Sony Sets Sights on Future; GameStop Shareholders Startled
January 8, 2014
Sony (SNE) announced Tuesday that it sold 4.2 million copies of the PS4 during 2013, exceeding estimates for ~3 million sales of Microsoft’s (MSFT) Xbox One units during the year. The PS4’s lower price tag of $399 versus the Xbox One’s $499 sale price coupled with wider distribution (53 countries versus 13) helped drive the better numbers at Sony. Sales levels of each competing console, however, were fantastic, which bodes well for game developers such as Electronic Arts (EA) and Take Two (TTWO). Sony remains firmly on track to surpass its PS4 sales target of 5 million units by March 2014 and will likely turn a nice profit of about $25-$50 per unit (despite the lower price). Microsoft’s XBox sales may be
In-Line Is Good Enough…for Today
January 7, 2014
Tuesday brought a couple of interesting developments that showed sometimes in-line performance is good enough. Valeant Pharma (VRX)—fact sheet download here—surged more than 10% in trading Tuesday as it spoke favorably about its long-term ambitions. Though fourth-quarter financial guidance in the presentation was in-line with expectations, the company’s outlook for 2014 and its intermediate-term goal to become one of the world’s top five pharma companies (by market capitalization) by the end of 2016 caught investor’s attention. We don’t think saying such a noble goal is a reason for its stock price to appreciate, but the company’s other strategic priorities are worth noting. We think the “one significant deal” highlighted below may potentially refer to a future purchase of or a
Boeing Sets Records for 2013; Aerospace Thesis Remains Intact
January 7, 2014
Boeing (BA) revealed the tremendous strength of global commercial aerospace demand in a news release Monday. During 2013, the aerospace giant noted that it delivered a record 648 commercial deliveries, received a record 1,531 gross commercial orders for the year, and posted a record 5,080 units in its backlog of unfulfilled orders at the end of 2013. The 1,355 net commercial order mark for the year was the second-largest in company history. Boeing continues to execute well on its production rate increases, and three of its programs set records for deliveries during the year: the 737 program, the 777 program, and the 787 Dreamliner program. 2013 was a fantastic year across the board for Boeing and for much of the
Household Durables Firms, Electronics Retailers Face Pressure
January 6, 2014
On Monday, the maker of the Sleep Number bed, Select Comfort (SCSS) sent shudders through the furniture and bedding manufacturing industry when it warned that not only would fourth-quarter sales miss the mark but that the challenging times would continue into 2014: Select Comfort Corp…reported that preliminary fourth-quarter 2013 total net sales grew 5% year-over-year to $231 million, with flat company-controlled comparable sales growth. The mid-point of the company’s fourth-quarter EPS guidance range of $0.18 to $0.26 assumed low-double-digit growth in total net sales and mid-single-digit growth in company-controlled comparable sales. Through November, company performance was trending consistent with the EPS guidance range, with solid sales results and expense controls. From Cyber Monday through the end of December, however, sales
Throw December Auto Sales Numbers Away; December Ice Storms and a Late Thanksgiving Holiday to Blame
January 5, 2014
The excuses for the subpar selling performance at automakers in December (up just 0.3%) were many: the frigid ice and snow storms that scared customers away; a late Thanksgiving holiday that stole sales from the month; and a shortened holiday shopping season that left consumers scrambling to buy holiday gifts for family and friends, as opposed to spending time car shopping. Though the impact of each contributing factor is difficult to measure, we think the combination of these items was the main culprit for disappointing December auto sales, not that the consumer has decided to forgo car purchases and that the upswing in auto sales has come to an abrupt halt. Some caution is starting to creep into the market—see
Dividend Increases/Decreases for the Two Weeks Ending January 3
January 4, 2014
Below we provide a list of firms that raised/lowered their dividends during the two weeks ending January 3. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports, please click here (or use our ‘Symbol’ search box in our website header). Firms Raising Their Dividends Bank of the Ozarks (OZRK): now $0.22 per share quarterly dividend, was $0.21. Firms Lowering Their Dividends Gold Resource Corp (GORO): now $0.01 per share monthly dividend, was $0.03.
Buffett Doubles Down on USG; Teva Expected to Appoint New CEO; Crude by Rail Transportation Comes under Scrutiny
January 3, 2014
The day after the New Year holiday was light with news, as expected, but there were three developments that we thought you should be aware of. We recently highlighted the third-quarter performance of USG (USG), the maker of wallboard under the SHEETROCK name, as it scored one of the highest ratings of a 9 on the Valuentum Buying Index in late October. Warren Buffett on Thursday announced that he has increased his stake in the firm, to 30.5% (more than double previously-reported figures). According to a recently-filed Schedule 13D/A, he now owns 43.4 million shares of the firm. USG continues to be significantly undervalued on the basis of our discounted cash-flow process, and we peg its fair value estimate north
Dividend Growth Investors Face Unique Risks in 2014
January 2, 2014
With 2013 now in the rear-view mirror, we can happily say that the Dividend Growth portfolio significantly exceeded its goals of an annualized return in the mid- to- high-single digits for the year. We know that you’ve been a part of this journey in 2013, and we wanted to congratulate you as well. In fact, the successful year would not have been so without you, and we wanted to extend a big thank you for that. If you haven’t been a member for that long yet, we’re expecting an exciting 2014, too! For one, dividend growth investors are enjoying a time like no other in the history of the equity markets. The attractiveness of dividend growth investing as a style
Merger Chatter Heating Up for the New Year
December 31, 2013
With corporate news slow as the New Year’s week unfolds, merger chatter has heated up to fill the void. On Monday, StreetInsider reported that the New York Times (NYT) may be catching the eye of a suitor. Chen Guangbiao, chairman of China Huangpu Renewable Resources Utilization Group Co, is reported to be interested in making a bid for the firm. The likelihood and the terms of an announcement, however, remain extremely vague, and we point to only one source. Newspaper outlets have certainly been of significant interest as of late, and the well-documented declines in newsprint circulation have done nothing to discourage buyers. For one, Amazon CEO Jeff Bezos recently acquired the Washington Post’s namesake earlier this year in what
