Monday, April 9, 2012

April 9, 2012 - Monday's Weekly Links

"How Dennis Rodman Can Improve Your Discipline" - By Jessica Peletier

Key Excerpt:  "But when you’re a trader – especially a day trader – correcting your mistakes can have unintentional consequences. When you’re in a day trading environment, things are moving quickly.  You need to feel balanced and sure-footed. Making an undisciplined error is bad for that – it unsettles you and throws you off your game.  It wreaks your focus.  But when you get straight back into the market to try and correct your error, you end up way over-correcting and in a huge psychological tail-spin. One act of undisciplined behaviour has suddenly morphed into two, because your quick correction is undoubtably an off-the-cuff reaction."

Key Excerpt: "What's odd about White's new price target -- which is at least $201 higher than the most bullish of his colleagues -- is that the model supporting it is actually rather modest. We know of four professional analysts who have called for higher Q2 revenues than White's $37.02 billion, nine with higher EPS numbers than his $10.06, and 15 with higher iPhone unit sales estimates than his 29.64 million. The only number that sticks out in White's spreadsheet is his estimate of 14.47 million iPads, which is higher even than all but two of the most bullish independent analysts. So how did he get to $1001? By factoring in Apple's cash holdings, anticipating continued breakneck growth and using a P/E ratio from 2006-2010:
Our 12-month price target of $1,001.00 for Buy-rated Apple is based on just over 17x our interest expense/income adjusted CY13 pro forma EPS estimate plus net cash per share of $103.66. This equates to a straight P/E of just over 19x our CY13 EPS estimate and is below the mid-20 multiple of 2006-2010. In our view, Apple's valuation does not reflect the growth the Company has been able to deliver in recent years, nor future growth prospects. Between FY04-FY11, Apple grew sales by 44% per annum and increased EPS by 86% per year. Trading at a P/E (ex-cash) of just under 10x our CY13, we believe the stock still has significant upside potential."
"Card Processor: Hackers Stole Account Numbers"- By Robin Sidel

Key Excerpt: "Global Payments Inc., the credit-card processor that reported a significant security breach Friday, said that hackers stole account numbers and other key information from up to 1.5 million accounts in North America. The news, released Sunday night in a statement, came after the company received a fresh blow over the weekend when Visa Inc. yanked its seal of approval from the company. It was the first time that Global Payments disclosed details of the breach. The company didn't say how the intruders got access to the information" 

"Sequoia to Lead 500M Valuation Round of Instagram" - By Krystal Peak

Key Excerpt: "The two-year-old company now looks like it will be grabbing $10 million more than early reports stated -- bringing the total funds raised to $57 million. That's some serious dough for a company with near a dozen employees. The mobile application was able to grow so rapidly with such a small team because it is a photo-sharing app that places most of the content management and work on the side of the user. The app was an instant hit, reaching one million users in only two months after launching in October 2010 and is growing past 30 million users as we speak. The site has gained a lot of traction over its 18 month history with more than 1 billion photos shared and nearly 100 comments added every second on the app-centric service."

"Burger King to Be a Public Company Again" - By Leslie Patton

Key Excerpt: "Burger King Worldwide Holdings Inc. (BKC), the fast-food chain taken private in 2010 by New York investment firm 3G Capital Inc., will go public again after merging with a company owned by William Ackman. 3G will get $1.4 billion in cash to transfer Burger King to Justice Holdings Ltd. (JUSH), a special-purpose acquisition company co- founded by Ackman, according to a statement yesterday. Justice and its founders will hold 29 percent of the fast-food chain, giving Burger King an equity value of about $4.8 billion. 3G, backed by Brazilian billionaires such as Jorge Paulo Lemann, paid $3.3 billion for Burger King just 18 months ago. Since that takeover, the biggest restaurant deal in at least a decade, Burger King sales have stagnated, prompting the chain to experiment with new items and delivery service" 

"Inside a Glass House that is Morningstar" - By Michelle Leder

Key Excerpt: "A shareholder has filed a resolution challenging the fact that the company’s founder, chairman and primary stockholder, Joe Mansueto, is also its CEO. Morningstar has been issuing stewardship grades for stocks, and one of the key components of that grade is whether the company’s chairman and CEO is the same person. According to the grading system, companies that don’t split the role should have “a lead independent director that can actively challenge the authority of the chairman/CEO.” Morningstar does not have a lead director. We’ve found a number of recent examples where Morningstar analysts gave companies low stewardship grades at least in part because of this dual role. For example, Moody’s (MCO) which has some overlap in terms of business with Morningstar, was given a C grade for stewardship late last year because “Ray McDaniel became CEO and chairman in 2005 and had served as president of the rating business since 2001. We’d prefer to see the roles of CEO and chairman split.”

"Job Growth Loses Steam" - By Josh Mitchell and Eric Morath

Key Excerpt: "U.S. employers added 120,000 nonfarm jobs last month, half of what they added in February, the Labor Department said Friday. For the first time since November, the economy added fewer than 200,000 jobs in a month, ending a streak that helped boost the stock market and expectations of a more robust economic recovery. The unemployment rate dropped a tenth of a percentage point to 8.2%, a three-year low. The report also fell far short of economists' expectations that job growth would again exceed 200,000."

"Jobs Report: Don't Fret till Monday" - By Steven Rossulillo

Key Excerpt: "On any other Jobs Friday, the downbeat employment report would’ve generated a frantic reaction on Wall Street. But on this Friday, few are fretting. With stock markets closed for the holidays and bond markets only open for a few hours, the jobs report came crashing down on mostly-deserted trading floors.  Some say the timing of this report is actually the best thing that could have happened. It gives traders and investors three days to mull over the ramifications of slowing job growth and how the Fed will react to such data. “The fact that there’s a weekend for people to digest these numbers, if anything, is probably a good thing for the market"

"Amazon S3: 905 Billion Objects Stored, 1 Billion added each day" - By Sarah Perez

Key Excerpt: "Amazon has released some fairly impressive numbers showcasing the growth of Amazon Simple Storage Service (S3) over the years. By the end of the first quarter of 2012, there were 905 billion objects stored, and the service routinely handles 650,000 requests per second for those objects, with peaks that go even higher. To put that in perspective, that’s up from 262 billion objects stored just two years ago and up from 762 billion by Q4 2011. Or maybe it’s more impressive when you look further back: 2.9 billion in 2006, for example. And how fast is it growing? Well, says Amazon, every day, over a a billion objects are added. That’s how fast."

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