Top 5 ideas of the week:
We think that Apple Inc’s (AAPL) late CEO Steve Jobs said it best about Google Inc. (GOOG) when he said “Our lawsuit is saying Google you bleeping ripped off the iPhone, wholesale ripped us off.’ Grand theft! I will spend my last dying breath if I need to, and I will spend every penny of Apple’s $40 billion in the bank (as of 2011), to right this wrong. I’m going to destroy Android, because it’s a stolen product. I’m willing to go to thermonuclear war on this. They are scared to death, because they know they are guilty. Outside of Search, Google’s products – Android, Google Docs – are bleeped.” We have had the misfortune of having to use Android, Google Drive and Google Docs and needless to say Google’s offerings in these categories fall short of its competitors. We find the iPhone to be much easier to use than Android based smartphones and we are considering replacing our PC and laptop with a Mac Desktop, a MacBook Air and or an iPad tablet. That’s one of many reasons why we believe that Apple is still a better value for investors than Google.
We were overjoyed that Duke Energy’s (DUK) CEO James Rogers announced that he would be retiring from Duke Energy as of the end of 2013. We believe that Rogers retired due to ill health as we were sick and tired of Duke Energy’s second-rate performance under his leadership and the North Carolina Utilities Commission was sick and tired of the bad publicity generated by Rogers sacking Progress Energy CEO Bill Johnson hours after naming him CEO of Duke Energy.
We are pleased to read that merger speculation involving SUPERVALU Inc. (SVU) is more than idle chatter and that significant progress is being made with strategic deal talks involving Cerberus Capital Management LP. According to a recent report from Bloomberg, Cerberus is nearing a deal to acquire some of SUPERVALU’s assets and become a shareholder in the new SUPERVALU Inc., according to three people familiar with the matter. The parties have agreed to the framework surrounding the deal and are expecting to unveil it on January 10th, when SUPERVALU announces its Q3 2013 EPS. According to a December report from Bloomberg, Cerberus and SUPERVALU were in discussions in which SUPERVALU would sell its Albertsons and Save-A-Lot operations to Cerberus and Cerberus would take a stake in the rest.
We think that the financial model for Tesla Motors (TSLA) and Elon Musk’s other publicly traded company SolarCity (SCTY) is as innovative as its products. We think that the electric vehicle evangelists have bid up Tesla’s shares by nearly 8.5% since Tesla announced its secondary offering on September 25th for the following reasons:
- Tesla’s secondary offering only diluted existing shareholders by 7.5%
- Tesla’s Co-Founder and CEO Elon Musk forecasted Tesla would be profitable in FY 2013
- Musk also chipped a staggering $1M to buy stock in Tesla’s secondary offering. We think that was a real sporting move by Musk for buying $1M of the $222M secondary offering.
- According to Musk’s Twitter feed, Tesla was narrowly cash flow positive for the week ending November 30th.
We can see why Sprint Nextel (S) offered telecom investors the best opportunity for a turnaround and why it generated the highest total stock return for its investors. While we believe that its near term upside will be limited due to the terms of its deal with SoftBank (SFTBF.PK) we believe it will continue to generate the strongest fundamental performance versus FairPoint (FRP), RIMM, Alcatel-Lucent (ALU) and Nokia (NOK).
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