no_slapps and beanbean714: Despite your ever present criticism of NPK, its management and its business, the stock made a new high today. It is now about 6 points above its low set in about the February-March period. That is equal to about 20%-25%. Not bad for a company that you said might go bankrupt and which certainly doesn't have a future. Of course I know that you will say that the market is wrong about NPK or that it is just rising with the overall market. However, let me suggest that it is just possible that after many the market is finally starting to figure it out. Companies can't perenially do there accounting fraudulently, they can't pay their employees forever with options which they don't expense and they can't perpetually fool investors .
beanbean714: I agree. With higher earnings and the transition to offshore sourcing complete, I think NPK will reward us with more dividends. They are sensitive about taxes and will appreciate the lower tax rates on dividends for shareholders.
no slapps: I am somewhat inclined to agree with your assessment of accumulated earnings being paid out to stockholders when the management can't find a worthwhile use for excess cash. But, I don't think you appreciate how patient these people are and how rare that trait is. Most other managements would have rushed into investing the money into any old junky business and they probably would have borrowed more and lost it all. To me, it as a great achievement to have run a business for a long time and accumulated a great fortune while starting with next to nothing. In the past five years there have not been a great many good businesses for sale at reasonable prices. In view of that fact, I think management has acted responsibly. I wish they had the talent to be great investors in any market, but alas, they do not appear to have the same genes that make up Warren Buffet.
pmlljl, while you may feel comforted that management clings to the cash hoard, the boardroom inaction is proof that they don't know what to do with the money.
That's fine. If steering clear of potentially bad investments has become the guiding philosophy, that shows an uncommon humility among corporate managers. However, if management doesn't know what to do with the money, it should be given to the people who will happily make that decision:
The money belongs to the stockholders and if the company admits it is not capable of investing the cash wisely, then the company should return it to the owners -- the stockholders.
Of course, with the deck stacked against minority shareholders by the Cohens, it's clear the stockholders won't get their hands on the cash as long as current management is in control.
ackolb2000: Granted the company's rate of return has been very low during this period of low rates of return on passive investments and intense foreign competition in small appliances. But I think that you and other critics fail to give enough credit to management for NOT having done something stupid with all of their accumulated earnings. You probably know that most acquisitions do not succeed and they have resulted in huge writeoffs. For example Tyco, Cendant, MCI and many more. Maybe the reason NPK did not make any great acquisitions is that there were none to be made. I find the presence of all that cash to be very comforting.
pmlljl, you wrote:
"Companies can't perenially do there accounting fraudulently, they can't pay their employees forever with options which they don't expense and they can't perpetually fool investors."
You seem to be suggesting that among the thousands of publically traded companies in the US, NPK is one of a handful run by honest management. And that is a rather silly notion.
Have you noticed that the rise in the number of companies that posted inaccurate numbers is over? It looks as though all the current malefactors have been caught or taken a more honest path. Furthermore, both Worldcom and Enron will emerge from bankruptcy soon. Both had good core businesses. Following their emergence from bankruptcy, both will have much less debt and, as a result, will probably post some good numbers in the year ahead. The bad guys at those firms are gone, but the good businesses will most likely prosper after the bankruptcy court restructuring.
Meanwhile, the stock market still puts an almost negligible value on NPK's operations. The market valuation is probably a bit too low, but it's not far off the mark unless the company opens up a huge new sales venue.
no_slapps: You just don't get it! If Enron and Worldcom had such fine businesses, why are their shareholders getting nothing ($0) for their shares? I don't know about you, but I am investing to make money. That is, I want dividends and capital gains from my stocks as well as my principal back.
Are you one of those new modern investors who thinks the role of the capital markets is to supply unlimited capital to smart young people so they can start crazy new businesses with no chance of success and without adult supervision?
Secondly, where money is concerned, the bad guys never go away. The con men are always scheming to get your money any way they can. The recovery from the bubble is only about half over. Because the credit cycle eased the pressure on the weak sisters has eased. But I guarantee you that when they can no longer sell stock or borrow to keep their leaky old boats afloat, it will become apparent that there is still a lot of trouble in the financial world.
Someday I want you to take me on a tour of your hi-tech kitchen and show me your measuring cups with embedded micro chips and your internet toaster.