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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Johnny Canuck who wrote (45030)	10/6/2008 9:15:59 PM
From: Johnny Canuck	Read Replies (1) \| Respond to of 70980

The Trick Of Timing Paychex (PAYX) September 30, 2008 \| By Stephen Simpson Email this Article Print this Article Digg This Article I am willing to bet that everybody reading this has heard more than enough about the economic conditions in the United States and the arguments as to whether we are in a recession (or are soon about to be). Although I am not going to wade into that particular battle today, I think we can all agree that it is a critical issue for Paychex (Nasdaq:PAYX) - after all, when you make your money from processing payrolls for businesses, you have a vested interest in the business of business. So Far, So-So If you do accept the idea that Paychex is a bellwether for the health of small and mid-sized businesses (and not losing share to competitors like Automatic Data Processing (NYSE:ADP) or Administaff (NYSE:ASF)), then last week's earnings report will not leave you feeling too excited about a quick turnaround in the economy. The company reported that revenue rose about 5% for the quarter, with core payroll growth up 5%, human resources revenue up 16% and float income down 25%. The company managed to maintain margins, though, as reported operating income also rose about 5% for the quarter. (Learn more about the income statement. Be sure to take a gander at Find Investment Quality In The Income Statement.) Storm Clouds on the Horizon That sort of growth is admittedly not so bad, and although the company did lower its guidance a bit, management is still projecting overall revenue growth in the 6-8% range. The trouble is that that's just a projection; I don't question or doubt that management is being honest, but conditions can change faster or further than people expect (after all, that's why we have earnings surprises, right?). Bankruptcy rates in the company's target markets are up about 10% from last year (though from a relatively small base), checks-per-client were down about 1%, hiring is sluggish across the economy (excluding the government), and banks are decidedly less inclined to offer business loans. None of that is good news for this company. What's more, the company seems to be feeling pressure on its higher-margin activities. Historically, Paychex has been good at upselling (getting clients to add additional, more profitable, services) and that's a tougher sell when clients are coming under growing pressure to just pay the bills they already have. Secondly, the company is certainly seeing a different environment in managing its float (the money it collects, holds and earns interest on before paying out to clients' employees). This is admittedly not a huge part of the overall business, but it carries very high margins, and additional chaos in the credit markets could represent a one-two punch that hurts both the company's clients and its float management. When To Step In? As I see it, Paychex is one of those relatively rare businesses that earn solid returns on capital from a growing market. There are competitors, like ADP, Administaff, Intuit (Nasdaq:INTU) and so on, but there is a lot of business to go around, and Paychex has a long-established network of CPAs and banks that provide referrals. So, that's all good. On the flip side, though, this company has undeniable economic sensitivity. If the economy continues to weaken, buying Paychex today could be like reaching out for a falling knife. Given that past banking crises have virtually always led to actual recessions (and not just "slowdowns"), my hunch is that you can wait to buy these shares. But eventually the economy will recover again, and Paychex is the sort of solid value-producing company that could be a good horse to ride.

To: Johnny Canuck who wrote (45030)	10/7/2008 7:50:19 AM
From: Logain Ablar	Respond to of 70980

Harry not sure if this set up is ready for a sustainable bounce. The BP's sure hit low numbers yesterday so maybe we did.

To: Johnny Canuck who wrote (45030)	10/8/2008 4:20:28 AM
From: Johnny Canuck	Read Replies (1) \| Respond to of 70980

Degree of difficulty M.B.A. grads face daunting job market By Whitney Jackson, Medill News Service Last update: 7:17 p.m. EDT Oct. 7, 2008Comments: 17WASHINGTON (Medill News Service) -- Fresh M.B.A. grads, especially those working for large banks, say they are living in a climate of fear. "I feel lucky that I still have a job at this point because I've seen so many people lose them," said Deepa Pai, who recently obtained her master's degree from Northwestern University, and now works for Bank of America in New York. Pai started her job at Merrill Lynch, a company that was bought out by Bank of America as the credit crisis was unfolding. As this type of upheaval became commonplace on Wall Street, a dicey reality emerged for young M.B.A.s. Read more on Wall Street's job woes. "A lot of people are looking for a job whether they have one or not because they don't know what's going to happen with banks and the economy," Pai said. "I feel like the [job] recruiting process didn't end." Turmoil in the stock market and decreased opportunities at big banks directly affect a lot of classic M.B.A. career paths, according to Steven Goodwin, an independent Washington-based education and career-strategy specialist. He said he's received a surge of phone calls from nervous workers who obtained degrees over the past few years. Many of these former students are forced to broaden their job search and lower their standards, a move labor economists say trickles down and strikes people at the lowest rung of the ladder. In general, students who settle for a lower position during an economic downturn rarely make up the financial differences in the long term, according to Lisa Kahn, a Yale University economist who studies the intersection of employer practices and external labor market factors. M.B.A.s are a unique subset of these students because most of them worked for several years before going back to school. While it's too soon to tell how many people's career hopes have been dampened by the Wall Street crisis, it's likely that many M.B.A.s who wanted to work in the financial sector took jobs elsewhere -- or don't have a job at all. These individuals will have a lower financial trajectory over the course of their lifetimes, Kahn said. "I definitely thought that getting out [into the working world] would be a time to focus on making long-term connections at the bank," Pai said. "But now I think I just need to focus on what I can do over the next six months to make sure I don't get laid off." There is a small silver lining. "The people who do survive this in the banking sector will have a promising career," Pai said.