Cisco (CSCO) quarterly / annual update

Cisco reported annual earnings today. Wall Street, so far, responded unfavorably to future guidance provided by the company. I am not sure I fully agree, but acknowledge that the crystal ball is opaque at best with the current irrationally moving economic parts … so one key question: “Is CSCO hedging the future with very, very conservative guidance?”

This financial block really got my attention given the service provider order drop – quote, with my bold: ” In terms of orders in Q4, total product orders growth was flat. Looking at our geographies Americas was up 1%, EMEA was up 4% and APJC was down 8%. Total emerging markets was down 8% with the BRICS plus Mexico down 20%. In our customer segments, enterprise was down 2%, commercial grew 7%, public sector was up 13% and service provider was down 21%. “

CEO continued on: “Let me double click on service provider just a bit. The Americas was generally the same from an order perspective from the prior quarter, so no real shift positive or negative. Europe was actually positive in the SP space. In Asia, we saw continued weakening in our China service provider business and we had two massive build outs in India a year ago that just didn’t replicate this year with the two major players there. That’s the net of the service provider situation it’s not more complicated than that. “

Bottom line – if CSCO was not one of my largest stock positions, I might be backing up the truck over the next few downturns (I am assuming them to occur), so I’ll watch and back up the little red wagon when opportunity knocks with a >3% yield.

Fitbit trade debacle

Ok … sometimes you just need to confess up to making an error and then working a way out of a hole.

Yesterday with Fitbit due to report earnings, I thought that it may surprise on upside … boy, was I wrong!

With all the published information wrt FIT, I added the following inputs:

  • Apple reported decent growth in Apple Watch sales
  • Almost everybody I know uses a FIT device and does NOT want to buy the more expensive Apple Watch (i offered to buy them for wife and daughter and both declined and chose to stay w/ FIT)
  • I scaned the blogosphere and Stocktwits for any noise – it all came back neutral in RECENT posts

I purchased a total of 300 shares (not much capital intentionally so for a speculative earnings trade)

FIT earnings were good, but the company reduced revenue and margin targets … to sell more cheaper devices (?) … the FIT watch device is NOT selling well.

I am in a hole … I did not sell, I bought a bit more to lower my entry price. Why? User data. The data FIT has is not reproducible. If the current management team cannot figure out how to monetize it, somebody else will … I will keep working (trading) to make a bit of $ of this – a bit of lemonade from really sour lemons.

Key learning: when hunting for noise in blogosphere, retracing steps backward longer in time is worth it.

Better late than sorry – DBI (old DSW) Q1 Conf Call

Disclaimer: Not recommendation just an observation and opinion

I just finally read carefully the latest earnings conference call from DBI – i was really late as this sat in my inbox since May 30 – a month late. Between now an then, I doubled my position in DBI due to the price / valuation and X-div dates. My current long position is ~2% of my actively managed portfolio, and I am considering increasing that position.

The earnings call held a couple of nuggets: a) first q2 will not be a barn burning (a buying opportunity?) and q3 is seasonally strongest; b) management enthusiasm for their strategy was high and their opportunities / challenges were well explained; and c) analysts did not ask tough questions in the call – are they comfortable w/ management’s strategy and delivery, or have they just punted on anything / everything retail? Hard to sa

I will most likely not add to my position until q2 earnings are out to see the depth of analyst disappointment (or absence thereof)

An active investor

https://seekingalpha.com/news/3473007-big-u-k-investor-dumps-exxon-climate-change

quote:

  • Exxon Mobil (XOM +0.9%) is being dropped by the U.K.’s biggest asset manager, which also says it plans to vote against the reappointment of Chairman/CEO Darren Woods for failing to adequately address the threats posed by climate change.
  • XOM is the only oil major Legal & General is divesting, as competitors including Chevron (NYSE:CVX) and Royal Dutch Shell (NYSE:RDS.A) meet or exceed the insurer’s basic standards on climate change action.
  • The divestment affects a small part of XOM’s equity – Legal & General owns just 0.6% of the company, and the divesting funds hold just part of that -but it could increase pressure on the oil giant.

The more investors who apply pressure with their capital to further climate change considerations the better! Carry on!

Data on some Banks – Canada

Disclaimer: Not recommendation just an observation and opinion

The big banks in Canada are some of my favorite equity income portfolio kernels; currently long time long, BMO, RY, & BNS.  Seeking Alpha post on the banks presented a good bundle of data to compare the banks – with a bias or narrative assuming mortgage credit issue impacting the banks’ portfolio quality.  I am a fan of these banks given the higher regulatory environment in Canada as well as (and most importantly) a long tradition of >100years successfully managing capital… a bit of differentiating DNA.

https://seekingalpha.com/article/4270368-toronto-dominion-banks-dividends-appear-secure-among-peers

Here is my comment to the author:  Thanks for putting all the data on the table. I am a long time (US citizen) holder of BMO & RY as core portfolio dividend kernels – their history speaks for itself. BNS is interesting as more aggressive in emerging markets; total portfolio position 50% less in BNS than in BMO or RY. Based on the data presented here, is there really a material (statistical?) difference between TD, BMO and RY on the ratios? – My take is not so much and probably depends on your point in time to review. Currency issue/risk is worth the predictability of dividend flows. I am also looking to increase current BNS position @~$41.00US

A climate reason behind ‘why not’

Looking at different new investments, an industrial REIT surfaced from my value screens … I am not a huge fan of economic cycle REITs at this point, but the valuation was interesting – MNR

I was primarily interested in a preferred stock MNR/PR/C. But … after looking at their financials and business model a bit closer, this graphic struck me

They have a sizable property distribution on the eastern US seaboard … if i am looking at a 10 yr investment, do i really want to purchase hard physical assets that are on the coast? NO! Climate change risk was a big factor in walking away from this investment.

Apple’s WDC from Morningstar

Morningstar was out this morning on Apple’s WDC so far … they made a point that hit me too. quote: “One of the most important announcements, in our view, was Project Catalyst, which helps developers port existing iPad apps onto the Mac, facilitated by the latest macOS, Catalina. We believe these moves in aggregate will usher Apple toward having its MacBook offerings running on its ARM-based A-series processors in lieu of Intel processors. However, we don’t believe this will meaningfully come to fruition for at least another three or four years, if not longer, given Apple’s 100 million Mac and MacBook installed base and the incumbent applications written for Intel’s x86 architecture.” (bold is mine)

Developers are the key and refreshing to see focus put back where it belongs. Devices are the delivery systems and need to be hip and fabulous, services need to be valuable and meaningful to users, but without apps …. nothing. There are two transitions that seem to be setting up – a) iPad / Mac blurring and interoperability (moving the iPad closer to Mac than iPhone which makes sense) and b) x86 to ARM in Mac … both totally make sense, but without developers paving the way for those, again … nothing. If I’m close to right, it surfaces how Apple is playing a long game.

BMO Earnings Conf Call

Disclaimer: Not recommendation just an observation and opinion

https://seekingalpha.com/article/4267058-bank-montreals-bmo-ceo-darryl-white-q2-2019-results-earnings-call-transcript

This conference call seemed better to me than the recent RY (posted earlier). The comments around expenses and differentiating between a specific business and the enterprise was refreshing. I just thought the leadership team had a better grasp of their business and strategies.

I also really appreciated this comment by CEO in opening remarks – quote: ” As I look across the bank we’re building on our strong foundation and differentiating strengths to grow our businesses and deepen customer loyalty. “

I am long BMO for ~ 10yrs but have reduced my position to core buy/hold/DRIP, and include this as a core holding in my equity income growth sub-portfolio with RY and BNS.

NXP buys MRVL connectivity portfolio

this is a complete surprise to me and will need an investigation into why (if possible). i had opinion that MRVL connectivity portfolio (especially the Bluetooth) was a solid IOT play. Quote below from https://briefing.com

NXP Semi to acquire Marvell’s (MRVL) Wireless Connectivity portfolio in an all-cash, asset transaction valued at $1.76 bln 8:31 AM ET 5/29/19 | Briefing.com

The acquisition encompasses Marvell’s WiFi Connectivity Business Unit, Bluetooth technology portfolio and related assets. The acquisition will enable NXP to deliver complete, scalable processing and connectivity solutions to its customers across its focus end markets. The acquisition includes approximately 550 people worldwide. NXP expects the acquisition to create new revenue opportunities in its target end markets. With approximately $300 million in revenue in Marvell’s fiscal 2019, NXP anticipates revenue associated with the acquired assets to double by 2022. The acquisition is expected to be accretive to NXPs non-GAAP operating profit in the first full quarter after the transaction closes

GLW – a quick review

Disclaimer: Not recommendation just an observation and opinion

GLW surfaced as an up-coming X-div stock with a solid history of paying / increasing dividends and also fits into the 5G infrastructure narrative as the demand for fiber should increase with the build out.

I took a look thru my favorite first view lens, … but at current prices it is just too expensive – somewhere <$25 would be more interesting. – NO FURTHER Reasearch but will add to my ‘sort of watch’ list.

From technical view (Investing.com)

From a fundamental view

FinBox.io DCF analysis is neutral imho

Simply Wall St DCF analysis is positive

Fast Graphs shows the expensive stock price based on forecasts (which have not been that accurate)

Tip Ranks overall score is neutral

RY Earnings Conf Call

Disclaimer: Not advice or recommenation, just observation and opinion

This was milktoast https://seekingalpha.com/article/4266134-royal-bank-canada-ry-ceo-dave-mckay-q2-2019-results-earnings-call-transcript

While I am long RY and consider it w/ BMO and BNS part of my core income-based equity holdings, this conference call was a waste of time for those who participated imho. A common practice of walking thru the financial performance slide deck with analsysts asking clarifying questions so they can adjust their predictive models.

Without the dividend and the conservative Canadian regulations, I would move my capital elsewhere. I prefer to hear strategy updates, risk clarifications with mitigations and analysts challenging the strategy.

Mary’s First Big Deal?

Mary Meeker is a long time fixture in my investment readings – as well as standard business strategy. Her approach is no longer novel but her insights are typically worth every ounce of energy spent understanding them …

In her new gig as an investor rather than an analyst, she’s made her first big bet https://www.bloomberg.com/news/articles/2019-05-20/mary-meeker-s-new-fund-chooses-australian-startup-for-debut-deal

Having used Canva and worked with creative types who love it … hard to argue against the idea at this point. Go Mary Go!

Q1 2019 Earnings Conf Call #4 – ACB

Disclaimer: Not a recommendation to buy, sell or hold … just observations.

https://seekingalpha.com/article/4264473-aurora-cannabis-inc-acb-ceo-terry-booth-q3-2019-results-earnings-call-transcript

ACB is different. First, I own very, very little (100sh) so I do not have much skin in this game. I thought the conf call telling on a couple of points: a) medical, b) beverages not a bar scene, and c) production ownership. I think they are the most interesting of the big canada weed companies, and will look to add to my position but <$8.00 somewhere on a weed cycle downer day. The company has a clear vision and strategy; what will be telling is if the demand shows up as expected (or more).

VZ offers NB IOT network

https://seekingalpha.com/pr/17511427-verizon-extends-iot-leadership-position-launching-narrowband-iot-network-nationwide-offering

This is just a beginning. One cool part of the announcement is the inclusion both IP and non-IP traffic, and even more so specific use cases. Quote:

  • Smart cities – improve citizen experience and municipal operations through parking sensors, waste management and smart lighting.
  • Smart buildings – enhance building safety and incident response times through connected smoke detectors including regular auto-test, battery check and real-time alerts to the relevant parties in case of fire.
  • Industrial – improved machinery maintenance cycles and factory safety through machinery control such as equipment status, factory control, and process and safety monitoring.
  • Environment monitoring – increase focus on environmental responsibility through status reporting of manhole covers, fire hydrants and chemical emission levels.
  • Agricultural – improve efficiency in the agricultural industry with livestock tracker, connected greenhouse, stationary tracking and monitoring of air quality, humidity, moisture, temperature, and weather conditions of air and soil.
  • Asset Tracking – improve efficiency and decrease costs by using pallet tracking and geo-fencing.
  • Utilities – improve efficiency and decrease waste by using gas and water metering, including smart meter consumption tracking and pipeline monitoring.

The more of these announcements, use cases and developer kits the more device innovation will take off!

Q1 2019 Earnings Conf Call #3 – DOC

https://seekingalpha.com/article/4258671

This is my second major Healthcare REIT (WELL, DOC and LTC-minor). WELL conference call was already covered. DOC call was nothing to write home about, imho; though not negative. Just not as complete with strategy beyond ‘leverage relationships’ – which is all good, btw, but I wanted to hear more about their industry, opportunities and how their strategy is playing out. Their call reminded me of sitting in a meeting of financial analysts – critical and necessary, but not sufficient. I am skeptical if I add more to position beyond DRIP.