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Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: Earlie who wrote (261164)	9/28/2003 9:06:01 AM
From: Pogeu Mahone	Respond to of 436258

MARKET WATCH Taking a Closer Look at Debt By GRETCHEN MORGENSON HEN hard times hit, one of the toughest lessons managers have to learn is that while the value of their company's assets is likely to shrink, the debt they have amassed will not. Exhibit A for this harsh market reality was the telecommunications industry, which borrowed billions from investors in the late 1990's to build networks that almost immediately plummeted in value. For far too long these companies carried the amount they had sunk into the networks as an asset, offsetting the heavy debt they had taken on to build them. As the assets lost value, many of the companies were forced into bankruptcy. The assets fetched pennies on the dollar. Lately, companies have been doing what they can to shore up their balance sheets. But some companies still find themselves struggling to get out of the straitjacket of debt. "Until recently the window for obtaining capital from the equity markets was shut, and companies had to be more self-sustaining than they had been," said Sean J. Egan, managing director of Egan-Jones Ratings in Wynnewood, Pa. "This whole corporate governance issue has also caused companies to re-evaluate their positions." Evidently, there's nothing like seeing executives from bankrupt companies hauled off in handcuffs to focus the mind. Mr. Egan said that over all, more balance sheets are improving than worsening right now. But not all companies can shore up their financial position. And given the lackluster economic recovery, investors should be on the lookout for the ones whose situations are deteriorating. Statisticians at Egan-Jones, an independent bond rating firm that is not paid by the companies whose debt it rates, scanned the ranks of public companies to identify those with the biggest improvements and those with the largest deterioration in their financial health in the past 12 months. The firm measured the ability of each company to meet the expenses associated with its debt, also known as its interest coverage ratio. The ratio is calculated by combining a company's pretax income and interest expense, then dividing by the amount owed in interest during the year. Although ideal coverage ratios vary by industry, Mr. Egan said that when a company's interest expense is roughly equal to its income, warning flags should go up. SOME of the names on the list were surprising. Among the companies showing the greatest improvement in their financial position during the past year was Amazon.com; its coverage ratio rose from 0.67 percent of its interest owed to 1.8 times the figure. The ratios for Mattel, JetBlue Airways, Nextel Communications and Gap also increased fairly substantially. As a bond analyst, Mr. Egan has no view on whether the stocks of these companies are cheap or overpriced. But he said that an improving balance sheet gives the companies more room for error and provides a cushion of sorts for investors. Many of the shares have risen smartly of late. According to Mr. Egan, the industries investors need to watch now include the full-price airlines, because business travel has still not rebounded, and steel makers, which will be hurt if protective tariffs are lifted. Also threatened are big grocery chains, which are coming under attack by Wal-Mart and its strategy of keeping prices low. Among the companies with declining financial positions was Royal Ahold, the Dutch supermarket chain, whose interest coverage ratio fell to 5 from almost 5.3. Ratios also dropped at BE Aerospace; Ryerson Tull, a metals processor; and Pathmark Stores, another supermarket chain. Shares in all but one of these companies are up for the year. Ahold is down 28 percent, but BE Aerospace has risen by 16 percent and Ryerson Tull by 28 percent. Pathmark Stores is up 35 percent. The stocks of these companies may hold up, of course. Stockholders are ever the optimists, while bond investors, who are Mr. Egan's clients, watch for clouds on the sunniest of days. But even the most upbeat shareholder should have a complete grasp of a company's leverage. And in today's world, less is more. Copyright 2003 The New York Times Company \| Home \| Privacy Policy \| Search \| Corrections \| Help \| Back to Top

To: Earlie who wrote (261164)	9/29/2003 6:21:18 PM
From: ild	Read Replies (2) \| Respond to of 436258

Start of a warning season 17:49 ET Enterasys warns for Q3 (ETS) 5.70 +0.25: Co. sees Q3 (Sep) revenues in the range of $94.31-99.73 mln, Reuters Research consensus is $110.5 mln. Co. indicated that "sales for Q3 were adversely affected by delays in purchasing decisions among customers during the final week of the quarter. These delays were most pronounced in the Co's mid-Atlantic region as a result of hurricane Isabel."

To: Earlie who wrote (261164)	10/28/2003 9:39:56 AM
From: Perspective	Read Replies (2) \| Respond to of 436258

Uncle, you still 'round these parts? AMKR released today: finance.yahoo.com 8:02AM Amkor price target increased to $25 at W.R.Hambrecht (AMKR) 16.19: W.R. Hambrecht reiterating its Buy rating on AMKR and increasing its price target to $25 based on the following: 1) the co turning the corner of profitability in Q3; 2) Q4 guidance of 5-8% topline growth and indications of a better-than-seasonal Q1; 3) utilization running at an all-time high, which supports additional gross margin expansion going forward. Firm is increasing its FY:04 estimates to $2,000M and $0.93, and raising its price target to $25 from $20. biz.yahoo.com I know I underestimated the power of this cylical upturn. I doubt this lasts for long, given the unsustainable source of all the demand (US debt creation), but do you have any thoughts on how long this takes to play out? Perhaps this provides a clue: 7:12AM Target sales running below expectations (TGT) 38.80: Reuters reports that co's sales at its stores open at least a year tracked below its expectations last week and were running "somewhat below" its October forecast due to its underperforming department store business. Funny how people aren't buying as much now that those tax rebate checks and mortgage refi cash outs have all been cashed... Patiently waiting for the opportunity to remove the safety and squeeze off a few rounds... BC