MSFT screams value

Microsoft screams value. Its fiscal 2012 price-to-earnings ratio is 9.5x and its enterprise value to EBITDA multiple is 5.8x. Further, it is projected to generate $3.50 of cash flow per share for a cash flow yield of 13%. Add on the now 3% dividend yield and the company is cheap, plain and simple. Wall Street analysts are projecting fiscal 2012 EPS of $2.855 growing 10% to $3.134 in fiscal 2013.

Between the addition of Skype, the continuing Windows 7 conversion, the positive developer response to Windows 8 and its potential to be a credible competitor in the tablet operating system space, Office 365, the potential of the Nokia smart phone relationship, and the incredibly inexpensive financial metrics, Microsoft could be poised for a step function up in stock price.

Disclosure: I am long MSFT.

via Microsoft: The Dividend Increase To $0.20 Per Quarter Portends A Material Increase In The Stock Price – Seeking Alpha.


Jim Chanos Debunks The Myth Of China As The World’s “White Knight”

One of the recurring themes on Zero Hedge in the past several months has been the continued mockery of the seemingly global conventional idiocy that China can bail out the world, when it itself is on the verge of a huge credit bubble popping and requiring the rescue of China itself by the rest of the global pyramid scheme (which however will be far too busy monetizing its own debt by then). Why, we vividly recall this quote from July 4, “So let’s get this straight: a country which has 10% of its GDP in the form of bad debt, is somehow expected to be credible enough to buy not only Greek debt, but the EURUSD each and every day? Mmmmk. In the meantime, Dagong downgrades the US to junk status in 5, 4, 3…” Well, Dagong did since downgrade the US (as did S&P), although not to junk just yet, and somehow the world still continues to labor under the illusion that China (whose shadow banking system we also covered most recently here), is somehow healthy because it is far better than Europe (and the US) in hiding the true severity of its problems. Naturally, as long as that persists, the global ponzi will always have the benefit of pulling out a “white knight” whenever needed, regardless of just how ludicrous such an presumption has become. Today, famous China bear Jim Chanos appeared on Bloomberg TV and recapped his thesis which summarizes the bulk of these points, further extrapolating based on the Andy Lees analysis posted yesterdaywhich estimates what a true economic growth rate is when one factors for bad debt and loss severities. His conclusion: “If we assume that China will grow total credit this year between 30% to 40% of GDP, and half of that debt will go bad, that is 15% to 20%.  Say the recoveries on that are 50%. That means that China, on an after write off basis, may not be growing at all. It may be having to simply write off some of this stuff in the future so its 9% growth may be zero.” And this stagnant, overlevered behemoth is somehow supposed to be… the world’s white knight?

via Jim Chanos Debunks The Myth Of China As The World’s “White Knight” | ZeroHedge.