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GirlsUnder30 (88.29)

January 2014

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5

The intel on Intel

January 06, 2014 – Comments (2) | RELATED TICKERS: INTC , AMAT , QCOM

Intel (INTC) is moving into the mobile space in a big way and judging by the history of their executions, they are likely to have a very competitive product but will they make money? In the following post, I will present my thoughts about Intel's profitability in the immediate future: I shouldn’t have to describe the Intel business to anyone reading this post, even the laymen know that anything computer related has a very good probability of having an Intel product or technology in it. They are the behemoth of the digital world and a dominant player in many of its sub-categories so what’s the problem?.  In a sense, they are a victim of their own success. Their processors were so far ahead of software development that many found no need to upgrade their equipment. I know many people happily chugging along with ten year old Intel computers so how does Intel make money? Well, the server and infrastructure businesses are the current cash cow but most consumers (or businesses) have no need for super computer power in a chip. In the current consumer market, price/performance is king and this explains the reason for the stagnant growth. Okay, so what is Intel doing? They have continued to invest in technology that advances performance and this means new fabs and equipment. This does not come cheap so we can expect a huge cash drain from the company going forward. Will it threaten the dividend? Probably not but it will definitely make it harder to pay it. The good thing about capex is that it is mostly recoverable through depreciation write off but huge depreciation expenses are only painless when there is operational income to offset it. When the money isn’t coming in, it hurts the income statements and this is why I think Intel will underperform the market until their mobile business gets going. Fortunately, their fabs have technology that will make it possible for Intel to produce the best power to performance ratio around which should make their products first rate but the question is whether the end consumer will be willing to pay a premium for this excellence. We may see the same ‘good enough’ attitude that has made the Chromebook and Kindle Fire viable alternative purchases. Intel will have a very tricky pricing path to follow for its upcoming products and I believe their current share price reflects their success has already happened. It is for this reason, I fear purchasing Intel above $20 until we get a clearer indication of how this will all pan out. With bad news, I can see a share price in the $16-17 range. I imagine this article will incite some but as Dennis Leary would say, “that’s my story and I’m sticking to it”  [more]

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7

POZN for a headache

January 05, 2014 – Comments (4) | RELATED TICKERS: POZN , MO , MON

This blog usually contains a fairly dim view of the stocks many people injudiciously fawn over but today, I’m going to be a cheerleader for a stock with homely financials, no friends in their industry and a brilliant product that genuinely serves humanity. This may not impress people who hold stocks like Altria and Monsatan…er…Monsanto but for those do-gooders like me, who enjoy exposing corporations that really do make the world better, reading this should make your day. For those of you who don’t know, Pozen (POZN) is a little pharmaceutical company that figured out how to make high dosage aspirin easier on the human body. It directly competes with the established blood thinners in effectiveness and has far fewer negative long term effects. By all sensible and financially disinterested accounts, it should be the treatment of choice for ALL patients with circulatory issues. Not only have clinical trials proven its effectiveness and safety but it is also incredibly cheap to make. You would think, given the skyrocketing cost of health care, hospitals would be adopting this treatment immediately but for those understanding the close relationship of the FDA and ‘big pharma’, this lack of success is not surprising. POZN can price these aspirin derivative treatments like a public service and still make a wonderful return but in the process, some of the big pharma products would be displaced and ugly losses would eventually show up on their income statements. Big pharma will pull every lever and tweak any nose they can to prevent this from happening. Sadly this strategy has worked for about two years now and because of this, thousands of patients with heart and other circulatory blockage issues were prevented from using this economical alternative resulting in billions in profit for the entrenched healthcare interests and billions burdened upon the taxpayer. I never wanted a company to succeed as badly as I want this one to. From the CEO on down, they are the epitome of what a good corporate citizen should be and yet, they continue to struggle. This company is the poster child of what is wrong with America and if you buy it, know that you are buying a David sticking a finger in the eyes of a metaphorical Goliath but this time, the outcome might be different than in the book.  [more]

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5

Let's talk about yours and mines 8^)

January 04, 2014 – Comments (3) | RELATED TICKERS: GDXJ , TLTHF.DL , MCP

I think the most amazingly undervalued economic sector is the extraction industry. Just about every mining company from gold to coal is either available at a discount to asset value or earnings. I believe the big story for the mining sector will start in 2014 and really go gangbusters in 2015. I foresee a period of consolidation not unlike what we saw in the banking industry not too long ago and as a result, greater commodity price control going forward. You might think this will hurt manufacturers but they’ll just pass the cost downstream. The businesses most likely to benefit are those whose product is demand inflexible. Okay, now that we know the sector is safe, what is the best play? It’s hard to ignore Freeport (FCX) with its huge capitalization, strong financials and dividend payout but I like the smaller players not only for the potential takeover but also for the amazing growth opportunities. Gold and silver prices cannot continue to be suppressed for much longer and I think we’ll see a slow climb up to $1400/oz. for gold and $40/oz. for silver in 2014. This will force many mines offline and set the stage for the aforementioned consolidation and the explosive growth going to 2016 where I see $2100/oz. gold and $100/oz. silver. I have my own personal favorites but seriously, if they’re in the ground, you should have them in your portfolio.  [more]

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It's kinda Corning to discuss GTAT sapphire

January 03, 2014 – Comments (7) | RELATED TICKERS: GLW , AAPL , MSFT

Gorilla Glass is amazing stuff! It’s strong, flexible and optically accurate so why use sapphire? Looking at it superficially…ahem… there really isn’t any reason to. At best, the hardness of sapphire comes at the expense of brittleness so even though you get less scratches, you get more cracks. No, the reason Apple decided to try sapphire was because it believes it can fuse the sapphire to a less expensive substrate where it will retain the hardness as a micro thin layer on that substrate. This is definitely an experiment that can go horribly wrong for both Apple and GTAT and should that happen, Corning will smile and tell Apple I told you so but let’s say Apple is successful and the new glass works like they planned. The entire Apple line will then feature this ‘Apple Glass’. Will this result in oven sales like crazy for GTAT? Nope. Apple will guard this technology like a favored child and will go to war with anyone who even tries to produce anything similar so you can count out all the other mobile and television producers from GTATs potential user base unless those manufacturers are willing to pay onerous licensing fees. We can safely assume that they won’t. This will be the cementing of the AAPL/GTAT relationship and GTAT will only grow in price as much as Apple will let them. This should be great news for Corning, it loses Apple but it gains all the other producers, right? Not so fast. Microsoft is looking at other nano-materials to fuse onto substrates and the other mobile producers will be under greater pricing pressure to compete in the market which in turn will hurt the pricing of gorilla glass. Hmmm, so who is the big winner? If Apple can make this new glass work, they once again get the lion’s share, if they don’t Google, Amazon and Microsoft will fight it out for the new king of consumer mobile products. Corning will do okay for as long as gorilla glass is not ‘outglassed’ by a competing product but considering all the nanotech materials research being done, this is not likely. The big loser in all this is GTAT. They sold their sapphire future to Apple for a measly 500 million dollars and if the Apple glass product fails, it may very well be their end as an independent company.  [more]

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2

Checking up on Chesapeake

January 02, 2014 – Comments (0) | RELATED TICKERS: CHK , CHKR , XCO

Over a year ago, a pessimistic article appeared on this blog describing the problems faced by the Chesapeake Energy companies (CHK) and (CHKR). The recommendation at the time was to sell both and the reasons to do so were highlighted and found to be mostly prophetic. CHKR did very little to make investors happy and CHK, although outperforming the market this year, is nowhere near well situated for the future. You may ask why I would say this given the seemingly right steps the company has made, after all:  [more]

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NEON may brighten your future

January 01, 2014 – Comments (0) | RELATED TICKERS: GLW , AMAT , AAPL

Folks have been asking about Neonode (NEON), a small display manufacturer with some pretty ugly financials. Ugh! Who needs another display manufacturer in this competitive environment and what serious contender would want to do business with them given their small size and financial weakness? Well, someone who doesn’t want their stuff sharing parts with their competitor offerings might be interested. Companies looking for a price advantage or dedicated distribution channel might also take a tumble. So who might fall into this category? Anyone with real market clout wouldn’t take a chance on such a tiny startup with hardly any capital backing, would they? Well, rumor has it that a serious contender in the mobile space is doing just that. Microsoft (MFST) is rumored to be seriously talking about using this company’s products for its surface and other upcoming mobile offerings. So what does this mean for Neonode? Earnings estimates that I’ve seen range from $0.80-1.40 in 2014 and these numbers may nearly triple going forward if Microsoft achieves its planned mobile market share. If you add in the pessimistic outlook of the street and the short squeeze potential here you may very well see a big fat multi-bagger.  [more]

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