The Dow Chemical Company (DOW)

I'm not sure people realize the fundamental change that has occurred in DOW's business model. Several joint venture companies have been formed and virtually every one will provide DOW with distinct advantages relative to raw materials and markets. The Saudi JV provides a stable, low cost supply of petro. The JV in Brazil with a stable raw material for many plastic products. DOW should be less cyclical than in the past, and with the $1.68 dividend, (4% yield) a dividend reinvestment policy should provide 10% + annual growth over the next few years with little risk.

I submit that sometime within the next 10 years DOW will see 50. Assuming that happens you would then see a 400% return on your investment excluding annual dividends, annualizing in excess of 40% per year. The company is a long term player. It will suffer now in the short run, but if you are looking to invest, park a few bucks here and let time go by.

The Rohm and Haas purchase was a complete debacle. Andrew Liveris should have been fired over the mismanagement of that M&A decision. The dividend was reduced from ~$0.37 to $.05. The crisis in this company was at one point so strong, there was a small possibility that they may have been forced into bankruptcy (as evidenced by the $5+ stock price in March). But not anymore.

The Rohm and Haas purchase has been completed. Since the shotgun wedding of these two goliaths, DOW has had to take out a bridge loan of $9.2BB and issue additional stock in order to pay for the $15BB purchase price of ROH. DOW has correctly recognized they now have a large debt problem (duh!). DOW has begun breaking off non-core businesses, such as Morton and its interest in a refinery in the Netherlands, and putting them up for sale. DOW is using the money from these sales to pay down debt from the bridge loan. It will take some time, but DOW will successfully pay back the bridge loan and once again be prepared to grow its business.

The face of DOW’s commodity business is changing dramatically. The purchase of ROH will be the catalyst for DOW to shift its business model from a commoditized chemicals company, to a more specialized chemicals firm that will enable it to generate higher operating margins and more cash. It will also help the company to avoid the earnings troughs that come about every 5 years and drive its stock price into the tank. It will still be in the basic chemicals business, but those units will not dominate the largest portion of the overall company earnings. Its exposure to peaks and troughs will have been greatly mitigated.

The purchase of ROH has enabled the company to become a growth company once more. They can leverage their existing customer base and have an expanded product line / offering beyond the commoditized chemicals. The margins captured on the newer lines are going to generate much higher profits / cash with much less volatility. This may not play out for a few years, but I do believe this will be a multi-bagger over time. $15 a share is a steal considering future growth and cash generation.

Dow Chemical, one of the largest chemical companies in the world, is a diversified worldwide provider of chemical, plastic and agricultural products and services to a wide range of markets. With foreign operations accounting for more than 60% of its revenues, the company is now using joint ventures to gain access to foreign countries with lower capital requirements. This will allow the company to focus on investments in specialty chemicals business, which contributes almost half to the company’s top-line.

Commodity chemical industry’s demand foresees cyclical strength over the next two years. Furthermore, prices for many basic plastics and chemicals envisages positive outlook for the first half of 2007 in response to seasonal stronger demand, as against a decline in the current year owing to customer inventory reductions.

The company has become more bullish, because of its forecasted solid demand in most businesses and territories. Although, ongoing volatility in energy and feedstock costs raise some concerns, a relative price stability and falling raw-materials cost should allow the operating margins to go for a free ride. Strategically moving, the company is focusing more on international sales to increase global footprint and to take advantage of lower costs abroad.

To give a boost to its agricultural sales, Dow AgroSciences recently collaborated with Monsanto to cross-license each other’s genetic modification technology, thereby giving Dow an edge by allowing it access to Monsanto’s industry-leading technology and closes the chapter on a litigious past between the two firms.

Dow has improved its financial health considerably in recent years. On a redemption spree, the company has now a manageable amount of debt, lowering its interest expense and generates ample cash flow. This combined with its aggressive share buyback program, should ensure positive sentiments for the stock.

Though they got themselves into a bit of a mess with ROH, it should help out their bottom line in a few years once dow has digested this acquisition. look past the effective 78$ price tag to the negotiation terms. a judge did not force them to do this deal, they settled on agreeable terms for it.

though ROH will put a lot of stress on their balance sheet in the short term to maybe a year, they'll be fine within a few years.

i dont care much for the current management, but as that story goes... Thomas Watson Jr. was president of IBM from 1952 to 1971. There is a story about an IBM employee in the early 1960s that was running a division of IBM that lost 10 million dollars! Watson called him in to headquarters. The man walked into Watson’s office weak-kneed and Watson said, “Do you know why I called you here?” He said, “I assume you called me here to fire me.” Watson said, “Fire you? Hell, I just spent 10 million dollars educating you. I just wanted to be sure you learned the right lessons.”

As part of today's agreement, Rohm and Haas's two largest shareholders have agreed to purchase $2.5 billion in face value of perpetual preferred equity issued by Dow. In addition, one of the shareholders, the Haas Family Trusts has agreed that at Dow's option, they will make an investment in an additional $500 million of Dow's equity. These equity investments substantially reduce the debt financing required to fund the acquisition, Dow has restructured the transaction to essentially pay the equivalent of $63 per share in cash, and $15 per share in face value of preferred equity securities. To fund the acquisition of Rohm and Haas, Dow will use the proceeds from the equity issuances to reduce the amount it would otherwise be required to draw down from the $12.5 billion bridge loan, which was renegotiated last week to provide a one-year extension on $8 billion of the total loan. The financing for the acquisition also includes equity investments of $3 billion by Berkshire Hathaway and $1 billion by the Kuwait Investment Authority (KIA) in the form of convertible preferred equity.

This CEO od DOW, don't care what his name is, should win a NOBEL PRIZE to how single-handedly destroy a legendary company. What a super idiot he is to buy another company in this market at 80% premium. What the hell is he thinking??? He should have his head examine by a psychiatrist. Shareholders must force him and the Board out right now.

This portfolio tracks the progress of 'good' companies vs. 'evil' companies.

Dow may be slowly improving its actions, but it has yet to atone for sins of the past.

Evil elements: creation of chemical weapons, marketing poisonous chemicals, illegal dumping of toxins into populated areas, environmental destruction, health problems, death

Dow Chemical has been destroying lives and poisoning the planet for decades. The company is best known for the ravages and health disaster for millions of Vietnamese and U.S. Veterans caused by its lethal Vietnam War defoliant, Agent Orange. Dow's "invent first, ask questions later" standard of business led the multinational company to develop and perfect Napalm, a brutal chemical weapon that burned many innocents to death in Vietnam and other wars. In 1988, Dow provided pesticides to Saddam Hussein despite warnings that they could be used to produce chemical weapons.

In 2001, Dow inherited the toxic legacy of the worst peacetime chemical disaster in history when it acquired Union Carbide Corporation (UCC) and its outstanding liabilities in Bhopal, India. As the Students for Bhopal website recounts, "On December 3rd, 1984, thousands of people in Bhopal, India were gassed to death after a catastrophic chemical leak at a UCC pesticide plant. More than 150,000 people were left severely disabled-of whom 22,000 have since died of their injuries-in a disaster now widely acknowledged as the world's worst ever."

Dow refuses to address its liabilities in Bhopal or even admit its existence, continuing in Union Carbide's tradition of profiting from extreme corporate irresponsibility. In India, Dow's subsidiary faces manslaughter charges and is considered a fugitive from justice for a pending criminal case related to the 1984 xhemical explosion. Dow and UCC's lack of accountability in the disaster continue to affect the lives in Bhopal to this day.

World wide, Dow is involved in human rights abuses: environmental destruction, water and ground contamination, health violations, chemical poisoning, and chemical warfare. Dow Chemical's impact is felt globally from their Midland, Michigan headquarters to New Plymouth, New Zealand. In Midland, Dow has been producing chlorinated chemicals and burning and burying its waste including chemicals that make up Agent Orange. In New Plymouth, New Zealand, 500,000 gallons of Agent Orange were produced and thousands of tons of dioxin-laced waste was dumped in agricultural fields. Dow's toxic legacies of human rights abuses traverse to agricultural fields in Central America where Dow exported EPA-banned pesticide DBCP for use on banana and pineapple crops. As a result, thousands of banana workers were exposed to DBCP and became sterile. In retail markets across the world Dow's dangerous chemicals are present as common household solvents, plastics, paints and pharmaceuticals.

Dow this low? ridiculous. Buy as much of this as you can afford.

Low P/E and even lower forward P/E. One of the leading innovators in the chemical industry. Good management philosophy and company ethics. They'll go back up this year and as a long term investment, they'll be alive and kickin' for the forseeable future.

looks like a red tag sale to me!

High dividend, P/E well below the rest of this sector. This world market player has been undervalued for some time. Lower energy prices and recent insider buying underscore the fact that the timing is right for this stock.

price is lower than book value. This is long term, bear market value investing at its finest.

Cyclical stock now on the rise, as high oil prices are factored into their daily operations as a permanent cost of business. DOW is a leader in the industry, and will be able to pass the cost onto customers more easily, leading the pack.

The company is setting up a research and development center with an initial investment of 4 billion rupees ($90 million) near Shinde village, about 200 km (120 miles) from Mumbai.
The Dow Chemical Company (Dow) is a diversified chemical company that offers a range of chemical, plastic and agricultural products and services. The Company is engaged in the manufacture and sale of chemicals, plastic materials, agricultural and other specialized products and services. It services customers in approximately 160 countries, helping them to provide from fresh water, food and pharmaceuticals to paints, packaging and personal care. The Company has 150 manufacturing sites in 35 countries and produces approximately 3,100 products. Dow operates in six segments: Performance Plastics, Performance Chemicals, Agricultural Sciences, Basic Plastics, Basic Chemicals, and Hydrocarbons and Energy. The Company is also engaged in the property and casualty insurance and reinsurance business primarily through its Liana Limited subsidiaries. In April 2008, The Dow Chemical Company announced that it has opened a silicone rubber plant in Zhangjiagang, in Jiangsu Province, China.

The 326% rally off the lows is overdone. Negative tangible book, dividend cut, severely negative free cash flow. Even the typically aggressive analysts think they will only earn $1.17 per share in 2010. Find the next generation Chinese or Brazilian version of Dow Chemical circa 1947 and invest in them instead. (I didn't say it would be easy.)

Dow chemical is vastly underrated. When investors finally discover the breadth and scope of its product line and its financial strength, they are likely to bid its price up by 50% in the next two years.

China water play

This is assuming that the company uses the money from the purchase of some of their plants to buy another company

Like many companies out there DOW is at a great buy point. Solid company. Solid long investment.