Sunday, May 16, 2010

Barrons Summary


"Stronger than ever" – bullish cover story on US blue-chip companies, which currently have some of the strongest balance sheets in their history; margins are near record levels; buybacks and dividends are being ramped up; some of the companies w/the most balance sheet flexibility – SWK, THC, GMR, and NVLS – Barron's

PCS: Mentioned positively in Barron's, which cites that many users switched to pre-paid plans during the recession, and that growth has since accelerated. In Q1 - total prepaid subscribers increased to 57M; which represents 16% growth vs. 3% growth in the postpaid market. On the speculated PCS/LEAP deal – the combination would reduce competition and also make PCS more attractive to possible buyers, including VZ & Deutsche Telekom. Barron's believes the PCS stock could hit $12 next year. [Barrons']

Video Games: Mentioned negatively by Barron's, saying that free games on social networking sites are hurting the industry. April's weak NPD data comes as consumer spending (such as PC demand) has improved. While several improvements in the future may help (MSFT's Project Natal and Sony's update on the PS3), the iPad, cell phones, NFLX and others still pose a problem. Also, AAPL plans to have a "Game Center" on the next iPhone operating system, which will make free and cut-rate games interactive [Barron's]

ATVI: Mentioned positively by Barron's, which claims that ATVI is better positioned than its competitors. Losing the studio heads of Infinity Wars (who signed a publishing deal with ERTS) has negatively impacted ATVI's stock price, but Barron's believes the price is cheap around $11 and a 10 year pact with Bungie should also help. Analysts at Wedbush Securities and RBC capital believe ATVI will reach $16 next year. Also – CEO Bobby Kotick has lightened up on selling stock since last fall. [Barron's]

V, MA – weakness in the stocks appears overdone – Barron's

Utilities – positive comments; sentiment v negative; their defensive nature could help in this market environment; high dividend yields – Barron's

The Euro could slide to $1.18 and potentially move lower this year; it could hit parity longer-term; positive comments on Canadian dollar, Swedish krona, and Australian dollar – Barron's

STX, WDC – positive comments on both; the stocks could advance 50% each; PEs only 6x vs. historical averages 10x. Barron's

GHL – cautious comments; valuation is very expensive; insiders have been selling; IB business won't be strong enough to justify the stock price. The stock could slide into the low/mid-$60s. Barron's

NOK – neg. comments – the co will continue to lose market share – Barron's

Enterprise tech – bullish comments on the space; ORCL, SAP, IBM, INTC all are ramping up their

acquisition activity and each is bullish on the outlook. Barron's
SAP – neg. comments on the deal; SY has a nice mobile computing franchise, but this is a relatively
small part of the company and SAP paid a lot of money – Barron's

Software M&A will accelerate from here – ORCL, IBM, and others, will all be ramping up their pace
of deals – Barron's

QCOM – positive comments; valuation is very cheap; dominates its market; very strong balancesheet w/high margin structure. Barron's

AGN – positive comments; valuation is cheap and growth is strong; the expansion of botox for the treatment of migraines could be an added positive. Barron's

AMZN – cautious comments; the valuation is very expensive – Barron's

AAPL – positive comments; valuation is near the lowest of the last 5 years – Barron's

KFT – Barron's is positive on the stock post-Cadbury acquisition.

Barron's Michelle Index – Barron's Follow Up says now is the time to start taking some profits on the group.

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