Friday, March 29, 2013
Thursday, March 28, 2013
Inbox (2,275) - robertjcotter@gmail.com - Gmail
This is a long, scholarly presentation on how, as individuals, we come to a belief of what is the best approach to government and individual rights. Very interesting and revealing.
What if there had never been an Industrial Revolution in England?
What if there had never been an Industrial Revolution in England?
AT&T: A Toxic Aristocrat - Seeking Alpha
I have always considered T to be one of the safest investments in the world. This article points out some real issues between free cash flow and operating earnings.
A TRAP????
AT&T: A Toxic Aristocrat
A TRAP????
AT&T: A Toxic Aristocrat
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
AT&T (T) has raised its dividend every year since 1985. It's also the 13th largest S&P 500 company by market capitalization. This means that it should be a relatively safe stock. These two things combine to make a compelling case for buying AT&T if you want a nice safe dividend paying stock. So why am I calling it a toxic aristocrat and recommending you avoid it?
The dividend payout ratio is 144%. This is simply not sustainable. The good news is that the dividend is well covered by free cash flow. This means the risk is not as immediate as the payout ratio suggests. The difference between earnings and FCF is being made up by recognizing actuarial gains on pensions and post-retirement benefits (as it was last year) rather than being from business-related activities. However, there are only so many improvements you can make in your pension arrangements.
Gross profit margin is 56.7%, which is impressive but not surprising when you consider the lines of business AT&T are in - phone calls do not cost much to "produce" once you have the infrastructure in place. However, they have high expenses - especially selling, general and administrative (56.9% of gross profit) - that reduce their net margin to just 5.7%. This is better than most of their competitors but that says more about the competitiveness of the communications industry than the quality of AT&T. Their net margin also seems to be in a fairly steady downtrend over the last 10 years (with 2011 as a notable outlier).
Debt is growing in both absolute terms (8% increase in long-term debt last year) and compared to treasury share adjusted shareholder equity (10% increase from 1.3:1 to 1.43:1). While now is a pretty good time to be borrowing as interest rates are low this will not last forever. Interest expenses are currently 4.8% of revenue. This is down slightly from 4.9% last year thanks to borrowing at lower interest rates and repaying some higher rate debt. Currently it would take AT&T 9 years of net earnings to repay their long-term debts.
AT&T is improving their receivables both as a percentage of revenue (10.7% of revenue down from 11.6% in 2011 and 11.9% in 2010) and in absolute terms. This is a sign of operating efficiency and a boost to earnings although it will obviously get harder to continue to do this. It does suggest the company is being competently managed though.
The return on total assets is very low at 2.7% and even with gearing AT&T is only providing 7.3% on return on equity. This just is not good enough to guarantee that they will continue to be able to provide an attractive dividend.
This analysis of AT&T's financials suggest that the current 4.9% dividend yield is a trap. The dividend is currently being kept afloat by accounting improvements. At some point this will end. They may be able to continue their record of dividend increases but it will come at a cost to the balance sheet. The less quantifiable attributes don't look particularly favorable either.
The telecommunications market, or at least AT&T's share of it seems to be stagnating. The two main segments of the business are wireless (cellular) and wired (landline) telecommunications services. Both are about half of the company's business (52% and 47% respectively).
Wireless gross customer acquisition has slowed by 13% over the last year while customer losses have increased to the point wireless net customer acquisition (acquisition minus losses) slowed by 52%. One very simple model (assuming gross acquisition stays constant and losses remain at their current rate) suggests that we may have reached an equilibrium in the AT&T wireless customer base. This trend is also playing out in the wireless market generally with the number of new subscribers each quarter dropping from 5 million in 2011 to an estimated <2 107="" 2013.="" amp="" at="" b="" comparison="" for="" have="" in="" million="" subscribers.="">
The wired side of the business is in worse shape - they posted just a 1% increase in revenue which was merely a partial reverse of a 4.7% loss in 2010. The only sub-segment to grow revenues last year was data. It seems likely this flat or slightly downward trend will continue as traditional phone lines become less and less popular.
While AT&T do have a significant market share in their two main market segments (which is good) the overall customer bases are not growing (or even shrinking) so the marketplace will get more competitive. The unfortunate fact is that telecommunications services are very close to being a commodity business. More customers are realizing this and either switching providers or threatening to do so in order to receive improved pricing.
Overall, I think AT&T is an average company that is trading at inflated levels at the moment due to its superficially attractive yield and strong reputation. A nearly 5% yield is very tempting in a low yield environment, especially from a dividend aristocrat. However, AT&T has a relatively poor financial performance and is in a difficult industry. They may be able to weather the storm and continue paying and (maybe even raising) the dividend but it will be challenging. My belief is that future increases would be at or below the 2.4% average from the last three years (which barely beats inflation) and would probably come at further expense to the solidity of the balance sheet.
Monday, March 25, 2013
OBAMA'S TEMPER TANTRUM PUTTING AMERICAN LIVES AT RISK -- BY DONNA GARNER - 3.24.13 - Tea Party Nation
OBAMA'S TEMPER TANTRUM PUTTING AMERICAN LIVES AT RISK -- BY DONNA GARNER - 3.24.13 - Tea Party Nation
RAGE #2 – AIRPLANE SAFETY
“Obama’s Temper Tantrum Putting American Lives at Risk
by Donna Garner
3.23.13
Obama’s temper tantrum is putting Americans’ lives at risk. Because he is furious that the Republicans did not back down when he tried to bully them into caving on sequestration, he is determined to make sure the federal agency cuts are in the places that will be most noticeable and hurtful to the public. This way he thinks he can turn the public’s wrath toward the Republicans. With Obama, everything is always about politics!
Ironically, it was Obama who came up with sequestratian in the first place back in the summer of 2011. He thought by threatening deep cuts in defense spending that the Republicans would eventually feel pressured enough to agree to higher taxes. Obama’s plan didn’t work. The Republicans stood by their pledge not to raise taxes, and sequestration went into effect on March 1, 2013.
RAGE #1 – ILLEGALS RELEASED FROM JAIL
Obama decided to have ICE (U. S. Immigration & Customs Enforcement) free 2,228 illegal immigrants from local jails throughout the country between Feb. 9 and March 1 – before sequestration was even to go into effect. Homeland Security Secretary Janet Napolitano originally said it was “several hundred”; but when the House Judiciary Committee released an internal document from ICE, the number turned out to be thousands. More illegals were released in Texas than in any other state, putting citizens and law enforcement at great risk.
These 2,228 illegals were not innocent, “nice guys,” including those who had been arrested multiple times for drunken driving, theft, child abuse, and assault charges. Ten of them were labeled as Level 1 offenders which is the most serious classification given.
As stated by Arizona Gov. Jan Brewer, “The American people were initially told there were hundreds, not thousands, of individuals released. We were assured they were low-level detainees of little public risk. As we now know, neither of these claims was accurate.”
Congressmen have suggested that rather than let dangerous, illegal criminals out on the streets that ICE could have made other cuts in such things as travel, conventions, conferences, publicity, and/or government vehicles.
RAGE #2 – AIRPLANE SAFETY
In an attempt on Obama’s part to cause flight delays that would produce a public backlash against the Republicans, the FAA announced closures of 149 air traffic control towers (with cuts to take place on April 7) even though there are $50 million in unobligated FAA research and capital funds that could be used to save the air traffic control towers. Cuts also could have been made in the FAA budget (and in all government agencies) by cancelling the many diversity/sensitivity/LGBT conferences that take place on a regular basis, many of which are held in expensive resorts. (Here is the White House list of 2013 LGBT conferences: http://www.whitehouse.gov/lgbt/white-house-conferences and http://www.whitehouse.gov/blog/2012/02/02/announcing-white-house-lg... )
As a person with the National Air Traffic Controllers’ Association stated, “Closing control towers is equivalent to removing stop lights and stop signs from our roads. It is clear that this administration is putting its top-line message, that spending cannot be cut without severe consequences, before the safety and well-being of Americans.”
People who work in the airline industry (e.g., airport directors, pilots, and workers in the airline sector) have vehemently stated that pilots flying into these 149 airports (who should be focusing on vital landing and takeoff procedures) will be left to try to coordinate their takeoffs and landings among themselves over a crowded, shared radio frequency because there will be no ground controllers to help them.
Many of these 149 airports (13 in Texas alone) help their communities economically because they attract businesses and tourists. Without them, more unemployment and increasing local debt will occur.
RAGE #3 – WHITE HOUSE TOURS
Obama decided to cancel the White House tours during spring break, thinking this would elicit fury directed toward the Republicans. However, the public put the blame on him instead of on the Republicans, particularly when it became known widely that the TSA had recently signed a $50 million contract with VF Imagewear for new uniforms, mostly made in Mexico at a cost of $1,000 per uniform!
Thursday, March 21, 2013
Kelly Warns of Potential Crime-Terrorism Nexus in Latin America - robertjcotter@gmail.com - Gmail
Am I alone; or do you feel like the world has decided that
the U.S. is not going to respond to any threats and many
smaller countries are lining up to topple the country that was the number 1 world power only 5 years ago???
the U.S. is not going to respond to any threats and many
smaller countries are lining up to topple the country that was the number 1 world power only 5 years ago???
Kelly Warns of Potential Crime-Terrorism Nexus in Latin AmericaBy Jim GaramoneAmerican Forces Press Service WASHINGTON, March 20, 2013 - A potential connection between crime syndicates and terrorists in Latin America would constitute a clear danger to the region, U.S. Southern Command's senior leader told reporters at the Pentagon today.
"The concern is that ... they're looking ... for influence -- say for votes in the U.N. on sanctions," he said. "But also, and I've ... made mention to some of our friends in the region that these guys are very, very good at what they do, and very, very skilled at what they do, and that people should just be careful as to who they're dealing with." The general stressed he is not accusing Iran of sponsoring terrorism in Latin America, but he noted that Iran is involved in terrorism in other areas of the world. "We do know that some terrorist organizations are able to skim off fairly substantial sums of money from the drug profits," Kelly said. "And so there has to be kind of a network for that to happen." The criminal networks in Latin America are very sophisticated and very well financed, he said. Drugs are the basis for this wealth and the drug-related money coming out of the United States "is astronomical," Kelly said. "I mean palettes of money," he said. "For a buck, anything can get on the [drug transport] network." That network, Kelly said, transports tons of drugs into the United States and Europe and moves bales of money back out. "The point of it all is the network is a very dangerous thing to have working as effectively as it does, because anything can get on it," he said. Kelly said his command is working to build military-to-military contacts throughout Latin America and the Caribbean. "The good news about Latin America and my part of the world is that there are no wars," he said. And most Latin American countries, including Brazil -- the world's fifth-largest economy -- want the United States as a partner, Kelly said. The countries of the region don't ask for much, the general said. "When I go down and visit, they're not asking for an awful [lot] -- they're not asking for money," Kelly said. "They're willing to pay their own way." What the Latin American countries need is expertise, the general said. For example, Peru is asking for help in getting its separate military services to work together better. Colombia needs help in countering improvised explosive devices that the terror group FARC and criminal syndicates use to protect coca fields and factories. Other nations need medical expertise. Turning to another topic, Kelly noted that sequestration will hit his command hard. He said there will be fewer vessels to interdict cocaine shipments, and fewer troops to operate with partner militaries. | ||
| Biographies: Marine Corps Gen. John F. Kelly |
8 Tax Mistakes You Can't Afford to Make
8 Tax Mistakes You Can't Afford to Make
8 Tax Mistakes You Can't Afford to Make
As the April 15 tax-filing deadline approaches, you're running out of time to get your taxes done. But smart tax planning doesn't start in April. To truly get on top of your taxes, you need to always be thinking ahead. As you prepare your 2012 return, don't forget about changes you can do right now to make your 2013 tax situation a lot better.
The best way to make taxes a lot less painful is to avoid making unnecessary mistakes. Below, we'll look at eight things taxpayers commonly do wrong that can cost them thousands of dollars in extra taxes.
Recommendation: Pay less in taxes by using the many special tax-favored accounts that the IRS allows.
- IRAs, 401(k) plans, and other employer-sponsored retirement accounts.
- 529 plans and Coverdell Education Savings Accounts, which offer tax-free growth when proceeds are used for approved expenses.
- Health savings accounts and flexible spending accounts provide tax benefits for your medical spending.
Bottom line: Not using these accounts is like handing over free money to Uncle Sam.
Recommendation: When possible, opt for longer holding periods, since the capital gains rate you pay depends on how long you held the investment.
- Hold an investment less than a year, and you'll pay your ordinary rate of as much as 39.6% this year.
- Hold it more than a year, and the maximum is 20%, with many taxpayers paying lower rates of 15% or even 0%.
Bottom line: Long-term investing can be rewarding.
Recommendation: You must have enough tax withheld from your paycheck to cover most of your tax liability when you file your return.
- If you don't withhold enough, you'll pay penalties and interest on what you should have paid in estimated taxes.
Bottom line: It's too late to fix for the 2012 tax year, but be sure to look up Form 1040-ES to make sure you're in good shape this year.
Recommendation: If you have tax-favored accounts, make sure you use them wisely.
- High-income bonds, as well as real estate investment trusts Annaly Capital (NYSE: NLY ) and American Capital Agency (NASDAQ: AGNC ) produce income that's typically taxed at high ordinary-income rates, and so they often do best in IRAs rather than taxable accounts.
- By contrast, a low- or no-dividend stock that you buy and hold for decades may actually cost you more in taxes in an IRA than a taxable account.
Bottom line: Position your investments to make the most of available tax savings.
Recommendation: Be smart about harvesting tax losses, timing deductible expenses, or deferring taxable income.
- Late last year, many taxpayers did their best to pull income into 2012 and leave deductions for 2013 in order to capture lower 2012 tax rates and reduce their 2013 tax liability.
Bottom line: With taxes, timing is key.
Recommendation: Be sure to consider special tax rules for certain investments
- For instance, precious-metals investors need to be aware that because of their structure,SPDR Gold (NYSEMKT: GLD ) and iShares Silver (NYSEMKT: SLV ) have their gains taxed as collectibles, which carries a higher rate on capital gains even if you hold the shares for more than a year.
- Selling too soon after receiving a dividend can take away the lower tax rate on your payout.
Bottom line: Be careful before you sell.
Recommendation: Be sure you have the records to back up the figures on your return so that you can defend your filing during a possible audit.
- Many tax benefits require documentation to prove that you're entitled to them.
- For instance, when you give to charity, you should get an acknowledgment letter showing that you made a donation and didn't get anything of value for it.
- But with some donations, such as gifts of vehicles or expensive property, further documentation or even a formal appraisal may be necessary.
Bottom line: Forewarned is forearmed.
Recommendation: Even if you can't pay, you should still file in order to avoid huge penalties.
- The penalty for not filing is 10 times as much as the penalty for not paying on a filed return.
Bottom line: Even if you are in financial straits, save yourself some big money and prepare your return anyway.
Monday, March 18, 2013
734502main_v838_hubble_full_full.jpg (2238×2448)
734502main_v838_hubble_full_full.jpg (2238×2448)
Light Echoes from V838 Mon
What caused this outburst of V838 Mon? For reasons unknown, star V838 Mon's outer surface suddenly greatly expanded with the result that it became the brightest star in the entire Milky Way Galaxy in January 2002. Then, just as suddenly, it faded. A stellar flash like this had never been seen before -- supernovas and novas expel matter out into space. Although the V838 Mon flash appears to expel material into space, what is seen in the above image from the Hubble Space Telescope is actually an outwardly moving light echo of the bright flash.
In a light echo, light from the flash is reflected by successively more distant rings in the complex array of ambient interstellar dust that already surrounded the star. V838 Mon lies about 20,000 light years away toward the constellation of the unicorn (Monoceros), while the light echo above spans about six light years in diameter.
In a light echo, light from the flash is reflected by successively more distant rings in the complex array of ambient interstellar dust that already surrounded the star. V838 Mon lies about 20,000 light years away toward the constellation of the unicorn (Monoceros), while the light echo above spans about six light years in diameter.
Wednesday, March 13, 2013
Thursday, March 7, 2013
Variations on a Scheme | Consumer Information
One of many scams that are increasing via phones and internet:
Variations on a Scheme | Consumer Information
Variations on a Scheme | Consumer Information
March 7, 2013
We’ve heard reports that a variation on an old scam is making the rounds. It sounds like this:
<Ring, ring>
Unsuspecting person who answers the phone: Hello?
Scammer who is calling: Ma’am, I’m calling from the government. We’re about to send out national medical cards for the new Affordable Care Act. You’re one of the lucky people to get yours first, so I just need to confirm your name, address and phone number. Oh, and your bank account number, too…
This kind of scam pops up anytime there’s a big change in a government policy, or when a topic is in the news. Scammers use people’s uncertainty to try to get them to reveal personal information. From there, it’s not much of a leap to identity theft, with scammers racking up bogus charges on your credit cards, opening new credit cards in your name, even taking out loans in your name.
You can protect yourself. If you get a call asking for your information, hang up. It’s a scam. Government organizations and the legitimate groups you do business with have the information they need. They’ll never call to ask you for it.
But do me a favor: If you get a call like this, report it to the FTC. The phone number on your caller ID – if there is one – or the name or location of the caller – is helpful information to investigators and professional fraud fighters. You can report it online or on the phone, toll-free, at 1-877-FTC-HELP. Your report might help stop the scammers, and it could help keep others from being scammed.
Subscribe to:
Posts (Atom)