cci>As near as I could tell (which may not be all that near, mind you), their earnings did in fact include a large portion from their trading.
Well, I just reviewed it, and I can't find any evidence of outsized trading earnings. Trading revenue was $730 million out of a total $6,792 million. While it's technically possible that they have 100% operating margins on trading revenues, I kinda doubt it. Again, I'd love to hear any interpretations leading to a different conclusion, but faint allusions don't really help me sniff it out.
chse>
You can't really look at a simplistic measure like P/E for a company like this. The stock looks cheap because everybody is probably scratching his head trying to figure out if they're geniuses or bums. Generally, I lean toward bums. There just ain't that many geniuses who go around snapping up everything in sight successfully. Charles Wang. Bernie Ebbers. Not many others.
Doubts about this company? Well, if you ex out their $500 million in goodwill, you're left with $250 million book. But they've already committed $320 million ($295 million cash, $25 million stock) and assumed debt for their next acquisition. This is cash they don't actually have. Yep, they're bootstrapping their way into the big leagues by levering up. Now, you'll never hear me criticizing the judicious use of leverage. But I just can't stand management whose egos are orders of magnitude larger than their abilities. |
