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Electronic Arts Inc. (ERTS) Message Board

dansmith46 63 posts  |  Last Activity: Apr 15, 2014 10:19 PM Member since: Jan 10, 2012
  • Reply to

    no buyout

    by lucetteo1 Feb 25, 2014 11:42 AM dansmith46 Feb 25, 2014 12:16 PM Flag

    I think they won't do anything dividend or buyback wise until at least 2015. They are still focusing on building cash and paying down debt. Which for someone coming off three years of terrible capital management, is really what you have to do, and I don't disagree with it.

  • Reply to

    Iron Ore Spot VS Revenue

    by w999surf Feb 24, 2014 2:58 PM dansmith46 Feb 24, 2014 5:45 PM Flag

    If their average price per ton only fluctuated that little, why did their earnings go from $11+ annually to now around $2-3?

  • Reply to

    Learn from the Homebuilders

    by w999surf Feb 19, 2014 1:55 PM dansmith46 Feb 20, 2014 3:10 AM Flag

    the way I read it as is this.

    Lets say you have a mine with 100 tons of iron ore. When you acquired the mine Iron ore was trading $200 per ton. Thus maybe you valued it at $20,000 (100x200). After one year you've mined 10 tons so you depreciate the asset down to $18,000 (90x200). However lets say at the beginning of the next year Iron ore is now trading at only $100 per ton. The IRS is going to come in and say "that mine with 90 tons of ore left is not worth $18,000, it is is worth $9,000 (90x100) due to the fall in the price of the underlying asset." THAT is a write down and it is not the same as normal depreciation. Depreciation happens as you use up an asset. A write down is the marking down of an asset to current market value.

    The only unfair part of this is that if iron ore then went to $300 per ton, the IRS does not allow you to mark up your assets in value.

    I just wanted to make clear that depreciation and write-downs are not the same thing.

  • Reply to

    After a Great Day Trading

    by w999surf Feb 19, 2014 3:44 PM dansmith46 Feb 19, 2014 5:49 PM Flag

    I appreciate surf and his high activity on the board. He represents bull side well

  • Reply to

    Learn from the Homebuilders

    by w999surf Feb 19, 2014 1:55 PM dansmith46 Feb 19, 2014 5:20 PM Flag

    No that would be an example of something like double-declining depreciation. A write down means that the auditors don't believe your assets are worth as much as you say. You aren't depreciating your asset. You are literally taking away value from it. Depreciation occurs as you use something and it's value decreases because of use (in our case this includes depletion of iron ore reserves). Write-downs are losses of value without use, and thus are not good.

    Depreciation and write-downs both decrease near term taxes and free cash flow, but don't pretend that write-downs are a net gain

  • Reply to

    Learn from the Homebuilders

    by w999surf Feb 19, 2014 1:55 PM dansmith46 Feb 19, 2014 5:14 PM Flag

    $400 million per quarter? That doesn't sound right. They reduced cappex by $400 million annually. This means they would have additional cash of about $100 million per quarter. For them to pay off $400 million per quarter that would require $300 million in earnings too which is about $2 per share. I am not anticipating earnings of $2 per quarter. Run through the numbers and tell me how they are going to pay down debt by $400 million per quarter

  • Reply to

    After a Great Day Trading

    by w999surf Feb 19, 2014 3:44 PM dansmith46 Feb 19, 2014 5:10 PM Flag

    So you're telling me you don't even own CLF overnight normally? Yet you are this bullish all the time?

  • Reply to

    Interest Rates Heading Up?

    by w999surf Feb 19, 2014 3:11 PM dansmith46 Feb 19, 2014 5:09 PM Flag


  • Reply to

    Short, Place Your Bets on Chinese Iron Ore Demand

    by w999surf Feb 18, 2014 11:35 AM dansmith46 Feb 18, 2014 2:11 PM Flag

    what acquisitions are happening in the space? Rio and BHP together adding about 90 million tons of productions, Vale adding a little, and FMG adding about another 40 million tons for a total of about 140 million tons new capacity by the end of Q1 2015 I think Iron ore price steadily decreases through 2015 and then steadily increases after that. Speaking in terms of yearly averages of course.

  • Reply to

    Iron Ore Futures

    by w999surf Feb 17, 2014 9:02 AM dansmith46 Feb 17, 2014 9:58 PM Flag

    If you look at the port stockpiles graph this same thing did not in fact happen last year. Last year inventories were at fairly low levels. And what bothers me is that as inventories have risen dramatically during the December and January months (records for chinese imports) that the price still fell the way it did. Last year during the restock prices for spot hit the upper $150s for a bit. This year prices steadily declined until the past two days.

    So what troubles me is that we now have the largest stockpile since august of 2012 and when stockpiles got this high back then spot completely fell off a cliff the next month. That's what troubles me. However I think the buildup has a lot to do with credit tightening and people using the ore as collateral for credit contracts. If it's not actual demand then we may be in for a substantial decline in spot price

  • Reply to

    Iron Ore Futures

    by w999surf Feb 17, 2014 9:02 AM dansmith46 Feb 17, 2014 4:22 PM Flag

    oh wait. it might be just because he has you on ignore. I had you on ignore until this post as well. You used to be pretty annoying with all of your shorting talk an calling people sheep and such. You should stick to actual analysis like this post you just had.

  • Reply to

    Iron Ore Futures

    by w999surf Feb 17, 2014 9:02 AM dansmith46 Feb 17, 2014 3:10 PM Flag

    I see we both keep up with the iron ore page on Macro Business. very informative postings over there. I too have been saying this, but I am still bullish on CLF. Surf never responds to me either when I mention the increased port stocks. He responds to most things just not this and I don't know why

  • Reply to

    VALE PE 16.4

    by w999surf Feb 16, 2014 12:31 PM dansmith46 Feb 16, 2014 1:20 PM Flag

    I really don't think the PE is really what matters with materials companies. I think it's all about the free cash flow. CLF has traded for extended periods with a PE of 5, other extended periods with a PE of 10, and even as high as 15 or 20. PE isn't what matters so much as cash flows.

  • Reply to

    Running through Income Statement

    by w999surf Feb 15, 2014 3:16 PM dansmith46 Feb 15, 2014 3:40 PM Flag

    The freight is simply a reimbursement. They aren't making money on that. The cash cost they report is the actual cash cost. There's no adjusting that needs to be done.

    The only adjustment is adding back in depreciation when you are calculating cash flows. It means that right now even though bloom lake has about -$10 per ton in income, they are actually contributing about +$10 per ton in free cash flow. Still not much of a help and honestly somewhat of a liability in this pricing environment. But at least it's a a positive contributor for the time being. The same is true for the coal operations btw

  • Reply to

    Return of capital to shareholders in Q2?

    by sompati Feb 14, 2014 2:00 PM dansmith46 Feb 14, 2014 3:05 PM Flag

    I would prefer simply just aggressive debt payments. Just keeps going as long as you are making a profit until long term debt is 0. Might take a few years but it's worth it. No risk of bankruptcy, more free cash flow since no interest expense that can be paid to share holders.

  • I say $22.65 today.

    And 6 months from now hopefully $30 plus

  • Reply to

    Over the Year

    by w999surf Feb 14, 2014 12:04 PM dansmith46 Feb 14, 2014 12:14 PM Flag

    granted 700 million of that debt reduction was through a public share offering that diluted all of us, but still impressive. Now what do you think of these port stocks numbers?

  • dansmith46 Feb 14, 2014 11:02 AM Flag

    Surf if you are out there I am still interested what your opinion of the port stocks buildup is

  • dansmith46 Feb 13, 2014 3:09 PM Flag

    Part Three

    I think there are three possible scenarios here:

    1. The most bullish scenario is that Chinese demand somehow continues to grow so much that it soaks up current supply and future increases in supply and prices still go up.

    2. Another scenario is that the Chinese are doing this intentionally to try and crash the price in the near future.

    3. Lastly, there could be some shutting down of mines in China due to pollution from the use of low grades. There is some evidence for this as the spreads for low grade and high grade iron ore have widened. The Chinese government may be cracking down to try and reduce pollution and this could help the seaborne market some. Going along with the government regulation, tighter credit markets lately may be causing steel producers to hold more IO on hand to serve as collateral in credit agreements, and there is also a good bit of evidence for this.

    The fact is more IO is being imported, but more IO is not actually being used. It is sitting in stockpiles at the ports and this could be a bad omen for IO in the near future.

    I think anyone interested in CLF should be reading the daily IO reports in macro business every day. It will help in our discussions here.

  • Part One

    First of all regarding Cassablanca, I disagree with them on two main points. I don’t think splitting up the company will add to shareholder value. Think about getting shares in a new company that only contains the foreign assets of CLF. No one would want that and the share price would tank. Most likely they would go bankrupt in a max of five years, especially if they took some of the debt with them. It would be better to either just idle non-performing assets or sell them off. Sure we would sell at a large discount to when we bought them (when IO was at it’s very peak of $180), but at least we would get something and be able to pay down some debt.

    Secondly I don’t think Halverson needs to be replaced by their new CEO nominee who will essentially be their puppet. I think Halverson has done only good for the company so far and I support him. His first action was stopping the leakage of cash into the Chromite project, then he stopped the leakage of cash from Wabush by shutting that down, and he’s also cut cappex by 50% for next year. So far it seems he is doing only good for free cash flow and I respect his actions so far. He has done in three months what Carrabba didn’t do in two years. Hopefully we can get further Cappex cuts next year too that could bring us down into the $250 million level.

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