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ettubrutusad 25 posts  |  Last Activity: Mar 25, 2015 10:18 AM Member since: May 29, 1998
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  • ettubrutusad ettubrutusad Mar 25, 2015 10:18 AM Flag

    Well, of course you don't know that for sure, do you? I agree that Clf is paying a very high price to get this issue out there, but it should get rid of liquidity concerns for at least two years. Actually, with the issuance of such a large amount of first lien notes on top of the exchange second lien notes (whatever that amount will be), it is hardly good news for holders of the original senior notes to which I happen to belong. On the one hand, I can rest easy that I will receive my note payments for the next two years, provided the co doesn't do something stupid with the $490 mil. On the other hand, there will now be perhaps as much as $1.7bil in debt senior to mine in the event of bankruptcy. Not great news. I wonder if Casablance is buying some of these first lien notes.

  • Reply to

    The $1 Price Target

    by ettubrutusad Dec 18, 2014 4:57 PM
    ettubrutusad ettubrutusad Mar 23, 2015 11:23 AM Flag

    I will repost this one more time. I think it is pretty clear that the primary if not sole reason Capital World has sold off most of their holdings is because the dividend was eliminated. Their shares were held in income funds. But note above the had not sold any of their shares of the preferred stock because it is still paying a dividend. You could have predicted this months ago, as some of us did.

  • Reply to

    The $1 Price Target

    by ettubrutusad Dec 18, 2014 4:57 PM
    ettubrutusad ettubrutusad Mar 22, 2015 11:50 PM Flag

    I am reposting this from dec 18th as an explanation for why Capital World has been selling out their shares. Once the dividend was completely eliminated, it was inevitable that they would be selling the bulk of their shares. Note, however, that as of their most recent filing, they had not sold any of their holdings of the Clf preferred because it is still paying its dividend. This giant sell should not be read as an indication that Capital World was concerned about bankruptcy, but there's no question it added sharply to the selling pressure on the stock price. Always dangerous to predict, but it did appear to me that Clf was attempting to put in what might be a near term bottom last week in the 4.10 to 4.30 range. I believe the near term direction will be dictated by the success or lack thereof of the $500mil first lien note private placement. If this succeeds, it should end all discussion about liquidity concerns for the foreseeable future, ie. The next two years, short of a resurrection of the BL issue, which seems unlikely.

  • ettubrutusad ettubrutusad Mar 21, 2015 6:03 PM Flag

    verylongsigh, I have enjoyed your occasional droll, pithy and insightful comments. In this reference to Yeats, I hope this is not an admission that you have been verylongcliffs. I went down that road with another stock till the bitter end many moons ago, but discovered that given enough time, all wounds can heal.

  • Reply to

    Hello,Any Idea on Q-1 earnings

    by shark6137 Mar 20, 2015 1:01 PM
    ettubrutusad ettubrutusad Mar 20, 2015 2:05 PM Flag

    Lishe, I asked you above. Where exactly are you finding this $237mil tax refund in Q4 Report. Can you provide a page or heading?

  • Reply to

    Today's bond news is excellent news!!!!

    by lishe235 Mar 19, 2015 11:30 AM
    ettubrutusad ettubrutusad Mar 20, 2015 8:15 AM Flag

    I did not see or hear anything about a $237mil tax refund. They have tax credits which can be applied against future earnings. Where exactly are you getting that? Also, on the conf call for last qtr, co said that BL balance sheet will take $50mil of their cash, so cash was actually $240mil, not $290mil. Also, I recall mgmt. saying that they would have to pay some arbitration judgment in the first qtr of approx. 90-100mil regarding Canadian assets. That was on the 3rd qtr conf. call - no mention on the 4th qtr call. Clf needs more liquidity to weather the next two years and for investors to get comfortable at this point. As I said before, it was a bit of a shock to see just how tied their contract prices are to the seaborne price on the reset. If clf can pull this exchange/new issuance off, that will bring in an additional $500mil in liquidity with some increase in R cost, but barring something blowing up (like the BL reorganization) and given LG's hard push to lower costs everywhere, closing the finance should be very good news. We will see. It is screwing the current noteholders (like myself), but if the new notes trade in the open market, there may be an opportunity there down the line.

  • Reply to

    Today's bond news is excellent news!!!!

    by lishe235 Mar 19, 2015 11:30 AM
    ettubrutusad ettubrutusad Mar 19, 2015 6:52 PM Flag

    Lishe, what news are you referring to? My numbers on what Clf's debt picture will look like assuming full completion of this exchange/issuance happens are close to your revised above. Clf should have approx. $3.2bil debt outstanding (this includes about $250mil in misc like equipment leases), offset by approx. $750mil in cash and equivalents, indicating a net debt of approx. $2.45bil. Moody's 550-600mil ebitda number seems optimistic to me, but it wouldn't be the first time a rating agency gets their numbers wrong. At $550mil, they are estimating $25 margins on 22mil tons. maybe LG can continue to drive costs down hard. We'll see. If these numbers allow clf to get the deal done, so be it. But they were still far away from the new exchange number they were shooting for a week ago. One curious thing. Credit Suisse has a $1 target on the stock, yet they're one of the 4 dealer managers on the offering. Finally, I hold some of the march 2020 5.9% senior notes. As a retail investor, I'm shut out of the exchange offering. I wouldn't mind getting some of those first lien notes, but I expect mine will drop further than $64 if this deal goes thru.

  • Reply to

    Does I/O go back to the $10-$16 range???

    by ohtaegun Mar 10, 2015 5:33 PM
    ettubrutusad ettubrutusad Mar 10, 2015 7:10 PM Flag

    Yes, true, but that doesn't explain what their gross margin costs were, because the company suvived for years with what must have been lower labor and overhead costs. But were they really that much lower? The co had no debt back then. How did they survive because that is the issue at hand - an increasing number of analysts saying they won't survive without a restructuring or bankruptcy.

  • Reply to

    Does I/O go back to the $10-$16 range???

    by ohtaegun Mar 10, 2015 5:33 PM
    ettubrutusad ettubrutusad Mar 10, 2015 5:58 PM Flag

    Yes, I have seen the charts. But then explain to me how Clf ever suvived all those years when their cost margins were in the $60+ per ton range?

  • ettubrutusad by ettubrutusad Feb 18, 2015 1:03 PM Flag

    I know the stock is volatile, but the reaction today to the released report seems extreme. Yes, proved reserves have dropped, but proved oil reserves are at 69 mil barrels, and that appears to be an increase of 9 mil barrels from this time last year.

  • Does anyone have a clue for today's move. I haven't looked at Io prices or possible news out of Australia.

  • Reply to

    Earnings in 2015 is going to be $2

    by w999surf Feb 6, 2015 1:08 PM
    ettubrutusad ettubrutusad Feb 6, 2015 2:26 PM Flag

    I would not disagree with your numbers if Clf can get to a $55 cost per ton, but that seems a stretch at the moment. I have said earlier that Clf's tables in their earnings press release indicate actual cost will average around $62.50, so unless the Io price goes up, there goes your positive cash flow short of asset sales, which are certainly possible. I would certainly say that if anyone can costs down it would be Goncalves. The man appears to be totally committed to righting this ship.

  • Reply to

    Baffled

    by davistran54 Feb 6, 2015 8:23 AM
    ettubrutusad ettubrutusad Feb 6, 2015 12:40 PM Flag

    Yes, but that assumes you actually have taxable income that can be reduced or eliminated by offsetting with accrued tax benefits like nols. In Clf's case, they are unlikely to get to that favorable position because after subtracting their interest expense, they won't actually have made any taxable income in 2015.

  • Reply to

    Baffled

    by davistran54 Feb 6, 2015 8:23 AM
    ettubrutusad ettubrutusad Feb 6, 2015 12:12 PM Flag

    He is not bending the numbers, but you appear to be doing it with your claim of 26 mil tons claim for 2015 when the co clearly stated it would be 22 mil tons in their press release. Also, why do you keep talking about millions of dollars in tax advantages. Accrued tax benefits and nols merely offset future earnings to the extent there are any. They are not actual cash as you seem to be saying. Based on the numbers today, Clf will likely be slightly cash flow negative for 2015. They are nowhere near bankruptcy, but neither is the stock going to the moon. You're constant pumping is as bad as the shorts distorting.

  • Reply to

    Not Enough EBITDA..

    by vipinkot47 Feb 4, 2015 12:24 PM
    ettubrutusad ettubrutusad Feb 4, 2015 7:04 PM Flag

    You are just not correct with your assumption of $95 per ton for the 2015 projection. Clf's earnings press release is quite clear where the likely price will be. Under their fixed contracts, if the Platts Iodex 62% IO price is anywhere from $55 to $75, Clf will receive between $80-85. Currently, though it does jump around, 62% iodex sales are taking place in the $62-$63 range. The may futures are indicating higher prices, in the $75-$77 range. If they were to get to $80 and hold there, Clf's would realize a price between $85-90. That is not where the price is currently. I think one of the disappointing revelations for longs like myself is that Clf's contract price is definitely more affected by the price of seaborne IO than we were led to believe. Also, to get to $300mil ebitda for 2015, you do subtract sg&a, which the co currently projects to be $140mil.

  • Reply to

    Here is 2015 estimation.

    by lishe235 Feb 3, 2015 2:10 PM
    ettubrutusad ettubrutusad Feb 3, 2015 5:04 PM Flag

    I agree with your numbers, though I was surprised on the CC when mgmt. said that interest expense would be in the range of $175-195mil. With the debt buybacks, I thought interest would be down around $132mil for the year, so they must have borrowings elsewhere on equipment, leases, or other things. Calculating that all in and assuming $440 mil sales margin for USIO, after paying interest of say $180mil and the preferred $50mil, clf would be slightly cash flow negative for the year, maybe $70mil. If they can make some money in Asia/Pac or sell either or both of the coal mines, they would probably be cash flow positive. I noted also that on another post of yours below, you have the fully converted conversion taking share count to 187mil shares. I figured it at 178.4mil, ie. an additional 25.207mil shares. Where did I go wrong?

  • Reply to

    A net $17 a ton in N.A.

    by ettubrutusad Feb 2, 2015 5:24 PM
    ettubrutusad ettubrutusad Feb 2, 2015 7:24 PM Flag

    hi Lishe. Yes, perhaps I was being too conservative. The co states that the expected 2015 cash cost of goods sold per ton will be between $60-65, so I went for a midpoint, but in fairness it should have been $62.50. Their projected realized revenue based on a Platts Iodex price between $55 and $75 will be somewhere between $80-$85. So for that range I should have chosen $82.50, not $80. So, $82.50 - 62.50 gets you to $20 x 22mil tons = $440mil. And that is better, but that is still a far cry from $600 or even $500mil. I posted earlier about doing a multiple of ebitda to get a fair share price, and I am not sure that $440mil is enough to support a price much above here. We will see, though.

  • ettubrutusad by ettubrutusad Feb 2, 2015 5:24 PM Flag

    That's what it looks like Clf is saying they will see for North America in 2015. At 22mil tons projected sales, (80 -63) that comes to about $374mil total sales margin for NA in 2015. Correct me if I am wrong, please, but if correct, I don't think that will go down well.

  • Reply to

    Thoughts on the proposed dividend cut of 52%?

    by jj21383 Jan 30, 2015 5:05 PM
    ettubrutusad ettubrutusad Jan 30, 2015 10:20 PM Flag

    I agree that this announcement removes one uncertainty that has been used against the stock price and it was more than I expected. Vale has made several statements over the past two months or so that the dividend was going to be reduced, so this should not have been a surprise to anyone- only the amount. 26 cents is the base dividend and I thought that might be what we saw- but we are getting an additional 13 cents for a 5.5% yield at $7.03. This should put a solid floor under the stock price - the shorts are going to have to pay this for certain for the next year so it adds to their carrying cost. Also, I think it is a statement by the co that although almost all commodity prices are in a bear market, we have been and will continue to take prudent steps to protect the co's financial strength in this difficult environment. It gives me renewed confidence that they will put up a decent ebitda number for the quarter and that they are confident that they can sell additional assets or raise money through a partial ISO in order to fund their ongoing capex projects. Ideally, I would like to see them reduce debt, but since 1/3 of their debt is priced in reals, on the dollar conversion their overall may show another reduction. The co had $8bil in cash on the books at the end of the qtr, so they have ample liquidity to support a dividend of this amt. I would love to see vale announcing a significant reduction in the amount of capex to be spent for this year, by extending out completion dates for some projects or perhaps even suspending certain ones that will only marginally reduce their overall cost of production for IO. We shall see, but I take this announcement as a very strong signal from the co.

    Sentiment: Buy

  • Reply to

    Why CLF is Dan Carman's #1 Pick for 2015...

    by vipinkot47 Jan 29, 2015 9:02 PM
    ettubrutusad ettubrutusad Jan 30, 2015 7:28 AM Flag

    Correction. By my calculation, Sprint is currently trading at around 7.3X ebitda. Vale, assuming it could continue to have 3bil in ebitda per qtr, is trading around 4,9X, but given it sharp sell off in the last week, the street probably believes it's ebitda for the next few qtrs will be lower than that given IO prices. It still looks like better value to me at these levels than Clf, but if Clf put up ebitda of 500mil, it's multiple gets it line with S at this price, $6 or so.

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