Time Warner Cable About $10 Too Expensive As Debt Jumps Higher

Time Warner Cable, recently announced a debt offering of $1.9 billion. ^[] This additional amount is expected to be used for general corporate purposes, which may include the repayment of debt and repurchase of the company’s stock. Time Warner Cable has more than $20 billion of net debt (total debt minus cash) outstanding, which compares to our roughly $20 billion estimated intrinsic value for the company and an implied $55.46 price estimate.

Time Warner Cable primarily competes with Comcast , AT&T and Verizon in both the pay-TV and broadband businesses. The company also competes with satellite pay-TV providers like Dish Network and DirecTV.

The recent debt offering means that Time Warner Cable is much more sensitive to changes in business conditions compared to some of its competitors given its higher leverage. Thus, it becomes even more critical for the company to maintain its competitiveness, as higher leverage heightens the company’s sensitivity to key value drivers like market share. We have a $55.46 Trefis price estimate for Time Warner Cable’s stock here.

Impact of Leverage on Company Valuation

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To examine the impact of higher leverage, we can look at how Time Warner Cable’s value changes with respect to change in its pay-TV market share. Currently we forecast stable market share going forward despite the declines that the company has seen in the past.

With its current debt levels, an annual 1% increase in pay-TV market share (including 2010) over the course of the Trefis forecast period leads to a 48% increase in the company’s value. However, if we change the net debt amount to zero and perform a similar experiment, the overall company value would increase by only 24%. The company’s value demonstrates similar downside sensitivity to changes in market share – and heightened risk.

The upside and downside risk of Time Warner Cable’s stock is high given its large debt levels. Thus it becomes absolutely necessary for the company to remain competitive and maintain both share and pricing, although Time Warner Cable is not alone in this position as other highly leveraged companies like Sprint face similar issues.

You can see the complete $55.46 Trefis price estimate for Time Warner Cable’s stock here

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What WikiLeaks Tells You About China’s Economic Numbers

Dec. 7 2010 - 5:42 pm | 2,653 views | 0 recommendations |

Beijing

We’re starting to like this Julian Assange character, trumped-up rape charges in Sweden notwithstanding. Thanks to the diplomatic cables made public by Assange’s WikiLeaks, we’re getting a better look at GDP numbers published by China.

One of the cables tells of a dinner between the U.S. ambassador to China and the head of the Communist Party. Li Keqiang is his name, and he’s widely expected to become the new premier in a little over two years.Li says if he really wants the pulse of the economy, he needs to know just three things.

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Li must be reading from our playbook: We check in from time to time on rail volume and other real-world economic indicators that can’t be massaged by government statisticians.

“By looking at these three figures,” the cable says, “Li said he can measure with relative accuracy the speed of economic growth. All other figures, especially GDP statistics, are ‘for reference only,’ he said smiling,”

Just like the Bureau of Labor Statistics!

Three Things You Need to Know About the Chinese Economy by Addison Wiggin originally appeared in the Daily Reckoning.

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What WikiLeaks Should Say About Regulators Who Knew Shady Deals Were Going On

While I can-not pre-dict what Wik-iLeaks will leak about some major banks, I have a hunch that one of the rev-e-la-tions might be from a spe-cial New Con-structs report pro-vided to the Sen-ate Bank-ing Committee’s Sub-com-mit-tee on Secu-ri-ties, Insur-ance, and Invest-ment in late Octo-ber?2009.

In that report, we revealed that reg-u-la-tors, if they were pay-ing atten-tion, would have seen that many Wall Street firms were engag-ing in alarm-ing lev-els of credit deriv-a-tives trading (credit default swaps or CDS).

For exam-ple, the notional value of Bank of America’s (BAC) credit deriv-a-tives con-tracts at the end of 2007 was over $3 tril-lion and 5328% greater than the $57 bil-lion at the end of 2001. For Amer-i-can Inter-na-tional Group (AIG) the notional value of its credit deriv-a-tives con-tracts at the end of 2007 was $562 bil-lion and 447% greater than the $126 mil-lion at the end of 2001.

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It is a won-der that Bank of Amer-ica was able to sur-vive the finan-cial cri-sis with-out the same level of bailout/takeover by the U.S. gov-ern-ment expe-ri-enced by AIG given that BAC’s credit deriv-a-tive expo-sure was so much greater. Per-haps, Wik-iLeaks will offer some insight into how that happened?

The growth in expo-sure to credit deriv-a-tives was so high that any-one pay-ing atten-tion would have noticed. So, either the reg-u-la-tors knew and chose to do noth-ing about it (i.e. Bernie Mad-off) or they sim-ply were not pay-ing atten-tion (i.e. Enron, World-Comm?etc).

The point is not that reg-u-la-tors missed or ignored clear and obvi-ous early warn-ing sig-nals of the impend-ing finan-cial fall-out that occurred years later. The point is that they seem to miss these sig-nals quite?often.

None of this sur-prises me given my expe-ri-ence work-ing with the SEC, Sen-ate Bank-ing Com-mit-tee, FDIC, Sen-a-tor Corker, and the Con-gres-sional Over-sight Panel. My pre-sen-ta-tions to them focused how to improve the integrity of the cap-i-tal mar-kets most effi-ciently by imme-di-ately fill-ing holes in the cor-po-rate finan-cial report-ing sys-tem. I high-lighted sev-eral major breaches of finan-cial dis-clo-sures that had gone unde-tected and remain uncor-rected by the SEC. For exam-ple, over the last 5 years we found 10 com-pa-nies whose income state-ments do not add up cor-rectly and 20 com-pa-nies in the last 11 years whose bal-ance sheets do not bal-ance. For more exam-ples, see the Cor-po-rate Finan-cial Dis-clo-sure Trans-gres-sions report I sub-mit-ted to the SEC and the Sen-ate Bank-ing Com-mit-tee. What you read in that report will surprise?you.

In my hum-ble opin-ion, our reg-u-la-tory frame-work (before and after over-haul) is woe-fully ill-equipped to find, track and address the finan-cial machi-na-tions con-stantly invented on Wall Street and in cor-po-rate America.

As I stated in Pri-vate Sec-tor to the Res-cue, “Given that our abil-ity to trust polit-i-cal lead-ers is low, we must rely more than ever on pri-vate enter-prise to lead our society.”

There is no sub-sti-tute for “doing the dili-gence.” Watch your back when investing in this mar-ket because no one else is watch-ing it for?you.

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10 things I hate about smokers

I don’t mind your stained, yellow teeth or the stale air that clings to you. I just mind that you’re around me.

1. ? ?I don’t mind your stained, yellow teeth or the stale air that clings to you. I just mind that you’re around me.

2. ? ?The idea that you would willingly squander time and money to almost certainly destroy your health — and gain peer acceptance in the process.

3. ? ?Their inconsiderate, egocentric behavior. This is the non-smoking section of the restaurant and I have my baby with me. Please take your nicotine-laden air elsewhere. And no, I’m not sanctimonious, I’m sensible.

4. ??When waiting for something – in a line to pay bills, at a restaurant waiting for the rest of the party to arrive — smokers get to look philosophical and mysterious. Non-smokers get to twiddle their thumbs.

5. ??The guilt they’re too willing to analyse with just about anyone — or, alternatively, the deep, delusional denial of the problem at hand.

6. ??The incessant, obsessive talk of quitting one day, of The Last Cigarette, of their almost-successful attempt which was sabotaged because of a chance meeting with an old smoking buddy. The weight of evidence is against you; face it: you won’t be able to quit.

7. ?The 10-minute breaks every other hour. Smoking gives the perfect cover to loiter and shirk work. Try wandering aimlessly in the corridors without a cigarette in hand and a smoke buddy to chatter with and see how severely you get reprimanded.

8. ??The fact that the juiciest tidbits of gossip are exchanged in the smoker’s corner might sting, but what really irks me is how random smoke breaks turn into official meetings, in which the most important business of the day is conducted. I work here too you know; thanks for not letting me in the loop when you were deciding on the next project.

9. ??Their denial of lung cancer. No, it’s not laughter you’ll be choking with when the cancer is growing in your airway.

10. ??That smoking pretends to be about rebellion when it’s actually just about fitting in. It’s the lazy, unthinking transgression that no one gets worked up about (except me).

Published in The Express Tribune, October 31^st, 2010.

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Bernanke Had To Brag About It, What He’s Doin’

Maybe it wasn't such a good idea to brag about QE2

The long-awaited report on economic growth in the third quarter was released Friday morning, and was a somewhat pleasant surprise. After declining from an annualized growth rate of 5.0% in the fourth quarter of last year,? GDP growth declined to 3.7% in the first quarter of this year, and to just 1.7% in the second quarter.

It had many economists worried about a double-dip back into recession, especially after economic reports for July and August, the first two months of the third quarter, showed sharp declines in auto sales, home sales, and consumer and business confidence. Some economists were projecting third quarter growth could be as low as 0.6%, and headed to negative growth (recession), although the consensus forecast was that GDP would be up 2.1% in the third quarter.

So, it was good news for the economy that the consensus got it right, with the report showing third quarter GDP improved to a 2.0% growth rate. Equally good news within the report was that the growth was propelled by a 2.6% increase in consumer spending, since consumer spending accounts for 70% of the U.S. economy. Federal government spending also added to GDP, rising 8.8%, following a 9.1% increase in the second quarter.

In the other direction, the U.S. trade deficit continued to weigh on growth, as imports grew by 17.4% while exports rose only 5.0%. And corporate pessimism weighed on business spending.

Although still anemic and too slow to improve the employment picture to any degree, the news that the economy turned up some in the third quarter was good news for Main Street. However, the news may not have been all that good for Wall Street.

As I noted in my column last weekend, the Fed seemed to panic after the stock market plunged in August in its worst August in years, as economic reports continued to worsen. The Fed seemed to give up on its prediction of only a temporary slowdown in growth in the summer months but not into recession, and then a return of growth in the second half and through next year.

In early September it was suddenly hinting at, and then virtually promising, a significant round of additional quantitative easing to rescue the economy.

As a result stock markets around the world began rallying off their late August lows, and produced the rarity of a substantial rally in September and October, historically the worst two months of the year.

However, now we have the report that GDP growth did not decline further in the third quarter, but improved, while recent economic indicators show retail sales, home sales, manufacturing, and consumer confidence have all ticked up, while unemployment claims have fallen for three straight weeks.

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As I suggested in my column last weekend, the Fed may now be wishing it had never mentioned quantitative easing, or virtually guaranteed markets a large program of easing, the extent of which it will announce after its FOMC meeting next Wednesday.

Global stock markets have factored in the substantial easing program that seemed to be promised, with projections that it could amount to a ‘shock and awe’ approach of as much as $1.5 trillion. That projection and the big stock market rally factoring the expectation into stock prices, has lifted not only the stock market, but investor sentiment, which is now at an extreme of optimism and complacency often associated with market tops.

So, the market has to worry that these economic reports that are good for the economy may not be so good for the stock market, if it results in the Fed disappointing next week by initiating only a token amount of quantitative easing to keep its promise on easing, and the stock market has to factor out the shock and awe easing it spent two months factoring in.

Looking out further however, the third year of the four-year presidential cycle, historically the most positive of the four years, is now but a couple of months away.

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Bernanke had perhaps about it, it is Doin'

Perhaps this was not a good idea to boast about QE2

Overdue on economic growth in the third quarter report was published on Friday morning and was somewhat pleasant surprise.Après decline of 5.0% in the fourth quarter of last year annualized growth rate, GDP growth declined 3.7% in the first quarter of this year and only 1.7 per cent in the second quarter.

He had many economists concerned by a double dip recession, especially after economic reports for July and August, the first two months of the third quarter showed sharp drop in sale auto sales house and confidence of consumers and businesses. Some economists have been projecting third quarter growth could be as low as 0.6% and a negative growth (recession), although the consensus forecasting that GDP was 2.1% in the third quarter.

Thus, it is good news for the economy than the consensus it got right, with the report showing the third quarter GDP growth of 2.0% improved.It also good news in the report was that the growth was driven by an increase of 2.6% of consumption, since accounts consumption for 70% of the Federal Government américaine.Dépenses economy is also added to GDP increased by 8.8% to an increase of 9.1% in the second quarter.

In another sense, the u.s. trade deficit continued to weigh on growth as the imports increased from 17.4% while exports grew by 5.0%.And company pessimism weighed on business expenditure.

Although still anemic and too slow to improve the image of the job to some degree, the new economy is some in the third quarter was good news for street Main.Toutefois news perhaps not the only good on Wall Street.

As I mentioned in my column last weekend, the Fed seems to panic after the stock market plunged in the month of August in its worst August in years, as the economic reports continued to worsen .the Fed appeared to abandon its forecast of only a temporary slowdown in growth during the months of summer, but not in recession, and then a return to growth in the second half and by next year.

At the beginning of September he was suddenly referring and then practically promising, an extensive series of quantitative easing further to save the economy.

As stock markets around the world began mobilizing off the coast of their lower-end of August and produces the rarity of a major rally in September and October, historically the worst two months of the year.

However, now we have the report growth of GDP decreased further in the third quarter, but improved, while the recent economic indicators showed retail sale house sales, manufacturing and consumer confidence are all checked, while unemployment benefits fell for three straight weeks.

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As I suggested in my column last weekend, the Fed can now be wishing that he had never mentioned quantitative easing or virtually guaranteed markets an extensive program of relaxation, that the extent of which he will announce after the meeting took place next Wednesday.

Global markets have taken into account in considerable relaxation program that appeared to be promised, with projections that might constitute a "shock and awe" approach as of 1.5 trillion dollars.Cette projection and the large stock market rally factoring waiting in the price of the shares lifted not only the stock market, but feeling of the investor, who is now at an extreme optimism and convenience often associated to top of the market.

Thus, the market was worry that these economic reports are good for the economy is perhaps not very good for the stock market, if it causes the disappointing Fed next week by launching only a symbolic facilitate amount quantitative to keep his promise relaxation and the stock market has factor of shock and awe relaxation he spent two months factoring.

The third year of the four year cycle presidential, historically the most positive for four years, looking again however, is now but a few months later.

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10 things I hate about pets

A dog and his trainer perform pumps with a show at the dog fashion show in Tokyo. PHOTO: AFP

1 On the other hand, they are for you. A colleague once told a story of his friend, serpent pet company (!) had not eaten for a few days. Every evening, the serpent would remain hungry and work look to its owner.Subsequently, she took her pet to the vet to mettre.La reason: the serpent was hungry, itself to strengthen appetite to eat its owner.

2 Pet owners: If you keep a pet snake, you deserve to be someone's breakfast.

3. These creatures will bring internet to its knees.You might think there is an unlimited space on the web.Vous will be proven wrong by idiots who photographs of their pets on Facebook and YouTube videos. You may think that your cat looks cute in a bow-tie; We do not know.

4. Their representation in popular culture. Hey, Timmie, try to get into the quicksand for real time.Lassie help vous.Elle will be licking their regions either.

5 Battue.Voici woman syndrome a common refrain of pet owners: "it is not because of poor Choo-Choo only it bit me."I should have made sure that the water in the bath was a degree of cooling. ?

6 Stubbornness. If your child refuses to eat his dinner, take a bath or sleep on time you will be reprimanded him scream at him and possibly even slapping him on the bottom.If your pet this - and it will be - you would simply be let be.

7 On the other hand, they are our masters.Pick up their feces, play games contained with them and nourish the only main.La good thing about it is that when an alien civilization wants to conquer the Earth, they go after pets and let us poor humans only slaves.

8. Their promiscuity.Pets have some standards.They mate with gradually nearly everything, including stray animals and your couch.

9 Flavour of luxe.Il is one reason why pet food is more expensive that thing Agha supermarché.Ils know that money is not an obstacle to keep our pooches pampered happy.

10 They highlight the eugenicist among company humains.Animaux transform into Joseph Mengle.Nous will rammed in almost every animal is - as long as they aren't mignons.Adorables those we deal with tenderness, love and company soins.Animaux make acceptable murderous racism.

Published in the Gallery of the express, October 17 ^th, 2010.

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The truth about Barney Frank

Rep Barney Frank (D - MA)

It is high time that someone is airing dirty laundry by Mr. Frank.Il continues to take on Wall Street, private companies and fat cats in, but it never takes a look to himself in the mirror (as most politicians).

"The private sector has us in this mess." The Government has to get out us of it."It's display of Barney Frank of the current financial mess that our country is, and nothing could be more frank vérité.Barney has been a strong supporter of all policies that we in this disorder, the Community Reinvestment Act with the mandate of President Clinton for banks to extend a minimum number of"affordable loans. Instead of blaming on the "Wall Street fat cats", Barney Frank must be held accountable for its acts!

Errors have not prevented to support these policies.After that they have adopted and implemented, Frank refused to admit that he had a problème.Comme Fannie and Freddie were billion in subprime debt, Barney Frank has continued to ensure that that there was no financial crisis and press ENTER to be more affordable loans.

To quote Barney Frank circa 2003, "people more exaggerate these problems, the pressure over there is on these companies (the reform), less we will see in terms of affordable housing.A year later, he conspicuously did still not recognize his mistake and is quoted saying: "I don't think I want to roll the dice a bit more in this situation to subsidized housing."

For those who are unfamiliar, the underlying cause of the crisis current credit was a bubble immobilière.parce as these interlinked policy and same term banks sub-prime loans, shocking 40% of loans mortgage U.S. were classified as the subprime and ALT - a.These loans were made with little or no downpayment (sometimes no payment down!) for people with credit less spectaculaire.Le result? A collapse of the housing bubble that has led to a recession worldwide real estate bubble same entier.La led to political pets of Barney Frank.

I am just a technical analyst, but the truth needs to be said and it put to light because for his re-election fifteenth, Barney Frank runs as a representative of the Massachusetts in the maison.Nous cannot make the same mistake and let Barney Frank to be re-elected.

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