I was on-air at CNBC Tuesday when one of the anchors asked Jeff Saut, the chief strategist of Raymond James, his favorite stocks. Jeff, an old friend, immediately said, Iridium. To which I said, 'I just red-flagged Iridium in a 3,000-word piece on Reality Check.' To which he said, 'Ron Baron,' of Baron Funds, a well-respected manager, with an extraordinary track record, just bought a lot of Iridium's stock.' To which I said, 'Green flags and red flags, that's what makes markets.' That is the one thing I don't believe you'll find any disagreement regarding Iridium, or any other company. In my years of doing this, there is one truism: There are very smart people, who think they know better, on both sides of many stocks. Often they both get it right and wrong, depending on timing. But in the end, one often prevails.
The live blogging, constant TV coverage and the overall hype surrounding the Apple developer's conference has me wondering: But, why? In what amounts to a giant free advertisement, Apple gets coverage of the latest and greatest tweaks to its operating system and even new products. But, for the most part, everything being rolled out, for the average user, is incremental (and, it could be argued, annoying because if the new operating system is at all radically different than the one customers just learned to use, they may now have to learn something different.)
Kors is simply too confusing and opaque for its own good.
The most significant thing that came out of Valeant's VRX investor call Wednesday was this comment from CEO Mike Pearson: 'I probably was incorrect in talking about the $150 billion market cap company. That was just more a statement that we are not just going to sit back and do nothing and that we are just like each of the business units as hungry to achieve organic growth and continue to build shareholder value.' Later in the day, Pearson added: 'And I think we put -- maybe putting the $150 billion number out was a mistake, but I think our investors understood that. It meant that we're not satisfied with where we are. We're going to continue to try to build and drive shareholder value. And if you do that, you're eventually going to have a higher market cap.' They were 'incorrect' about discussing the $150 billion market cap? It was a 'mistake'?
The CEO is now taking back his target for a $150 billion market cap -- and the concession is as absurd as the original comments were.
Here is a given in business: When companies start giving discounts and coupons, it's not out of strength.Today SolarCity issued a press release on its partnership with Groupon headlined, "SolarCity and Groupon Offer First of Its Kind Deal on Solar Power."From the press release:"Groupon (GRPN) will work with SolarCity (SCTY), the nation's largest solar power provider, to offer deals on solar systems in the Groupon marketplace. SolarCity makes it possible for many homeowners to pay less for solar electricity than they pay for utility power. For a limited time, customers can benefit from additional savings with a deal from Groupon by paying $1 for $400 off home solar power."Groupon has more than 200,000 active deals and more than 51 million active customers globally. The SolarCity offer is Groupon's first national deal in the solar category and is part of their growing collection of home and auto services deals."After purchasing today's solar deal on Groupon, homeowners will be contacted by SolarCity to schedule a consultation. If the homeowner decides to move forward with solar service, the discount will be applied. Homeowners can install their solar system at no additional cost and pay only for the power. SolarCity currently serves thousands of communities and major metropolitan areas in 15 states."
Companies don't give out coupons when business is booming.
Michael Kors beat on the top and bottom lines, but this is worth noting: Gross margin was 59.9%. While that's in line with the company's guidance, which called for a "slightly higher" number than last year's 57.7%, it missed when compared with 60.1% a year earlier.What's more, on its call this morning, the company guided to a slightly "lower-than-expected" margin for the current quarter.More disconcerting, perhaps: Last quarter's meager margin performance, relative to expectations, came on top of 12.5% increase in revenue. In theory, at least, margin should have risen commensurately.I understand the concept/argument that "everybody in retail missed on margin" in what arguably has been a horrible market for the sector.But that, I believe, makes my point stronger. Everybody and Kors is missing on its margin guidance -- yet, with better-than-expected revenue, it's the outlier against its peers, customers and the malls themselves. So the implication is that, in order to keep its revenue up, Kors is discounting more than ever.Lower margin guidance, as the company provided for this quarter, would seem to confirm that. Higher inventory, as was the case, doesn't help, and this suggests more discounting is on the way.
Michael Kors' numbers suggest that, in order to keep its revenue up, the company is discounting more than ever.
Iridium is a leap-of-faith story.