Are We In Another Bubble?

Originally posted on The Economic Contrarian:

As you can all tell, I don’t have much to say these days. I feel nothing has changed and I am unable to see what is convincing the markets that “all is good!” I am sticking with my October 2012, Money Aplenty thesis. There is way too much liquidity in a far too confined space. All this money is searching for places to make a return, which equates to chasing yields and risk. This all works as long as the pyramid scheme does not begin to show that it is stalling out. People make lots of money in pyramid schemes — until they don’t!

It seems that the real issue is that as hard as the Fed attempts to spur inflation, it is not succeeding (at least if you look at official inflation measures). The reason they are not succeeding is the product of extremely low money velocity (rate at…

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The tricky art of valuing a company

Originally posted on Business 360:

Editor’s note: Ivan Nikkhoo is managing director at Siemer & Associates,a boutique merchant bank that provides highly targeted M&A, capital raising and financial advisory services to Internet, software and digital media companies.

One question I am most often asked is: “How much is my company worth?”

In addition to the customary, “it depends,” my answer is usually followed by: “It depends on who the buyer is.”

As Bill Gates famously said: “Intellectual property has the shelf life of a banana.”

So, in the tech world, there is a constant and continuous search for good, scalable intellectual property (IP). “Scalable Intellectual property” essentially means that the system or network of a company must have the ability to be expanded — and keep up with the times.

Tech companies are generally cash rich, and the pace of internal developments can’t possible keep up with the necessary growth expected by Wall…

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ValuationDeal:

We need to take heed!

Originally posted on 24/7 Wall St.:

78489302After U.S. markets closed today, Moody’s Investors Service cut its ratings on U.K. domestic- and foreign-currency government bonds from ‘Aaa’ to ‘Aa1’. The ratings agency also lowered its rating on the country’s central bank, the Bank of England, from ‘Aaa’ to ‘Aa1’. Both ratings are accompanied by a stable outlook.

In issuing the downgrade Moody’s cited “sluggish growth” in the medium term which the agency expects to continue to the end of the decade, the challenges that this slow growth poses to the government’s “fiscal consolidation programme,” and the country’s “high and rising debt burden” which will give the government little room to maneuver until at least 2016.

Moody’s had threatened a similar action on U.S. debt if the government could not figure out a way to dodge the fiscal cliff. Standard & Poor’s and Egan Jones have both cut U.S. debt to below triple-A status.

Moody’s noted:

Moody’s believes…

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ValuationDeal.com’s take on Research In Motion’s new BB 10

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Today Research in Motion (RIMM) revealed two new phones, well over due for the market and the saving of the company, after over two years of excuses as to why they couldn’t produce. Well, I won’t necessary call them excuses, more so “we couldn’t get the job done in time as we lose our bottom line” but the lag time has definitely not done well for the company’s staying power. The question that remains is, will this bring them back into the game? Competitors like iPhone and Android have been enjoying their surge in market share as they have launched slicker products and phones and RIM hasn’t. Apparently, RIM (who also stated they will be changing their name to Blackberry) has a lot to prove as many consumers have long jumped ship. Nevertheless, the company still has a global presence and hopes to rebuild their brand with newer phones which are set to hit the market mid March.

Today, RIMM loss 12%, closing at $13.86/share. Net income growth for the prior year of 2012 surged 66.84%, with sales growth down almost 10%. There are some positives about the company’s balance sheet for the past year and one of them is debt. There is no short term or long term debt on the books for 2012 and their liquidity looks strong. This is proven by their 1.78 quick ratio and 0.52 cash ratio (the two most conservative liquidity ratios). They also have strong retained earnings as well as solid equity left over for the year.

With the cash flow statement, there appears to be a problem with their net investing cash flow and this proves itself under capital expenditures. But, as we know the negative capital expenditures in “other assets” should benefit the company for the future. With that said, lets just call this a positive (only time will tell).

Gross margin for 2012 was 32.92% and Apple’s was 42% (not bad for a company that has waited two years to put a product out and it’s market share thrown to the sharks of the new world order of technology). Operating margin for 2012 came in at almost 12%, with it’s current 2013 P/E ratio at a little over 7%. Analysts estimated EPS for February 2013 has it down $0.29 for the 1st Quarter of the year, but is nothing compared to last years report which was up $0.81!! Currently, the estimate for growth for February 2013 is a horrible -136%, more than half of the hit the industry is taking which is nearly -67%. Even with an approximate positive growth of 76% for the company, the industry will topple it with more than 40 times better growth at 3,025%!!! Clearly, you can see the estimated growth for the industry will grow substantially in the next quarter, the question is who will be taking most of that growth?

Analysts are calling this stock a 3.4 out of 5, with 1 being a strong buy. That would put this stock in the category of “hold” if you still are holding shares. If you’re a big option player, then you could place more than a few option plays on this stock in the coming months and also hedge your money. I’m not much of a gambler, so I wouldn’t come near this stock. Globally, RIM (soon to be Blackberry) could gain some strength and I would look there for their momentum to sprang into action, but definitely not here in the US. I would strongly say if their strategy for restructure works, sales will be based on a global affair with consumers; a definite divorce of US sales would remain solid on their bottom line.

Mark Stafford

Find me at:

Twitter @MarkStaffordMBA

Copyright 2013 ValuationDeal.com All Rights Reserved

Blog Time!!! … really?

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Okay, today is April 2, 2012, and I still have not had any time to valuate as much as I really want to. I keep thinking to myself, how do people find time to blog (or in my case do company valuations)? Well, all I know is I think about it and crave the time to do it, so I’ve come to the realization that I will just have to “take” the time, steal it, and aggressively go after it!!! Good news is I am almost finished with the first company I wanted to valuate and that is JcPenny (JCP). I’ve noticed they have a new marketing campaign and every time I’m watching television or driving past a billboard it gets me excited. I’m elated for the company, but still can’t help to see the approximate $7 drop since the last time I looked at it consistently over the past 2 months. Of course, this can be temporary especially if you’re looking at long term growth, but you still want to ask the question “why”? So, give me a little more time (more like 1 week) and I will have JCPenny’s valuation finished.

On a side note, time is not on my side tonight and for some strange reason I’m more tired than normal. So until next time, I will talk to you soon.

Mark Stafford

THE VALUATION DEAL

VALUATIONDEAL.COM

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Welcome to ValuationDeal.com. I will do my best valuating companies that I choose from different industries and look forward to doing the research and due diligence. Over  time, I can’t wait to meet and network with new people as I continue this journey. Feel free to contact me if you have any questions or concerns. **Please note** Anything I state cannot be taken as advice. I am not liable for any investments or decisions made as a result of a valuation of any company.

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