SI

What does this mean for Prem, the Chairman of the board, visa-a-vis studying his strategic options and the AMZN/FB rumored phone. Clearly as an insider going to 10%, should we all take that to imply there is no monetization event of the patents in the near future to those trying to build there first phone reportedly this holiday season? Could he have upped his stake while reviewing alternatives? Could he have upped his stake before the investment banks delivered that review? Anyone know what the implications are? Disclosure: I have no RIMM investment but am a FFH shareholder.

I have considered subscribing to this in the past. Is there anyone here who has subscribed, if so what has been your opinion of the content?

Blodgett had a recent posting on this topic as well with some good charts. http://www.businessinsider.com/corporate-profits-just-hit-an-all-time-high-wages-just-hit-an-all-time-low-2012-6#ixzz1yZnjmfOM

I have also sold some FFH a few weeks ago to fund some purchases of last generation tech & alternative telcos.

No, they have said non-PC businesses last quarter are more than 50% of gross profit. In today's press release they said that their high value business will contribute operating income in excess of 5 percent of revenue in future contribution. Getting to the matter at hand which is separating the PC business from the high value business this is the other things I would think about. Dell has said consumer is 19% of revenue. Maybe more importantly, today they have said non-PC businesses will grow 10% through 2016. It is slightly vague but assume 2016 is 4 fiscal years. Now the P/E multiple is quite low anyway but here is a rough take at what today's press release implies: -This year they are slated to do a total of $13.1Bn in gross profit. Assuming 50% that is PC is not growing. So non-PC gross profit of $6.55Bn in 4 years grows to $9.6B in 4 years and you have $16.1B in gross profit when you add back the $6.5B PC gross profit that is not growing. -Bernstein has opex of $9.2B in 2014(farthest out they go) which if it grows at a 5% clip from there means by 2016 it is $10.1B in opex. -So $6B in EBIT by 2014 is taxed at 20% meaning $4.8B in net income. -Bernstein has them shrinking shares at 2.5% per year for the next two years but assume they don’t buyback any addl stock in year 3 & 4 which is conservative even when you consider today’s divd that leaves you with 1.74B shares as your denominator and $2.76/share in 4 years. -Discounted back at 10% that would mean: $2.07 $2.28, $2.51, $2.76 over the next 4 years. Assuming no growth in PCs(or opex redux that would go with PCs in ex-growth), no buybacks in the 2 out years of your forecast period and that FCF doesn’t exceed earnings you would be well in the money with those 4 years of earnings which sum to $9.62/share and YE net cash of $5.70/share. A few other things to add: -One other way to think about it, the 2016 EBIT of $6Bn looks funny next to today’s EV which is $12Bn. -Some would argue that no growth in PCs is conservative. -FCF has always been well in excess of net income. -The net cash per share estimate is morningstar's. -$2.07 is well above Wall Street's estimate this year which last I looked was ~$1.90 though $2.07 is probably shy of Wall Street estimates of FCF this year.

I am a sucker for the network business models.... Amazon has been mentioned. No arguments. UPS hasn't. German Post + DHL + Airborne Express + 8 years of burning money at high clips led DPW to retreat back across the Atlantic. If UPS stops to deliver 3 packages on your street but FDX does 3 packages in your neighborhood how does that advantage ever erode? ROIC 25%, Great Balance Sheet , low single digit units and pricing on the topline in mature markets and HSD units but less pricing in less mature parcel markets(now also have a dominant position in Europe via TNT). In addition every package lowers your cost while capex to sales(5%) isn't what you get at PM(no disrespect to another great model) there isn't a ton of unit growth there and eventually people tire of pricing or the tax authorities get back involved.

So Berkshire trades at 1.14x book value. What is the motivation to buy a generic P&C insurer which largely is a bet on a bond portfolio for the same multiples(1.1-1.2x BV) when you could be getting the ROEs off of Berkshire's great businesses and capital allocation across the investment landscape on all incremental capital generated.

Many great companies you would think about buying mentioned on this message board are trading at 6% fcf yields. For fun, look at AMZN's forward fcf yield which I think may intrigue some of you. SI

Orange County, CA.