• Vale's (NYSE:VALE) credit rating is downgraded by Standard & Poor’s for the first time in more than eight years, as market fundamentals for iron ore continue to weaken and erode Vale's operating cash flow generation as the company's capital expenses remain high.
• The downgrade follows S&P's revision of iron ore price assumptions to $65/ton in 2015 and 2016 and to $70/ton in 2017.
• S&P reduces its rating to BBB+, the third-lowest investment grade, from A-
A growth of 7% does not necessarily mean 7% growth in steel production. The problem right now is excess supply coming into the market by RIO, BHP a, and VALE. That may continue for a couple of years.
This is the mark of a badly-managed company.
6 months ago, the CEO of VALE was sure that by now the price of iron would be about $90. The resident snake on this board, cash.mccall, agreed then with the CEO.
1. Berger deceived the investors when he acquired Enterasys. He gave a strong impression that annual earnings would be $0.6+ in the first year following the acquisiton. This is why the share price run up to $8. The acquistion of Enterasys rendered the tangible book value of EXTR nil and its liquidity poor. Meanwhile, the share count is being significantly diluted because of the massive stock-based compensation and employee share repurchase program.
2. There was no way EXTR could be sold at $10 before showing sustained growth and profitability. EXTR and Enterasys had histories of stagnation and very poor profitability. The new EXTR is yet to do any better. Because of its poor balance sheet, EXTR is very susceptible to bear raids.
3. There were a couple of large activist shareholders years back. They gave up and bailed out. After a succession of CEOs, Berger has been the last and final hope. Either he will succeed or the company will be liquidated for very little. The aging washeout ex-Cisco executives that Berger has hired will not salvage the company.
Is that an indication that the sales are collapsing and EXTR's credit ratings are to be lowered or is it program trading chasing the stock down because it has broken technical support? The selloff continues unabated with late-day large volumes. Berger deserves a curse for what he has done to the balance sheet of EXTR and to the shareholders.
A PR was released today on the availability of a mobile application, the Partner-Link. The performance of the stock does not fit that of a world-class company in-the-making as bombastically claimed in the following paragraph in today's PR.
Bob Gault, vice president of Global Channels and Partners, Extreme Networks
"As we continue to build a world-class company with best-in-class products and programs focused on partner success, it's imperative that we give our partners the tools they need to succeed. With the launch of PartnerLink, we're doing just that. PartnerLink streamlines operations to allow sales teams more time to focus on the activities that matter – moving prospects through the sales funnel and generating revenue. The launch of PartnerLink is just one example of how our commitment to partner profitability and innovation is second-to-none."
Note also the Form S-8 filed on Jan 12.
Common Stock, par value $0.001per share reserved for issuance under the Employee Stock Purchase Plan.
12,000,000 shares at a maximum purchase price of $2.958 per share. So it is a dilution of the share count by 12M shares with a maximum $35,496,000 proceeds for the company.
Is that the result of the company presentation at the 17th Annual Needham Growth Conference Wednesday, January 14th?
How badly have Berger and his hand-picked washed-out executives mismanaged the company in the last quarter? Will they claim competition from Cisco and Juniper and poor macroeconomics conditions as the excuse for the ongoing poor performance?
The book value is a moving target. Higher gold prices will take it up, lower-down. Possible large writedowns will lower the book value. $2B in cash but much more in debt. Management is experienced and yet the stock is at decades low; not an indication of high business IQ. ABX is not a value stock. It is a high-leverage-speculation on much higher gold prices than current.
Those news are dated from AFTER Sep 2, 2014, and are baked into the stock by now (but not before Sep 2, 2014). High debt load means less ability to get new loans at attractive rates.
1. Bad news from the Pascua Lama mine in Chile. (The possibility of a very large environmental fine, delayed production, and a very large writeoff).
2. Bad news from the Lumwana copper mine in Zambia. (Suspension of operations and a possibility of a large writeoff).
3. Falling copper prices and a belief that gold prices in mid-2015 will drop below $1100. (By some bearish analysts).
All of the above work against ABX which has relatively a very high debt load.
"Gold will extend losses this year as U.S. interest rates increase, providing an opportunity for investors to buy the metal to benefit from a rebound spurred by Asian demand, according to Barclays Plc."
"Bullion will probably average $1,200 in the first quarter, $1,180 in the second, $1,130 from July to September and $1,170 in the final three months of this year, Barclays said in the report. Prices will breach $1,130 for the first time since April 2010, according to the analysts."
25% of the float is shorted so the large shorts will do their best to prevent the stock from rising rapidly. Nevertheless, in the absence of very large rig markdowns and if the dividend is cut in a half rather than eliminated altogether, the short squeeze will be tremendous.
1/8/2015 RBC Capital downgraded ABX: Outperform - Sector Perform $17.00 - $14.00
On Aug 2014:
Research analysts at RBC Capital raised their target price on shares of Barrick Gold (NYSE:ABX) from $23.00 to $25.00. The firm currently has an “outperform” rating on the stock.
The sure prediction is that Laub will announce (as usual) that Atmel has had hundreds of design wins which should surely spur growth in the future...
Laub must have been doing better for the shareholders in 2014 than in 2013......
17-Dec-2013 238,069 ATML Acquisition (Non Open Market) at $0 per share.
11-Dec-2014 397,537 ATML Acquisition (Non Open Market) at $0 per share.
I see that you are finally coming to your senses. Berger has been the last hope for EXTR. He will be the final CEO of EXTR. EXTR will either be acquired or turn into a penny stock. Extreme has a tangible book value of $0, a poor balance sheet, and an aging management that is getting top-heavy. The acquisition of Enterasys ruined the balance sheet of EXTR and has not spurred growth. It is already 2015 and Extreme is yet to announce any deals with Lenovo.
12/18/2014 Zacks Upgrade Underperform - Neutral $3.50
12/15/2014 Needham & Company LLC Lower Price Target Buy $7.00 - $5.00
10/21/2014 Zacks Downgrade Outperform - Neutral $3.70
10/16/2014 Wunderlich Lower Price Target Buy $9.00 - $7.00
8/20/2014 Zacks Upgrade Neutral - Outperform $5.80
7/22/2014 Wunderlich Reiterated Rating Positive - Buy $9.00
6/19/2014 Buckingham Research Initiated Coverage Neutral $5.00
5/7/2014 Raymond James Reiterated Rating Outperform $8.00 - $6.50
5/7/2014 Needham & Company LLC Reiterated Rating Buy
4/1/2014 Wunderlich Initiated Coverage Buy $9.00
3/27/2014 Raymond James Initiated Coverage Outperform $8.00
11/26/2013 Needham & Company LLC Initiated Coverage Buy. $9.00
Strong relationship? What is the manifestation of it?
What evidence is there that Extreme actually benefits from the supposed Lenovo and Ericsson relationships?
Do you really think that Berger is trustworthy?