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PC Shipments Expected To Stabilize

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According to data released by the International Data Corporation (IDC) Worldwide Quarterly PC Tracker on December 2, personal computer (PC) shipments are now expected to drop more than 10% in 2013, slightly below the previous projection of -9.7%. Though 2013 will be the most severe yearly contraction on record, this news wasn’t the key takeaway. Instead, it was expectations for stabilizing demand by 2015 that provided a shot of optimism to the PC supply chain (see image below). Image Source: IDC The commentary provided by IDC was not terribly exciting, but market expectations are closer to the PC going the way of the dodo than stabilizing at just over 300 million units (roughly 2008 levels). We continue to believe that … Read more

Apple Up on News of China Mobile Deal and Icahn Request

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Apple (AAPL) continues to be a holding in the portfolios of our Best Ideas Newsletter and Dividend Growth Newsletter. Since we added the firm to our actively-managed portfolios, its Valuentum Buying Index rating has hovered between a 3 and an 8 (the equivalent of a ‘consider hold’ rating), and we have been quite pleased with the informative nature of the index. In what is typical of the Valuentum process, we add firms to our actively-managed portfolios when they register a 9 or 10 (the equivalent of a ‘consider buy’ rating) on the Valuentum Buying Index and hold them until they register a 1 or 2 (the equivalent of a ‘consider sell’ rating). However, just like a value investor doesn’t add all undervalued … Read more

Great Early Holiday Sales Read for Best Ideas Portfolio Holdings

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On Saturday, IBM Digital Analytics Benchmark, a source for real-time cloud-based online retail data and analysis, revealed strong online retail trends for this Thanksgiving and Black Friday: US Holiday shoppers once again shopped online early for the best deals with Thanksgiving Day online sales increasing by 19.7 percent over 2012. This momentum set the stage for a record Black Friday, with online sales growing 18.9 percent over the same period last year. The biggest surge came from mobile sales increasing to 25.8 percent of total online sales for Thanksgiving and 21.8 percent for Black Friday as consumers went from the dinner table to their tablets to lock in the best offers. In addition, IBM reported that New York City consumers … Read more

Heins Bails, Blackberry Fails

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On Monday morning, beleaguered smartphone maker Blackberry (BBRY) announced the resignation of CEO Thorsten Heins, as well as a $1 billion private placement of convertible debentures. Heins’ departure comes as little surprise in the wake of weak performance from Blackberry 10 which coincided with a write-down of nearly $1 billion in inventory. As for raising capital, one might assume that a well-capitalized company like Blackberry wouldn’t need new capital; however, its current cash-burn suggests an interjection is necessary if the company wishes to attempt (another) fundamental turnaround. The New Leadership John S. Chen will replace Heins as interim CEO and chairman of the board of directors. Chen is best known for his reign atop Sybase where he was responsible for … Read more

Apple’s Products and Free Cash Flow Are Amazing

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Best Ideas Newsletter and Dividend Growth Newsletter portfolio holding Apple (AAPL) posted decent fiscal fourth quarter results Monday, finishing off a tremendously profitable 2013 fiscal year. Revenue increased 4% year-over-year during the fourth quarter to $37.5 billion, easily exceeding consensus estimates. For the full-year, the iPad maker’s revenue grew 14% to $170.9 billion—more revenue than Chipotle, Netflix, Tesla, and Facebook combined. Earnings per share easily exceeded consensus estimates but fell 4.7% year-over-year to $8.26. For the full-year, earnings per share declined 10% to $39.75. However, Apple generated $45.5 billion in free cash flow for fiscal 2013, up about $3 billion year-over-year and equal to 27% of revenue. iPhone Refresh a Success   Apple sold 33.8 million iPhones during the quarter, an … Read more

Third-Quarter Industrial Earnings Support Exposure in Best Ideas Portfolio

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For starters, if you haven’t yet read through our piece on General Electric’s (GE) third-quarter earnings, it’s a must-read. The step-up in backlog and order trends at the industrial behemoth are quite remarkable, and we think GE’s performance bodes well for the sector as a whole. Still, let’s drill down on a few themes across the industrial space and how our Best Ideas portfolio is well-positioned to capture the strength of underlying trends. Danaher (DHR) Danaher reported third-quarter results Thursday that showed revenue expansion of 5.5% and diluted net earnings per share growth of 9%. The company generated 30 basis points of operating-margin improvement and generated more than $800 million in free cash flow, or about 17.8% of revenue (a very … Read more

Verizon’s Investment Grade Credit Rating May Be Challenged

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On Thursday, Verizon (VZ) reported better than expected top- and bottom-line performance in its third quarter, which showed impressive subscriber additions and healthy iPhone sales. We continue to evaluate Verizon for addition to the portfolio of our Dividend Growth Newsletter, though we note its pursuit of Verizon Wireless has complicated matters quite a bit (given the outsize debt load it will take on). We’d like to see how the financials shake-out post-transaction, as there are quite a few moving parts that will negatively impact the firm’s Valuentum Dividend Cushion score (and potentially challenge its investment-grade rating). Verizon added 1.1 million net retail wireless connections and 927,000 net retail postpaid connections in the period, leading to quarter-end marks of 101.2 million total … Read more

Pandora: Don’t Be Misled by September Metrics

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Shares of Pandora (click ticker for report: ) have been on a wild ride lately as a result of the combination of strong listening metrics and the announcement of a new competitor in the form of Apple’s iTunes Radio (click ticker for report: ). We continue to steer clear of shares. Here’s why.   Share Offering   Though shareholders rarely ever want to see companies issue equity as Pandora did when it sold 18.2 million shares of its overvalued stock at $25 per share September 24, when a firm sells overpriced shares, the process actually creates value for existing shareholders. Think of it this way. If you can get more money for something than it is actually worth, you’re creating … Read more

Take the Money and Run: Fairfax Bails Out Blackberry

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Late last week, smartphone maker Blackberry (click ticker for report: ) preannounced terrible second quarter results. Revenue likely declined approximately 43% year-over-year to $1.6 billion, which is nowhere in the ballpark of consensus estimates in the $3 billion range. This amounted to 3.7 million phone sales, far less than the number of units Apple (click ticker for report: ) sold during the first weekend of its iPhone 5S/5c release. The firm will post an operating loss of $950 million to $995 million driven primarily by a pre-tax inventory charge of $930 million to $960 million. Cash fell to $2.6 billion, and the firm announced that it would lay off 40% of its global staff, leaving the company with 7,000 total … Read more

They Like It. They Really Like It! Reviews Praise New iPhone

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Following shares of portfolio holding Apple (click ticker for report: ) has been an interesting task during the past week. Shares dropped 8% following the announcement of the iPhone 5S and 5c and the lack of a statement about a final deal with China Mobile. We continue to believe the China Mobile announcement will eventually occur, but for now, let’s look at what some top reviewers are saying about the iPhone 5S. The New York Times: “The best part is that it actually works — every single time, in my tests. It’s nothing like the balky, infuriating fingerprint-reader efforts of earlier cellphones. It’s genuinely awesome; the haters can go jump off a pier… The iPhone’s ecosystem is a deal-sweetening perk — the best apps; … Read more