Myth465

ValueCarl why not start a blog?

Is HPQ in runoff too? ;D HPQ is now getting pounded during the day. What do you think of their strategy Myth? LOL Val. Aside from all the jokes. Honestly I have no idea. I see where HPQ and DELL are going, but I am in no positions to really analysis any of these giants, and in no condition to buy with convection / confidence. This sector is quite interesting. All of it is trading below a PE of 10 (if you net out cash), and all of it is growing to some degree. You also have the fact that 50 billion and 100 billion market cap stocks wont stay cheap forever. Maybe not a PE of 15 - 20, but at least 12 - 14 makes sense. DELL and HP suffer from the same thing, though it seems as though DELL is a bit further along, and cheaper if we do our cash magic. It seems like everyone wants to be IBM. So many product lines, so competitive, and so much trapped cash (with the exception of HP), makes it tough for a guy to get to the bottom of these giants. I will likely eventually take a shot gun approach and buy small stakes (2%) in 4-5. My brother works for HP in the large servers devision, I plan to have a beer with him tonight, though he is quite low in the organization so I dont think it will be very fruitful. Funny enough I asked him why they were trying to create an OS and why they bought Palm, he was like we are HP. I think they will fail and end up with Windows or Android. Times have changed, inmo consumers dont like relearning new OSes.

Is HPQ in runoff too? ;D HPQ is now getting pounded during the day.

I would get 2 cups - Jumbo size. Democrats aren't known for their boldness.

I feel like everyone is nuts. Obama should draw a line in the sand, the Republicans should balk. We should pick up cheap shares on the carnage. And the Republicans will have egg on their faces.

Is HPQ in runoff too? ;D So many funny things about this quote and post. So many....

Thanks for the link. I enjoyed it.

Parsad I agree with just about all of your comments. Though I havent been around as long, and have little faith in our ability to coop and change. What I see is oil goes up, people hem and ha's, and complain. The President makes a speech, oil Barrons go to Congress, Congress hems and ha's, then the price goes down $10 - $20 and everyone moves on. Its been that way from $30 - $100. Almost like a ratchet. There is never a long term solution or plan undertaken by the largest consumer and importer of energy. This has only been cured by a recession. I will say now its all discounting, froth, dollar and supply concerns but inmo this is the trial run. Our 7 lean years will end at some point and my fear is what happens when the World Economy is humming along. We keep failing these dress rehearsals, which inmo will make the Big Show and required adjustment rather painful. The US is well positioned though, because the emerging countries will have to drop their subsidies, and the US consumer of energy will be one of the last standing as prices rise. It will wreck havoc on our economy, but will do worse for third world countries. The world will go on, but it seems like a silly way to deal with a long term problem. ---- Canada and Australia are in an interesting position. You guys are going to have to be willing to destroy your currencies too, to keep things at a happy range. Call it the genius or foolishness of Bernanke. I am not quite sure which one just yet.

Lets be real. If Peak cheap oil is to be believed to be real by most Americans, Congress, and the President .Oil becomes a strategic national resource and he risks Wind Fall Profits or Nationalization. Its interesting, someone will be right. Buffett said something very simple in his interview in India. Its a finite resource and one day it will run out. We use more each year, and it looks like we will peak at somepoint. When I dont know. But there are more reports from Official (Department of Energy, Defense, Various Governments) sources warning of potential shortages each year. Tillerson, me, and just about everyone else is mostly talking our book. Only time will tell. I didnt expect him to come out and say oil is running out and we are making obscene profits. Best to tax us and reinvest to find the next big thing. Now that would have been crazy talk. http://www.guardian.co.uk/business/2010/apr/11/peak-oil-production-supply - The idea that this resource we have been pulling out of the ground and burning up at a breakneck pace for the last 100 years is limitless and will forever be cheap is the one I find foolish. What the price should be, I have no idea. I just know there is less of it available today, then there was yesterday....... With that said, in this weak economy. I do think their is froth.

There are no windfall profits to see here. Move along. You have to love being a capitalist in America. You cant even get the public to agree to raise taxes on 5-6 of the most profitable companies in the world. Its just UnAmerican. The markets are frothy, but shouldnt they be discounting peak oil? Arent markets forward looking? Its tough though, I believe in peak cheap energy but Val has a point. If I was a producer I would be hedging 2 years out for 80% of my production......

Very interesting. I am at 20% cash, and looking to move up to 30% - 40%.

HPQ and DELL at this price I agree. GOOG: it is cheap and has a lot going for it, but I think most under-estimate the competitive pressures they may be facing in the next decade... They have been spending tons and tons of money in non-directly accretive projects but since they are not MSFT but GOOG nobody asks questions... What they invest in at least looks cool (Windmills, cars that drive themselves, and that big facebook type flop (well that didnt look cool). MSFT just takes money, goes outside on a windy day, and hopes for the best. They might have purchased Washington Mutual if Mohnish had his way (he suggested Bill Nygren manage their cash). Also give that cash to the true Genius. Buffett, Also where is Gates? I would assume he would have to sign off on these things. Buffett could have made 10% on that cash from 2008 till now by just loaning it out to solid companies. I dont mind swinging for the fences. But we have 22 pages, and hundreds of articles online about Skype. No one has really offered a truely moving reason for the buy, and at best people are willing to give it time. No one is downright excited. You know software technology patterns recurrently come back: we are getting back to a renewed client/server paradigm and also multi-device paradigm. Last time it didn't destroy SAP and other ERP systems. But I do understand your concern and some of it is justified. SAP is different inmo. They have companies by the balls. Great service business, and once you are in. Its hell on Earth to switch, then one of the other ERPs have you buy the balls again. I would buy at a PE / Cash Flow yield of 8 or 10%.

If we keep going we may overtake the LVLT thread ;D

My issue is I cant account for what Ballmar will do with the majority of that cash. If it were truly in runoff with 50% going to building a new moat online / other moats and 50% going back to shareholders I would be fine. It would be a buy. But I cant say thats the case, they could have a yahoo or Skype purchase every 2 years or so. Jerry Yang saved them a few years ago but not everyone will turn down free money. INMO the profitable section of MSFT (OS, Office) is in runoff. I dont think we will be computing in the same way (desktop / office) in 10 to 15 years. They are moving into other businesses, but I am not the best guy to evaluate that. What I see is a business with an unbreakable moat, which is in runoff. Management is trying to bridge to the next deal. Similar to IBM, HP, DELL, and other tech companies. MSFT has a huge advantage in their move and may be successful, but thats not what I am paying for. I am not in the business of picking winners. I can say without a shadow of a doubt things will be different, but dont know in what way. It will likely be cloud / net based with smaller support groups and easier upgrades. Data will be pulled down to devices which may run a number of OS's. That doesnt matter, MSFT throws off a hell of a lot of cash, and that 10 - 15 year runnoff is enough for us to do well, but I have my doubts about the capital allocation ability. CISCO is perhaps a better example. What I am getting is perhaps these companies deserve the multiples they trade at given the risks. HPQ, DELL, and Google seem a bit better....

I have been rethinking my entire approach to portfolio allocation. The downside for me with all of these large tech companies except for maybe Google. Is they are all extremely competitive and all of their moats are thin and under extreme attack from companies with billions of dollars. Microsoft is attacking Sony (winning / won), Google, Cisco, Apple, ..... And all the others are attacking MSFT. I have no idea where it goes or who wins, and more importantly have no real trust in Ballmar to be ahead of the curve. WDC and Seagate are under attack, but WDC has strong Management and tend to be ahead of the curve. Ballmar is playing catchup with Billions of dollars in shareholders money. I dont know where it goes, who wins, and there is a big chance to make a losing bet. Its tough. I can understand the multiples for these stocks when I think about it. Cisco has a great FCF yield, but will they be able to compete with software solutions and cheap Chinese copycats. MSFT has a great business, but it is basically in runoff. Perhaps a 10 - 15 year runoff, but runoff nonetheless. Not a problem but that cash is going into the Skypes of the world. Hoping that something sticks. Tough way to make a buck, I think one must take a basket approach to really make it work. The only one I have confidence in over the short to medium term is Google.......

Prunes I think you are wrong. We will be Googling until Google screws up. I dont think search is a commodity. Mindshare is worth something, its very difficult to attack Coke, Youtube, Google, or Facebook, or even MSFT in their core businesses.

Tariq do you know of a good way to find beat up sectors in equities. Everything as far as I can see has ran except for large cap technology and banking. I am wondering if I perhaps missed a sector. Also thanks for the link to the Joy of Stats Video. I am a big fan of Rosling, didnt know he had a documentary out.

30 years is an eternity in tech. I cant think of 1 tech company that is going to be around till then. I think Buffett has the right idea, buy chewing gum, utilities, and railroads (im not totally sure on this one) if you want some sort of promise of longevity.

http://www.dataroma.com/m/holdings.php?m=FFH Interesting.

This would be a tough one. I guess anything can happen but this would be the ultimate bait and switch. Also want about those who converted a traditional to a roth....

They should have taken the 30% - 40% tax hit and brought the money back and paid a dividend or did a buyback. Better to lose 40% of $8.5 billion, then to piss away the whole thing inmo. Not sure on the rate, but probably the max rate if they bought enough of it back. Unless Steve has something under his sleeve, like getting into Telecom using Skype, I dont know how they will see a full return of the money, or a return on the money.

I would be interested in the same thing. Primus has some warrants as well. I would wait to see what Q1 looks like, but its another de-leveraging telcom.

Ya its rough. Would have been nice to sell leaps at $13 and buyback at $10... Tom is smart and I now view this as an owner manager. Him and the new CFO appear to know exactly what the market wants. The CFO is address debt and trying to get it to the right metric, and Tom and trying to get SD to where ATPG will be come year end - self funded. They closed the 2011 gap in record time, and now want to get the 2012 one closed. I believe they said they will have enough cash flow in 2013 to self fund. I like that he was hedging all the way out, which helped me hold most of my leaps, and really like the fact that they want to monetize and pull drilling forward. Hopefully they sell, JV, or Trust 250,000 acres and drill baby drill. What would kill me, and the share price is more equity, converts, or debt (in that order). If we avoid those 3 things, then I think we will be rewarded for holding. ATPG is a whole other story. Its like the little company that could. I think that catalyst is right around the corner. Just have to finish these next 2 wells, and put out 1 good cashflow number. After that I think we are set. Though been saying that for a year. ----- Thanks Granitepost, that makes sense. Hopefully he comes back.....

LOL, very true.