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Sprint Corporation Message Board

  • stockaholic1 stockaholic1 Jun 10, 2003 1:23 PM Flag

    S rumors

    rumor the credit card biz sale is not going as good as expected.

    reports were at Street Insider

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    • Actually, the articles I read last month
      referred to the 5-15% premium being on top of
      the net difference between the sale price
      and the related debt! Not on top of the
      sale price. If it were on top of the sale
      price and the AR's were valued as Jfur
      lists, then 5% seems more likely or 1.5b
      more. 30.8b + 1.5b equals 32.3b or 5.8b
      net above debt (27.5). Even 10% is only 7.3
      (4.3b net + 3.08b premium) and after taxes
      and fees still comes out to my 8b scenario.

    • Much higher? Conservative estimate? Sears operating profits last year from the CC division were 1.5 billion or 1.3% higher than your conservative estimate. Sears gave a 2003 outlook of operating profits down low to mid single digits.

      In Q1 operating profits from the CC division were down 48 million or 10.8%. If they are already in the hole 48 million or 10.8% versus last year it's going to be tough to be down only 20 million for the entire year. Especially given the guidance they have given for Q2.

      Given Sears guidance and Q1 results 1.48B would be an optimistic number. Certainly not conservative.

    • "What were Sears CC profits last year? I don't think they were 1.48 billion."

      You're right - their operating profits were MUCH HIGHER in FY2002. The $1.48 billion is a CONSERVATIVE ESTIMATE for this year.

      ez

    • What were Sears CC profits last year? I don't think they were 1.48 billion. Total net income for the company was only 1.56 billion. Sears has said they expect CC profits to be down this year. Charge-offs are also higher than 6.5%.

      2003 Outlook

      The company's preliminary outlook for 2003 is for comparable earnings per share to increase in the low- to mid- single digits. The Retail and Related Services business is expected to grow operating income in the mid-teens, while operating income for the Credit and Financial Products segment is expected to decline at a low- to mid-single-digit rate. Sears Canada is anticipated to post increased year- over-year profitability, and the Corporate and Other segment is expected to remain relatively flat with productivity savings being offset by higher benefit and insurance costs.

    • To even get $6.3b, then the sale price would
      need to provide a 50% premium ($4.5b net value
      x 1.5). And this is before due diligence
      has been performed on an 'aggressive
      accounting' portfolio (re: ONE). These
      credit card companies are lunatics so anything
      is possible. But if serious DD was performed
      on a 240 day aging portfolio with cardholders
      who qualify on S personal rating system and
      not commonly accepted credit bureau ratings,
      then guess what they will decide... It is
      possible they will price the cc AR's less
      than $31.5b which S has them at and then
      a 15% premium from there. GE and C may say
      the portfolio is really only worth $29b
      and only will pay $29.5b or $2b net related
      to the S financial statement AR number.
      After taxes, fees, etc then they would
      realize $1.2b or $4 a share cash.

 
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