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TranceAddict Investors Club @ Marketocracy (pg. 103)
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| Moongoose |
Krypton you need to fix the price on GLW on your chart there, you still have it listed at above 20$ per share, but it fell today to 16.60 per share. If there was a crying emoticon on ta, this would be a time to use it.
If i had any spare change lying around i would put some real money down on this. It cant get much lover, or can it?
| quote: | From Yahoo finance
Corning Creamed
By Rich Smith
September 4, 2008
Comment (0)
Recommend (3)
GLW
Corning, Inc.
Rate GLW
CAPS Community Rating 5/5 Stars
Down $16.60 $-0.45 (-2.64%)
More about GLW
* 5-Star Stocks Poised to Pop: Corning
* Bring On the Pain!
* BROWSE ALL GLW ARTICLES
The NEXT Berkshire Hathaway
Wow. That was unpleasant.
Like many investors, I spent much of Tuesday wondering: "What the heck is going on with Corning (NYSE: GLW)?" As the stock shed 5% on no apparent news, we waited until late in the day for Barron's to explain that analyst Collins Stewart was warning that Taiwanese LCD panel makers faced "severe pricing pressure," and were probably extracting price concessions from Corning in turn.
Which explains why not just Corning, but also AU Optronics (NYSE: AUO) collapsed Tuesday.
Mystery solved?
Almost. Sure, Collins Stewart explained the otherwise inexplicable sell-off. As it turned out, though, this was only the first shoe to drop. The other one fell Wednesday, when Corning cut guidance (and investors slashed its share price to ribbons). Here's the skinny:
* Corning sliced 5% off of its revenue projections for the fiscal third quarter and now expects to book about $1.6 billion in revenue.
* Because the company has relatively high fixed costs, reductions in revenue have a disproportionate effect on profits at Corning. Hence, a 5% revenue reduction will yield about a 10% reduction in earnings. Corning's now looking for about $0.44 per share (before items).
* Gross margins in particular are expected to come in more than 300 basis points lighter than previously thought. Rough guess: 47%.
Who's to blame?
Corning blames the "set assemblers" -- companies like Sharp, Sony (NYSE: SNE), Samsung, and Philips (NYSE: PHG) -- which take the LCD panels prepared by AU Optronics and LG Philips (NYSE: LPL) and incorporate them into finished TV sets. The assemblers apparently ordered too many panels in the first half of this year. Oversupplied, they're now cutting back on orders, forcing the panel makers to idle factories, and in turn depressing demand for Corning's LCD glass.
Who benefits
You. "Supply glut" is just another way of saying "buyer's market." With everybody upstream desperate to move inventory, consumers like you should see lower prices on the LCD TV sets lining the aisles at Best Buy (NYSE: BBY) and Circuit City (NYSE: CC).
Also benefiting: You, the investor. (Lucky you!) Thanks to the warning on Wednesday, you now have the chance to own Corning for the low, low price of five times earnings. Not bad for a projected 15% grower.
So who says supply gluts are bad news?
Why do Fools love Corning, whatever it reports? If you have to ask, you must not have yet read our interview with the CEO:
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| Shakka |
| No doubt bears on GLW have been waiting for the kind of forecast cut they announced this week--and the stock paid dearly for it. The most positive things GLW has going for it right now IMHO are 1) dirt-cheap valuation, 2) interesting clean-energy technology for diesel emissions, 3) potentially game-changing bendable optical fiber. If I were a long-term investor, I would not be afraid to own it at all, but I see no reason to step in right now and lose some potential returns in the short-term. There is no reason to rush in from my perch. |
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| Krypton |
| quote: | Originally posted by Moongoose
Krypton you need to fix the price on GLW on your chart there, you still have it listed at above 20$ per share, but it fell today to 16.60 per share. If there was a crying emoticon on ta, this would be a time to use it.
If i had any spare change lying around i would put some real money down on this. It cant get much lover, or can it? |
I think it's worth just over $30. That hasn't changed. |
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| Shakka |
| quote: | Originally posted by Krypton
I think it's worth just over $30. That hasn't changed. |
If it takes 7 years to get from 18 to 30, that's not exactly a barn-burner of a return to be chasing after. I think that's part of the problem. |
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| Krypton |
| My expectation is more in the range of 1-2 years. Not 7. My estimate is 60-80% return which is a huge margin of safety. That's a great return for 1-2 years. Even 3, 4, or 5 years. Just as long as the company has great fundamentals and a competent management team. You shouldn't have to worry about short term volatility. Anyways, with all this excess inventory, retailers will be marking down LCD displays big time. That will drive up demand. Inventory will plummet and orders will pick back up for GLW. If you hold with time horizon I have, this is completely feasible. |
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| Shakka |
| quote: | Originally posted by Krypton
Anyways, with all this excess inventory, retailers will be marking down LCD displays big time. That will drive up demand. Inventory will plummet and orders will pick back up for GLW. |
This is what bulls have been saying for several years now, and it's more than worth pointing out the extent to which prices have already declined in the FPTV space. Just yesterday I saw a 40" 1080p Sony Bravia LCD TV for $1,099. Prices will likely continue to come down (these are electronics we're talking about). However, the nature of the product is largely commodity based and if there is continued price pressure on the final product (the TV), ultimately there will be continued pressure on component suppliers like GLW (who just make the glass for the LCD). I'm not a bear on GLW, I'm just pointing out potential risks or holes in your thesis. |
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| mndeg |
wow. sndk puts probably worthless now. is this how it works now? a stock gets near a 52w low and someone makes any buyout rumor and it jumps up 25%? given that after any rumor stock tumbles from the high but still (almost always an easy short play from what I've seen)
they should still be worth more than what I paid for them depending on time decay
| quote: | | "As SanDisk's market cap is just around $3 billion, we believe this reason itself could serve as an acquisition merit for Samsung," said Lehman Brothers Vice President of Asia Technology, CW Chung, in a research note Friday. |
not anymore.
if a company is going to buyout a company they should just do it, why talk about doing it making yourself possibly pay more in the future as investors demand more relative to current PPS? sndk management won't accept a buyout so the only way for them to acquire sndk is through a hostile takeover which they just made quite a bit more expensive if that was actually their plan. |
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| Krypton |
| So Wal-Mart is making new highs. Anyone thinking this one is about to pop? I think its overvalued. |
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| mndeg |
sndk is down like I said. lol
look at the chart. pretty amazing. everytime it gap fills it falls back down.
market was fairly weak today given the news. looks like the market movers aren't buying it. and asia futures are down big right now.
http://www.bloomberg.com/markets/stocks/futures.html
today was a HEAVY fed intervention day and in the past fed intervention days we've rallied harder with less weakness.
I'm still liking the common sense trades, however gotta find a good entrance. Always a huge danger of manipulated pump & dump like sndk buyout rumors or LEH buyout rumors (all fake)
i think the next common sense trade will be to short homebuilders. definitely don't want to jump in right now though. also will buy puts on carmax into earnings. option buyers have been very very bearish on it for weeks now.
i have puts on lehman and the stock went down (12+%) today even though it was supposed be a huge financial rally day. awesome. |
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| mndeg |
^there goes LEH
down 35%
RDN also tanked since I said it would be a good time to go short.
it's beautiful when you have puts and your stock is going down even when the market and it's sector ralleys huge.
for a while I was pure technical analysis, didn't even care what the ticker stood for or what industry it was in. that actually worked fine buying dips in a bull market. RSI(2) < 1 and the stock would almost always bounce at least in the short term. |
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| atbell |
| quote: | Originally posted by Krypton
So Wal-Mart is making new highs. Anyone thinking this one is about to pop? I think its overvalued. |
For definate.
Still waiting on the housing market to take another hit as the fall/winter sets in.
Not happy with the bail out either. The monetary situation in the US is getting worse and worse. The financial times is starting to slowly get articles that are moving to this point. |
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| atbell |
| quote: | Originally posted by mndeg
^there goes LEH
down 35%
RDN also tanked since I said it would be a good time to go short.
it's beautiful when you have puts and your stock is going down even when the market and it's sector ralleys huge.
for a while I was pure technical analysis, didn't even care what the ticker stood for or what industry it was in. that actually worked fine buying dips in a bull market. RSI(2) < 1 and the stock would almost always bounce at least in the short term. |
I'm assuming that LEH is Leahman Brothers. If so I have a nasty feeling they might go under. The "buzz" (I hate that word) has been building since late spring / early summer. |
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