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Petroleum Geo Service ASA (PGO) Message Board

  • tad_no tad_no Nov 3, 1998 6:40 AM Flag

    PGO $21.60

    PGO's share in Oslo: $ 21.60. Probably because of norwegian oil & gas company, KVAERNER's big losses for third quarter (share down 25%!)

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    • Michael Dell may not have sounded good on your
      program, but he has become the darling of Wall St., and
      that is more important. Some of your post may portend
      problems for the future. It assumes that Intel won't stay
      ahead of the game. I don't follow the sector, so I
      don't have any idea. What Dell has done, though, is
      beat IBM and Compaq with the build-it-and-ship-it
      computer. IBM and Compaq are trying to play "me too!" but
      are bound up in a real problem. They are competing
      with their best customers, like Circuit City. Even
      though these companies are putting kiosks in Computer
      City stores to order direct, there will still be a
      commission to pay to Computer City if a computer is ordered.
      And there will still be inventory on the dealer
      shelves. Unless Compaq is willing to drop its dealers, it
      still has the inventory problems which keep it behind
      Dell in growth. If Michael Dell's only talent is
      hiring good people, he has made it work! Dell needs very
      little parts inventory, and virtually no finished
      product inventory. His customer service is super. From
      personal experience, IBM's is not that great with respect
      to PC's. Neither is Compaq's. I think Dell's market
      share will continue to grow.

      Regarding my being
      in love with PGO, no. My wife and I currently hold
      only four stocks. Three are oil service stocks that
      comprise 97% of our combined portfolios. I must admit,
      though, when we got back from a vacation trip today and
      saw that PGO had gone from 43% to 47% of our combined
      portfolios, I did start to feel just a bit of lust toward
      PGO! The oil service stocks, in my opinion, presently
      present the most predictable short-term prospect for
      profit. I expect the sector to rise nicely in January. At
      the previous four-month highs, I will be watching
      like a hawk to sell, or hold, if they appear to be
      climbing higher. I have done this before, and made a very
      nice profit. Most of the stock is in Roth IRA's where
      you can't short. I shorted FGI on the last trip down,
      and made a nice profit, in an individual account. Now
      I'm long on FGI. Am I in love with FGI? No. What I
      like about FGI is predictable volatility.

      There
      are a lot of ways to make money in the market.
      Short-term trading is the area where I find that I am the
      happiest, and most successful. Putting all the eggs in one
      basket may seem risky, but it has rewarded us well, so
      far, and watching the basket gives me something to do.


      If I wanted to be spread out so that "one of my
      favorite holdings" constituted only 2% of my portfolio,
      I'd go with mutual funds. I don't enjoy gambling in
      Las Vegas, but somehow enjoy the action of short-term
      trading (usually one to four weeks).

      You and I
      both made money on PGO's nice gain today. What I
      haven't figured out, yet, is WHY? There seems to be no
      news, and no one on this board has offered an
      explanation. Any ideas?

      Have a great New
      Year.

      Wile E.

    • Wile;

      If you've got 40% of your assets in
      PGO, then you are definitely guilty of falling in love
      with it. The stock is one of my favorite holdings, but
      it's a bit more than 2% of my average portfolio, or
      4-5% of the equity holdings.

      Michael Dell is no
      wizard. I interviewed him for a radio program back in
      1993, and i can honestly say that he was the least
      impressive guest I ever had-----and we're talking about 250
      CEOs, CFOs, authors, etc. Was he simply having a bad
      day? I doubt it, because he sounds awful when he
      speaks on CNBC.

      I think Dell made a couple of
      fabulous hires;; a great person to head up his
      manufacturing and distribution efforts, and a stupendously good
      choice for the guy who runs the sales effort. But those
      choices could owe a lot to luck. Otherwise, Dell has
      simply hitched his wagon to Intel; INTC does all his
      engineering, and gives him a lot of marketing support. The
      tradeoff is that he can't use cheaper microprocessors, and
      so far that hasn't mattered.

      In 1999 it WILL
      matter, because Intel is incapable of producing an
      integrated microprocessor----that is, a microprocessor with
      the sound, graphics, and other functions on board.
      Such integrated processors are cheaper and better, in
      the same way that the microprocessor was an advance
      over the collection of chips, cards, and wires that
      preceded it. Intel will have to slash its profit margins,
      and it won't take the news gracefully. INTC will
      distribute some of that pain to its suppliers and customers,
      and Dell will struggle with overpriced PCs for a
      while until he finally leaves the Intel-only
      fold.

      But even then, he'll face shrunken profit margins.
      $500 PCs can't possibly offer the profit that he is
      currently harvesting on $1700 machines. The only solution
      is a huge increase in volume, but that can only come
      in retail----and Dell has always bragged that most
      of his sales are to Fortune 1000 companies.


      Technology might be Wall Street's favorite industry, but
      history insists that this preference will fade----and
      probably drop with a thud. Better to think about the NEXT
      hot area;; Biotech, perhaps?

      Good Luck in
      1999,

      JL

    • I agree with both of you. I think that PGO is
      going to be an excellent performer over the next five
      years, and for that reason it comprises a significant
      portion of my portfolio. By the same token, I've owned
      DELL in the past and sold it in June only because it
      just seemed that no one could breathe up in the PE
      heights it had reached. Of course, it has since reached
      greater heights.

      Both are well-run companies.
      Dell, however, is certainly in the driver's seat of an
      industry that is currently preeminent and which, unless
      there is a significant blip, will continue to be a
      profound driver of economic development over the next few
      decades. Computers are, as so many say, the steel and
      railroads of this generation. Thus, it is difficult to
      believe that the multiples given to that industry segment
      will be shared by the oil service companies under most
      scenarios.

      There is one scenario, however, under which I could see
      it happening. No one knows what the impact of the
      Y2K thing will be on the world economy. Although I
      tend to side with those who project that the actual
      technological impact of the Y2K bug will be relatively minor
      (some production equipment malfunctions, and perhaps a
      few stories dressed up in breathless prose to justify
      the enormous amount of writing that has been done
      about it to date), I do not think the market has even
      begun to price in the potential problems. There may
      come a time this coming year when anything to do with
      computers will be looked upon with complete scorn, even
      those companies, like DELL, that are likely turning out
      100 percent Y2K-compliant machines.

      If we
      couple that market switch with an OPEC that shows
      backbone in March (or before), or some other,
      millenialist-inspired mischief in the Middle East (and it really does
      not even take a millenium turning to generate
      mischief in that region), we could see a sector shift
      toward oil that would place PGO, and others in that
      segment, in a position to receive a greater market
      multiple than DELL.

      I wish you all the best of luck
      in the coming year. It should be very
      interesting.

      Z

    • You may be right that PGO will have greater
      earnings than DELL, but I think Dell will remain the
      better performing stock. Dell is in a sector with much
      more public interest. It is a much better-known
      company. Also, is not an ADR. ADR's just aren't as popular
      as domestic stocks. Last, but not least, Michael
      Dell is a wizard! With the development of the
      build-it-as-you-sell-it computer factory, he has become the Henry Ford of
      the computer business. I fully expect him to keep
      being innovative and continue to garner more market
      share.

      It sounds to me, though, as if you have
      fallen in love with a stock. That is a dangerous affair
      to have. Earnings projections are speculative, and
      going beyond 1999 with those projections is like trying
      to predict the weather for those years. Increasing
      competition, decreasing spending on exploration (already
      becoming a reality), a sudden breakthrough in cold fusion,
      could all create very real problems for PGO's bottom
      line.

      Don't get me wrong. PGO comprises more
      than 40% of my portfolio, right now. Obviously, I
      think it will do well. January should see a big rise in
      price in the whole sector, IMO. That rise will probably
      subside again, and we will see the prices in the OSS back
      at present levels within the next two months. Until
      oil prices rise to stay, PGO will be stuck, rising
      and falling with its peers in this sector. It is
      known by the company it keeps! The OSS stocks rise and
      fall together like corks on an ocean wave. PGO may
      gain some ground on the others, but it is still riding
      the same wave. One of the best reasons to be invested
      in PGO is that, with the strong earnings and balance
      sheet, PGO will be around when oil prices rise. There
      are several companies in the sector that may not
      survive. I fully expect PGO to go to 40 or 50 when oil
      prices go back into the 20's. That may take several
      years. I have read that the U.S. government studies
      indicate that oil prices will stay down until 2007. By
      that time, Michael Dell may own Microsoft!

      So
      we agree on PGO, but for different reasons.


      Happy holidays!

      Wile E.

    • Wile E;

      We are in agreement on most
      things. But I'm not going to back off on my assertion
      that PGO is likely to trade above Dell at some point
      during the next four years. You've obviously been
      investing for a while, so I'm sure you've seen a lot of
      great names fall from grace----Polaroid, Kodak,
      Digital, Micron (and now it's doing a round trip!), Apple,
      etc. To a lesser extent the same applies to Motorola
      and Coke, which are no longer mentioned as
      one-decision super-stocks.

      Dell faces a lot of serious
      issues. So far the company has managed to keep the price
      of its average machine above $1,700, but there's no
      chance that they'll close 1999 above $1,500----at least
      not if they plan to grow their revenues. By April
      you'll be able to buy 350 MHz machines with good sound
      and graphics for $500; that's a big change, but even
      more important is the fact that large corporations are
      suddenly warming to the idea of low-end, non-Intel
      machines. Those large companies are Dell's bread and butter
      and more, and it's also important to note that
      Fortune 500 PC purchases are slowing. The big action is
      at the low end, in retail.

      We used to own
      shares of Dell, back in 1992 and 1993 when the stock had
      a low PE ratio (!), and we made at least 250% on
      it. Sure, I wish I'd held it longer, but you can't
      expect Dell's competitors to be incompetent forever.
      Compaq might not have the build-to-order concept quite
      figured out, but they're not anchored to Intel
      processors, and they picked up some enormous technological
      assets when they bought DEC.

      As for PGO, it will
      fluctuate, and sometimes it will be on the high side rather
      than the low side. When small caps were in favor,
      stocks like PGO routinely sold for 1 1/2 times the
      market multiple-----which would put PGO in the mid
      forties. My earnings numbers for PGO and Dell are straight
      out of Value Line; for those who missed my earlier
      message, PGO is expected to have higher earnings-per-share
      than Dell in 1998, 1999, 2000, 2001, and 2002. And
      possibly forever.

      Merry Christmas, JL

    • If you are new to stock investing, and stumbled
      onto PGO, I want to know what else you have invested
      in! This is a super company, although little
      known.

      US GAAP= United States generally accepted accounting
      practices. The auditors all say they use them, but in the
      case of CD (Cendant Corporation) and SOC (Sunbeam
      Corporation), they missed a few things. Both companies' stocks
      tanked after "inaccurate earnings figures" were
      unearthed. Al Dunlap was the CEO of Sunbeam, and, in my
      view, should be prosecuted for defrauding the
      shareholders. He had a golden parachute worth $30 or $40
      million dollars. Whether or not he has collected it, I
      don't know. Vulture-lawyers were waiting in the wings
      to sue Sunbeam and Dunlap, and I am sure Dunlap's
      employment agreement called for Sunbeam to indemnify him by
      paying all lawyers' fees and damages. The only ways I
      see to really protect the shareholders is to make
      such parachutes and indemnity dissolve if the officer
      is found to have fudged the numbers. Dunlap went on
      CNBC to try to "save his good name." What a laugh! He
      is the biggest jerk I have ever seen on TV. If he
      did not know what was going on with the numbers at
      Sunbeam, he is an incompetent. If he did know, he is a
      crook. What I was saying is that we need strong federal
      legislation in this area, which would put the Dunlaps in
      prison. That would discourage others from following
      suit.

      I know of NO accounting problems at PGO. PGO's
      earnings have continued to grow when others are having
      problems. That is because of lack of competition in PGO's
      arena, and excellent management. Deep water exploration
      is still the strongest part of the oil service
      sector. If I could own only two stocks, they would be PGO
      and FGI.

      Wile E.

    • I'm new to PGO and investing in general, I was a
      "closet investor" investing strictly in mutuals. Would
      you be so kind as to explain the following
      questions:

      1) Who is Al Dunlap, and how does his actions effect
      PGO.
      2) The accounting method you describe in your message of
      "cooked" reports does this reflect PGO numbers?
      3) Who
      or what is CD, SOC, and US GAAP?

      Thank you
      for not laughing at my ignorance regarding the above
      questions, and I appreciate any information you might be
      able to pass along.

      SaxFooool

    • I wish we could forget accounting problems. CD
      and SOC also use US GAAP. Until the Al Dunlap-types
      get long prison terms, we are always risking profit
      reports which are created rather than earned. I feel
      strongly that when the Al Dunlaps get NO parachute, and NO
      indemnification for the civil suit attorneys' fees, BY LAW, they
      will quit pulling the crap they pull. If Congress
      would quit wasting time on Bill Clinton's sex life, and
      start concentrating on the needs of the country, maybe
      they could enact something meaningful.

      I have
      more PGO than any other stock, and I'm only holding
      four stocks at present. I think this is a fabulous
      company. I am also a bit paranoid.

      Remember: Just
      because you're paranoid doesn't mean they aren't out to
      get you!

      Wile E.

    • Forget the "accounting problems" - PGO reports US GAAP.


      of

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