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Non-Tech : SPIN-OFFS "secret hiding places of stock market profits" -- Ignore unavailable to you. Want to Upgrade?

To: Paul Senior who wrote (1100)	6/28/2007 12:15:03 PM
From: Jurgis Bekepuris	Read Replies (1) \| Respond to of 1185

Personally, I think that Discover (Amex as well, btw) has lost attractiveness for the last 10 years or so. Back in the day, it was the only credit card that offered cash back bonus. Now there's tons of Visa/MC cards doing the same and with higher bonuses. At that time, the cashback counterbalanced the negatives of Discover: less accepting locations, no international presence, etc. Now I just got a my Discover card to renew and I can't make up my mind whether to cancel it instead. Discover (and Amex) made some deals with airlines and hotels to issue their bonus cards, but again they are only few and not greatly attractive. In essence, I am not sure what is attractiveness for Discover (and Amex) going forward. BTW, AMEX still has a strong corporate foothold, which helps them. A lot of corporations require you to get Amex card for business trips and so on. I do not invest in financial companies though, so this is just a personal experience.

To: Paul Senior who wrote (1100)	6/29/2007 3:48:06 PM
From: Stewart Whitman	Read Replies (1) \| Respond to of 1185

There are at least a few good points for DFS: 1. There will be significant SAR's allocated to management & employees. A lot of management incentive. 2. Some have speculated that a the large banks are said to be interested in acquiring it so that they can issue cards. B of A has said suggested that it is considering starting it's own payment network to process credit cards because of the savings it could obtain. Discover would be an obvious acquisition target. 3. Earnings should be about $1.70 to $1.80 or so. Thats make the the P/E at the current stock price around 17x. With a little growth, maybe 15x next year's earnings. 4. Management seems to be improving performance and operating results. Their UK performance seems to have hurt results. But then again, it is a relatively recent acquisition. 5. Recent court rulings tend to favor Amex/Discover vs. MC/Visa. So, I like it. Opportunity for improvement, enough incentive, potential acquisition, not too expensive. Regards, Stew