Using Veritas to Construct the "Per…

29-04-2017 Hits:87194 BoomBustBlog Reggie Middleton

Using Veritas to Construct the "Perfect" Digital Investment Portfolio" & How to Value "Hard to Value" tokens, Pt 1

The golden grail of investing is to find that investable asset that provides the greatest reward with the least risk. Alas, despite how commonsensical that precept seems to be, many...

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The Veritas 2017 Token Offering Summary …

15-04-2017 Hits:81115 BoomBustBlog Reggie Middleton

The Veritas 2017 Token Offering Summary Available For Download and Sharing

The Veritas Offering Summary is now available for download, which packs all the information about Veritas in a single page. A step by step guide to purchasing Veritas can be downloaded here.

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What Happens When the Fund Fee Fight Hit…

10-04-2017 Hits:80956 BoomBustBlog Reggie Middleton

What Happens When the Fund Fee Fight Hits the Blockchain

A hedge fund recently made news by securitizing its LP units as Ethereum-based tokens and selling them as tradeable (thereby liquid) assets. This brings technology to the VC industry that...

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Veritaseum: The ICO That's Ushering in t…

07-04-2017 Hits:85428 BoomBustBlog Reggie Middleton

Veritaseum: The ICO That's Ushering in the Era of P2P Capital Markets

Veritaseum is in the process of building peer-to-peer capital markets that enable financial and value market participants to deal directly with each other on a counterparty risk-free basis in lieu...

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This Is Ground Zero for the 2017 Veritas…

03-04-2017 Hits:81928 BoomBustBlog Reggie Middleton

This Is Ground Zero for the 2017 Veritas Offering. Are You Ready to Get Your Key to the P2P Capital Markets?

This is the link to the Veritas Crowdsale landing page. Here is where you will be able to buy the Veritas ICO when it is launched in mid-April. Below, please...

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What is the Value Proposition For Verita…

01-04-2017 Hits:84116 BoomBustBlog Reggie Middleton

What is the Value Proposition For Veritas, Veritaseum's Software Token?

 A YouTube commenter asked a very good question that we will like to take some time to answer. The question was, verbatim: I've watched your video and gone through the slides. The exchange...

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This Real Estate Bubble, Like Some Relat…

28-03-2017 Hits:55177 BoomBustBlog Reggie Middleton

This Real Estate Bubble, Like Some Relationships, Is Complicated...

CNBC reports US home prices rise 5.9 percent to 31-month high in January according to S&P CoreLogic Case-Shiller. This puts the 20 city index close to an all time high, including...

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Bloomberg Chimes In With My Warnings As …

28-03-2017 Hits:83373 BoomBustBlog Reggie Middleton

Bloomberg Chimes In With My Warnings As Landlords Offer First Time Ever Concessions to Retail Renters

Over the last quarter I've been warning about the significant weakness in retailers and the retail real estate that most occupy (links supplied below). Now, Bloomberg reports: Manhattan Landlords Are Offering...

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Our Apple Analysis This Week - This Comp…

27-03-2017 Hits:83112 BoomBustBlog Reggie Middleton

Our Apple Analysis This Week - This Company Is Not What Most Think It IS

We will releasing our Apple forensic analysis and valuation this week for subscribers (click here to subscribe - lowest tier is the same as a Netflix subscription). As can be...

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The Country's First Newly Elected Lame D…

27-03-2017 Hits:83004 BoomBustBlog Reggie Middleton

The Country's First Newly Elected Lame Duck President Will Cause Massive Reversal Of Speculative Gains

Note: Subscribers should reference  the paywall material here for stocks that should give a good risk/reward scenario for bearish trades. The Trump administration's legislative outlook is effectively a political desert, with...

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Sears Finally Throws In The Towel Exactl…

22-03-2017 Hits:89256 BoomBustBlog Reggie Middleton

Sears Finally Throws In The Towel Exactly When I Predicted "has ‘substantial doubt’ about its future"

My prediction of Sears collapsing once interest rates started ticking upwards was absolutely on point.

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The Transformation of Television in Amer…

21-03-2017 Hits:86977 BoomBustBlog Reggie Middleton

The Transformation of Television in America and Worldwide

TV has changed more in the past 10 years than it has since it's inception nearly 100 years ago This change is profound, and the primary benefactors look and act...

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Worsening end market demand and continuous reduction in the dealer inventory have led a steeper than anticipated decline of 41% (y-o-y) in the CAT’s revenues to $7.98 bn in 2Q09 from $13.62 bn in 2Q08. Total machine sales and engine sales declined 49% and 32%, respectively, while the revenues from financial products declined 13%. Decline in machine and engine sales was primarily volume driven and was across all geographies. Machine sales in North America, EAME (Europe, Middle East and Africa), Asia Pacific and Latin America declined a significant 51%, 61%, 25% and 47%, respectively. Engine sales in North America, EAME, Asia Pacific and Latin America declined 30%, 36%, 26% and 31%, respectively. The weak demand scenario propelled by cut in residential and non-residential construction spending is reflected in the company’s recent financial results.

The bottom line was severely hit by the sharp drop in the top line along with margin contraction. The increase in SG&A and R&D expenses as percentage of revenues offset the improvement in gross margin achieved through drastic workforce reduction. While the cost of goods sold (material and labor cost) as percentage of revenues declined to 72.1% in 2Q09 from 73.7% in 2Q08, the SG&A costs as percentage of revenues increased to 11.5% in 2Q09 from 7.9% in 2Q08 and the R&D costs as percentage of revenues increased to 4.4% in 2Q09 from 3.0% in 2Q08.

Operating profit (excl redundancy costs of $85 mn) declined 71.7% to $401 mn in 2Q09 from $1,525 mn in 2Q08. However, the sharp decline in operating results was moderated by $93 mn of favorable currency impact included in other income (expense) and lower effective tax rate which was about 10.0% in 2Q09 against 28.2% in 2Q08. Consequently, net income declined 66.5% to $371 mn in 2Q09 from $1,106 in 2Q08. EPS was $0.60 in 2Q09 against $1.74 in 2Q08.

 


2Q09 Actual versus our estimates – not much difference

The decline in revenues was more severe than anticipated and the reported revenues were lower at $7.98 bn in 2Q09 against our estimates of $9.2 bn. Although the company gained from larger than expected decline in workforce which boosted the gross margin, the gains were offset by higher than expected SG&A and R&D costs with the operating margin (excluding redundancy costs) marginally higher at 5.4% against our estimates of 5.1%. CAT’s total workforce declined 7.1% (q-o-q) in 2Q09 to 95,761 from 103,078 against our estimates of 3.0% reduction.

Operating profit (excl redundancy costs) were 7.9% lower at $432 mn against our estimates of $469 mn. Variation in the operating profit (incl redundancy costs) is largely due to variation in the redundancy costs which amounted to $85 mn in 2Q09 with balance expected to be incurred in the second half of 2009. We accounted for the redundancy costs of about $200 mn (expected redundancy costs for full year 2009 less redundancy costs incurred in 1Q09) in 2Q09 itself.

Net income (excl redundancy costs) was 27.9% lower than our estimates and the variance is largely on account of favorable currency impact (majorly hedging gains) of $93 mn included in other income (expense) and lower tax rate. The 2Q09 EPS (excl redundancy costs) of $0.72 included $0.14 per share impact from hedging gains and $0.12 per share impact for lower tax rate. Excluding these two items (which don’t relate to CAT’s core operations and are not expected to recur in coming periods), 2Q09 EPS comes to $0.46, close to our estimate of $0.54 (and much higher than consensus estimate of $0.22)

Company’s 2009 Revised Guidance versus our estimates

As per the Company’s revised guidance, the company expects the revenues within the range of $32 bn to $36 bn for full year 2009. EPS (excl redundancy costs) is expected within the range of $1.15 to $2.25 per share. Thus, after excluding the EPS for the first half of 2009 of $1.11, the company is expecting EPS (excl redundancy costs) ranging from $0.04 to $1.14 for the second half of 2009 thus estimating a subdued performance for 2H09 against 1H09.

Our projections include 2009 revenues and EPS (excluding redundancy cost) estimates of $36.9 bn and $2.04, respectively, in line with company’s guidance.

Click to enlarge. 

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