Update: AT&T Q4 2014 Earnings Highlight Declining Operating Income

Summary

• AT&T reports Q4'14 earnings.
• Investors should continue avoiding the stock.
• The original investment thesis remains intact with margins under extreme pressure.

The quarterly results of AT&T (NYSE:T) were only in line with the already reduced expectation of analysts. The giant domestic wireless provider produced record smartphone gross adds and upgrades while watching margins plunge. The net effect remains a stock that is likely to continue churning in the low $30s range while investors collect a solid 5.7% dividend yield and wait for the impact of the wireless auction.

Read the full update at Seeking Alpha.


Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

Net Payout Yields - 4 Years Of Beating The Market

The Net Payout Yields model on Covestor has now beaten the benchmark S&P 500 for all 4 years on the investing platform. In addition, the model is slightly ahead starting the 5th year and it's exceeded the benchmark by at least one percentage point each of those 4 years.

Most importantly though for investors looking for a conservative portfolio to grow retirement funds or reduce total risk, the model has a beta of only 0.90. This means the concept is less volatile and risky than owning the S&P 500 index directly. In addition, Covestor calculates several other ratios to highlight the benefits and reduced risk of the model for any interested investors.

Please click on the link to invest directly via the online Covestor platform.


Disclosure: Historical results are not indicative of future performance. Positive results are not guaranteed and individual results will vary depending on market conditions. Investing may cause capital loss. Please review the disclaimer page of the blog for more details. 

Update: Goldman Sachs Reports Q4'14 Earnings

Summary

• Goldman Sachs reported Q4'14 earnings.
• The stock remains a Strong Buy.
• The original investment theory of solid yields and huge earnings remains intact.         

After the weak bank earnings this week, investors didn't expect much from Goldman Sachs (NYSE:GS) by the time it reported Friday morning. The bank actually beat estimates, though analysts greatly reduced these estimates from levels of a week ago. Even after the sell off this week, the stock is struggling to gain traction with it trading down around $2.00 mid-day. Again, investors appear more concerned about momentum instead of the valuation proposition of the financial institution.

Read the full update at Seeking Alpha. 

Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

DISH Network: Over-The-Top Service Adds Limited Value

Summary

• DISH Network begins offering limited pay-TV services online.
• The satellite TV operator has a first mover advantage, but the service doesn't appear to offer anything proprietary that couldn't be replicated or enhanced.
• Content providers with the best content will benefit the most from these scaled-down online packages that feature only top channels such as ESPN and TNT.

DISH Network (NASDAQ:DISH) made the interesting announcement last week that it is joining the over-the-top revolution for pay-TV services. The company follows recent announcements by Time Warner's (NYSE:TWX) HBO and CBS (NYSE:CBS) to offer subscription services online to compete with Netflix (NASDAQ:NFLX) due to the increasing amount of consumers that are cutting the cord.

Read the full article at Seeking Alpha.


Disclosure: Long TWX. Please review the disclaimer page for more details. 

IBM: Capital Returns To Shareholders Aren't Financial Engineering

Summary

• Financial engineering is an overused term when a company does a large-scale stock buyback program.
• The weak results of IBM are well documented, but the FCF remains strong compared to the market valuation.
• The recent 15% net payout yield is a strong buy signal.

With the recent collapse of International Business Machines' (NYSE:IBM) stock, lots of questions surround the large stock buyback. When a company uses FCF (free cash flow) and even issues debt to repurchase shares, some in the investment community - including an article by Stock Market Sherpa - like to proclaim financial engineering has occurred. By making that statement, it suggests that the company is undertaking something to deceive investors.


Read the full article at Seeking Alpha.


 Disclosure: Long IBM. Please read the disclaimer page for more details.

Buy Twitter If Instagram Is Worth $35 Billion

Summary

• Citigroup analysts assigned a $35 billion valuation to Instagram that is only now monetizing the user base.
• Instagram and Twitter have comparable logged-in user bases, though the former is growing faster.
• Twitter is significantly ahead of Instagram on the monetization path, and provides an attractive valuation compared to Instagram that is part of the significantly larger Facebook.

The absurdity of a $35 billion valuation on a company division that is barely producing revenue is comical, but that is the valuation assigned to Instagram by a Citigroup analyst. The market and especially investors in Facebook (NASDAQ:FB) that bought the social picture sharing service for $1 billion were initially excited about that news. Clearly, Facebook got a great deal at the $1 billion valuation, but investors need to wise up to the proclaimed valuation.

Read the full article at Seeking Alpha.


Disclosure: Long TWTR via GSVC. Please review the disclaimer page for more details. 

Is AT&T Harming DirecTV Shareholders?

Summary

• The AT&T and DirecTV deal isn't set to be finalized until next year.
• AT&T is potentially the big bidder at the AWS-3 spectrum auction that could harm the valuation ultimately obtained by DirecTV shareholders when the deal closes.
• The domestic wireless pricing wars and wireless spectrum auctions continue to dilute the potential windfall for DirecTV shareholders.

With AT&T (NYSE:T) in the middle of closing the DirecTV (NASDAQ:DTV) merger, the apparent aggressive spending on the domestic wireless auction brings up corporate governance issues for shareholders. Along with the domestic wireless pricing war, the situation highlights the issues with corporate stock deals that take so long to finalize. It leaves investors of the acquired company trapped waiting to cash out of the stock while hoping the acquirer doesn't make moves in the meantime to impact the stock.

 Read the full article at Seeking Alpha.

 Disclosure: Long T and DTV. Please read the disclaimer page for more details.