Professor Elam

Howard Davidowitz on JCP

Wed June 22, 2011

My favorite retail analyst is Howard Davidowtiz. in this clip he analyzes the differences in JCP and Apple.

This is pretty much what I thought. JC Penny is nothing like Apple. Apple has a few products that virtually no one else sells. JCP sells what everyone else sells. What as Ron Johnson thinking? Sure the Apple stores look modern and slick but people want the products. One can buy what JCP sells at multiple other locations. 

PCAOB Urges More Auditor Opinion

Wed June 22, 2011

We currently have a Management Discussion and Analysis in annual reports. Now the PCAOB suggests 

a Auditor Discussion and Analysis. This idea would have auditors expressing opinions of financial management of the firm. 

It is hard to me to see how this will work when the firm employs the auditor. As the article says, it is pass fail at the moment, the auditor says the statements fairly reflect the firm position or they don't. 

This would be like asking your best friend to analyze your hair do or wardrobe, how long would that friendship last?

I am going to suggest this for an article on the discussion board. 

CNOOC Buys Chesapeake Energy Assets

Tuesday June 21, 2011

Chinese ENergy Company CNOOC is paying $2.2 billion for a one third stake in assets.

Apparently they are interested in the Eagle Ford play south of San Antonio among other interests. This bears watching. Recall our post on Halliburton moving into South San Antonio to work this area as well. 

Sixteen Meaningless Phrases

Monday June 20, 2011

Henry Blodget has scripted a fine guide to cutting thru the BS of the usual commentator on CNBC,Bloomberg, Fox Business

Here are his sixteen phrases which sound great and mean nothing.

The Need for Speed

Monday June 20, 2011

Well here we are in June and of course our thoughts turn to  the 24 Hours of Lemans. 

What has this got to do with accounting, absolutely nothing, other I suppose than the idea that racing sells street cars. 

Here is a narrated video of a C6.R Corvette doing one lap of the Lemans track, it takes about 5.5 minutes. Watching this video sure beats going there. And it is much safer as well.

RIMM, RIP?

Monday June 20, 2011

Here is another article about the rise and fall of Research in Motion.

As the article says, they come and go quickly in telecom. Here is a quote which also demonstrates something else.

"We've seen this movie before (Motorola, Nokia, Sony-Ericsson, LG, Palm) the history of wireless is littered with OEMs that had significant product/cycle share gains, but then missed structural market shifts," writes Citigroup analyst Jim Suva, who cut the stock to sell from hold today. "

Now after it is down from 150 to 27 he cuts it to sell?  As usual analysts opinions are of little value to value investors. 

How Gates Grew

Monday June 20, 2011

We have had some good discussion about leadership in the Cost class. Here is an article on how 

Bob Gates managed as the Defense Secretary. I find it interesting that he did not bring anyone with him. It was also interesting that he visited with the Joint Chiefs in their territory. 

Rumsfeld was not well regarded as SedDef nor was his book about it. Gates served under two Presidents of different parties and is coming off much better. 

Paris' Blackberry Goes Public

Sunday June 19, 2011

Socionomics

Research in Motion is front page news, but for all the wrong reasons.  This is a good example of just how fast things can change. Computer makers change over time, the Stars of the 1970s, DEC, Wang, and Control Data are unknown to  today's Computer majors. Likewise, Lotus 123 and Wordperfect are long gone as major software players. The telecom business changes even faster. And no wonder, cell phones are a multi-faceted swiss army knife of phone, camera, internet,and gps, not to mention the latest fashion accessory. 

The latest casualty is Research In Motion's Blackberry. And then it hit me, the Blackberry was the official texting instrument of, yes, another recent fallen icon, Paris Hilton. And so I wondered if there was  a correlation between the recent rise and fall of Paris Hilton and RIMM. Before you dismiss this idea, take a look at the following chart of RIMM. A quick Google search revealed several time lines for Paris Hilton. Theirs (RIMM and Paris)  was a bottle rocket type parabolic rise, and then fall. While the graph is of RIMM, I put the comments about Paris in hot pink, it just seemed appropriate. 

 

 

Paris dropped out of high school in 1999, but when you are gorgeous and  an heiress, school is just bother rather than a stepping stone. After the first role in the movie Zoolander, RIMM hit their bottom and then took off with a more popular line of phones. RIMM's Blackberry pioneered the thumb accessible keyboard and  as well, surfed the internet. And so we have the perfect match for two rising careers. Paris followed her initial foray into movies with a TV series, the Simple Life. More movies, records, and a perfume line quickly followed. The release of a sex video only seemed to generate more buzz then disdain. Which just goes to show you, in a bull market, all news is bullish. By 2005 Playboy dubbed her the Sex Star of the Year and she landed another movie role. 

In February, 2005, as art imitates life as  Paris' Blackberry Goes Public!  Someone hacked into her Blackberry giving both she and RIMM untold free publicity.  To this writer that forever linked the two. 

A correction for both RIMM and Paris then set in. She became the World's Most Overrated Celebrity and was arrested for DWI. In a wave of things to some, she was ordered back to finish a 45 day jail sentence. 

In February 2007, Apple introduces the iPhone at the Macworld event.  RIMM would peak a year later at $150 a share, a staggering increase over its Paris Zoolander days. 

In 2008 The Hottie and the Nottie debuted starring Paris Hilton. Theaters showing the movie opening weekend averaged $249 on ticket sales. Here's a wiki quote about the movie.

The review aggregator Rotten Tomatoes reported that 5% of critics gave the film positive reviews, based on 61 reviews, concluding that "The Hottie and the Nottie is a crass, predictable, and ineptly staged gross-out comedy that serves little purpose beyond existing as another monument to Paris Hilton's vanity."

As the iPhone caught on, RIMM peaked. Paris had her Reality TV Series, My Best Friend Forever My BFF. Frankly that sounds like a description of she and the Blackberry. At any rate, that was the socionomic top for both of them. 

Today RIMM is front page on the WSJ. Here's the quote from the article linked at the start of this section. 

Shares in RIM plunged 21% to their lowest level in five years as investors questioned whether its executives can pull the company out of its slump.

 With Lady Gaga and Brittany Spears on top, we might say the same for Paris. 

And so, as RIMM went from $2 to $150 and back to $27 in a mere 8 years. Whether one is  investing in high tech or tracking the latest celebrity, it is not a buy and hold game. Social mood has its fickle side. 

 

Cash Flow Quality

Friday June 17, 2011

Here is an interesting article on the quality of cash flows. Articles on the quality of earnings are fairly common. But we are studying cash flows in intermediate accounting and this offers some ways to analyze just that. 

Meet Xiaoling Qin!

Thursday June 16, 2011

We have a visiting Chinese Scholar at Texas A & M San Antonio for this next year!

Xiaoling Qin arrived in San Antonio in April, 2011. She is completing her dissertation at Southwestern University of Finance and Economics. The school is located in Chengdu, China.  Just for orientation, Chengdu is in Central China. 

We zoomed in up close and noticed that Chengdu looks a bit like San Antonio with two circular traffic loops!

Her dissertation is on Law in the Workplace. She has both certifications in Law and in Accounting in China. She tells me that completing her PhD in China will require three years. Then she plans to teach and research legal issues in China.