Friday, April 23, 2010

50 Billion Decisions - Only One Steve Jobs - Apple's Mountain of Cash

Apple and Steve Jobs, their (Founder - CEO - and  Savior) have a problem.
However this problem is a great freaking problem to have. Apple sits upon a green mountain that we will call Mount Cash. Apple has right around 40 billion dollars that typically sits on the side lines earning a mire fraction of  1% a year. Jobs main goal with these funds is pure preservation and who can blame him, given the market over the last couple of years.

Economy or no economy the fact is that in another year or so Apple should easily have over 50 billion dollars laying around doing nothing. Steve Jobs and the rest of the folks behind those cash machines known as Mac books and iWhatevers produce more then enough free cash flow to fund any necessary product development or R&D. Free cash flow levels should be around 12 - 16 billion dollars over the next 12 months. Sure every now and then Apple will spend a 300 or 400 million dollars to buy some young interesting company or firm but that just doesn't add up to anything significant when you consider how much these guys keep under the mattress.

What are the Choices for Apple and Steve Jobs?

  • Payout a large chunk and plan a continuous dividend program for their faithful and entitled stock owners.
  •  Start buying back their own stock stock.
  • Invest in a totally new direction and operation. Maybe even a search engine.
  • Start investing for return with such investments in securities like bonds and stocks.
  • Perhaps the best thing to do besides nothing when you don't know what to do is to do a little of everything.

I for one think this is an easy question.

First and foremost I think Jobs needs to pay his share holders. I don't know why companies don't pay their owners... well let me rephrase that i don't know why investors buy stocks that don't pay money when they clearly have more then they know what to do with.

Second and much more of a speculative suggestion, I think Apple should develop some sort of Adsense like publishers program. I think there is plenty of room in both display, and video content advertising in terms of innovation. Also a content targeted program is a proven model as long as you can accurately match supply with the content demanded.

iAd is going to be a great start. Every aspect Apple advertising with iAd and the way they are going about this is insanely clever and intuitive in my opinion.

I really wish I knew what Google was thinking when they found out.

Related Articles

Apple Reports Killer Earnings

Check out the New iAD Video Demo

Yahoo!'s Earnings Double

Innovative Investing Ideas

Thursday, April 22, 2010

Obama’s Auto Industry Bail-Out is Working – Who Knew?

It seems as if Obama and his administration’s decision to bailout the Auto industry giants such as GM and Chrysler has paid off or at least is paying off and is on the right track.

GM has paid back a 6 billion dollar plus loan ahead of schedule. The simple fact that this was possible so early by the folks at General Motors as it emerges from their financial hardship is outstanding.

More good news and supporting evidence that Obama new what he was doing comes from Chrysler. They have pulled off what I would have shamefully called impossible, they are operating profitably.

The biggest surprise to me however was the notion that over the last three quarters the US auto industry has added 45,000 jobs. That is just awesome.

I suppose we should start giving Obama some credit, especially the finance world, for his leadership and establishment of economic recovery plans and programs that thus far seem to be working. The Making Home Affordable Plan that created such mortgage assistance programs such as HAMP and HARP have done very well, much better then I expected. HAMP - the Home Affordable Modification Program Obama's mortgage modification assistance has helped over a million Homeowners.

HARP is the Home Affordable Refinance Program and has also done well when you consider that it is a mortgage refinance program

Related Articles
Banks Pretty Up Balance Sheets - Deceptive Maneuvers?
Debt Help and Debt Solutions
Mortgage Modification - No Easy Task - Tagging the Net – One “Like” Button at a Time has and will continue to connect people, places, and things. They now plan to unveil a new simple gizmo that will add websites and web pages to that list. Face Book is providing a free tool to websites every where called a “Like Button”.

What is the Like Button?

The “Like Button” is a button that will be featured on a web page that allows the user to simply click and the link with some sort of teaser summary to and of the web page will be posted automatically to the users face book page profile and the news feed you always encounter.

Sound Small and Simple?

How satisfying is that never ending stream of friend requests from folks of the past?

There is at least 400 million users out there who know what I am talking about. 400 million is a big number. To put that in perspective the population of the United States is just above 300 million. To add even more perspective consider the following (employers with internet accessible work environments may want to look away)… these users are on face book an average of 3 1/3 entire days on!! This is the equivalent of two weeks of a full time job with zero lunch breaks.

Now just imagine the traffic surge this tool can provide both Face Book and the off-site websites. This will have a big impact.

I think that this will help boost advertiser interests in using as a advertising medium and should eventually boost ad revenue indirectly. Only one billion plus in revenue is expected from in 2010.

Related Reading

FaceBook Starves the Porn Industry

Yahoo Doubles Up On Earnings

iAd Advertising by Apple

Bing and Yahoo! Search Deal

Wednesday, April 21, 2010

Yahoo Doubles Up on Earnings

Yahoo reported some great earnings for the quarter. However the earnings are so impressive on the surface because of one time non reoccurring payments from Microsoft as agreed in the Yahoo Search and Microsoft Bing Deal.

Yahoo reported 310 million in profit for the last three months. This comes to 22 cents per share.

The same period last year was almost 118 million or 11 cents per share.

Yahoo now has 16.9 % of the Internet search market which has been trending up. Carol Bartz the CEO expects this market share figure to increase.

Suggested Reading
Optimize a Website for Search

Goldman Sachs Pumps Killer Earnings

Goldman Sachs, the company whom has and continues to be highlighted in headlines everywhere for the SEC charges of fraud, has reported yet another great earnings quarter.

The investment brokerage and holding firm has produced an impressive 3.2 billion dollars of profit over the last quarter. Also a worthy point to note is the company’s decision to purchase 2.3 billion dollars of its own stock this year.

Despite this seemingly good news the stock prices continue not to reflect the positive earning results. The SEC charges of fraud against Goldman Sachs still discourage the investing community.

Political backlash abroad has now factored in to the situation. Both the United Kingdom and Germany are seriously considering cutting off all ties with the Investment firm.

Suggested Reading

Citi Mortgage Earnings

Bank of America Earnings

Debt Help and Debt Solutions

Commercial Mortgage Loan Defaults

The mortgage crisis is threatening the economy with a second coming.
This time the mortgage crisis comes in the form of commercial mortgage loan defaults. Taking a look at a 500 billion plus pool of commercial real estate backed loans Fitch found that 7% of the loans are in default. As if this was not bad enough Fitch also reported that they expect 11% of the loans to be in default by year end.

To put this in perspective these loans typically have a default rate of less then 1%. So if Fitch is right then the investors are looking at a almost 1200 % worst then expected default rate!

Just like residential mortgages, borrowers will have to try a way to stop foreclosure and obtain a mortgage workout such as modification if they are to keep the property.
Related Articles
Debt Help and Debt Solutions

Apple Computer Quarterly Earnings Come In Strong

Apple continues to do what it does best… Developing Marketing and Selling Mac Products and making billions doing so.

Apple brought in 13.5 billion dollars over the last three months. After about 10 billion in costs and expenses they profited 3.07 billion dollars. That comes to about 3.33 dollars per share.

Compared to last years numbers of almost 9.1 billion dollars in revenue of which 1.62 billion was profit creating a earnings per share of 1.79 dollars.

This means that year over year the seller of everything Mac increased revenue by almost 50% and increased profits by almost 100%.

Those guys that make up Apple have continued to prove themselves as a dominating innovative leader amongst not only the Technology sector but the entire business world we all know today.

Related Articles

iAD - Advertising By Apple

Video Sample of iAD

Monday, April 19, 2010

Banking Giant Returns to Profitability - Citi Group Reports Great Earnings Report

The financial storms that encased the economy in this recession seems to be burning away in light of the positive earnings results being reported by the big banks. This new day for banking giants just got a little brighter in light of the reported earnings issued by Citi Bank.

Last earnings report from Citi had them cemented in the red ink ledger and all was still gloom for the bank as it continued to cut back business operations such as retail banking.

However this earnings season had a different tune. Citi recorded rather impressive profits.

Citi Bank reported earnings

  • 25.4 billion from $24.5 billion in revenue from the year prior
  • $ 0.15 earnings per share
  • Credit quality and credit accounts in credit card portfolio improving
These numbers put up by Citi even beat out both JP Morgan & Chase and Bank of America Profitable earnings reports. They had results of 3.4 billion and 3.2 billion respectively.

Despite the incredible News from Citi the stock has put up a comparatively modest bump due to investor worries caused by the SEC allegations against Goldman Sachs.

Related Articles

Sunday, April 18, 2010

Big Banks Bet and Bank on Trading Profits - BoA and Chase Ride Trading Revenue to Profitability

Both JP Morgan and Chase and Bank of America reported profitable quarters this earnings season go around.

Though Chase has been in better shape over this economic down turn both banks profitable quarters relied on their investment banking activities.

Chase Bank reported 3.3 billion dollars for the first quarters profit. Bank of America came in right behind them with 3.2 billion dollars. 3/4's or 75% of Chase Bank profits came from trading and investment banking activities and 2/3 or about 65% of Bank of Americas profits came from their newly found investment banking operations. This profitable Merrill Lynch deal has beat the overall outside consensus and expectations. Just goes to show you that old Ken Lewis knew and still likely knows what he is talking about.

Though it is the new guy Brian M. over there amidst the executive offices of Bank of America who is wiping the sweat of his forehead as the new CEO of Bank of America.

The New CEO, Brian T. Moynihan of BoA is doing a great job in my opinion. He is making some great decisions as the banking giant's leader.

His focus on image, loss mitigation, referral networking with the new investment banking operations and corporate banking division, and what ever else he is doing is certainly getting the job done (at least from what I have seen).

My finance hat goes off to him, as well as Ken Lewis who deserves some credit from the media, and of course the genius over there at Chase Bank, Mr. Diamond.

The stock prices of these two banking giants were unfortunately blocked and pushed down due to the outrageous claims of mortgage backed securities fraud against Goldman Sachs. This claim and lawsuit courtesy of the SEC.

Related Articles and Resources

Banks using Deceptive Accounting Practices - So What?

Debt Help and Debt Soloutions

Loss Mitigation

Tuesday, April 13, 2010

FDIC Extends Business Insurance Program

The FDIC Insurance for 100% of all business deposits will be extended for at least another six months if not longer. I predict that the program will be here through at least part of 2012. However the serious talks and sources that I have seen are saying mid 2011.

The business deposit insurance is unlimited as opposed to the generic 250,000 dollar deposit insurance that most of us have become accustom with.

The program is significant to the economy and more directly to the small banking industry because it assures small business owners that they are safe. Otherwise business owners may immediately with drawl significant accounts from small banks they feel may be in bad shape.

Though the banking industry appears to be in much better shape and on the right track there is no doubt there is still some risk in the indust5ry as things are still shaky due to loan defaults and foreclosure.

To date since 2008 there have been over 200 bank failures across the nation. A third, 70 approximately, have been small 1 – 2 branch banks.

Conan O’brien Finds a New Home with TBS and the Time Warner Family

I love Conan. He is as funny as they get in my opinion.

He has found a new office and place of work with TBS. I will become another of the almost one million viewers that watch TBS at 11:00 pm. He is scheduled to create 4 new shows a week.

Conan and TBS have not announced the details of the contract as far as I know but I can confidently say that he is at least getting something above 10 million dollars a year that’s my speculative opinion.

Conan and staff were awarded 45 million dollars to break contract with NBC.

Congratulations Conan

Finance Guy

Dow Tops 11,000 – Time to Go Back Down

This is a prediction that the DJIA will drop over the next several quarters to about 9000 – 9700 with the half way point 9350 my meat and potatoes estimate.

I have come up with this figure by referencing my gut as well as some simple estimated calculations using recent highs and lows of the market.

I also feel that the general investor confidence that I interpret from watching the media that covers the market on a daily basis supports my speculative predictions.

Time will tell how my financial prediction prevails or fails.

Sunday, April 11, 2010

Fashion and Clothing Retailers Are Showing Substantial Sales Growth

The stock market continues to push forward and the buyers or bulls of the financial world have been rewarded with great sales figures from the retail sectors.

Below are some of the great numbers that have been reported for year over year sales growth…

Kohls ……………….. 23%

Nordstrom…………... 17%

Target……………….. 10%

Just by coincidence I was actually out shopping at kohls when these numbers were coming out.

I was only planning on spending about 200 or so dollars, I spent 321 dollars by the time I walked out.

I was enticed by the very low prices. I saved 445 dollars off of the sticker price. It is not surprising that other shoppers are spending more after taking such a brake from spending on such items as clothing and other specialty items that such retailers sell. If you couple this with the idea that the retailers are really sacrificing the margins they are accustom to taking in by slashing prices so drastically then it is really no big surprise.

The real question here is two fold.

  1. Will this sales trend stick and move forward for retailers or is this just a fluke caused by the sudden and prolonged stop to consumer spending of the recent past?
  2. Is this a sign that the worst is really behind us?

I would like to know what you think. Please leave your answers in the comment box.

Banks Lowering Debt to Present Prettier Balance Sheets – Is This Dishonest?

How could banks and financial firms be accused of being dishonest when they lower debt at the end of the quarter?

Well… the answer is quite simple they lower the debt strategically at the end of the quarter and then raise the debt to its peak by the quarter’s half way point.

This maneuver gives the banks a better looking balance sheet for quarterly reports which share holders are presented with. Thus the quarterl7y reports shed a different light on the debt levels held by the bank.

Just How Much Debt is Hidden?

Approximately 40 or so percent is the average practice. This figure is the difference between the mid quarterly peaks compared to the quarter’s end where levels sink.

In my opinion this practice is in deed deceiving to the average investor but I understand why it is done. Its legal. It is a natural operational strategy for a company that is so influenced by share price as a typical publicly held company is. I am sort of surprised that most companies do practice this habit.

Weird little practices like this are due to regulation of the financial markets.

Related Articles

Debt Help and Debt Solutions
DIY Debt Management

Apple Steps into the World of Online Advertising With "iAD"

Mobile Advertising a growing advertising medium accounting for about 400 - 500 million dollars a year of the online advertising business just got shaken and stirred by Steve Jobs and Apple when the introduction to the "iAD" was unveiled last week.

What Does the iAD mean for the world of Online Advertising?

Though this announcement of the Apple iAD mobile advertising platform is by all means a significant and important factor for the online advertising industry, the iAD relative to the 23 Billion dollar online advertising industry is a rather small ripple, at least in the short term.

Key iAD Points of Interest to Consider 

  • Only used for mobile app and online apps advertising

  • User does not leave app if clicks on advertisement

  • 60/40 revenue split with developer apps generally sell for 0 - 4 dollars 

iAd Video from

Here is the video fro YouTube that has the iAD Advertisement for Nike as a demo. This is presented by Steve Jobs Ofcourse.

View the Related Feature Article...

Apple Steps into the World of Online Advertising With "iAD"