Friday, October 5, 2012

Microsoft: Updating our Model for the Office Tech Guarantee, Dividend Increase, and Gartner's PC Unit Forecast

As discussed previously many times, dividends will become more important. And look, Microsoft is increasing the dividend. Aivars Lode

We are revising our MSFT earnings model to reflect: i) MSFT’s guidance for the impact of the Office Tech Guarantee; ii) a dividend increase to $0.23 per share from $0.20 per share; and iii) Gartner’s latest PC unit shipment forecast. The net effect of these changes is relatively modest: for FY2013, revenue and GAAP EPS are now $80.5 billion and $2.94, compared to $80.7 billion and $2.96 previously; for FY2014, revenue and GAAP EPS are now $86.0 billion and $3.24, compared to $86.8 billion and $3.28 previously. We continue to rate shares of MSFT Neutral.
  • Office tech guarantee. Management estimates $100–140M of Office revenue will be deferred in the SepQ; we estimate a further ~$500M will be deferred in the DecQ. These amounts will be recognized as revenue upon GA of Office 2013, which we assume happens on January 1, 2013.
  • Dividend increase. As previously announced, MSFT’s dividend per share will increase to $0.23 from $0.20 starting in the DecQ. This amounts to about $250M of additional quarterly dividend payments.
  • Gartner’s updated PC unit shipment forecast. Gartner’s latest forecast calls for CY12 and CY13 y/yunit growth of 0.2% and 7.3%, compared to 2.4% and 10.1%, previously.
  • Model changes. Our SepQ revenue and GAAP EPS are now $16.3B and $0.51 vs. $17.0B and $0.54 previously; our FY2013 revenue and GAAP EPS are now $80.5B and $2.94 vs. $80.7B and $2.96 previously; and our FY2014 revenue and GAAP EPS are now $86.0B and $3.24 vs. $86.8B and $3.28 previously.
  • We continue to rate shares of MSFT Neutral. We are establishing a December 2013 price target of $30 based on our DCF.

Wednesday, October 3, 2012

Naples man sees the light and turns his inspiration into decorative bollard business

As we have discussed many time in the past, once individual’s start to realize that they cannot permanently retire they will create new business that have not been there previously. This is a great example right in our backyard. Aivars Lode

NAPLES — When Dick Metchear saw metal lights at Walt Disney World Resort in Orlando corroding from the sprinkler system's reclaimed water, a light bulb went off in his head.
Why not make them out of precast concrete?
The idea spawned a new company for the Naples man, a former lighting consultant for Bob Vila's PBS TV series, "This Old House," and his wife, Betsy Piper, an interior designer.
The couple incorporated Stonelight LLC in January 1996, the day they married, and now manufacture their distinctive concrete bollard lights in a Bonita Springs warehouse.
Their first delivery went to Animal Kingdom after Disney officials spotted the lights on their website, Since then, their security and decorative bollard lights, which often are used to light pathways, have been installed in many parks, beaches, businesses and communities, including Pelican Bay, Pelican Marsh, Royal Poinciana's entrance, and Gulf Shore Boulevard condos such as The Regent, Provence, Le Jardin, and Monaco Beach Club.
"If someone asks me what I do, I say I hide the source of light," said Metchear, 76, of Naples. "I have a passion for lighting and this product I came up with — and I'm loving it."
The company has expanded to turtle lights, which they've sold on Jekyll Island in Georgia, Deerfield Beach and Treasure Island in Florida. Now, it's begun delivering 220 to the Marco Island Marriott Resort & Spa, which is installing them around the hotel and beach.
"When the turtles hatch, we want them to go to the moonlight," Metchear said, noting that Stonelight's dark amber LED lights, which shine downward, exceed Florida Fish and Wildlife Conservation Commission standards.
Government restrictions on beachfront lighting keep light from shining on beaches, where bright lights and urban glow from afar can discourage sea turtles from nesting and endanger turtle hatchlings by attracting them away from the moon's reflection on the Gulf of Mexico.
"The turtles cannot see amber lights. They're invisible to them," Metchear said. "A lot of residents think yellow bug lights are OK with code, but they're not."
The turtle lights are a new direction for Stonelights LLC, which has focused on decorative lights that highlight walkways, landscaping and sculptures, provide security or block access. Like their other lights, the turtle bollards come in a variety of styles and sizes. Stonelight also makes concrete mailboxes.

"We don't have any inventory," said Piper, 72. "It's all custom orders. We mostly sell to the states and the islands, but we have sold in Alaska."
The company doesn't sell to retail stores, but markets its products online at
On a recent day, bollards lay on the ground outside their warehouse, curing in the sun, as one of four subcontractor employees, Oscar Gonzalez, directed his brother as he poured concrete into a mold inside.
"The bollards have to cure for three weeks after we pour the concrete," Piper said. "Otherwise, they'll crumble when we ship them on a flatbed."
The lights, which contain only American-made parts, stand up to high winds, rain, strong sun, and other harsh weather conditions. A spritz of chlorine and water keeps them clean.
In 2009, they introduced the Stonelight Solar Bollard, which doesn't require remote panels or wiring and stores enough solar energy to produce light for five nights, even without sunshine. The LED, 8-watt impact-resistant glass lights have an average life of 50,000 hours, and also can be used for turtle lights.
They don't list pricing on the website because there are too many variables and prices go down with quantity. Their most popular bollard, The Granada, which is 8-by-44 inches, sells for $875 each for orders of one to 11 bollards.
Stonelight doesn't have to advertise. Most business comes to the couple through their website, which Piper peppers with keywords to get hits during Google searches. In addition, satisfied customers' recommendations — and their certification as one of four approved turtle light vendors on the state fish and wildlife website — bring in business.
Metchear does the marketing; Piper does the designs, website, invoices and answers the phones.
Schools in Texas and New Mexico continue ordering bollards, they just completed a Bermuda order and are finishing work at Pelican Bay's Bay Colony Beach. They're awaiting an order for 140 from Clearwater, working on a project in East Naples, and just did a presentation for bollards for Siesta Key's downtown crosswalks, where pedestrians have been hit.
Government officials in Oman, in the Middle East, are interested in 6,000 bollards for a botanical garden. If Stonelight gets that job, he said, it's too much to ship, so they'll send molds and an employee to supervise manufacturing there.
Metchear, who owned four lighting shops in Boston, has always been fascinated with lighting and still does consulting work on homes and businesses worldwide, including Chicago, Lyford Cay in the Bahamas, and Canyon Resort in Miami. Locally, he's designing lighting for Moorings Park's restaurant and auditorium.
He's working seven days a week, he said, adding, "I love it. I don't know what I'd do without it."