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Analog Devices, Inc. Message Board

big_red_sun 94 posts  |  Last Activity: Mar 27, 2015 11:50 AM Member since: Mar 27, 2012
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  • big_red_sun big_red_sun Mar 27, 2015 11:50 AM Flag

    Kraft and IBM have headwinds in the US. Buffet is buying them for their overseas opportunities as much as anything else. The growth is not in the US.

    The whole organics thing is a very serious competitive threat as it gains traction. But, let's face it, most folks won't shop at Whole Foods, aka, Whole Paycheck. But, IBM doesn't sell groceries.

    Buffet is a GARP player as much as anything at this point. The earnings will come from overseas, not so much the US. If they come at all for either IBM or Kraft. But, the price of both is pretty reasonable, so not a lot of risk (on the surface).

    The next few quarters of IBM on the hardware side will say a lot about prospects. New cycles on Z and P should drive some good biz. If it doesn't, that will definitely show diminished near term prospect for IBM. If Open Power can blunt ARM, then deflate INTC profits, then it gets interesting.

    BRS

    Sentiment: Hold

  • Reply to

    buffet bought GE back in 06 for $34

    by aud802009 Mar 16, 2015 10:36 PM
    big_red_sun big_red_sun Mar 18, 2015 1:20 PM Flag

    He's not buying stock, he is buying a piece of the business. What the stock trades at is of almost no interest to Buffett in the short term. He's said that over and over.

    So, he will think like an owner, and decide if IBM is right track or wrong track to producing real economic returns to shareholders. Which they have, over the long term. Put a 20 year chart in place comparing IBM vs S&P 500. IBM, even after the horrid last 2 years, outpaces it two to one.

    Given the relatively conservative valuation vs some balance sheet leverage, he may choose to wait. IBM is morphing to being a software company. Never the less, IBM is being valued as a hardware company. They may not have the moat they used to have, but they do have some tools to work with.

    BRS

    Sentiment: Hold

  • Reply to

    buffet bought GE back in 06 for $34

    by aud802009 Mar 16, 2015 10:36 PM
    big_red_sun big_red_sun Mar 18, 2015 1:07 PM Flag

    Speaking of cloud, etc, anyone got any guesses on how attractive/powerful the current mainframe cycle is likely to be. The original cloud -- kinda.

    The next few quarters on systems business will be interesting to watch, and may prove Buffet right or wrong.

    Between Z, P (and i), and Open Power (the real wildcard, as the new P8 has little endian, and is aimed at scale-out as well as scale up), something like 80% of IBM's customers buy all three general buckets - hardware, software, service. So, the systems may be only 10% of revenue, but they sure are important. The Z and P look to be in secular decline (not just product cycle), which is what market is betting.

    BRS

    Sentiment: Hold

  • big_red_sun big_red_sun Mar 16, 2015 1:18 PM Flag

    Cool beans, thanks for the response.

    There have been countless articles over the Saudi's aiming to hurt: Iran, Russia, Frackers, roughly in that order. So, this could go on for a while. It may be the Venezuela's and Nigeria's that go unstable first. Maybe Iraq, though there might be a few other factors at work with that mess.

    I am thinking a bit the opposite on you from on holes drilled. Maybe wrong longer term, or even shorter term, but throwing it out there.

    The UDW holes, like Mainframes, will chug along spewing out tons, and if you have the data/biz, it makes sense -- always on at massive volume. Scale up.

    The frackers, more like distributed computing. Cheap little bits, maybe not optimal as far as useage load. Scale out.

    Which one won in the computer industry? Generally, scale out.

    It's just an analogy, granted, but right now, more oil is not what is needed. More demand is. Until Saudis influence the supply side, it's up to demand. We'll see.

    BRS

    Sentiment: Hold

  • big_red_sun big_red_sun Mar 16, 2015 12:32 PM Flag

    Best of the day. Whatta hoot!

    I believe you are negative, generally, on UDW/offshore, and I can understand that. In the current environment, the fracking may provide shorter term payback per hole drilled. Everyone in survival mode, so big holes in the ocean are hard to justify, etc etc.

    The Saudis may be trying to kill fracking, but UDW's caught some of the hits, and seem to be more exposed. Longer term, maybe better, but in the long term, we're all dead.

    That said, do you see a bottom in oil (it's all a guess) this year? I am guessing late April when 1Q earnings come in, everything gets washed out. Just a guess.

    No positions in oil/services at this time, just lurking. Also and ex-IBMr. Lots of us out there. Kinda like there were a lot of ex oil folks in the 90's. Grim humor....life goes on.

    BRS

    Sentiment: Hold

  • big_red_sun big_red_sun Mar 16, 2015 11:58 AM Flag

    So, you're saying they wildly overpaid for the vessels? Just kiddin' a bit. That is apparently how market is seeing it. BTW, I gave you a thumbs up, not down, as it is an interesting point you make.

    I have been looking at PACD, ORIG, RDC, ESV, SDRL. All exposed to off shore, but kinda bucketed into newer rigs. I know I am missing some.

    The first two, they have controlling interests. That makes me pause, as you never know their motivations. They also have a bunch of leverage. RDC seems less leveraged than some, but not pure deep water, granted. ESV seems a good bet from a combination of UDW, less leveraged, but some older rigs. If you glued them and RDC together, I'd sure be tempted. SDRL, has a big owner too, leverage is way out there, and the Russian exposure makes me nervous.

    Anyhow, this looks like the end of the beginning to me, with the beginning of the end to come, to paraphrase Winston Churchill.

    When we see some distress sales, and a few articles on this segment of the industry is not relevant anymore, that'll be when you buy. Unless you don't, which is probably me. I just don't like the leverage on these.

    BRS

    Sentiment: Hold

  • big_red_sun big_red_sun Mar 14, 2015 5:37 PM Flag

    Thank you, I try to be straight. I am a value or growth at a reasonable price guy, and take no joy from hearing you or anyone else lost 20%.

    I can do that on tech stocks. I've seen me do it. I was a genius in 1999, not quite so smart by late 2000.

    I then looked at oil, bought Pennzenergy, got acquired eventually to DVN, made some money. But, I started with off shore drillers and gave them a pass in 2001. Ooops. That said, here I am looking at them. Can't get comfortable with debt.

    In a couple months, maybe some mid cap E&Ps or a fund, as Exxon, Chevron, etc go hunting. It's a speculation.

    I think oil rallies are capped, and between Saudis and fracking advances, we ain't seeing 100 bucks soon. But, if it drops to 30 or so, it might bounce to 80.

    Just a complete SWAG from Central Texas. Besta luck!

    BRS

    Sentiment: Hold

  • big_red_sun big_red_sun Mar 14, 2015 2:55 PM Flag

    The assets are application specific rigs that are used for nothing else. They are not assets like computers, trucks, or other general purpose tools that can be re-purposed. They do only one thing, very well, but only one thing.

    With demand for those services falling off like crazy, and a flood of new builds coming on line, nobody believes those assets are worth full value.

    That's the danger with looking at assets vs liability, without considering future demand and associated day rates. If the demand for off shore stays lowered, those assets are worth a fraction of what the balance sheet says.

    That said, they sure are trading at a big discount, like the end of the industry is coming. it is tempting. No position yet for me, besta luck.

    BRS

    Sentiment: Hold

  • big_red_sun big_red_sun Mar 14, 2015 2:47 PM Flag

    ORIG is worth exactly what the bid is. That's about 6 bucks. Anything else is just hopeful thinking.

    Virtually nobody, outside of oilmen and owners of oil stocks at a higher basis, thinks oil is running to $100 anytime soon. Of course, that probably means it will, contrarian thinking wise. But you're just hoping that.

    Debt can be due if covenants on loans get broken. It ain't that simple, stating 2017. What if contracts terminate early, or day rates get renegotiated.

    If your two points on oil price and debt had any certainty, the market would efficiently price stocks, and it might be 23. But it's not, that's the cold hard fact. It's 6, that's the current value.

    In any event, if you are a holder at a higher price, besta luck.

    BRS

    Sentiment: Hold

  • Reply to

    Management update on quarter?

    by bdinvest1 Mar 13, 2015 12:35 PM
    big_red_sun big_red_sun Mar 13, 2015 1:14 PM Flag

    I think the stock is trading on out quarters and years. Panic, in other words. Other bad news? Well, if oil stays low for a year, other contracts will cancel I'd imagine. At a minimum, the day rates charged will crater.

    Current quarter/contracts, etc are probably fine in short run, less fine further out. So, saying anything about current quarter is not going to remedy much, stock price wise.

    EC saying they will seek remedies. Big whoop. There are so many variables, two of which might be: First, ORIG/DRYS goes under before court date. Second, the other side goes ashcan themselves. Get in line behind creditors. Sure.

    Saying anything involving lawyers is straight forward is not the reality I have experienced. Remember, they will advocate for you down to your last penny. Then drop you in a heartbeat. It's just business in billable hours.

    I have no position, and am a bottom fisher, but cannot get comfortable with the drillers.

    BRS

  • Reply to

    If Obama lifts ban on U.S. oil exports

    by greedy_pbm Mar 13, 2015 12:26 PM
    big_red_sun big_red_sun Mar 13, 2015 1:06 PM Flag

    It would be good policy, as it recognizes the reality that "energy independence" is a mirage. Oil is a world wide market. Heck, we don't even get our electricity from oil anyway. It's for transportation, chemicals, etc.

    That said, I'd think what it would do would be narrow the gap between Brent and WTI pricing. It might make WTI go up some, and Brent down. Brent going down might even be marginally harmful to UDW drillers.

    But, I think it's a wash. Oil has to go back up in price, or a lot of the drillers (offshore or on) are gonna be low to no profit for a good while.

    BRS

    Sentiment: Hold

  • Reply to

    Management update on quarter?

    by bdinvest1 Mar 13, 2015 12:35 PM
    big_red_sun big_red_sun Mar 13, 2015 12:53 PM Flag

    I can't imagine they would say anything at all this quarter. It's probably pretty bad news, why feature it? Let things settle out, then talk if oil rebounds.

    They would never make direct claims that UDW is cheaper than other plays, as they are just the service company. That claim would be up to the E&P companies, and would vary play to play.

    UDW is not cheaper than fracking in many areas now. That is not even too relevant. What is now relevant is that you can drill/frack a well for 3-6 million in a month. UDW takes months/years at 10's of millions of dollars. Granted, more oil comes out, but nobody needs more oil right now. Why spend lots of money on one big hole right now? Fracking is much more granular and quicker to market.

    That's the issue. The only thing that bails these speculative UDW's out is higher oil, in my opinion. But, that might come right quick, who knows.

    BRS

    Sentiment: Hold

  • big_red_sun big_red_sun Mar 13, 2015 12:45 PM Flag

    Likely the direct opposite. Lower oil prices (or at least stable) help the economy. Look at the 90's while oil was low, market rocked. While oil was high in the 70's and 2000's market tanked. Market recovered in last few yrs with higher oil, but at least it was stable.

    Are there some banks exposed? Yeah, but not like on housing. It is much more regional, and much smaller part of the economy than the housing was.

    Oh yeah, the housing that was built is just white elephant/dead assets of huge houses and over priced condos that nobody wanted or still wants in some areas. Someone, at the right price, will want the oil. Oil is a very productive, flexibly used resource. A starter castle or McMansion is not.

    BRS

    Sentiment: Hold

  • big_red_sun big_red_sun Mar 12, 2015 9:09 PM Flag

    If you are already invested, I suppose patience is the best policy. Me, I'm just looking at this point.

    Whether oil goes up "as expected" (by who?), it's just a guess. It could stay low for 10 more years. Or is could double by end of year. Both are very low odds, but cannot be entirely discounted.

    I don't like the debt load. Too much of a gamble. They need good contracts that are actually honored (not always the case) to keep paying down debt. This year, maybe not a problem. The out years, oil price will tell the tale. I think that is why the price keeps sinking. Debt is for real, contracts less so.

    BRS

    Sentiment: Hold

  • big_red_sun big_red_sun Mar 12, 2015 1:47 PM Flag

    Thanks for a straight response. I don't mind being generally agreed with either, but it takes some getting used to. Then again, a straight disagree is good too, flames not required.

    A lot of the UDW fans keeps saying "but look over there!"...."squirrel!" ... and then change the argument. It seems a bit frantic.

    This is why I have held off on the UDW drillers and drillers in general. I think the profitless prosperity flows to consumers. Some real efficient operators do okay too with shale, etc.

    In any event, I have kind of shifted my thinking towards, maybe in Apr-June time frame (back end of 2Q most likely), holding my nose and buying a basket of E&P mid caps or a fund. Maybe Exxon etc go shopping for those assets locked up in drilled holes.

    Ya never know. Make your bets or fold. So far, I fold on drillers and pretty much everything else in oil. I am a bottom fisher, and I am not sure we are there yet.

    I bought PennzEnergy back in 2001, it rolled all the way up to DVN, and I got real lucky on a 10 bagger. So, I am tempted with this crash. But, I missed 2009 drop and subsequent climb altogether, so I am no svengali.

    This downturn could go on a heckuva lot longer than I think. I have no real idea. Neither to UDW fans. Thats where I get off the bus.

    Best of luck,

    BRS

    Sentiment: Hold

  • big_red_sun big_red_sun Mar 12, 2015 11:46 AM Flag

    I am with play_tow (Hemlock anyone? Socrates?). Day rates could be down for a long long long time....

    Oil coming back up, eventually, to quote you -- leaves a lot of time variance. In Texas, where I live, eventually was 15 years from mid 80's to 2001.

    I just read an article in Forbes, on the fracking, and I get nothing but ignored on this point from the UDW folks.

    I am asking, not to take shots, but because I have not bought a UDW, and this is part of why. I am not convinced some of these levered smaller drillers don't go ashcan, let alone be wildly profitable. My opinion only.

    See clip below about drilled, but not fracked wells storing oil:

    Today, the United States has some 3,000 wells drilled and ready to flow. Nearly all of them will remain idle until needed. The amount of oil stored in those 3,000 wells ready to flow is at least three times greater than all the oil stored in steel tanks around the country. And it only takes a few months to turn on well production. All those wells, when they roll, will add nearly three million barrels per day to U.S. production.

    Add to this then, all the ‘extra’ oil parked in the steel tanks around the country that, when released, can add nearly another one million barrels per day. That combination, four million barrels per day, equals an amount equal to the total growth in U.S. oil production seen over the past half dozen years.

    Sentiment: Hold

  • Reply to

    "Fratlog" will keep oil prices depressed for a while

    by edgk15 Mar 11, 2015 2:05 PM
    big_red_sun big_red_sun Mar 12, 2015 7:48 AM Flag

    Fair enough. BTW, the Captain Obvious reference was aimed at myself. If you thought it was aimed at you, apologies.

    Oil price going back up is the obvious key. Duh, BRS.

    My costs did not include transport. I think they could also be off some, as assuming there is actually one oil price is false, and that each resource play had near to same breakeven within a technology like drill/frack is false. But ya gotta make some type of estimate. That's all I meant them to be.

    Transport cost can vary, but fracking rail and or sand costs are in the 7-15 dollar a barrel range, your estimate is way off. You can google up endless articles on shipping costs.

    Fracked oil out of Bakken hit down around 30 per barrel a couple months ago, when oil dropped to 44 or so. The differential was likely mainly rail costs. Maybe some storage.

    At this point, I'll stick with my assessment that the UDW drillers are at a short term systematic disadvantage to the frackers.

    Good luck with it, still lurking, waiting.

    BRS

    Sentiment: Hold

  • Reply to

    "Fratlog" will keep oil prices depressed for a while

    by edgk15 Mar 11, 2015 2:05 PM
    big_red_sun big_red_sun Mar 11, 2015 8:36 PM Flag

    Fracking and oil sands are two different propositions. One is drill for light sweet, the other is surface for heavy sour. It's just not that simple.

    That said, fracking has certain areas where costs are around 40/barrel (estimated) like parts of Permian, Eagle Ford, and Bakken. Some as high as 90-100 like Miss Lime.

    I think the oil sands falls in the roughly 70-90 category.

    I am sure off shore, from shallow to UDW has variable costs too, and I have read that it is in the 60-70 region roughly.

    All that said, you cannot get around the cost of a drilled and fracked well being 3-6 M, where the UDW wells are what? 10's of millions at 400K per day?

    Doesn't it make more sense to drill small and risk small vs bigger UDW risks? The market seems to say so. Horizontal drilling and fracking is so much more granular in production, it makes UDW seem pointless at lower oil prices.

    It all comes back to oil price. That's Captain Obvious, signing off!

    Besta luck,

    BRS

    Sentiment: Hold

  • Reply to

    Okay Pedro or Jack,

    by big_red_sun Mar 11, 2015 11:57 AM
    big_red_sun big_red_sun Mar 11, 2015 8:22 PM Flag

    Cheers! It's not my first thumbs down, I'm sure all the others were accidental too. Ha!

    BRS

    Sentiment: Hold

  • Reply to

    Okay Pedro or Jack,

    by big_red_sun Mar 11, 2015 11:57 AM
    big_red_sun big_red_sun Mar 11, 2015 5:11 PM Flag

    Where have I heard that last line before? Like I said previously, if I ever let you know I bought some PACD, run for the hills.

    Til then, I hope the thing triples for you. No skin off my nose if it does. Again, I gotta get another hobby. I never buy the drillers, just sit and watch. Pathetic, but it's interesting to me for some reason.

    Anyhow, good luck to y'all. Thank goodness this is not the SDRL board. Gettin' right tetchy over there. Distasteful even.

    BRS

    Sentiment: Hold

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