Tag Archive | "words"

Nokia Refutes Talk Of Microsoft Sale; Ticonderoga Likes It

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Shares of Microsoft (MSFT) have been under pressure this morning, and one thing appearing to contribute to downturn are rumors the company would step in to purchase Nokia (NOK) for $19 billion, according to remarks by Eldar Murtazin, a blogger widely credited with scooping Microsoft’s deal with Nokia earlier this year.

Murtazin’s blog appears not to have that claim today, but he is cited as stating such by Todd Haselton in a piece this morning on BoyGeniusReport.

A Nokia spokesperson, however, tells The Wall Street Journal’s Christopher Lawton a short while ago that, “These rumors are completely baseless.”

Murtazin has speculated as recently as May 16th that the two companies were talking about a deal.

Microsoft shares are down 54 cents, or 2%, at $24.47.  Nokia shares are down 34 cents, or almost 5%, at $6.68.

Well, at least one believer this morning is Brian White with Ticonderoga Securities, who follows Apple (AAPL) and has a Buy rating and a $612 price target on that stock.

“We believe reports from Boy Genius highlighting the potential for a Microsoft purchase of Nokia for $19 billion should provide Apple investors with even greater confidence that the company can continue to gain market share at the expense of legacy vendors in the mobile phone market,” writes White.

“In our view, Apple investors could not ask for a better deal, and we believe a transaction would only further Apple’s market share gains in the coming quarters.”

Sounds like White is choosing his words carefully, but it also sounds like he believes the rumor.

Article courtesy of Tech Trader Daily

Bill Gross’s Investment Advice: Don’t Let The US Government Boil Your Frog Legs Or Drown You In A Pitcher Of Milk

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Just, let him finish.

I’m going to one-up Mark Twain in the quantity department and spin two yarns about jumping frogs, one which has been frequently told, the other not so much. Neither of them have anything to do with Samuel Clemens’ heralded short story, but both, metaphorically at least, describe our current investment markets and how to think about the future. My first story is the one you’ve all heard about. Put a frog in a kettle of boiling water and he’ll jump out faster and further than any of those blue ribbon winners at the Calaveras County jumping frog contest. Put him in a pot at room temperature, however, slowly turn up the temperature to boiling, and you’ll have frog legs for dinner. This latter, more unfortunate toad temporarily adapted to his external environment, which seemed like a practical thing to do, until – well, until he reached 212° at which point he was cooked. Today’s bond investors are experiencing a similar fate with nary a “ribbet” of complaint.


All right fellow frogs, so we’re being repressed and shortchanged in order to allow Uncle Sam to balance its books. Whatta we gonna do about it? “Frogs of the world unite,” as Lenin might have said, and so here’s where I harken back to Mark Twain and my second lesser-told frog story. There was this other frog who instead of being tossed into a pot of hot water was left to cool its heels in a pitcher of cold milk. Unable to jump out, he churned and churned those frog legs until eventually the milk turned into butter and the hardened butter allowed him the platform to leap to froggy freedom! Well, let’s get churnin’, fellow frogs. If the U.S. or the U.K. or any other government is going to attempt to boil us alive, let’s make butter! Butter in this instance is what PIMCO characterizes as “cheap bonds.” Potentially confusing, “cheap bonds” is really a simple concept – sort of like the teeter-totter. Any bond, even a Treasury bond, is composed of several pieces – sort of like an atom with its neutrons, electrons, protons, positrons, neutrinos (whoops, don’t wanna go too far here). There’s an interest rate or yield piece, commonly measured by “duration.” There’s a credit piece, typically referred to as a “spread” when you buy a corporate bond. And there’s a volatility piece, a liquidity piece and other little bits and particles that will go unexplained for now. The important point, though, is that if the government is going to artificially repress yield, then an intelligent frog should focus on the parts of a bond that are less repressed! You can, for instance, produce a 1% expected return in today’s market in a number of ways. Buy a repressed 3-year Treasury note at just under 1%, or purchase an A-rated corporate floating rate note (FRN) with little to no durational risk at a 3-month LIBOR +75 basis points spread, currently returning 1%. Which is the better deal? Well, they both appear to lead you to the same place but our cheap bonds argument would maintain that the FRN gets you there with a lot less risk. The credit piece, in other words, is a safer spread than the duration piece.

Journalists, financial advisors, and perhaps even some clients marvel at how PIMCO can be doing so well in 2011 while being underweight the Treasury/durational component of the bond market. Folks – we’re making butter. If you’re being repressed, our strategy is to churn those legs, get out of the pitcher, and above all stay away from boiling pots of water.

Buy Cheap Bonds With Safe Spread [PIMCO]

Article courtesy of Dealbreaker

Apple: iPhone Should Bolster Margins, Says Jefferies

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Jefferies & Co. analyst Peter Misek this morning seeks to allay fears of a gross profit erosion at Apple (AAPL), writing that “concerns on serious gross margin deterioration are overdone,” and reiterating a Buy rating and a $500 price target.

Apple’s overall corporate gross profit margin will likely find a “floor” at 35%, he thinks, and perhaps range as high as 40% over the course of the next year. (Apple’s gross margin as a percentage of sales was 41.4% in the quarter ended in March, and 39.9% for the six-month period ending that month. Those numbers were down slightly from 41.7% and 41.2% for the corresponding periods a year earlier.)

Misek points out Apple is able to add $100 to the price of an iPhone for flash memory content that costs the company only $20 to $30 per part, leading to iPhone margin of 50%, the highest for any of its products. He expects a re-acceleration of iPhone sales based on the prospect Apple will have a “mid-marketiPhone in the $300 range (in other words, cost to the wireless operator, before subsidy), in addition to the expected iPhone 4S and the iPhone 5, which he expects in June of next year.

A cheaper iPhone at the mid-market would increase Apple’s addressable market by 500 million phones per year, and if such a device were made with a $180 cost of goods, every 10 million of them sold would add $1 to Apple’s per-share profit.

Misek also thinks Apple can maintain gross margin on the iPad at around 35% to 40% “over the medium term,” thanks to the higher-priced, more feature-rich models of the device.

Article courtesy of Tech Trader Daily

Apple: Al-Waleed Reaffirms His Faith On CNBC

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In case you missed, Saudi prince Al-Waleed Bin Talal was on CNBC this morning — he’s 26th on the Forbes billionaire list with $19.6 billion in personal net worth, in case you’ve lost count — and he was talking about about Apple (AAPL), among other things.

“We got into Apple at $9 many years ago, and Steve Jobs is my friend, I always visit him in California,” said Al-Waleed. “We always believed in Apple. Apple is a very good company, and they are the leader right now in the technology industry. Clearly, there are lots of challenges, they are being attacked from all fronts, but Apple is a big force to be reckoned with in the technology industry.”

(In the video clip below, the discussion of Apple comes in at about 7:40 into the set.)

Asked about growth, Al-Waleed said that the tablet and phone markets have “not yet peaked” for the company. Al-Waleed was also asked about the fate of the company given CEO Steve Jobs’s leave from day-to-day operations.

“Steve Jobs is a unique person, and he has good people with him. You know, he’s not managing the company on a day-to-day basis, but still the company is on a good track and doing good.”

On the general economic outlook, Al-Waleed said that the global economies went through “intensive care,” and “you don’t expect someone to go walking and jogging right away. Hopefully some jogging will take place soon.”

Remarking on the impending end of the Fed Reserve’s “QE2″ program of bond purchases, he likened it to a “scaffolding” of a building, arguing that when a scaffolding is taken away, the “building has to stand.” He doesn’t believe, in other words, that when QE2 ends in June, it will have a major impact on markets. Of greater concern is what is done with the U.S. budget deficit and “brinksmanship” over the U.S. debt ceiling, which he called a “time bomb.”

As long as the U.S. issue can be taken care of, there will be low growth for several years to come, he avers, but not a return to recession, despite European debt issues.

Article courtesy of Tech Trader Daily

Apple: World’s Best ‘Bank Account’?

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Frank Curzio with The Growth Stock Wire this morning writes that Apple (AAPL) is “one of the world’s best ‘bank accounts‘,” by which he means the recurring revenue stream from iTunes content that flows through to the company from rising sales of its iPhone, iPod and iPad.

Curzio notes that the company made “a whopping” $17 billion in free cash flow in the last 12 months, for a total cash position of $65 billion. Back out that cash, and the stock fetches 10 times projected earnings. “You could take the super-safe route, put your money in cash, and earn next to nothing in interest… But Apple is the better play.”

“To put this $65 billion in perspective, that’s larger than the market cap of Home Depot (HD) and Boeing (BA). It’s also bigger than the market caps of 90% of the companies listed in the S&P 500. And this cash position could easily grow to $100 billion over the next 18 months.”

Noting the words of CEO Steve Jobs that “one or more strategic opportunities may come along that we’re in a unique position to take advantage of because of our strong cash position,” Curzio concludes “Apple expects to use this cash to purchase other companies.” It has enough money to buy MGM Resorts (MGM), Las Vegas Sands (LVS), and Wynn Resorts (WYNN) “and have a near-monopoly on the gaming industry,” he observes.

Now that’s a thought: Apple dominating slots!

Apple shares today are down $1.60, or half a point, at $344.97.

Article courtesy of Tech Trader Daily

Opening Bell: 05.12.11

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Next Up: A Crackdown on Outside-Expert Firms (DealBook)
With the government securing a conviction against Raj Rajaratnam of the Galleon Group on Wednesday, federal prosecutors will shift their focus to expert networks — the intricate web of money managers, corporate executives and consultants at the center of another wave of insider trading cases.

Goldman Sachs Viewed Unfavorably by 54% (Bloomberg)
The company was viewed less favorably than other banks by the 1,263 poll respondents. While 54 percent said they had an unfavorable view of Goldman Sachs, 25 percent felt the same about JPMorgan, 49 percent for Citigroup Inc. (C) and 48 percent for Bank of America Corp. (BAC) Thirty-five percent had an unfavorable view of Frankfurt-based Deutsche Bank AG (DBK), which was also singled out in the U.S. Senate subcommittee report.

AIG Share Sale Starts But Could Be Pulled (WSJ)
The stock offering commenced Wednesday following lengthy discussions between Treasury and AIG’s management and directors about what they want to achieve from the share sales…Following the discussions, the Treasury and AIG are now in alignment about how to proceed with the offering, and they won’t sell shares if taxpayers don’t earn a profit now and in the future on the sales, according to people familiar with the matter. In other words, if they don’t get the price they want, Treasury will “pull the deal,” said one of the people.

Glencore Said to Gain Double Orders for IPO (Bloomberg)
Glencore International Plc received enough demand from investors for its $11 billion initial public offering to sell the shares more than twice over, according to three people with knowledge of the matter. Highbridge Capital Management LLC, a hedge fund owned by JPMorgan Chase & Co., proposed a $500 million investment, said one of the people, who declined to be identified because the information isn’t yet public. The last orders for the offer are due on May 18, with final pricing to be disclosed the following day, according to a term sheet for the sale.

Exit interview: Kobe Bryant says Lakers’ failed title run was a ‘wasted year of my life’ (LA Times)
Kobe Bryant is never much for sentimentality, and he’s not going to change any time soon. So when he reflected Wednesday on the Lakers’ underachieving 2010-2011 season, which included being swept in a Western Conference semifinal series, Bryant didn’t mince words on his disappointment.

China hikes reserve requirement ratio for banks (MarketWatch)
The People’s Bank of China lifted the ratio of funds domestic banks must set aside as reserves on Thursday, the fifth such hike this year amid persistent inflation concerns. From Monday the reserve requirement ratio will be increased 0.5-percentage point, bringing the rate to 21% for most big banks and 19% for smaller banks.

Copper tumbles to 5-month low on growth blues (Reuters)
Copper tumbled to a five-month through on Thursday as investors headed for the exit, fearing slower economic growth and demand from top consumers China and the United States. Also weighing on sentiment was the stronger dollar .DXY across a basket of currencies, which makes commodities priced in dollars more expensive for holders of other currencies.

SEC Investigating State Street Foreign Exchange (WSJ)
The Securities and Exchange Commission is investigating State Street Corp.’s foreign-exchange trading on behalf of pension funds in a sign that law-enforcement probes into how custody banks process tens of thousands of foreign-exchange trades are widening.

Draghi to Take Helm at ECB in November (Bloomberg)
[Italy’s Mario] Draghi, 63, will on Nov. 1 inherit an ECB that’s almost unrecognizable from the one Jean-Claude Trichet took charge of eight years ago. The bank’s balance sheet has more than doubled to 1.9 trillion euros ($2.7 trillion), mostly as a result of the extraordinary measures it used to battle the global financial crisis and now Europe’s sovereign debt woes…[German Chancellor Angela] Merkel made clear she’s backing the Bank of Italy governor in the expectation he will subscribe to the tight-money tradition of the Bundesbank, which provided the blueprint for the ECB when it was created 1998.

Bill Proposes Mortgage Shake-Up (WSJ)
Two lawmakers, a California Republican and a Michigan Democrat, are set to unveil legislation Thursday to replace mortgage giants Fannie Mae and Freddie Mac with at least five private companies that would issue mortgage-backed securities with explicit federal guarantees… Like Fannie and Freddie, the new entities would be restricted to buying loans that meet certain standards, including size caps. But the firms would have to hold much more capital than Fannie and Freddie.

Goldman, Beijing Launch Yuan Private-Equity Fund (WSJ)
Goldman Sachs Group Inc. has signed a deal with the Beijing government to launch a yuan-denominated private-equity fund that aims to raise 5 billion yuan ($769 million), according to a person familiar with the situation.

Morgan Stanley to Announce Private-Equity Yuan Fund (WSJ)
Morgan Stanley is expected to announce details of a yuan-denominated private equity fund in Hangzhou next week, according to a person familiar with the matter. The Wall Street firm will be running the fund in a partnership with Hangzhou Industrial & Commercial Trust Co., the person said. It wasn’t immediately clear how much the fund expected to raise.

China growth could slow to 8 percent: Goldman’s O’Neill says (Reuters)
“It is my judgment that the Chinese economy is probably slowing down more than people realize,” [O'Neill, Chairman of Goldman Sachs Asset Management] said, adding that as a result, he was not surprised that commodity prices are coming under pressure. As evidence, he cited the Goldman Sachs China Activity Index, the firm’s propriperary indicator of GDP, which shows that the momentum of Chinese growth has slowed, and that slowdown was supported by economic data reported this week. “And I suspect that China is going to slow down to around 8 pct GDP growth. If I’m right, that means sometime in the 2nd half this year, Chinese inflation will not be a problem, and will come back down to around 4 percent,” he said. “And the PBOC will be able to stop tightening monetary policy and we can all live happily ever after.”

UBS: Basel Rules Leave Banks Overcapitalized (WSJ)
Banks will likely have too much cash by 2019 as a result of the Basel III global banking rules, UBS AG Chief Executive Oswald Grübel said Thursday. “In the next 10 years, at the end of 2019, we will have overly liquid, overcapitalized banks,” said Mr. Grübel, who was addressing a business audience at a conference here. “However this also means we won’t have a lot of growth,” he said.

MIT sells $750m of century bonds (FT)

The Massachusetts Institute of Technology is planning to sell 100-year bonds as the recent drop in interest rates draws a flood of bond issuance this week.

In Exquisite Detail, Donald Trump Describes How He Styles His Hair (Rolling Stone via Vanity Fair Daily)
“O.K., what I do is, wash it with Head and Shoulders. I don’t dry it, though. I let it dry by itself. It takes about an hour. O.K., so I’ve done all that. I then comb my hair. Yes, I do use a comb. Do I comb it forward? No, I don’t comb it forward. I actually don’t have a bad hairline. When you think about it, it’s not bad. I mean, I get a lot of credit for comb-overs. But it’s not really a comb-over. It’s sort of a little bit forward and back. I’ve combed it the same way for years. Same thing, every time.”

Article courtesy of Dealbreaker

"Can You Feel The Love Tonight": An Examination Of Passion At Bardot Through "Lion King" Song Lyrics

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Go HERE for more photos by Jessica Azizi and tag yourself and your friends!

There must be something about this premature summer heat that’s got L.A. all hot and bothered because we saw a new, heightened passion in Angelenos frolicking in the night this weekend. It had us wondering if you noticed it too. And we just want to know, in the words of Sir Elton John, can YOU feel the love tonight? Join us as we interpret the swelling passion we saw at the No Shirt/No Shoes party at Bardot Friday night through Disney’s animated musical The Lion King. Read the full story

"Can You Feel The Love Tonight": An Examination Of Passion At Bardot Through "Lion King" Song Lyrics

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Go HERE for more photos by Jessica Azizi and tag yourself and your friends!

There must be something about this premature summer heat that’s got L.A. all hot and bothered because we saw a new, heightened passion in Angelenos frolicking in the night this weekend. It had us wondering if you noticed it too. And we just want to know, in the words of Sir Elton John, can YOU feel the love tonight? Join us as we interpret the swelling passion we saw at the No Shirt/No Shoes party at Bardot Friday night through Disney’s animated musical The Lion King. Read the full story

Andrew Sorkin Wants To Hear Warren Buffett Say “I’m Upset With Myself”

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As you may have heard, this weekend is Berkshire Hathaway’s annual shareholder meeting. As he has in the past, CEO Warren Buffett will speak at length, and unlike time’s past, this year’s talk will include at least one awkward topic, that being the David Sokol/Lubrizol incident. We previously came up with a bunch of WB-esque words he could offer that would get him back in everyone’s good graces, including but not limited to:

“While nothing illegal went down on Berkshire’s watch, what David did is not the way we expect people to conduct themselves and it certainly left a bad taste in everyone’s mouth. Not unlike what I imagine would be the result of some boyhood experimentation on the farm and a cow with some funky tasting spunk.”

According to Andrew Ross Sorkin, who will be at the meeting, if Buffett wants to make things cool with shareholders, he can’t just say he was disappointed in David Sokol but that he was disappointed in himself.

It’s possible (though highly unlikely) that ARS and I are wrong. If you’re a Berkshire Hathaway shareholder, what would get you to decide the whole thing is water under the bridge? Is it a mea culpa or something else? As Buffett may not have found the words himself, perhaps you should just tell him what you want. A walking tour of his favorite whorehouse? His butler services for one year? An all-access pass to walk into any Dairy Queen across the country and stick your mouth under the soft serve machine without getting shit for it?

Article courtesy of Dealbreaker

Raj Rajaratnam’s Handlers Think Articles About Alleged Insider Trading Make Him Sound Bad Because Reporters Are Trying To Get In Good With The…

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Keeping watch over the 20 or so journalists reporting on Rajaratnam’s trial is Jim McCarthy, who handles the defendant’s media relations. McCarthy, the founder of New York-based CounterPoint Strategies LLC, isn’t shy about his views of the coverage. “Some of the coverage has been” — he paused for five seconds as he considered his words — “distorted and irresponsible,” McCarthy said in an interview yesterday. He’s particularly critical of some reporters and news organizations who he claims “have been slanting their coverage” in hopes of “gaining favor with the government,” he said. [Bloomberg]

Article courtesy of Dealbreaker