Agilent structure is the idea that the more stable life sciences group can offset the more cyclical electronic measurement business. Right now, though, both are doing quite well. Total revenue rose 32% in the second quarter, or 21% on an organic basis. Growth was led by the chemical analysis growth, with a 60% jump in reported revenue, though life sciences and electronic measurement did fine at 39% and 19%, respectively. Order growth of more than 26% (18% organic) was also encouraging, though this number seems to be decelerating.
Gross margin did decline on a year-over-year basis (55.4% versus 56.9%), one of the few blemishes of the quarter. Operating income, though, grew more than 61% and the operating margin jumped three and a half points on controlled SG&A and R&D spending. Agilent still spent close to 10% of its revenue on R&D, though, so it is not as though Agilent is robbing the future for present growth.
To read the full piece, please click the link:
http://stocks.investopedia.
Monday, May 16, 2011
Investopedia: CA - Quality Is There, Growth Is Not
Looking only at cash flow, CA Technologies (NYSE:CA) should be a slam-dunk for value investors. The company produces a lot of cash flow, has a strong position in its core markets, and provides software that is critical enough to its customers' operations that switch-overs to competitors' products are not undertaken lightly.
To read the full piece, please click the link:
http://stocks.investopedia.
But then there is the growth problem. CA Technologies just is not growing that much, has not grown much in a long time, and serves a market (mainframes) that seems to be in inexorable decline. Given the relative scarcity of technology value investors, then, CA is a stock may well be much too cheap and yet could languish anyway.
A Fiscal Fourth Quarter that Was Not Strong
Sometimes companies report earnings that look bad at first and get better with further exploration. In other cases, the opposite is true. It looks like CA Technologies belongs in that second category.
To read the full piece, please click the link:
http://stocks.investopedia.
Investopedia: Waiting To Warm Up To Middleby
Foodservice equipment manufacturer Middleby (Nasdaq:MIDD) is following a time-tested strategy - bring innovation and consolidation to a fragmented and, in some ways, stagnant industry. At the same time, certain realities still apply to the company and the stock. Foremost among them is the fact that the capital equipment market for the foodservice industry is still challenging, and Middleby still competes against well-known and well-heeled competitors.
First Quarter Results Look Warm, Not Hot
Middleby's first quarter was not necessarily bad, but institutional investors will likely focus on the company's shortfall in revenue. While the company did report revenue growth of nearly 14%, the company still came in below the lowest published analyst estimate. Organic sales were up more than 7% for the period, with the commercial foodservice unit up nearly 9% and the more volatile food processing unit down about 3%.
Even if revenue was disappointing, the company did well on margins. Gross margin was nearly flat, though the company did mention pressures from higher material costs. Operating income rose 19%, and the company saw about 80 basis points of margin expansion, as flat general/administrative expenses helped offset higher sales expenses.
Read the full article here:
http://stocks.investopedia.
First Quarter Results Look Warm, Not Hot
Middleby's first quarter was not necessarily bad, but institutional investors will likely focus on the company's shortfall in revenue. While the company did report revenue growth of nearly 14%, the company still came in below the lowest published analyst estimate. Organic sales were up more than 7% for the period, with the commercial foodservice unit up nearly 9% and the more volatile food processing unit down about 3%.
Even if revenue was disappointing, the company did well on margins. Gross margin was nearly flat, though the company did mention pressures from higher material costs. Operating income rose 19%, and the company saw about 80 basis points of margin expansion, as flat general/administrative expenses helped offset higher sales expenses.
Read the full article here:
http://stocks.investopedia.
Investopedia: Cisco - No Growth Today, Try Again Tomorrow
Value investors have a tough time with tech; the good, growing companies are often far too expensive, and the value-priced companies struggle to grow their businesses. Cisco (Nasdaq:CSCO) is a good case in point - the company looks cheap by many metrics, but most tech investors have washed their hands of this name until the company proves that it can shore up its switching and routing businesses, and find new growth opportunities.
A Mediocre Fiscal Third Quarter
Arguably the best that can be said about Cisco's fiscal third quarter is that it was not any worse than most people expected. Revenue rose almost 5% from the year-ago level to $10.87 billion, basically matching the averaged analyst guess. Within the top line figure, product revenue rose almost 3%, with switching down almost 10% year-on-year, routing rising more than 7%, and new product revenue growing about 15%. On a sequential basis, a different pattern emerges - switching was up a bit less than 5%, routing was up better than 11%, and new products were up a bit below 2%.
Profitability continues to be an issue. GAAP gross margin fell 260 basis points, though product gross margin rose almost four full points. Operating income fell 7% and operating margin contracted by 250 basis points. Though the non-GAAP figures are different, directionally they were the same. Although CSCO did not disappoint on the non-GAAP per-share earnings number, guidance for the fourth quarter revenue number was quite weak and that is likely to dominate a lot of discussion of this stock.
To continue reading, please follow the link:
http://stocks.investopedia.
A Mediocre Fiscal Third Quarter
Arguably the best that can be said about Cisco's fiscal third quarter is that it was not any worse than most people expected. Revenue rose almost 5% from the year-ago level to $10.87 billion, basically matching the averaged analyst guess. Within the top line figure, product revenue rose almost 3%, with switching down almost 10% year-on-year, routing rising more than 7%, and new product revenue growing about 15%. On a sequential basis, a different pattern emerges - switching was up a bit less than 5%, routing was up better than 11%, and new products were up a bit below 2%.
Profitability continues to be an issue. GAAP gross margin fell 260 basis points, though product gross margin rose almost four full points. Operating income fell 7% and operating margin contracted by 250 basis points. Though the non-GAAP figures are different, directionally they were the same. Although CSCO did not disappoint on the non-GAAP per-share earnings number, guidance for the fourth quarter revenue number was quite weak and that is likely to dominate a lot of discussion of this stock.
To continue reading, please follow the link:
http://stocks.investopedia.
Investopedia: NVIDIA In Transition
Give credit to the management at NVIDIA (Nasdaq:NVDA), they have learned from history and understand that graphics processor companies don't last long. Sure, there can be a great ride up for shareholders as the newest "new thing" grabs share, but real franchises in graphics chips are hard to build and harder still to maintain. NVIDIA seems to want to stick around, though, and the company is expanding into a lot of interesting new areas to do so.
A Reasonable Start to the Fiscal Year
A lot of investors have bought into the "new NVIDIA" story and expectations are high. To that end, the company delivered a solid result this quarter. Revenue was down 4% on a year-on-year basis, but up more than 8% sequentially and above the high end of the analyst range. Within the results, GPU sales rose 4% sequentially (and are more than two-thirds of revenue), while professional solutions (heavy-duty graphics chips and Tesla supercomputing products) fell about 1% and consumer solutions (which includes chips for mobile devices) rose 78%.
Margin performance was also pretty solid. Gross margin improved on both a sequential and year-on-year basis, while operating income was likewise up and margins expanded.
Good as that all may be, institutional investors are obsessed with the future, and NVDA's guidance is likely why the stock was indicated lower in pre-market trading Friday morning. Revenue guidance was alright, but the company did pull back a bit on margins. Operationally it's no big deal, but given the valuation on NVDA shares, it's fairly clear that the expectations are high.
To continue, click below:
http://stocks.investopedia.
A Reasonable Start to the Fiscal Year
A lot of investors have bought into the "new NVIDIA" story and expectations are high. To that end, the company delivered a solid result this quarter. Revenue was down 4% on a year-on-year basis, but up more than 8% sequentially and above the high end of the analyst range. Within the results, GPU sales rose 4% sequentially (and are more than two-thirds of revenue), while professional solutions (heavy-duty graphics chips and Tesla supercomputing products) fell about 1% and consumer solutions (which includes chips for mobile devices) rose 78%.
Margin performance was also pretty solid. Gross margin improved on both a sequential and year-on-year basis, while operating income was likewise up and margins expanded.
Good as that all may be, institutional investors are obsessed with the future, and NVDA's guidance is likely why the stock was indicated lower in pre-market trading Friday morning. Revenue guidance was alright, but the company did pull back a bit on margins. Operationally it's no big deal, but given the valuation on NVDA shares, it's fairly clear that the expectations are high.
To continue, click below:
http://stocks.investopedia.
FinancialEdge: Great Investors Not Named Buffett
Sometimes it feels as though the name Warren Buffett is morphing into something like the legend of Bloody Mary - say his name three times in a column about investing and readers suddenly appear. It is very much worth mentioning, though, that Warren Buffett is simply one example of a successful investor and businessman.
Granted, Mr. Buffett is an excellent example of a successful investor, but readers might be interested in considering the approaches and track records of other investors that have enjoyed considerable professional success, but do not necessarily get the same publicity as Warren Buffett. (This esteemed investor rarely changes his long-term investing strategy, no matter what the market does. See Warren Buffett's Bear Market Maneuvers.)
George Soros
Perhaps it would have seemed impossible to imagine as he was living through World War II, but George Soros became one of the most successful investors in history. With a current net worth north of $14 billion, Soros is largely retired as an active investor. However, he established a remarkable record while running the Quantum Group of hedge funds.
To read the complete column, please follow the link:
http://financialedge.investopedia.com/financial-edge/0511/Great-Investors-Not-Named-Buffett.aspx
Granted, Mr. Buffett is an excellent example of a successful investor, but readers might be interested in considering the approaches and track records of other investors that have enjoyed considerable professional success, but do not necessarily get the same publicity as Warren Buffett. (This esteemed investor rarely changes his long-term investing strategy, no matter what the market does. See Warren Buffett's Bear Market Maneuvers.)
George Soros
Perhaps it would have seemed impossible to imagine as he was living through World War II, but George Soros became one of the most successful investors in history. With a current net worth north of $14 billion, Soros is largely retired as an active investor. However, he established a remarkable record while running the Quantum Group of hedge funds.
To read the complete column, please follow the link:
http://financialedge.investopedia.com/financial-edge/0511/Great-Investors-Not-Named-Buffett.aspx
Investopedia: Does Symantec Have A Next Act?
In technology, old dogs have to learn new tricks, or the market is all too willing to send them on that unfortunate one-way trip to the vet. That is a challenge, then, for Symantec (Nasdaq:SYMC). Once a hot tech growth stock, nobody cares about that history today. What investors do care about is evidence that the company has a real future in enterprise security and storage/server management.
A Solid Close to the Fiscal Year
Symantec ended its fiscal year on a relatively solid note, at least on a relative basis. Revenue rose 9% in the fourth quarter, and surpassed the high end of the analyst estimate range (a surprisingly narrow range, by the way). The company's consumer business rose 6%, the storage/server business grew 8% and the security/compliance business rose 24%. The real laggard was the company's tiny (5% of revenue) service business, where revenue dropped 21%. (For more, see The Data Storage Gold Rush - Who's Left?)
Other encouraging details related to future business prospects - deferred revenue rose 19%, and bookings increased 23%. License revenue rose 11% this period, while maintenance/subscription revenue rose about 9%. Symantec had mixed performance on profitability. Gross margin (on a GAAP basis) improved by almost two points, while operating income fell 3% on much higher sales and marketing expenses.
To read the full piece, please click this link:
http://stocks.investopedia.
A Solid Close to the Fiscal Year
Symantec ended its fiscal year on a relatively solid note, at least on a relative basis. Revenue rose 9% in the fourth quarter, and surpassed the high end of the analyst estimate range (a surprisingly narrow range, by the way). The company's consumer business rose 6%, the storage/server business grew 8% and the security/compliance business rose 24%. The real laggard was the company's tiny (5% of revenue) service business, where revenue dropped 21%. (For more, see The Data Storage Gold Rush - Who's Left?)
Other encouraging details related to future business prospects - deferred revenue rose 19%, and bookings increased 23%. License revenue rose 11% this period, while maintenance/subscription revenue rose about 9%. Symantec had mixed performance on profitability. Gross margin (on a GAAP basis) improved by almost two points, while operating income fell 3% on much higher sales and marketing expenses.
To read the full piece, please click this link:
http://stocks.investopedia.
Friday, May 13, 2011
Investopedia: Utilitarian Dividends
It is hardly controversial or innovative to look for quality dividend-paying stocks in the utility space. These companies typically operate as monopolies in their respective regions, and regulators are generally quite willing to grant rates to utility operators that all but ensure solid dividend payouts. That does not mean, though, that the entire industry is uniform and undifferentiated. As with any sector, investors do well to pick and choose among the best options available for their portfolio needs. (For more, see Trust In Utilities.)
Consolidated Edison (NYSE:ED)
Con Ed is a staple on lists of quality dividend-paying utility companies. Con Ed is the utility that provides electricity, gas and steam to New York City, and the company has a long dividend-paying history and a very secure corporate structure. Today's 4.5% yield is above the industry average, as is its payout ratio. Dividend growth and return on assets (ROA) have been below average, but Con Ed is a strong choice as a cornerstone utility holding.
CH Energy Group (NYSE:CHG)
CH Energy, the holding company of Central Hudson Gas & Electric, is the electricity and gas distributor for much of upstate New York, as well as operating cogeneration and ethanol operations in other states. Paying a 4.1% dividend yield today, the company could be in position to raise the payout in a year or two. Like Con Ed, CH Energy's payout is above average and the ROA is below average, but the financial stability looks good. (For more, see Dividend Facts You May Not Know.)
Please click the link below for the full piece:
http://stocks.investopedia.
Note: It should be Southern Company, not Southern Energy. I'll make sure that correction gets made. I don't know why, but I keep making that mistake...
Consolidated Edison (NYSE:ED)
Con Ed is a staple on lists of quality dividend-paying utility companies. Con Ed is the utility that provides electricity, gas and steam to New York City, and the company has a long dividend-paying history and a very secure corporate structure. Today's 4.5% yield is above the industry average, as is its payout ratio. Dividend growth and return on assets (ROA) have been below average, but Con Ed is a strong choice as a cornerstone utility holding.
CH Energy Group (NYSE:CHG)
CH Energy, the holding company of Central Hudson Gas & Electric, is the electricity and gas distributor for much of upstate New York, as well as operating cogeneration and ethanol operations in other states. Paying a 4.1% dividend yield today, the company could be in position to raise the payout in a year or two. Like Con Ed, CH Energy's payout is above average and the ROA is below average, but the financial stability looks good. (For more, see Dividend Facts You May Not Know.)
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Note: It should be Southern Company, not Southern Energy. I'll make sure that correction gets made. I don't know why, but I keep making that mistake...
Investopedia: Do Molycorp's Earnings Even Matter Right Now?
For the many years that I've been following and writing on stocks, I still manage to be surprised at how investors will react to certain bits of news. American rare earth producer Molycorp (NYSE:MCP) is just one example - talk after the company's earnings announcement was about how the company had missed estimates and how that was pressuring the stock.
Really?
At this point, revenue and earnings are all but irrelevant to the Molycorp story. That leads me to believe that events like earnings releases are more of an excuse and a liquidity opportunity for investors, and that ex-post facto explanations like missed estimates are missing the mark.
The Results
Molycorp announced that it sold 696 metric tons of rare earth oxides in the first quarter - 65% more than in the year-ago period and 9% more than in the fourth quarter. Realized prices were more than five times higher than in the year-ago period, and increased almost 11% on a sequential basis. With that, revenue soared relative to the year-ago period and rose more than 20% from the fourth quarter.
To read the full piece, please click the link below:
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Really?
At this point, revenue and earnings are all but irrelevant to the Molycorp story. That leads me to believe that events like earnings releases are more of an excuse and a liquidity opportunity for investors, and that ex-post facto explanations like missed estimates are missing the mark.
The Results
Molycorp announced that it sold 696 metric tons of rare earth oxides in the first quarter - 65% more than in the year-ago period and 9% more than in the fourth quarter. Realized prices were more than five times higher than in the year-ago period, and increased almost 11% on a sequential basis. With that, revenue soared relative to the year-ago period and rose more than 20% from the fourth quarter.
To read the full piece, please click the link below:
http://stocks.investopedia.
Seeking Alpha: BioMimetic Clears One More Hurdle
As I suggested a couple of days ago, BioMimetic Therapeutics (Nasdaq: BMTI) did indeed get a thorough grilling from the FDA's advisory panel.
The good news? The panel ultimately voted in BioMimetic's favor on the three key summary questions of safety, efficacy and benefit/risk. What's more, the foot-and-ankle specialists (the key intended application for BMTI's Augment product) were supportive.
The bad news? The FDA (and the panel, to some extent) clearly has concerns about the product, and it is far from certain that the agency is going to grant approval to BMTI to market the product.
A Meeting With A Challenging Tone
While some observers of the meeting (or those who followed the tweets of those following the meeting live) may have felt the panel was contentious and negative, it didn't strike me as all that unusual relative to recent meetings. Certainly there were some pointed questions, and the panelists took the company to task more than once for deficiencies in the study and/or its results, but it is frankly rare to see these meetings conducted as love-fests for the applicant.
To read the full piece, please go here:
BioMimetic Clears One More Hurdle
The good news? The panel ultimately voted in BioMimetic's favor on the three key summary questions of safety, efficacy and benefit/risk. What's more, the foot-and-ankle specialists (the key intended application for BMTI's Augment product) were supportive.
The bad news? The FDA (and the panel, to some extent) clearly has concerns about the product, and it is far from certain that the agency is going to grant approval to BMTI to market the product.
A Meeting With A Challenging Tone
While some observers of the meeting (or those who followed the tweets of those following the meeting live) may have felt the panel was contentious and negative, it didn't strike me as all that unusual relative to recent meetings. Certainly there were some pointed questions, and the panelists took the company to task more than once for deficiencies in the study and/or its results, but it is frankly rare to see these meetings conducted as love-fests for the applicant.
To read the full piece, please go here:
BioMimetic Clears One More Hurdle
(Repost) Investopedia: Looking For Reorientation On Louisiana-Pacific
Several years after the rupture of the housing market, there is still no joy among the companies that supply building materials. True, many product markets have stabilized, but investors rarely get very excited about "less worse". As a leading supplier of an increasingly popular building material, Louisiana-Pacific (NYSE: LPX) should see a very strong rebound in margins and stock performance when homebuilding picks up, but the stock could be dead money until and unless that happens. (For more, see 8 Signs Your Neighborhood Is On The Upswing.)
Q1 Results - Good, Bad and Ugly
Investors were not overly thrilled with LPX's first quarter results, as the company's loss was quite a bit worse than analysts had forecast. It was not all bad news, though.
Revenue rose 12% this quarter versus a year ago, mostly on the strength of siding and oriented strand board (OSB). Given that housing starts dropped about 10% during the first quarter versus the year ago quarter, that is a pretty impressive performance. In OSB (oriented strand board), LPX saw 18% volume growth as more and more builders choose OSB over plywood.
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Q1 Results - Good, Bad and Ugly
Investors were not overly thrilled with LPX's first quarter results, as the company's loss was quite a bit worse than analysts had forecast. It was not all bad news, though.
Revenue rose 12% this quarter versus a year ago, mostly on the strength of siding and oriented strand board (OSB). Given that housing starts dropped about 10% during the first quarter versus the year ago quarter, that is a pretty impressive performance. In OSB (oriented strand board), LPX saw 18% volume growth as more and more builders choose OSB over plywood.
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(Repost) Investopedia: Does Tyson Deserve Better?
Tyson (NYSE:TSN) is a tricky stock. Commodity food producers like Tyson almost never get the valuation that packaged food companies like Hormel (NYSE:HRL) and General Mills (NYSE:GIS) carry. Even with that being said, though, Tyson has shown itself to be relatively less volatile than other protein producers but still gets no premium for that distinction. If Tyson can somehow maintain its current levels of free cash flow production, this is a stock that value investors should seriously consider.
Very Mixed Performance for Q2
Tyson's fiscal second quarter was a real mixed bag - solid top-line performance, but not a lot of great news on profitability. Tyson reported that revenue grew about 12% in the second quarter, comfortably above the average analyst estimate. Growth was consistently positive across the board, with the company's large beef operations showing 19% revenue growth and the pork business jumping 26%. Even as a laggard, the poultry business was still up 10%.
Profits were not nearly so solid. Gross margin slid to 6.7% from 8.2% a year earlier; not a surprise, given the increase in grain, energy, packaging and other inputs. Operating income fell 12% from last year, and the operating margin compressed by 1.2%. Although operating income in the pork segment more than doubled (and margins were better than 10%), the profit in beef fell by a quarter and poultry income dropped nearly 68%.
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(Repost) Investopedia: April Rail Data - A Penny On The Tracks?
There is an interesting set-up in the transportation sector right now. The Dow Jones Transports Index is near a 52-week high, but it looks like momentum in the rail sector may be slowing. One month certainly proves nothing, but if traffic volume is stagnating that could mean that the end of robust revenue growth in the industrial sector and a transition to the next phase of the economic cycle.
A Tough April for King Coal
According to Rail Time Indicators, a monthly publication of the Association of American Railroads, U.S. rail traffic slipped 0.2% from the year-ago level in April and 2.5% on a sequential basis - the first year-on-year decline in over twelve months. Intermodal traffic was stronger though, growing 9% annually and 1.2% sequentially. (For more, see Rail Traffic Suggests A Slower Pace.)
At over 40% of all carload traffic, as coal goes, so goes the rail sector and April was a tough month for coal shipments. Coal traffic declined 2.9% from last year, but this number merits a little more investigation. Back in 2010, the April carload figure for coal surged more than 7% as utilities looked to rebuild coal stockpiles that had been run down during the recession. Consequently, it was a very difficult comparison.
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A Tough April for King Coal
According to Rail Time Indicators, a monthly publication of the Association of American Railroads, U.S. rail traffic slipped 0.2% from the year-ago level in April and 2.5% on a sequential basis - the first year-on-year decline in over twelve months. Intermodal traffic was stronger though, growing 9% annually and 1.2% sequentially. (For more, see Rail Traffic Suggests A Slower Pace.)
At over 40% of all carload traffic, as coal goes, so goes the rail sector and April was a tough month for coal shipments. Coal traffic declined 2.9% from last year, but this number merits a little more investigation. Back in 2010, the April carload figure for coal surged more than 7% as utilities looked to rebuild coal stockpiles that had been run down during the recession. Consequently, it was a very difficult comparison.
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Investopedia: Will Skype Transform Microsoft?
Any time a large company has both a lot of cash and a lack of growth, analysts love to play what I call the Chinese Menu Game. Pick a company from Column A, pick another one from Column B, and voila ... the analyst has a plan as to how the company can effectively exploit its cash hoard and reignite growth, as well as a call for that analyst's institutional salesforce to make on an otherwise slow news day.
Though there was no particular shortage of rumors surrounding possible bidders for Skype, including Google (Nasdaq:GOOG) and Facebook, and no shortage of rumors about possible targets for Microsoft (Nasdaq:MSFT), those two lines of thought never really intersected. At least, not before Microsoft announced on May 10 that it was acquiring Skype in a deal worth a total of $8.5 billion. (For more, see A Primer On Investing In The Tech Industry.)
Skype Gets Another New Home
Despite being fairly good at attracting users and becoming a significant presence in overseas voice calls, Skype has had a hard time finding a permanent home. The company was bought by eBay (Nasdaq:EBAY) roughly two years after its founding, but never really lived up to eBay's hopes of it as a new growth platform beyond auction services. As a result, three years of ownership and a $1 billion-plus impairment later, eBay sold 70% of Skype to a private investor group.
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Though there was no particular shortage of rumors surrounding possible bidders for Skype, including Google (Nasdaq:GOOG) and Facebook, and no shortage of rumors about possible targets for Microsoft (Nasdaq:MSFT), those two lines of thought never really intersected. At least, not before Microsoft announced on May 10 that it was acquiring Skype in a deal worth a total of $8.5 billion. (For more, see A Primer On Investing In The Tech Industry.)
Skype Gets Another New Home
Despite being fairly good at attracting users and becoming a significant presence in overseas voice calls, Skype has had a hard time finding a permanent home. The company was bought by eBay (Nasdaq:EBAY) roughly two years after its founding, but never really lived up to eBay's hopes of it as a new growth platform beyond auction services. As a result, three years of ownership and a $1 billion-plus impairment later, eBay sold 70% of Skype to a private investor group.
To read the full piece, please click the link:
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Problems with Blogger
There has been something very wrong with Blogger for the last 24 hours or so, and part of the impact has included the disappearance of Thursday's posts. I'm not sure whether those will be restored or not ... but I'll repost as necessary to get it all back up.
Wednesday, May 11, 2011
Seeking Alpha: Tough Talk From The FDA Batters BioMimetic
These are difficult times for any company trying to get through the FDA approval process with anything less than 100% perfect data, and BioMimetic Therapeutics (BMTI) is the latest stock to suffer. In response to FDA concerns posted on Tuesday ahead of the company's Thursday panel meeting, BioMimetic's stock is down about one-third on the fear that the company will panel rejection and/or FDA rejection for its new bone-graft substitute.
That said, investors with patience and a healthy appetite for risk might want to consider buying in ahead of the panel recommendation and FDA decision. While BioMimetic's Augment product is not perfect, it does seem to be a safe and efficacious product with a multi-hundred-million dollar market potential.
FDA Playing The Devil's Advocate
In almost all cases, the FDA plays the role of devil's advocate during panel meetings – questioning the safety and efficacy of data and challenging the company at every turn. It is not unusual, then, for the FDA's pre-meeting review to be challenging and adversarial. That said, the FDA was more negative than usual and certainly more negative than most investors expected.
To read the piece, please follow this link: Tough Talk From the FDA Batters BioMimetic
That said, investors with patience and a healthy appetite for risk might want to consider buying in ahead of the panel recommendation and FDA decision. While BioMimetic's Augment product is not perfect, it does seem to be a safe and efficacious product with a multi-hundred-million dollar market potential.
FDA Playing The Devil's Advocate
In almost all cases, the FDA plays the role of devil's advocate during panel meetings – questioning the safety and efficacy of data and challenging the company at every turn. It is not unusual, then, for the FDA's pre-meeting review to be challenging and adversarial. That said, the FDA was more negative than usual and certainly more negative than most investors expected.
To read the piece, please follow this link: Tough Talk From the FDA Batters BioMimetic
Investopedia: Sysco Humming Along
Food distributor Sysco (NYSE:SYY) is never flashy, but the company has an enviable track record of market share growth and consistent free cash flow growth. That makes it a staple name on lists of quality dividend growth stocks and conservative growth ideas. What's more, it is not a bad way to play what could prove to be many years of inflation pressure. (To help you build a dividend portfolio, read Build A Dividend Portfolio That Grows With You.)
Solid Third Quarter Performance
Sysco reported sales growth of just over 9% for its fiscal third quarter, quite a bit better than the consensus expectation of just under 6%. Growth was clearly fueled by food inflation of more than 5%; case volume growth was about 2% and real sales growth was just under 3%. That is relatively consistent with the customer traffic patterns being reported by major U.S. restaurant chains like McDonald's (NYSE:MCD) and Brinker (NYSE:EAT), so there is not much reason to think that Sysco is losing share.
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Solid Third Quarter Performance
Sysco reported sales growth of just over 9% for its fiscal third quarter, quite a bit better than the consensus expectation of just under 6%. Growth was clearly fueled by food inflation of more than 5%; case volume growth was about 2% and real sales growth was just under 3%. That is relatively consistent with the customer traffic patterns being reported by major U.S. restaurant chains like McDonald's (NYSE:MCD) and Brinker (NYSE:EAT), so there is not much reason to think that Sysco is losing share.
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Tuesday, May 10, 2011
FinancialEdge: What S&P's Warning On U.S. Debt Means
Standard & Poor's rattled the global financial markets and riled up the U.S. political forces in April when it placed U.S. government debt on negative credit watch. Though not technically a downgrade - U.S. debt still carries an AAA rating - this was a clear and explicit warning by the ratings agency that the U.S. must get its financial house in order or face a downgrade within two years. (Despite investor distrust, rating agencies can be helpful. Just be sure you use these ratings as a starting point, not an endpoint. Find out more in Bond Rating Agencies: Can You Trust Them?)
While not the first time that the United States' rating has been on negative watch (it happened in 1995-96 as well), it adds another element to already heated debate about the state of the country's budget deficit and outstanding debt burden. What's more, the news was enough to spook stock investors and encourage holders of hard assets like gold and silver.
What Happens If There's a Downgrade?
If the U.S. loses its AAA rating, the most likely near-term impact would be higher rates on U.S. debt. Given that U.S. government debt underpins many other interest rates, it would not be unreasonable to assume that there would be a widespread increase in rates across many other kinds of debt. Higher rates would not change the interest that bondholders receive (unless they hold adjustable-rate debt), but they would find that the price of those bonds would decline.
The full column can be read at the link below:
http://financialedge.investopedia.com/financial-edge/0511/What-SPs-Warning-On-U.S.-Debt-Means.aspx
While not the first time that the United States' rating has been on negative watch (it happened in 1995-96 as well), it adds another element to already heated debate about the state of the country's budget deficit and outstanding debt burden. What's more, the news was enough to spook stock investors and encourage holders of hard assets like gold and silver.
What Happens If There's a Downgrade?
If the U.S. loses its AAA rating, the most likely near-term impact would be higher rates on U.S. debt. Given that U.S. government debt underpins many other interest rates, it would not be unreasonable to assume that there would be a widespread increase in rates across many other kinds of debt. Higher rates would not change the interest that bondholders receive (unless they hold adjustable-rate debt), but they would find that the price of those bonds would decline.
The full column can be read at the link below:
http://financialedge.investopedia.com/financial-edge/0511/What-SPs-Warning-On-U.S.-Debt-Means.aspx
Investopedia: The Vale Between Two Peaks
Whether it's the anticipated end of QE2, ongoing growth in emerging markets, the economic recovery in North America and parts of Europe, or the fact that hundreds of companies are furiously digging new holes around the world, there are a lot of crosscurrents in the commodity space.
Although commodities have pulled back in early May, it seems early to call an absolute end to the secular rally. With that in mind, maybe Brazil's Vale (Nasdaq:VALE) is still worth a look for value-oriented investors who want some commodity exposure. (For more, see Investing In The Metals Markets.)
A Disappointing Start to the Year
The first quarter is virtually always the weakest for this huge iron ore and nickel producer, but this quarter was even weaker than analysts had in mind. All of that said, "weak" is a relative notion. Revenue was still almost double the year-ago level, while adjusted EBITDA climbed over 3.5 times from last year's first quarter. So although that EBITDA figure was about 10% below the consensus, clearly it is not as though Vale is scraping bottom.
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Although commodities have pulled back in early May, it seems early to call an absolute end to the secular rally. With that in mind, maybe Brazil's Vale (Nasdaq:VALE) is still worth a look for value-oriented investors who want some commodity exposure. (For more, see Investing In The Metals Markets.)
A Disappointing Start to the Year
The first quarter is virtually always the weakest for this huge iron ore and nickel producer, but this quarter was even weaker than analysts had in mind. All of that said, "weak" is a relative notion. Revenue was still almost double the year-ago level, while adjusted EBITDA climbed over 3.5 times from last year's first quarter. So although that EBITDA figure was about 10% below the consensus, clearly it is not as though Vale is scraping bottom.
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Investopedia: Alcatel-Lucent Still In The Fight
Alcatel-Lucent (NYSE:ALU) has had a long, difficult run. Created through the combination of two once well-respected, but struggling, telecom equipment vendors, Alcatel-Lucent has itself struggled to drive efficiencies from the merger. Making matters worse, the company has had to cope with a challenging capital equipment market while dealing with the rise of Chinese rivals Huawei and ZTE.
Now, though, it looks as though the company may be making real progress towards becoming a more efficient operator and translating its good market share into better shareholder returns.
A Good Start to the Year
Alcatel-Lucent posted a pretty solid first quarter. While revenue did fall 23% on a sequential basis, revenue did grow about 15% on a year-on-year basis. Like Ericsson (Nasdaq:ERIC), Alcatel-Lucent saw a relative benefit from its wireless business, while the optics business was less impressive. IP performance depends on the context - a 31% sequential drop was pretty weak, but the 28% year-over-year growth was solid.
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Now, though, it looks as though the company may be making real progress towards becoming a more efficient operator and translating its good market share into better shareholder returns.
A Good Start to the Year
Alcatel-Lucent posted a pretty solid first quarter. While revenue did fall 23% on a sequential basis, revenue did grow about 15% on a year-on-year basis. Like Ericsson (Nasdaq:ERIC), Alcatel-Lucent saw a relative benefit from its wireless business, while the optics business was less impressive. IP performance depends on the context - a 31% sequential drop was pretty weak, but the 28% year-over-year growth was solid.
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Investopedia: OM Group Looks Too Cheap
The first week of May has not been a good one for speculators on the long side of many metals trades. Silver took a significant plunge, gold sold off and copper cracked the $4 level. Not too surprisingly, then, it was a rough week for major metal commodity stocks like Vale (Nasdaq:VALE), Freeport-McMoRan (NYSE:FCX) or Barrick Gold (NYSE:ABX).
Investors who want to play commodities from a more strategic, and generally less volatile, angle may want to consider OM Group (NYSE:OMG). While OM Group is not a pure commodity company in the sense that it sells raw metal, the company does offer a way to play the demand for cobalt through its cobalt-based specialty products businesses. Better still, it seems too cheap.
A Great Quarter That Most Won't Notice
OM Group has precious little institutional coverage, so it's not exactly front page news when the company reports earnings. Moreover, 9% revenue growth probably does not seem all that exciting, even if it is well ahead of even the highest published revenue estimate. Top line growth was certainly boosted by the inclusion of a full quarter of the battery business; the pre-existing and fully comparable advanced materials and specialty chemicals businesses posted growth of 6% and 5% respectively on modest volume growth.
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Investors who want to play commodities from a more strategic, and generally less volatile, angle may want to consider OM Group (NYSE:OMG). While OM Group is not a pure commodity company in the sense that it sells raw metal, the company does offer a way to play the demand for cobalt through its cobalt-based specialty products businesses. Better still, it seems too cheap.
A Great Quarter That Most Won't Notice
OM Group has precious little institutional coverage, so it's not exactly front page news when the company reports earnings. Moreover, 9% revenue growth probably does not seem all that exciting, even if it is well ahead of even the highest published revenue estimate. Top line growth was certainly boosted by the inclusion of a full quarter of the battery business; the pre-existing and fully comparable advanced materials and specialty chemicals businesses posted growth of 6% and 5% respectively on modest volume growth.
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Investopedia: ON Semiconductor Getting Bigger And Better
Even investors who don't know a MOSFET from a Muppet should give some thought to attractively priced semiconductor stocks. It's true that it is an absurdly cyclical market and there is rampant competition, but these are also consummate second-chance stocks; investors often get multiple opportunities to invest in solid growers at reasonable valuations.
With that in mind, now may be a good time to consider ON Semiconductor (Nasdaq:ONNN). Although the recent weakness in the tech sector has not really impacted this stock (it's hardly down relative to its 52-week high), there is a lot of potential here as the company looks to move up the value chain with its customers.
First Quarter Results - Less Bad Is Good Enough
As has been the case for most chip stocks, no one was really expecting a strong quarter from ON Semiconductor, so "less bad" is good enough. Reported revenue rose 58% from last year and 50% from the December quarter as the company included the results of its Sanyo acquisition. Although pricing was not strong (down slightly on a sequential basis) and lead times are expanding, the impact of the quake in Japan was not as bad as it could have been. (or more, see 5 Hot Semiconductor Stocks.)
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Investopedia: Electronic Arts - From Growth To Turnaround ... To Value?
What a long, strange trip it has been for Electronic Arts (Nasdaq:ERTS). This leading video game software company was once a go-go growth stock, with a valuation that virtually required double-digit cash flow growth ad infinitum.
Perhaps not so surprisingly in a competitive marketplace, that growth didn't show up. That sent the financials and valuations to a very dark place, and the stock sold for about one-fourth its peak value. Now, though, the company seems to have turned the ship around. But the question still remains whether Electronic Arts has enough of a moat to be an appealing value-oriented stock.
Fourth-Quarter Results Show Some Progress
Electronic Arts certainly delivered the goods for the fiscal fourth quarter. Revenue (on a GAAP basis) climbed 11%, handily surpassing even the high-end estimate by over 10%. The mix of the revenue is fairly interesting. Growth in North America was just 4%, while European sales jumped 21%. Digital revenue rose 72% (to nearly one-quarter of the total). Within all of that, products for the PC dropped 4%, mobile/handheld was flat, and console sales were up 20%.
Read the full piece at the link below:
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Perhaps not so surprisingly in a competitive marketplace, that growth didn't show up. That sent the financials and valuations to a very dark place, and the stock sold for about one-fourth its peak value. Now, though, the company seems to have turned the ship around. But the question still remains whether Electronic Arts has enough of a moat to be an appealing value-oriented stock.
Fourth-Quarter Results Show Some Progress
Electronic Arts certainly delivered the goods for the fiscal fourth quarter. Revenue (on a GAAP basis) climbed 11%, handily surpassing even the high-end estimate by over 10%. The mix of the revenue is fairly interesting. Growth in North America was just 4%, while European sales jumped 21%. Digital revenue rose 72% (to nearly one-quarter of the total). Within all of that, products for the PC dropped 4%, mobile/handheld was flat, and console sales were up 20%.
Read the full piece at the link below:
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Monday, May 9, 2011
Investopedia: Can Visa Keep Pace In A Mobile Payment World?
It probably seems ludicrous to even challenge the idea that Visa (NYSE:V) is going to face any sort of relevant existential threat. After all, about 60% of the credit cards in this country have Visa's name on them and the cost of building up a rival network of thousands of banks and thousands more merchants is prohibitive.
And yet, maybe there are still threats investors should consider. Dinosaurs once ruled the world, too, but circumstances changed and they were not able to keep up with that change. The question for Visa is whether it can embrace and embed itself into the next generation of payment technologies.
A Second Quarter That Fits the Profile
Visa has generally been a dependable grower and this fiscal second quarter was no exception. Net operating revenue rose almost 15% from the year-ago level, as card servicing fees climbed nearly 24%. Sequential revenue growth was less impressive (just 0.3%), though, as data processing and international transaction fees skidded on a sequential basis.
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Investopedia: Transocean's Lull Creates Buying Opportunity
Offshore drilling company Transocean (NYSE:RIG) shows the power of the "whisper" number. Although the company reported disappointing results on Thursday, the stock actually traded up - a move that does not seem to make much sense until you look at the prior month's trading and see that the stock has been going almost straight down.
Even allowing that other drillers like Noble (NYSE:NE) and Pride (NYSE:PDE) haven't done well either, Transocean stands out. Likewise, Rowan (NYSE:RDC), Atwood (NYSE: ATW), and SeaDrill (Nasdaq:SDRL) have all been weak on a generally poor near-term outlook for offshore operators. Also keep in mind that Transocean's earnings estimate dropped by about one-third over the past three months - investors were bracing for bad news, they got it, and they are apparently relieved it was not even worse than they assumed.
Q1 Results - No Work, No Money
Transocean owns an impressive fleet of rigs (about 20% of the worldwide offshore fleet), but they are little more than depreciating hunks of metal when there are not enough orders to keep them busy. For the first quarter, revenue was basically flat with the fourth quarter. Dayrates were actually a fair bit better, up about 5%, and rates were even better for ultra-deepwater and harsh-environment rigs. (For more, see A Primer On Offshore.)
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Even allowing that other drillers like Noble (NYSE:NE) and Pride (NYSE:PDE) haven't done well either, Transocean stands out. Likewise, Rowan (NYSE:RDC), Atwood (NYSE: ATW), and SeaDrill (Nasdaq:SDRL) have all been weak on a generally poor near-term outlook for offshore operators. Also keep in mind that Transocean's earnings estimate dropped by about one-third over the past three months - investors were bracing for bad news, they got it, and they are apparently relieved it was not even worse than they assumed.
Q1 Results - No Work, No Money
Transocean owns an impressive fleet of rigs (about 20% of the worldwide offshore fleet), but they are little more than depreciating hunks of metal when there are not enough orders to keep them busy. For the first quarter, revenue was basically flat with the fourth quarter. Dayrates were actually a fair bit better, up about 5%, and rates were even better for ultra-deepwater and harsh-environment rigs. (For more, see A Primer On Offshore.)
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Investopedia: Atmel Getting Closer To A Sweet Spot
It is often remarkable that people who are entrusted with the responsibility of running millions (if not billions) of dollars are often so easily spooked. Right now, tech investors are running scared when it comes to the chip sector, leaving names like Broadcom (Nasdaq:BRCM) on the outs. Apparently Atmel (Nasdaq:ATML) can go on that list now too: Even though the company reported good results and consistent guidance, Wall Street does not seem overly impressed.
A Strong Start to the Year
Atmel reported revenue for the first quarter that just nearly matched the highest estimate and did surpass the average guess. Revenue grew just 1% on a sequential basis, while rising about 43% from last year on a like-for-like basis.
Growth was again led by the microcontroller business; now nearly two-thirds of the company's revenue base, microcontroller revenue was up 2% sequentially. Better still, the company's 32-bit microcontroller business was up 20% sequentially and the company continues to log impressive design wins in the smartphone and tablet industry. Non-volatile memory actually grew better than microcontrollers, while ASIC was the only segment to decline on a sequential basis. (For related reading, check out A Good Opportunity For Broadcom?)
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Friday, May 6, 2011
Investopedia: With Mylan, Maybe Smaller Is Better
Quite a lot of attention has gone to Teva (Nasdaq:TEVA) recently, as investors have tried to digest the impact of potentially greater competition in multiple sclerosis and the company's acquisition of Cephalon (Nasdaq:CEPH). While Teva has its own merits, investors may want to spend a little time on Mylan (NYSE:MYL), Teva's considerably smaller competitor. Though there is a risk that investors are underrating the patent challenges coming after 2013, growth and valuation may be more interesting here.
A Solid Start to the Year
Most analysts seemed quite pleased with Mylan's results and that is something of a mixed bag itself - happy analysts are better than angry analysts, but Mylan is already a well-liked and widely-owned stock. Nevertheless, the company did report 12% overall revenue growth, with the company's small specialty pharmaceutical business adding a small above-trend kicker (up 14%). (For related reading, see Teva And Cephalon Solve Each Other's Problems.)
While U.S. revenue was up a very strong 22%, overseas performance was much more mixed. Growth of 10% (constant currency) was alright, but European revenue dropped 4% in constant currency. Mylan is presently suffering through some European government pricing cuts, and they are certainly not alone in this regard, but building overseas growth has often been something of a challenge here.
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A Solid Start to the Year
Most analysts seemed quite pleased with Mylan's results and that is something of a mixed bag itself - happy analysts are better than angry analysts, but Mylan is already a well-liked and widely-owned stock. Nevertheless, the company did report 12% overall revenue growth, with the company's small specialty pharmaceutical business adding a small above-trend kicker (up 14%). (For related reading, see Teva And Cephalon Solve Each Other's Problems.)
While U.S. revenue was up a very strong 22%, overseas performance was much more mixed. Growth of 10% (constant currency) was alright, but European revenue dropped 4% in constant currency. Mylan is presently suffering through some European government pricing cuts, and they are certainly not alone in this regard, but building overseas growth has often been something of a challenge here.
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Investopedia: ConAgra And Ralcorp - If You Can't Beat Them...
Everybody knows the old expression, "If you can't beat 'em, join 'em". Apparently ConAgra (NYSE:CAG) is taking a different strategy - "if you can't beat 'em, quit and try something else". With ConAgra publicly making a bid for Ralcorp (NYSE:RAH), it would seem that this large Nebraskan packaged food company is content to cede the field to the likes of Kellogg (NYSE:K), Heinz (NYSE:HNZ), Kraft (NYSE:KFT) and General Mills (NYSE:GIS) in branded foods and focus much more closely on private label and value-oriented products.
The Deal That May Be
A deal between ConAgra and Ralcorp has been running through the rumor mill for a little while now, with Ralcorp recently mentioning that it had declined an unsolicited proposal while also preannouncing better-than-expected quarterly results. Clearly there was a not-so-subtle message here - namely, "we're improving quite well on our own, thanks".
Nevertheless, ConAgra has decided to go public with an offer of $86 per share in cash for Ralcorp. Not only does that represent a 32% premium to the pre-speculation price of Ralcorp, it also represents a sweetening of $4 per share from ConAgra's prior offer.
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The Deal That May Be
A deal between ConAgra and Ralcorp has been running through the rumor mill for a little while now, with Ralcorp recently mentioning that it had declined an unsolicited proposal while also preannouncing better-than-expected quarterly results. Clearly there was a not-so-subtle message here - namely, "we're improving quite well on our own, thanks".
Nevertheless, ConAgra has decided to go public with an offer of $86 per share in cash for Ralcorp. Not only does that represent a 32% premium to the pre-speculation price of Ralcorp, it also represents a sweetening of $4 per share from ConAgra's prior offer.
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Thursday, May 5, 2011
Investopedia: Applied Materials Gets Two For One With Varian
With Wednesday's announcement of its deal for Varian Semiconductor (Nasdaq:VSEA), Applied Materials (Nasdaq:AMAT) has to get full marks for a shrewd move and a surplus of chutzpah. It was just the other day when a major analyst downgraded Applied Materials on the basis of questions about the semiconductor equipment cycle. Clearly AMAT is playing with a longer-term horizon.
The Deal
Applied Materials has reached a deal with Varian to acquire the company for $63 per share in cash. That is a total price of $4.9 billion or about $4.6 billion after netting out Varian's cash. At this price, Applied Materials is paying a 55% premium for Varian shares, and giving investors the best price these shares have ever seen (and a 29% premium to the consensus analyst target price, for the very little that is worth). (For more, see Mergers And Acquisitions: Understanding Takeovers.)
What Applied Materials is Getting
In many respects Applied Materials is getting two really interesting businesses in one deal. Varian is a leader in ion implantation systems, tools that basically build transistors on chips through doping. Varian has really benefited from an industry switch towards single-wafer processing and has built a roughly 75% market share in this business. In fact, Varian is well ahead of rivals like Axcelis (Nasdaq:ACLS) and Applied Materials quit this business years ago after finding it too difficult to get competitive traction.
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The Deal
Applied Materials has reached a deal with Varian to acquire the company for $63 per share in cash. That is a total price of $4.9 billion or about $4.6 billion after netting out Varian's cash. At this price, Applied Materials is paying a 55% premium for Varian shares, and giving investors the best price these shares have ever seen (and a 29% premium to the consensus analyst target price, for the very little that is worth). (For more, see Mergers And Acquisitions: Understanding Takeovers.)
What Applied Materials is Getting
In many respects Applied Materials is getting two really interesting businesses in one deal. Varian is a leader in ion implantation systems, tools that basically build transistors on chips through doping. Varian has really benefited from an industry switch towards single-wafer processing and has built a roughly 75% market share in this business. In fact, Varian is well ahead of rivals like Axcelis (Nasdaq:ACLS) and Applied Materials quit this business years ago after finding it too difficult to get competitive traction.
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Investopedia: A Rare Stumble For Emerson
Industrial conglomerate Emerson (NYSE:EMR) offers an interesting case-study for investors after reporting its second quarter numbers. Should investors overlook a small stumble from an otherwise reliable and well-run industrial company, or should investors flee at this first sign of trouble and move into hotter names?
How an investor answers this question probably goes straight to the heart of their philosophy as an investor. Patient investors who seek out well-run companies for long-term gains should probably think of adding more, while investors who embrace higher turnover may well find it is time to chase faster prey.
Some Turbulence in a Strong Q2
On the whole, Emerson had a solid second quarter report, but the results were a little shy of analyst expectations - and for better or worse, that does shape a lot of near-term stock performance.
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New Poll
I decided to put up a new poll to see what readers are most interested in reading.
A lot of the work I do is earnings/news-driven, particularly in times like today when earnings dominate the trading. Nevertheless, I'm curious if that's what actually interests you most.
So, let me know.
Are you happy with the news/earnings-driven content?
Do you prefer industry-oriented coverage ("what's going on in semiconductors/food/mining"), or perhaps investment style coverage ("5 dividend stocks...")? And then there's the more straightforward "Buy this stock for the following reasons...".
Thanks for any and all who choose to offer up opinions.
A lot of the work I do is earnings/news-driven, particularly in times like today when earnings dominate the trading. Nevertheless, I'm curious if that's what actually interests you most.
So, let me know.
Are you happy with the news/earnings-driven content?
Do you prefer industry-oriented coverage ("what's going on in semiconductors/food/mining"), or perhaps investment style coverage ("5 dividend stocks...")? And then there's the more straightforward "Buy this stock for the following reasons...".
Thanks for any and all who choose to offer up opinions.
Wednesday, May 4, 2011
Investopedia: Chesapeake Making The Best Of A Tough Situation
Here's a question for natural gas investors to ponder: How much growth do you really want? Natural gas prices are still low and reserves are a limited asset, so does it really make sense for these companies to cash out a meaningful amount of these assets too cheaply? Certainly, these companies need to fund their operations and establish enough production to hold valuable leases, but production at below-trend prices is a mixed blessing.
Chesapeake Energy (NYSE:CHK), one of the largest independent natural gas producers, continues to walk that tightrope while remaining very highly leveraged to future rises in natural gas. (For more, see Natural Gas Industry: An Investment Guide.)
Decent Q1 Performance
Chesapeake reported over 6% sequential production growth for the first quarter, with realized prices up about 2%. Within those numbers, the company reported strong growth in its oil and liquids production - up nearly 9% on a sequential basis and up 56% from last year.
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Chesapeake Energy (NYSE:CHK), one of the largest independent natural gas producers, continues to walk that tightrope while remaining very highly leveraged to future rises in natural gas. (For more, see Natural Gas Industry: An Investment Guide.)
Decent Q1 Performance
Chesapeake reported over 6% sequential production growth for the first quarter, with realized prices up about 2%. Within those numbers, the company reported strong growth in its oil and liquids production - up nearly 9% on a sequential basis and up 56% from last year.
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Investopedia: Anadarko's Balance Paying Off
In the energy sector, investors never want the same thing for long. Oil is hot until it isn't again; foreign reserves are a great growth opportunity until local governments want to revisit the deals; and offshore is the last great opportunity to build reserves until somebody screws it up for everybody. For investors who don't want to try to play that game, Anadarko (NYSE: APC) is a good balanced play with solid exposure to emerging shales, oil-rich offshore deposits, and high-potential overseas reserves.
Good Cost Control in Q1
First quarter results for Anadarko were really solid, due in large part to good cost control. Production jumped more than 13% on a sequential basis, with most of the growth in natural gas and natural gas liquids (though oil was up 9% sequentially). Pricing was also solid, and that blended into 21% sequential revenue growth. (For more, see Oil And Gas Industry Primer.)
On the cost side of the ledger, Anadarko saw production expenses fall 3% sequentially. On a per barrel basis, cash costs dropped about 8%, with operating costs down almost 12% and DD&A expenses rising 2%. Results were definitely helped by the company's drilling success and that may not be sustainable. Likewise, production costs could be more problematic as the company expands its shale and offshore operations - companies like Halliburton (NYSE:HAL), Schulmberger (NYSE:SLB) and Transocean (NYSE:RIG) are all looking to make their own growth targets on those markets.
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Good Cost Control in Q1
First quarter results for Anadarko were really solid, due in large part to good cost control. Production jumped more than 13% on a sequential basis, with most of the growth in natural gas and natural gas liquids (though oil was up 9% sequentially). Pricing was also solid, and that blended into 21% sequential revenue growth. (For more, see Oil And Gas Industry Primer.)
On the cost side of the ledger, Anadarko saw production expenses fall 3% sequentially. On a per barrel basis, cash costs dropped about 8%, with operating costs down almost 12% and DD&A expenses rising 2%. Results were definitely helped by the company's drilling success and that may not be sustainable. Likewise, production costs could be more problematic as the company expands its shale and offshore operations - companies like Halliburton (NYSE:HAL), Schulmberger (NYSE:SLB) and Transocean (NYSE:RIG) are all looking to make their own growth targets on those markets.
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Investopedia: Teva And Cephalon Solve Each Other's Problems
Whenever companies announce a deal, managements try to paint it as a great move for each shareholder group. Experience says that is rarely the case, but Teva Pharmaceuticals' (Nasdaq:TEVA) acquisition of Cephalon (Nasdaq:CEPH) really could be a case where that is true. This deal solves significant, but different, problems for each company.
The Terms Of The Deal
Unlike Valeant's (NYSE:VRX) attempt at a hostile bid (or its thus far unsuccessful attempt to find a friendly agreement with Cephalon's board), Teva pursued a friendly offer and both boards agreed to it unanimously. Teva will acquire Cephalon in an all-cash deal that pays Cephalon shareholders $81.50 - 12% more than what Valeant had offered. The deal amounts to about $6.8 billion for Teva, which will have to raise debt for the bid.
Not Great, But Better
Cephalon shareholders may still grumble at the terms of the deal. After all, less than six times trailing EBITDA and about two times trailing revenue is not an exciting premium. What's more, in recent memory Pfizer (NYSE:PFE) paid for more for King and Abbott (NYSE:ABT) paid for Kos.
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The Terms Of The Deal
Unlike Valeant's (NYSE:VRX) attempt at a hostile bid (or its thus far unsuccessful attempt to find a friendly agreement with Cephalon's board), Teva pursued a friendly offer and both boards agreed to it unanimously. Teva will acquire Cephalon in an all-cash deal that pays Cephalon shareholders $81.50 - 12% more than what Valeant had offered. The deal amounts to about $6.8 billion for Teva, which will have to raise debt for the bid.
Not Great, But Better
Cephalon shareholders may still grumble at the terms of the deal. After all, less than six times trailing EBITDA and about two times trailing revenue is not an exciting premium. What's more, in recent memory Pfizer (NYSE:PFE) paid for more for King and Abbott (NYSE:ABT) paid for Kos.
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Investopedia: Hologic Holding The Line
Hologic (Nasdaq:HOLX) was an interesting undervalued health care play when the company was waiting on approval for its tomosynthesis product (a better type of breast imaging technology). With approval in hand, though, now the concerns move to customer adoption and low patient volumes throughout the testing business. Though still an attractive and high-quality franchise, the company is going to need to deliver more growth to get the Street excited about the name.
A Fiscal Q2 That's Solid, but Not Spectacular
Hologic delivered a modest outperformance for the fiscal second quarter. Revenue rose about 5%, fueled by nearly 9% growth in the breast health business, as the company saw good pricing and some early adoption of the tomosynthesis product. Diagnostics was still weak (down more than 1%), though, as patient visit volume has not rebounded yet. Gyn/surgical and skeletal were both up above the company average, but these are smaller units.
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A Fiscal Q2 That's Solid, but Not Spectacular
Hologic delivered a modest outperformance for the fiscal second quarter. Revenue rose about 5%, fueled by nearly 9% growth in the breast health business, as the company saw good pricing and some early adoption of the tomosynthesis product. Diagnostics was still weak (down more than 1%), though, as patient visit volume has not rebounded yet. Gyn/surgical and skeletal were both up above the company average, but these are smaller units.
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Investopedia: Tomorrow's Great Dividend Companies
Successful investing demands a balance between what we know about the past and what we think about the future. Today's great dividend-payer may not be such a great idea for the portfolio if the company's business is eroding and competitors are capturing the revenue it needs to fund those dividends. Likewise, a stock that may be entirely inappropriate for a dividend portfolio today could nevertheless emerge as a star dividend-payer in the future.
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With that in mind, consider a few companies that may not be great dividend ideas today (or may not pay one at all!) but could emerge as time goes on and the businesses mature.
Healthcare
I have lamented on more than one occasion that outside of pharmaceuticals, there is a distinct lack of quality dividend-payers in the healthcare space. Nevertheless, companies like St. Jude (NYSE:STJ) and Stryker (NYSE:SYK) could be part of a change in that tradition.
St. Jude has a very attractive pipeline of growth prospects and a solid present-day business in areas like cardiac rhythm management, neurostim and heart valve replacement. St. Jude presently has considerable debt and formidable competitors, but it also has robust free cash flow and it is not so hard to imagine that a dividend could be in the company's future.
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Tuesday, May 3, 2011
Investopedia: Novo Nordisk Still One Of The Best Around
Is Novo Nordisk (NYSE:NVO) a full-fledged pharmaceutical company, or does it fall into that "specialty pharmaceutical" niche? Will the company succeed in expanding beyond diabetes and very specialized hormone/protein therapies? Does anybody care so long as the company delivers double-digit revenue growth and returns on capital that approach 40%?
The Strong Get Stronger in Q1
While some analysts seem to be fretting a bit about a "slowdown" in the insulin business for Novo Nordisk, the fact remains that this is one of the fastest-growing major pharmaceutical companies on the planet. Total revenue rose 15% this quarter, with the diabetes franchise growing 16% and the biopharmaceuticals business up 10%. Within diabetes, insulins grew 8% due to continued growth of the analog platform, while Victoza showed nearly 200% growth and delivered over $200 million in revenue on its way to blockbuster status.
Profitability also improved this quarter. Gross margin slid a bit as the company could not completely offset a drag from foreign currency, but the loss was limited to 20 basis points. Operating income grew 24%, though, as sales, administrative and R&D expenses all grew by mid-single-digit amounts. Although the R&D spend looked a bit light this quarter, it looks like more of a timing issue than any sort of philosophical change.
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Monday, May 2, 2011
Investopedia: Wooly And T-Dawg Go Gucci
Somehow it just does not seem too likely that Gucci's core customer base overlaps much with folks who call themselves "Wooly" and "T-Dawg", but France's PPR, which owns the esteemed Gucci label, is going to give it a go anyway. On Monday morning, the French holding company announced that it would be acquiring U.S. boardwear apparel maker Volcom (Nasdaq:VLCM), which was founded by the aforementioned Wooly and T-Dawg in 1991. (For background reading, see Using Consumer Spending As A Market Indicator.)
The Terms of the Deal
PPR is paying almost $608 million for the smaller clothing company, giving Volcom shareholders $24.50 a share in cash, or a 24% premium to Friday's close. That puts a valuation on Volcom shares of about 1.5x trailing sales and about 10.5x trailing EBITDA - not exactly premium pricing for a once-hot stock.
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The Terms of the Deal
PPR is paying almost $608 million for the smaller clothing company, giving Volcom shareholders $24.50 a share in cash, or a 24% premium to Friday's close. That puts a valuation on Volcom shares of about 1.5x trailing sales and about 10.5x trailing EBITDA - not exactly premium pricing for a once-hot stock.
Still, it is difficult to value a company like Volcom on a relative basis. Billabong is publicly listed in Australia and trades at an even lower valuation, Quicksilver (NYSE:ZQK) is struggling, and other once-popular boardwear companies like Vans and Ocean Pacific faded years ago and were acquired by the likes of VF Corp (NYSE:VFC) and Iconix (Nasdaq:ICON).
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Investopedia: Coach Still Flying First Class
Some things never change, including consumer behavior. Maybe the great housing boom/bust did force a few consumers to change their ways, but as the economy has rebounded, the demand for high-end consumer goods has gone along for the ride. As one of the more popular brands around, Coach (NYSE:COH) continues to deliver solid financial performance.
On Target Performance
Even with the significant impact of the Japanese earthquake, Coach once again managed to modestly beat estimates. Revenue rose 14% this quarter, fueled by direct-to-consumer sales growth of 15%. North American comps were up about 10% (and ahead of expectations), while Japanese sales fell 9% in local currency. Such was the impact of currency moves, though, that Japanese sales were actually flat on a reported (dollars) basis.
Coach did not perform quite as well on the profitability side. Like so many companies, Coach is seeing pressure from currency, materials, shipping, and so forth. Gross margin declined about 140 basis points, while operating income (on a non-GAAP basis) rose 12%. Still, it is clearly worth noting that at over 29%, Coach produces exceptionally good margins (as well as very high returns on assets and capital).
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