Bartle Doo Article Archives

By Roland Head, The Motley Fool

Dow May Open Higher After Chinese Imports Beat Expectations

April 10, 2013 Bartle Doo Leave a comment

Filed under: Investing

LONDON — Stock index futures at 7 a.m. EDT indicate that the Dow Jones Industrial Average may open up by 0.29% this morning, while the S&P 500 may open 0.26% higher. The Dow closed at a new record high of 14,673.46 yesterday, but the CNN Fear & Greed Index remained almost unmoved at 53, or “neutral.”

European markets moved strongly higher this morning after Chinese import and export figures beat analysts’ forecasts. Imports rose by 14.1% in March, while exports rose by 10%, boosting trade hopes for European companies. At 7:20 a.m. EDT, the German DAX was up 1.16%, and the French CAC 40 was 1.18% higher. In London, the FTSE 100 was up 0.76%, helped by a strong showing from mining firms and financial stocks, which collectively make up the majority of the index’s capitalization.

In the U.S. today, investors are likely to focus closely on the minutes of March’s Federal Open Markets Committee meeting, which may provide some insight into the current thinking of the Fed’s interest rate-setting committee. The minutes are due to be published at 2 p.m. EDT, when details of March’s federal budget are also due to be released.

In other news, the Mortgage Bankers Association reported earlier this morning that its weekly mortgage-applications index increased 4.5% following a 4% decline the previous week. The EIA weekly petroleum status report is due at 10:30 a.m. EDT.

Companies due to report quarterly earnings before markets open this morning include Constellation Brands, CarMax, MSC Industrial Direct, and Bed Bath & Beyond. Earlier this morning, Fastenal reported quarterly earnings of $0.37 per share, an 8.8% increase on the same period in 2012. Fastenal also announced a $0.20 cash dividend for the second quarter of 2013.

Stocks that may be actively traded today include Herbalife, which slid nearly 4% before markets closed yesterday after it revealed that its auditor, KPMG, was to resign. The decision is the result of insider-trading allegations against the KPMG partner responsible for auditing the nutritional-supplements company, which is already the subject of a war of words between activist investors Carl Icahn and William Ackman. Trading in J.C. Penney shares may also be heavy after the retailer’s share price slid a further 12% in trading yesterday. The company’s shares have now fallen almost 60% over the last year.

Finally, let’s not forget that the Dow’s daily movements can add up to serious long-term gains. Indeed, Warren Buffett recently wrote, “The Dow advanced from 66 to 11,497 in the 20th Century, a staggering 17,320% increase that materialized despite four costly wars, a Great Depression and many recessions.” If you, like Buffett, are convinced of the long-term power of the Dow, you should read “5 Stocks To Retire On.” Your long-term wealth could be transformed, even in this uncertain economy. Simply click here now to download this free, no-obligation report.

The article Dow May Open Higher After Chinese Imports Beat Expectations originally appeared on Fool.com.

By Michael Lewis, The Motley Fool

Dell Tries to Pacify a Hungry Icahn

April 9, 2013 Bartle Doo Leave a comment

Filed under: Investing

Dell has offered its three suitors millions to cover bid expenses, but with caveats. For activist investor Carl Icahn, who is the last suitor and holds the highest bid of more than $15.60 per share, this means he has to be very un-Carl Icahn-like in his proposal. Clearly, the Dell special committee wants this process to go down smoothly, without proxy battles and costly litigation. Where are we with the Dell takeover, and should investors believe Icahn’s estimate that comes in north of $20 per share for the company?

Three houses
As has been widely reported by now, the Dell sale has attracted three bids in its “go shop” period, which concluded at the end of last month. The first player is founder and current CEO Michael Dell, who has partnered with private-equity firm Silver Lake Partners to offer $13.65 per share — valuing the company at $24.4 billion. The stock trades over $14 today.

The second suitor is private-equity group Blackstone. As mentioned in a prior article, Blackstone stepped into the ring with an interesting card — former Hewlett-Packard executive Mark Hurd. The firm believes Hurd, not Dell (the human), could bring Dell (the company) back to relevance as he did with his former employer. Blackstone’s offer came in higher than Michael Dell‘s at $14.25 per share.

The third and final suitor, as mentioned, is Icahn and his holding company, Icahn Enterprises . As usual, Icahn is the wild card in the bunch, vowing to take the company on via proxy fights and lawsuits if he doesn’t get what he wants. Icahn Enterprises currently owns roughly 100 million shares — or more than $1.4 billion worth of Dell stock. He also leads the pack with a bid of $15.65 per share. Before his bid, the investor publicly expressed his opinion that the company is worth more than $22 per share.

What’s a special committee to do?

Pay for play
Dell’s committee is paying all three parties millions of dollars to cover their due diligence — which may seem a little odd, but it sounds to me like they just don’t want to beleaguer the issue. It’s apparently a very peaceful, generous committee.

For Carl Icahn and Icahn Enterprises, the gift package comes in at $25 million. This good gesture came with a note, and one that I can’t imagine reads well on Icahn’s desk.

Specifically, the committee chastised Icahn as having “threatened the Company’s directors with ‘years of litigation’ and a proxy fight if they do not conduct the transaction process in the manner” he prefers. Basically, if Carl Icahn acts like Carl Icahn during this process, he will not be gifted the $25 million, and the committee will be very upset.

Sounds like cannon fodder for the king of corporate raiding.

The word
Looking at the market price, which hovers above Michael Dell‘s offer and below those of the other two, investors and analysts seem to …read more

By Caroline Bennett, The Motley Fool

Social Media and the SEC: A Love Story?

April 8, 2013 Bartle Doo Leave a comment

Filed under: Investing

In the beginning, there was the Internet. Then, in a big bang of light, sound, and tweets, there was social media. Since then, companies haven’t known quite what to do with themselves.

There has always been some gray area as to what’s appropriate for a business‘ social-media presence, and what isn’t. Now the SEC is getting involved, and its latest decision doesn’t crack down nearly as hard as you might think. In fact, Netflix is already reaping major benefits from it, not to mention Facebook itself.

The latest ruling
In a statement released on April 2, the SEC said it was perfectly ethical for companies to take to social media for releasing “key information,” just so long as they abide by the SEC‘s Regulation Fair Disclosure.

To find out what constitutes key information, take a look at the company that sparked the action: Netflix. Last July, CEO Reed Hastings posted on Facebook that users were streaming more than 1 billion hours of video a month. Within one day, Netflix’s stock jumped from $70.45 to $81.72, which raised quite a few red flags about the post.

But now, as far as the SEC is concerned, this kind of self-promotion is A-OK among public companies, just so long as they clarify which social-media tool they plan to use. If a company says its news will be available on Facebook, for instance, and it pops up on Twitter or (suspend your disbelief for a moment) Pinterest, then there’s a problem.

Are Facebook and Netflix better off?
Facebook’s stock took a noticeable jump after the SEC announcement, rising 5% from $25.32 to $26.67. This reaction suggests that the market is celebrating the SEC‘s decision, and the good news couldn’t come soon enough for Facebook. Even after the success of Graph Search‘s unveiling, the company is still struggling to return to its IPO price, so any positive press must feel like a breath of fresh air for Facebook and its investors.

The news is also Netflix’s second SEC victory in a month. A few weeks ago, the company finally got the government‘s go-ahead to make its social-media service, Netflix Social, available to U.S. residents. So why hasn’t its stock reflected these victories accordingly?

For one thing, the SEC news coincided with whispers that investor Carl Icahn had sold 10% of his share in Netflix. Even though Icahn later denied the rumor, the damage was already done. That news, paired with the announcement that Time Warner had released its own online streaming service, was enough to sink Netflix’s stock by 4%.

But don’t cry for Netflix just yet. The company’s annual revenue has more than doubled since 2008, and while it possesses a market cap of $9.46 billion, it has just $400 million on the books in long-term debt and boasts $3.9 billion in assets. And that doesn’t include the revival of Arrested Development.

There’s always money in the social-media stand
By and large, the market has met the SEC‘s …read more

By Business Wirevia The Motley Fool

Dell Special Committee Addresses Icahn Request for Expense Reimbursement

April 5, 2013 Bartle Doo Leave a comment

Filed under: Investing

Dell Special Committee Addresses Icahn Request for Expense Reimbursement

ROUND ROCK, Texas–(BUSINESS WIRE)– The Special Committee of the Board of Directors of Dell Inc. (NAS: DELL) today sent a letter to Carl Icahn addressing his request for expense reimbursement in connection with the alternative transaction he has proposed to the definitive merger agreement between the company and entities owned by Michael Dell, Dell’s Founder, Chairman and Chief Executive Officer, and investment funds affiliated with Silver Lake Partners.

The letter follows:

April 5, 2013

Mr. Carl C. Icahn
Icahn Enterprises, L.P.
767 Fifth Avenue, 47th Floor
New York, NY 10153

Expense Reimbursement

Dear Mr. Icahn:

This is in response to your request to the Special Committee of the Board of Directors (the “Special Committee“) of Dell Inc. (“Dell” or the “Company“) that Dell reimburse you for your expenses in pursuing a potential transaction involving the Company.

The Committee has carefully established an open and thorough process intended to result in a sale of Dell on the best available price and terms. We have welcomed your participation in that process, which has resulted in your submission of a proposal that the Committee has determined could reasonably be expected to result in a “Superior Proposal” within the meaning of Dell’s merger agreement with affiliates of Silver Lake Partners and Michael Dell. We encourage your continuing participation in our process, and hope that you will in fact submit a proposal we can determine to be superior to the currently pending merger.

At the same time, however, you have threatened the Company’s directors with “years of litigation” and a proxy fight if they do not conduct the transaction process in the manner you prefer. You have also sought a special waiver of Delaware’s business combination statute not only to facilitate your acquisition proposal within our process, but also your ability to contest that process and to pursue your goals outside of it.

We are willing to provide you with the same expense reimbursement that has been made available to the other two bidders if you will commit contractually to work within our process, but we are not prepared to do so as long as you, unlike them, reserve the right (and continue the threat) to subvert it with a proxy fight, litigation and other tactics that would prolong the instability and uncertainty facing the company. Our …read more

By Dan Caplinger, The Motley Fool

IBM's Challenges Could End the Dow's Record Run

April 4, 2013 Bartle Doo Leave a comment

Filed under: Investing

Lately, whenever stock markets have appeared on edge, the solution has involved central bank intervention. Today, it was the Bank of Japan‘s turn to add some stimulus to the global economy, with an ambitious program of asset purchases and monetary expansion in an attempt to stem the decades-long negative impact of deflation on the island nation’s economy. The greatest impact from the move came in Tokyo, where the Nikkei reversed an early slump to rise more than 2%. But even as European stocks slumped, the Dow Jones Industrials managed to take the BOJ‘s move and build on it, climbing more than 55 points.

IBM , though, fell 0.6%, which made it the biggest loser in the Dow on a percentage basis. As numerous Fool contributors have noted earlier today, Oracle scored a big win in its challenge to IBM‘s strategy of dominating the Big Data market, when a study showed that Oracle’s technology performed better than IBM‘s. As troubling as that is for Big Blue, it ordinarily wouldn’t have a big impact on the broader stock market. But because IBM‘s share price is so high, it has a disproportionately heavy weighting in the price-weighted Dow. As a result, if IBM can’t resolve its problems, a stock decline could make it very hard for the Dow to advance overall.

Alcoa also fell 0.6% as investors prepare for the aluminum company to open the official earnings season on Monday. Despite persistent weakness in aluminum prices, the company is well-positioned to take advantage of rising demand for aircraft, automobiles, and other industrial applications. As Fool analyst Taylor Muckerman noted earlier today, Alcoa’s active attempts to streamline and optimize its business should prepare it to benefit greatly from the next cyclical upturn, even if the company goes through more pain in the short run.

Finally, Greenbrier fell more than 4% after beating earnings estimates, but falling well short on overall sales. The railroad-services company said that deliveries fell 27% during the quarter, leading to a decline in revenue of nearly 8%. Perhaps, more importantly, Greenbrier shareholders seemed dissatisfied with the way the company has moved forward after rejecting a merger bid with American Railcar Industries that activist investor Carl Icahn had tried to broker. Even with expectations of better sales ahead and a cheap valuation, Greenbrier can’t seem to inspire confidence among investors.

Materials industries are traditionally known for their high barriers to entry, and the aluminum industry is no exception. Controlling about 15% of global production in this highly consolidated industry, Alcoa is in prime position to take advantage of growth that some expect will lead to total industry revenue approaching $160 billion by 2017. Based on this prospect and several other company-specific factors, Alcoa is certainly worth a closer look. For a Foolish investment perspective on this global giant, simply click here now to get started.

By Michael Lewis, The Motley Fool

Does Icahn Enterprises Need an Activist?

April 3, 2013 Bartle Doo Leave a comment

Filed under: Investing

Carl Icahn is the first of the activist investors — formerly known as “corporate raiders.” Long before Ackman and Einhorn, Icahn was a robber baron of the corporate world circa 1985. At 77 years old, the investor hasn’t pumped the brakes one bit, recently taking high-profile positions in companies such as Netflix and Herbalife . Though his reputation ranges from exalted to despised, his recent picks have proved profitable plays for investors who followed suit. Recently, one thing is a mystery: his own public company. Despite Icahn‘s investing successes, Icahn Enterprises has been a poor performer as of late. Let’s take a closer look to see whether the market‘s abandonment of the stock is warranted.

Recent performance
Icahn Enterprises is a near $6 billion holding company owned almost entirely by Carl Icahn (no surprise there). Since 2010, revenue has nearly doubled to $15.7 billion, while the bottom line in the most recent year was just shy of $380 million. The company has nearly $4.5 billion in cash and equivalents, as well as an easily manageable debt load. This year the company tripled its dividend to $4 per share — a 7.3% yield.

IEP subsidiaries include everybody’s favorite orange juice, Tropicana, and American Railcar Industries . Icahn’s recent bid for Dell is backed by IEP, as well as the company’s position in aforementioned Herbalife and Netflix. Objectively, the conglomerate owns a solid portfolio of companies and maintains minority positions in public entities that, with the exception of Herbalife, have performed well.

With many fundamental indicators suggesting that IEP is a stable, cash-generating business and recent wins in equity markets, why has the stock tumbled from its mid-February high of nearly $90 per share to today’s $55?

What happened?
For context, let’s look at some of Icahn’s stock holdings. Netflix earned $0.13 per share last quarter versus a market estimate of a $0.12 loss. Icahn owns 4.8 million shares, or nearly 9% of the company. In just three months, the value of those shares has gone from $441 million to more than $848 million — nearly 15% of Icahn Enterprises‘ current market cap. American Railcar Industries‘ stock has risen 53% in the last six months, boosting Icahn’s stake by millions.

One possible culprit was the company’s follow-on offering in early March, which came out priced at $63 per share. Investors may also be nervous regarding the company’s large position in Dell and Herbalife — two stocks that strongly polarize sentiment.

So what’s an investor to do?

The call
Icahn Enterprises‘ dividend yield has been erratic over the years, and I am not sure its current 7% yield is long for this world. As mentioned, the company is almost entirely owned by Icahn himself. While big insider ownership is a plus in many situations, this particular situation makes for limited liquidity and the risk that Icahn will take actions for himself, rather than shareholders.

The current valuation is compelling, and Icahn’s investments have certainly been on …read more
Source: FULL ARTICLE at DailyFinance

Dell's Turnaround Plan Is One Big Gamble

By Adam Levine-Weinberg, The Motley Fool

Filed under: Investing

Troubled PC giant Dell has been embroiled in a months-long battle with shareholders over founder and CEO Michael Dell‘s plan to take the company private (with help from Silver Lake Partners and Microsoft ). Two of Dell’s major shareholders, Southeastern Asset Management and T. Rowe Price, protested that the proposed buyout price of $13.65 was too low. Subsequently, Blackstone Group offered to pay $14.25 per share for Dell, and activist investor Carl Icahn offered to buy 58% of the company for $15 per share.

The recent bidding war has driven the Dell stock price well beyond the original proposed deal price of $13.65. However, last week Dell filed a discouraging proxy statement, which indicated that management expects things to get significantly worse for the company before any potential turnaround. The Special Committee of independent directors that evaluated the rival proposals concluded that the certainty of $13.65 cash from Michael Dell and Silver Lake was superior for shareholders to the Blackstone and Icahn bids, which would leave part of the company trading publicly. With Dell stock still trading at a premium to the Dell/Silver Lake offer — $14.30 as of Monday’s close — it is high time for shareholders to sell and lock in gains.

PC weakness continues
Dell’s big long-term problem is the decline of the PC, which has been cannibalized by the growth of mobile computing (i.e., tablets and even smartphones). The PC replacement cycle has slowed dramatically, pressuring Dell and competitors like Hewlett-Packard . Last year, HP had to write down the value of the Compaq trade name by $1.2 billion due in large part to declining PC sales. Yet the PC business is just a small part of what HP does, representing less than 30% of revenue and less than 10% of segment earnings from operations last quarter.

By contrast, while Dell has been trying to diversify into services, software, networking, and other growth areas, PC sales still represent half of the company’s revenue, and roughly 25%-30% of earnings. As a result, Dell has a lot more to lose from the continuation of weak PC sales than HP. In last week’s proxy filing, Dell stated that uptake of Microsoft’s new Windows 8 has been poor, and enterprise upgrades to Windows 7 PCs have unexpectedly slowed as well. According to a study by Boston Consulting Group (commissioned by Dell), PC division revenue could decline by as much as $10 billion over the next four years.

What’s the solution?
Michael Dell seems to be planning to double down on investments to move the company aggressively into the enterprise hardware, software, and services markets. The investments necessary to execute this transformation will depress profitability for several years. Given the strong competition in those markets from IBM, HP, and others, success is not assured.

It’s hard to fault Michael Dell for taking drastic measures to revitalize the business he founded in his dorm room decades ago. The more moderate transformation strategy …read more
Source: FULL ARTICLE at DailyFinance

Will Nuance Benefit From an Icahn Stake?

By Evan Niu, CFA, The Motley Fool

Filed under: Investing

Shares of voice recognition specialist Nuance Communications are having a good day, with shares gaining upwards of 9% on news that activist investor Carl Icahn has taken a stake in the company. The famed investor disclosed a 9.3% passive stake in Nuance, an indication that he believes shares are currently undervalued.

There are numerous possibilities on how Icahn could seek to restructure Nuance. Some analysts believe that Icahn could push for Nuance to strengthen its balance sheet, since it currently carries a large amount of debt due to its acquisitive nature. At the end of 2012, Nuance was sitting on more than $2.3 billion in long-term debt.

Since Nuance has so many businesses, it’s also conceivable that Icahn would be looking to divest some of the less important segments in order to focus on its core licensing businesses in health care, mobile, and enterprise. For example, the imaging sector was just 12% of sales last quarter, and could potentially be divested.

Nuance got crushed two months ago when it reported earnings and issued soft guidance for the full year. That sell-off brought shares to 52-week lows and was likely overdone. CEO Paul Ricci cited macro headwinds in Europe as contributing factors to the conservative outlook.

Meanwhile, Nuance’s valuation has always been a tricky topic, since its intangible amortization and other acquisition related costs put a drag on reported earnings and made its trading multiples appear inflated.

The fact that Icahn is buying in may give investors more confidence that Nuance isn’t overvalued at 39 times earnings.

Ricci is a notorious hardball, as is Icahn. I’d gladly pay a cover charge just to watch those two duke it out in a boardroom. I also wouldn’t be surprised if Ricci acted quickly to institute some anti-Icahn measures like a poison pill, a move other companies have made in the past to fend off Icahn’s unsolicited advances.

Speech recognition is yet another nascent technology set to explode with the rise of tablets and smartphones, and no company is better poised to benefit from this coming boom than Nuance Communications. However, this growth story doesn’t come without risks, too. The Motley Fool recently published a premium research report to break down what investors interested in Nuance absolutely have to understand before investing, so click here now to grab your copy today.

var FoolAnalyticsData = FoolAnalyticsData || []; FoolAnalyticsData.push({ …read more
Source: FULL ARTICLE at DailyFinance

Greenbrier Earnings: An Early Look

By Dan Caplinger, The Motley Fool

Filed under: Investing

The new earnings season is about to begin, but a few companies on off-quarter fiscal years are just now getting around to reporting their quarterly results. Greenbrier is about to release its quarterly earnings report. The key to making smart investment decisions with stocks releasing their quarterly reports is to anticipate how they’ll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you’ll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Railroads have enjoyed a renaissance in recent years, as high fuel costs have made trains a more energy-efficient way to transport goods. Greenbrier doesn’t run a railroad, but it provides the train-cars and other equipment that railroads need in order to operate. Let’s take an early look at what’s been happening with Greenbrier over the past quarter and what we’re likely to see in its quarterly report on Thursday.

Stats on Greenbrier

Analyst EPS Estimate	$0.37
Change From Year-Ago EPS	(35%)
Revenue Estimate	$442.9 million
Change From Year-Ago Revenue	(3.3%)
Earnings Beats in Past 4 Quarters	3

Source: Yahoo! Finance.

Will Greenbrier run off the rails this quarter?
Analysts have had mixed thoughts about Greenbrier’s earnings prospects in recent months. They reduced their calls for the quarter that ended in February by $0.03 per share, but they upped their full-year fiscal 2013 estimates by the same amount. The stock, meanwhile, has soared, rising nearly 40% just since the beginning of the year.

The big drama for Greenbrier during the last quarter has come from rival American Railcar‘s buyout bid for the company. With activist investor Carl Icahn involved in both companies, American Railcar‘s bid of $20 per share back in December sent Greenbrier shares soaring, and now, Greenbrier’s stock trades well above that figure. Greenbrier CEO William Furman said that he’s open to discussions about consolidation, but so far, no deal has been accepted.

But just last week, Greenbrier gave investors a taste of how much business activity it has seen recently. The company reported that it had gotten orders for 5,400 railcars with a total value of about $575 million. Nearly half of those orders were for tank cars, showing the importance of the energy industry to Greenbrier’s sales. Burlington Northern and Canadian National Railway have both taken advantage of transportation bottlenecks to key energy-producing areas to offer rail-based transport, and Greenbrier stands to benefit from the demand.

The big question is whether pipeline development will end oil and gas producers’ flirtations with rail. Greenbrier thinks producers will stick with rail regardless, and Phillips 66‘s deal to bring Bakken crude by rail to a New Jersey refinery is just the latest in extensive activity to move energy products.

In its quarterly report, watch for updates on the company’s strategic plans, …read more
Source: FULL ARTICLE at DailyFinance

Market Minute: HMO Stocks Rise on Medicare Advantage News

By DailyFinance Staff

Filed under: Goldman Sachs, Apple, Verizon, Market News, Healthcare Industry

Ty Wright/Bloomberg via Getty Images

Produced by Drew Trachtenberg

The Dow and the S&P 500 retreated yesterday from record highs. The Dow edged lower by five points, the S&P lost seven and the Nasdaq fell 28 points.

Shares of health insurance provider Humana (HUM) jumped yesterday and are set to gain more today. This follows an apparent change of course by Medicare, which is now calling for an increase in reimbursement rates on its Advantage plans. UnitedHealth (UNH), Aetna (AET) and Wellpoint (WLP) are also on the rise.

Another supporter falls off of the Apple (AAPL) bandwagon. Goldman Sachs (GS) dropped Apple from its conviction buy list, and lowered its price target on the stock. But Goldman still expects Apple to hit 575 dollars a share within the next 12 months. It’s now around 429 a share.

A former Anheuser-Busch (BUD) employee claims the company has filed suit against him in order to silence him. The employee charged last week that the company is selling watered-down beer. Anheuser-Busch rejects those allegations.

The major automakers report domestic sales for March, and analysts are looking the recent strong sales trend to continue. Edmunds expects the best annual sales rate in almost six years. Yesterday, General Motors (GM) launched a new front in its battle with Ford over pick-up trucks. GM claims its Sierra and the soon-to-be released 8-cylinder Silverado get better gas mileage than Ford’s top-selling F-150.

Verizon (VZ) and AT&T (T) are reportedly working on a plan to break-up Vodaphone. According to a Financial Times blog, Verizon would acquire the U.S. assets and AT&T would take the overseas assets. The deal would value Vodaphone at 245-billion dollars.

And shares of Nuance Communications (NUAN) are set to rally on word that billionaire investor Carl Icahn has taken a nine percent stake. It’s described as a passive stake, which means he’s not seeking a takeover of the speech recognition firm.

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Dell Thinks the PC Is Dead, Too

By Evan Niu, CFA, The Motley Fool

Filed under: Investing

PC giant Dell wants to go private. This we know. We also know that the company has garnered alternative proposals from Blackstone and Carl Icahn, both of which include higher per-share offers to investors that may be interested in selling their shares.

The board initially said the alternative proposals could potentially be superior, but it wasn’t for sure as a special committee was still reviewing all the tidbits before making such a claim. Both rival bids are structured so that Dell remains a public company, so that public investors can potentially benefit from a possible turnaround.

Well, Dell’s now trying to scare off public investors. Dell thinks the PC is dead, too.

In a recent proxy statement, Dell explains why going private is the best scenario to put public shareholders out of their misery. The company lists out a plethora of risk factors it faces, and while risk factors are meant to be scary, the filing is a gloomy acknowledgment that the PC market ain’t what it used to be.

Dell believes that the leveraged recapitalizations proposed by Blackstone and Icahn create too much risk for public shareholders. Even though both entities are offering to buy out some shareholders at prices higher than Dell’s initial $13.65 offer, the company believes that inevitably the offers are “unlikely to result in an aggregate value exceeding the $13.65 per share” after everything is said and done. That’s why shareholders should just go ahead and agree to the original deal that takes Dell totally private, the company maintains.

The company expresses little confidence in Microsoft Windows 8, even though Microsoft has committed to help finance the deal with $2 billion in unsecured subordinated notes.

Dell concedes that it is facing falling revenues in the PC market due to “lengthening replacement cycles, the uncertain adoption of the Windows 8 operating system, unexpected slowdowns in enterprise Windows 7 upgrades and the increasing substitution of smartphones and tablets for PCs,” among other things.

Industry analysts continue to reduce forecasts on PC units and Dell’s revenue has underperformed its own expectations in “for each of its prior seven fiscal quarters.” Meanwhile, the company faces downward pricing pressure due to commoditization, and Dell admits it’s missed out on mobile, acknowledging “the increasing importance of the smartphone and tablet markets in which the Company currently has very little presence.”

Translation: the PC is dead, so let Dell go private.

What’s that mean for Mr. Softy? In this brand-new premium report on Microsoft, our analyst explains the numerous challenges facing the company — as well as possible opportunities. He’s also providing regular updates as key events occur, so make sure to claim a copy of this report now by clicking here.

News, Politics, Government

When CEOs Get Terminated (by companies they founded)

March 28, 2013 Bartle Doo Leave a comment

By Karsten Strauss, Forbes Staff With RIM’s recent launch of its Blackberry 10, founder and board member Mike Lazaridis may have felt he’d, in some way, seen his company to safe harbor. “Safe” may be an overstatement, given competition in the mobile smartphone market these days and RIMs place in it, but let’s just say it gave him a positive event to step out on. But Lazaridis gave up CEO leadership at RIM over a year ago, some say due to shareholder pressure. It must be a surreal moment to be cast aside by a company you’ve founded. At best it must be like being dunked on by your own son, at worst like being shot in the knee by him. No wonder Facebook founder Mark Zuckerburg took such a strong ownership stance with his company. A number of founding company leaders have been dressed down by their own companies, some are stories of betrayal, some failure and some of redemption. In 2007, Jet Blue’s David Neeleman was pushed out of the top spot by the company he’d founded eight years prior. The reason? Service difficulties and the notion that JetBlue could have been more profitable with different leadership. Without skipping a beat, Neeleman stayed with the company and founded another airline, Azul, the following year. Aubrey McClendon founded Chesapeake Energy in 1982 at the age of 23. He announced this past January that he will step down as CEO amidst allegations of self-dealing, questionable business practices and a spendthrift nature. FORBES profiled McClendon in 2011, calling him America’s Most Reckless Billionaire. Possibly responsible for McClendon’s ouster is billionaire Carl Icahn, an investor with a presence on Chesapeake’s board, who felt he wasn’t cutting costs. In the wake of his departure announcement share prices have risen. Without the responsibility of running the company, McClendon may have time to complete the still unfinished massive wine cellar he began building in Oklahoma City in 2008. Win-win? Perhaps the most famous story of founder ouster is that of Steve Jobs. After hiring John Sculley as CEO in 1983, Jobs changed his mind about the former Pepsi President and conspired to have him removed. In a shocking twist, the Apple board sided with Sculley and Jobs was removed from his managerial role with Macintosh and resigned some months later. Following a failed but inspiring startup, NeXT Computer, and the acquisition of what would become Pixar, Apple’s purchase of NeXT brought Jobs back to Apple leadership and the rest, as they say, is history. Jobs has confessed that his ouster from Apple had been instrumental in his education and allowed him to develop his creativity and leadership. …read more
Source: FULL ARTICLE at Forbes Latest

By Selena Maranjian, The Motley Fool

Here's What This 1,022% Gainer Has Been Buying

March 28, 2013 Bartle Doo Leave a comment

Filed under: Investing

Every quarter, many money managers have to disclose what they’ve bought and sold, via “13F” filings. Their latest moves can shine a bright light on smart stock picks.

Today, let’s look at investing giant Daniel Loeb, founder of the Third Point LLC hedge fund. Loeb is a well known activist investor, famous for publicly airing his opinions about companies in which he invests, and not mincing words when he’s displeased. Loeb was instrumental in pointing out discrepancies in former Yahoo! CEO Scott Thompson’s biography – paving the way for Yahoo!’s new CEO, Marissa Mayer.

His activity bears watching, because the guy seems to know a thing or two about investing. According to the folks at GuruFocus.com, over 15 recent years, Loeb racked up a cumulative gain of 1,022%, compared with just 124% for the S&P 500.

The company’s reportable stock portfolio totaled $5.5 billion in value as of December 31, 2012.

Interesting developments
So what does Third Point‘s latest quarterly 13F filing tell us? Here are a few interesting details.

The biggest new holdings are News Corp. and Tesoro. Other new holdings of interest include AbbVie and Herbalife . AbbVie was split off from Abbott Labs, and contains the pharmaceutical business, while Abbott focuses on medical, diagnostic, and nutritional products. AbbVie is saddled with a lot of debt, but it sports about $18 billion in annual revenue, more than $6 billion in free cash flow, and gobs of cash. Bears don’t like its being very dependent on its blockbuster drug Humira, which generates half its revenue. It does have other drugs, though, and more in its pipeline – and a 4.1% dividend yield.

Herbalife , while having the support of Loeb and Carl Icahn, has some high-profile naysayers, such as David Einhorn of Greenlight Capital, and Bill Ackman of Pershing Square Capital Management. The company recently reported robust results, with revenue in 2012 rising 18% over year-earlier levels. It sports an attractive 3.2% dividend yield, but those worried about red flags raised by critics (such as concerns about its multi-level-marketing strategy) might want to wait for the dust to settle.

Among holdings in which Third Point increased its stake was ARIAD Pharmaceuticals , which received FDA approval for its leukemia drug Iclusig – though its initial sales have been weak, so far. (The drug seems to be nearing approval in Europe, though, which bodes well.) ARIAD‘s bone-tumor drug ridaforolimus was rejected in Europe, but it might still prove effective against other cancers. The company has been spending heavily on research and development, and it needs some more success from its pipeline, as it consumes a lot of cash.

Third Point reduced its stake in companies such as Hillshire Brands , which has been trading near a 52-week high. The company, the result of a split-up of Sara Lee, describes itself as “a leader in meat-centric food solutions for the retail and foodservice markets,” and encompasses brands such as …read more
Source: FULL ARTICLE at DailyFinance

By Alex Dumortier, CFA, The Motley Fool

Dell: How to Play This Deal

March 26, 2013 Bartle Doo Leave a comment

Filed under: Investing

The summit is only a few steps away! Investors shook off concerns about contagion from Cyprus today, handing the S&P 500 and the narrower, price-weighted Dow Jones Industrial Average a very respectable 0.8% gain. For the S&P 500, this is the 11th time this month the index has closed within 1% of its October 2007 high; surely that “ceiling” can’t resist much longer.

Consistent with those gains, option traders pushed the VIX , Wall Street‘s “fear index,” down 7% to close at 12.77. (The VIX is calculated from S&P 500 option prices and reflects investor expectations for stock market volatility over the coming 30 days.)

Breaking the deal process down
Two new bidders joined the fray in the battle to take PC maker Dell private (or semi-private) over the weekend, and they’re no greenhorns: private-equity giant Blackstone and legendary activist investor Carl Icahn. Let’s be clear from the outset: Neither is a defender of shareholders, per se — they operate with a very narrow yet highly developed sense of self-interest. However, in doing so with regard to Dell, they appear to be creating an attractive arbitrage for public market investors. Here’s where we stand:

In February, Dell agreed to be acquired by Silverlake Partners and Michael Dell for $13.65 per share. As part of the transaction, Dell’s board opened the process up to competing bidders during a “go-shop” period.

Blackstone has offered at least $14.25 for the whole company; it’s amenable to having founder Michael Dell and major shareholders roll their stakes over into the acquired company.
Meanwhile, Icahn is offering $15 for 58% of the company, which would leave an “equity stub” still trading.

A specially appointed committee of Dell’s board will now evaluate the three offers on the table. If they recommend one of the new offers, Silver Lake Partners will have one chance to raise its offer.

How should investors evaluate this situation? Let’s start with a reference price equal to today’s closing share price of $14.50 and think through some of the possible scenarios:

The board awards the company to Blackstone, and Silverlake declines to raise its offer. Investors face a 2% loss (they receive $14.25 for shares now valued at $14.50).
The board awards the deal to Icahn, and Silverlake declines to raise its offer. Investors who tender their shares to Icahn earn a 3% return; those who keep their shares face greater uncertainty, but they have Icahn working for them to raise the share price.
Silverlake Partners wins the contest. Given the opposition of major investors to their initial offer and the presence of competing offers, it’s unlikely that they will walk away with the prize without a sweetened offer that’s higher than Blackstone’s. (We’re comparing like-for-like deals; Icahn’s offer is different.)
The deal collapses entirely — all bidders ultimately walk away. In this situation, who knows what would happen to the share price, but the interest a Dell sale has generated suggests the shares are undervalued at …read more
Source: FULL ARTICLE at DailyFinance

By Sean Williams, The Motley Fool

Dell Shareholders Should Take This Deal

March 26, 2013 Bartle Doo Leave a comment

Filed under: Investing

I’ve always said investing takes a blend of skill and luck. Luck definitely shone in my favor in November when I picked up shares of PC-maker Dell the day after it reported third-quarter results that had Wall Street running for the hills.

In that report, investors saw a company that was in the midst of a very long transformation that was going to struggle with declining PC-sales as it pushed into information technology. What I saw was a company capable of producing billions in annual cash flow that already boasted a large net cash position, and that could be a potential takeover target. Little did I know how lucky I would be, because a few months later that takeover chatter would become a reality.

Three’s company
The initial deal offered by Silver Lake Partners for $13.65 per share didn’t sit too well with Dell’s largest shareholders — Southeastern Asset Management and T. Rowe Price Group , which together own 12.9% of all outstanding shares — and prompted activist investor Carl Icahn to make a sizable investment that led to the confidential opening of Dell’s books. Large shareholders criticized the deal for valuing Dell too cheaply with Icahn originally demanding Dell go into debt to pay out a $9 special dividend if the deal fell through. That all changed on Friday.

With three bids effectively on the table now — $13.65 from Silver Lake Partners, a minimum $14.25 per share offer from Blackstone Group , and an offer from Carl Icahn and Icahn Enterprises to purchase 58% of outstanding shares at $15 — things are about to get interesting. When all is said and done, one deal stands out to me, a Dell shareholder, as a clear winner.

Why the Silver Lake deal is yesterday’s news
The Silver Lake deal is essentially dead after these two competing bids emerged on Friday. Unless Silver Lake wishes to boost its bid — which could be more difficult now that Dell lowered its fiscal profit down to $3 billion for the year — or Michael Dell wants to dig more deeply into his own pockets (which seems very unlikely given that he was already utilizing his 16% stake in the company to finance the deal), then it’s as good as dead.

I think Icahn? Actually, I think not…
Carl Icahn‘s deal is intriguing from a shareholder perspective as it, on paper, appears to net the highest dollar amount per share, although we don’t yet know how high the Blackstone Group bid is willing to go. However, Carl Icahn‘s bid will only be for 58% of the company, exposing the remaining 42% to the public effects of a reduced earnings forecast and a discerning public eye that has been displeased with the pace of Dell’s turnaround.

This is the deal that makes sense
As a Dell shareholder, the Blackstone offer makes the most sense of all — and I feel …read more
Source: FULL ARTICLE at DailyFinance

Computers

Analysts: Dell could be unstable if alternative bids accepted

March 25, 2013 Bartle Doo Leave a comment

A long battle looms as bids are evaluated to take over Dell, but analysts are warning customers of operational instability if an alternative proposal to acquire the company is accepted.

Blackstone Group and Carl Icahn have made counterproposals to acquire Dell, competing with a $24.4 billion bid from company founder and CEO Michael Dell and Silver Lake partners.

A group led by Blackstone offered in excess of $14.25 per share, while Carl Icahn and affiliates offered $15 per share. Michael Dell and Silver Lake offered $13.65 per share when it first announced its intent on Feb. 5 to take Dell private.

Dell in a statement said that a special committee would investigate the counterbids, which “could reasonably be expected to result in superior proposals, as defined under the terms of the existing merger agreement.” The board will continue to support the original $24.4 billion until the alternative proposals are reviewed. The board has the option to terminate that agreement.

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