Showing posts with label DECK. Show all posts
Showing posts with label DECK. Show all posts

Best Wall St. Stocks Today:

A argument has arisen about whether the facility put together last spring to help finance Greece and to cover future bailouts of eurozone nations if they need it is large enough. The package put together by the EU and IMF totaled nearly $1 trillion.
That fund has put nearly $150 billion into Greece. Many capital markets investors believe that will need to be increased in two years. Ireland may need $130 billion, a
lthough the problems with its banks have not been sufficiently analyzed and the outcome of its austerity package remains unknown. Several EU members want Portugal to tap the fund because its cost to raise money has moved up sustainability. And, there is Spain with 20% unemployment and a housing market which gets into more trouble as time passes.
Several analysts have pointed out that the size of the Spanish economy is more than that of Ireland, Greece, and Portugal combined. It is a very crude measurement to determine what Spain may need in terms of money from the EU/IMF facility.
The total obligations to cover the financial needs of the four nations could rise to $600 billion or $700 billion, which would test the current fund. That test could become harder if any of the four nations’ voters reject austerity and vote in legislators opposed to cost cuts. The changes of heart do not mean the nations can dodge the laws of finance. It only means they may push their days of reckoning further into the future, and that would probably mean bigger bailouts.
There are two opposing arguments about the bailout fund size. The first is that the stronger nations of Europe and IMF should save all the troubled nations at once to salvage the euro and undercut the fears of investors. If this were to work, borrowing costs for the region would drop and perhaps the capital markets would return to normal. Countering that is the point of view that a larger bailout fund would lead to more contagion as the weaker nations grab for the money in the facilit! y to plu g the holes in their budgets. That argument against this is simple. Countries which take aide also lose a large portion of their financial sovereignty which is then transferred to the IMF, France, and Germany in exchange for the help.
The foot race is on: can Spain and Portugal convince investors that their budget plans are strong enough to mitigate their needs for capital? Or, will concerns about their financial futures continue to drive the yields on their sovereign paper higher?
There is middle course. It is for each country to raise taxes so rapidly that, if the increases hold, the need for outside capital will drop. Such a move would essentially make the countries self-financing. It might also cause unprecedented labor riots. Tax increases are the other side of the austerity coin. But, there is a long shot that higher receipts to treasuries may be a solution which keeps Spain and Portugal from the need to rely on outside help.

Best Wall St. Stocks Today: EK,HPQ,LXK

By Chad Brand Of The Peridot Capitalist

Eastman Kodak (EK) stock has been a value trap for years as increased sales of low margin digital photo products have struggled to make up the cash flow lost from declining traditional film sales. The next step in Kodak’s digital reinvention is aimed directly at Hewlett Packard (HPQ) and Lexmark (LXK). The company has unveiled its own line of inkjet printers complete with their own ink cartridges.
How does Kodak think it can compete with the established big guys in the printer market? By changing the rules of the game. For years, the hardware companies sacrificed margins on their printing hardware in order to secure the bulk of their profits from overpriced ink cartridges. Think of it as the Gillette business model. Get everyone using your razors and make your money selling replacement blades.
Kodak is going to try and take a slightly different approach, since low-priced ink recycling stores have popped up everywhere, aimed at customers frustrated by paying $30 for a plastic container of ink. Kodak will price their printers slightly above average, but simultaneously is slashing the prices of their replacement ink. Black cartridges will fetch $10, with color versions costing $15 apiece.
Will this strategy work? Well, it’s hard to say. Ink cartridge prices will most likely fall even further but that trend has already been in motion ever since ink recycling retailers like Cartridge World have gone ahead with rapid nationwide expansion plans. As a result, it is definitely bad news for HP and Lexmark, who will have to either lower prices to maintain market share, or give up some share to preserve profit margins.
But is this lightning in a bottle for Kodak? I’m not convinced yet, until I see what kind of margins the company can really get from thi! s strate gy. Hardware prices are always under pressure, so how long will Kodak be able to price their printers at the high end of the market, and how long will those prices hold? Will the total margin on a $250 printer and a $10 cartridge for a new entrant into the market be meaningfully higher than that of a $200 printer and a $30 cartridge from a company like HP that already possesses a low-cost production process?
It is surely a bold move from Kodak, and one they needed to make to reinvigorate their company and really take aim at a large consumer complaint; the high price of ink. However, even if they can take a nice chunk of the home printing market, it remains to be seen how much of that ink will really flow through to their bottom line. And that is really what will be important for Kodak investors going forward.
Full Disclosure: No position in EK, HPQ, or LXK at time of writing
http://www.peridotcapitalist.com/

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