NWS - News Corporation

[markrmau]

Like it or hate it, NWS had a huge reversal today.

I think it will be up >10% within a few days. (dont hold)

[Investor]

There is one fundamental weakness with this company, IMO.

The CEO is not getting any younger. :D

Management succession is a huge issue.

Also, media has been riding the long bull run. Economic conditions going forward, will not be as accommodating, by my reckoning.

Financial analysis of this company is probably harder than most people admit to.

I do not and will not hold.

[brisvegas]

NWS in my buy zone around these levels, any opinions out there about this one? Looking at US chart nudging TL support, looking for swing pivot here with stop under TL supp.


.................. Pete

US NWS chart

[MARKETWAVES]

Its good to see talk about an American Equity....

Here is my view of the situation .....
I dont want to see anyone get hurt out there ....


Looking a little bit longer term ... These charts look bearish ...

Is anyone familiar with Symetrical Triangles ?


Well, this is a massive one .....
STARTING TO LOOK LIKE A BREAK OUT... ( LONG TERM ) .....



ONLY AN OBSERVATION ......

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TRADE AT YOUR OWN RISK… The purpose of these charts is to point out significant highs and lows based on Fibonacci Retracement lines and Elliott Waves which are highly subjective . This information is for educational purposes and should not be considered trading recommendations . All trading decisions are your own sole responsibility …

[brisvegas]

Its good to see talk about an American Equity....

Here is my view of the situation .....
I dont want to see anyone get hurt out there ....


Looking a little bit longer term ... These charts look bearish ...

Is anyone familiar with Symetrical Triangles ?


Well, this is a massive one .....
STARTING TO LOOK LIKE A BREAK OUT... ( LONG TERM ) .....



ONLY AN OBSERVATION ......

--------------------------------------------------------------------------

TRADE AT YOUR OWN RISK… The purpose of these charts is to point out significant highs and lows based on Fibonacci Retracement lines and Elliott Waves which are highly subjective . This information is for educational purposes and should not be considered trading recommendations . All trading decisions are your own sole responsibility …

bearish ?? cant see it. TL supp low risk entry imo

get hurt ?? dont worry about me, stop losses prevent major equity meltdown.

as far as charting NWS over such a time frame i would be looking at ASX NWS charts as for most of your time period was predominanatly ASX traded stock as such with ASX leading US ADR price . lot of the major swings in SP were influenced to a degree by FX alterations rather than US sentiment

US indice included only recently so effectively only US price action led in recent history

appreciate comments and diversified view


....................... Pete

will post asx NWS chart shortly



if you overlay SPX chart you will see NWS.N basically follows SPX variations so in effect you seem to be bearish on US indice ????

[brisvegas]

Looking promising so far. AUD strength not going to help asx NWS much but with a dollar retrace it should kick along


........................... Pete

[brisvegas]

Developing nicely at this stage


............. Pete

[brisvegas]

NWS back to long term TL supp in quicktime. tonight should be pivotal


................. Pete

[MARKETWAVES]

This is what I was trying to explain pete .....

The larger time frame always more important than the smaller time frame ..... the last charts to look at should always be daily or intraday charts ...

I am telling all this to people and traders in all my travels....
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This stock broke support and it broke it hard......

hope you were saved by your protective stop... it's good to talk to a trader that understands the importance of using them....

Moving on ....
I would like to POINT OUT a Stock that is doing the exact opposite of NWS technically speaking that is ... It also is making a symetrical triangle .... but is breaking to the upside ... the Stock by the way is AMZN....
Take a look down below ...

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TRADE AT YOUR OWN RISK… The purpose of these charts is to point out significant highs and lows based on Fibonacci Retracement lines and Elliott Waves which are highly subjective . This information is for educational purposes and should not be considered trading recommendations . All trading decisions are your own sole responsibility …

[RichKid]

Newscorp may be back on the XJO index so more fund managers would have to buy in: http://www.theaustralian.news.com.au/story/0,20867,19194280-643,00.html

[wayneL]

Shoot, Rich!

It's actually showing some nice swing tradeable waves. It's obvious I have ignored it for too long.

Could my nemesis make it back onto my watchlist?

...my heart is beating real fast at the thought :eek: :D

[clowboy]

There use to be a way of finding the listing price of a stock but I can't remember how if my life depended on it. I am trying to find the original issue price for news, not the one a few years back when it merged or whatever.

Any help would be apreciated


thanx

[ducati916]

Current Price $19.25
Code NWS-A
Yield 0.6%
Market Capitalization $77289.0
TCI Price Target $0.00
Investment Sector Entertainment Diversified
Price/Earnings Ratio 28.9
Recommendation Avoid


INDUSTRY STATISTICS

Market Capitalization: 243B
Price / Earnings: 18.0
Price / Book: -36.2
Net Profit Margin 10.3%
Price To Free Cash Flow 121.5
Return on Equity: 9.0%
Total Debt / Equity: 0.4
Dividend Yield: 1.3%


The Industry is not for the faint of heart. Earnings and profitability are fleeting. The return on equity is low, and does not adequately compensate above the returns available on debt. The business is capital intensive, with low returns on capital and with very low profit margins.
If, the securities were cheap, on a bargain basis, then possibly a candidate may be located. Currently this is not the case with the average P/E ratio at 18.

CAPITALIZATION

Market Cap 60.72B
Enterprise Value 66.60B
Trailing P/E 28.90
Forward P/E 18.69
PEG Ratio (5 yr expected): 1.11
Price/Sales 2.45
Price/Book 2.13
Enterprise Value/Revenue 2.70
Enterprise Value/EBITDA 12.064


Capitalization structure is a very important component within the story of NWS-A & NWS.
The above figures representing Enterprise value are inaccurate. They are inaccurate for the reason that they do not take into account the “Off Balance Sheet” Operating Leases. These Operating Leases add some $5859.0 million to the effective debt. This is “potentially” a severe problem. The earnings are extremely volatile, and fluctuate wildly. Without a consistent margin above Interest on debt + Operating Leases, bankruptcy proceedings could be initiated by the “minority” bondholders.

How possible or likely is this?
It has happened once in the last five years, and been close on one other occasion.
Did the bondholders trigger bankruptcy? No, but they technically could have.

The second far more serious problem with the Capitalization resides within the Common stock itself.
There are two classes of Common stock; Class A and Class B.
Class A common stock represents the original common stock.
Class B common stock represents the converted Preferred Stock. This was converted on a 1 for 2 basis and was designed as a “Poison Pill” defense against NWS being acquired. Only Class B has voting rights, and thus control resides in one class of common stock that is held by Mr. Murdoch.

Therefore NWS is only going to be controlled by this one “unaccountable” owner. There will be no method by which the control of the company and its policies can be influenced by the other owners.

Holding NWS is therefore an examination of management and the strategies of management.
Have they been profitable and in the minority owners best interests?

INCOME STATEMENT

Profit Margin 8.84%
Operating Margin 15.59%
Return on Assets 5.25%
Return on Equity 9.65%

From the two margins we can ascertain that this business is just not that profitable. The Profit margin and Return on Equity are the two margins that flow to the Class-A common stock. They are poor. On aggregate the Profit Margin is 3.3%. This is not a profitable business.

Return on assets seemingly is high. This is very misleading.
The Return on Assets returns some $4.60 on investment. If we look at a different industry to get some perspective of what is possible, looking at OFIX the Return on Assets is $16.48. OFIX is also an “acquirer” of assets. The message being that you can buy high return assets that directly flow to the bottom line or you can buy low return assets. NWS tends to buy very low return assets.

The reason for such low profitability lies in the very high Costs associated with the business. Some 82% of gross revenues are consumed within the costs. Are there any discretionary cash-flows within the cost structure that are hidden, providing the margin of safety of redirecting them in time of need? Not at all, the Costs contain nothing that can be salvaged. This suggests poor negotiating on contracts with providers of content, be that the various sports bodies [NFL, NHL, etc]

The only discretionary cash-flows identified were found within Capital Expenditures. These amounted to $55.4 million or $0.01 per share.


BALANCE SHEET

Total Cash 5.32B
Total Cash Per Share 1.688
Total Debt 11.43B
Total Debt/Equity 0.401
Current Ratio 1.866
Book Value Per Share 9.021


Immediately there are problems that are highly visible that must call into question the advisability of NWS as an investment grade common stock.
The Current ratio falls below the minimum 2.0 required.
The debt is understated by the amount contracted to the Operating Leases.
The return on Retained Earnings has been 0.00%
This is unacceptable as an investment. It demonstrates unequivocally that the investment decisions under the incumbent management have destroyed shareholder value. The common stock is a pure speculation.

The Book Value resides in liquidation value only, and as such should be discounted by an appropriate rate as the demonstrated returns fall far below the purchase price paid. It is this either gross underperformance of purchased assets, or, poorly selected assets, combined with the poison pill defense that makes NWS such a dangerous investment.


SUMMARY
What do the Institutions think of NWS?
Well currently not that much.
Only some 10% of the float is owned by the Mutual Funds & Hedge Funds. This for such a large capitalization common stock is a very insignificant holding. I suspect the dual class of common stock is a negative in this age of owner activism. There is no way that value can be unlocked or increased without the management’s compliance.

The calculated Intrinsic Value = $0.00
Liquidation Value is the relevant valuation here, but has not been calculated.
The intricate capitalization structure designed to retain control of the business and thus the allocation of capital could be of benefit with the right management. With the incumbent management and demonstrated returns, it is an unmitigated disaster. I would advise looking elsewhere for an investment.

[clowboy]

Ducati,

Thanx for that but I could not find the listing price of NWS amoungst it.

Maybee I should have been more clear. By listing price I meant issue price, Ie the price the stock floated at the time of listing, for example NAB listed at $1 per share. I would assume that NWS was similar but I would like an exact price if that is possible.

Thanx

[marc1]

This one doesn't get any air play on this station but it just keeps going up !!!

Hit $31.00 intraday today , Smashed through 2 months of resistance @ $29 ish,

2 weeks ago on very solid volume. Wall st maybe taking a liking to it ???

Great exposure to the usa with out having to leave home.

All good news so long as you didn't buy @$55.00 in the good old tec days , who

knows it may get back there one day.

Holding atm average $22. :)

[quarky]

http://au.biz.yahoo.com/070626/33/1ah2t.html

News Corp. reached an agreement in principle to safeguard the editorial integrity of the Wall Street Journal as part of its hostile takeover bid for Dow Jones, the Journal reported Tuesday.

The thorny issue of the Journal's independence has emerged as a key sticking point in News Corp.'s attempt to takeover Dow Jones for five billion dollars. The Journal is considered to be Dow Jones's most prized asset.

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this could see the NWS/NWSLV stock prices get to around AU$30, especially if News Corp. makes an acquisition such as Wall Street Journal.

(and NWS also has Myspace too. :rolleyes: )

[legs]

Anyone any interest in this stock? I am considering entering as it looks like good timing? Good support at $27???

[Ken]

I am looking at the stock, and the dividend stinks.

Thats the first thing I looked at.

But I think the growth aspects are good.


So goes hand in hand I guess.

[greenfs]

A check of the sp graph suggests that this one might be about to take a solid run up in the sp. Does anny1 else have a similar view?

[vishalt]

It's a media stock and there's the problem, its only moving because Murdoch is such an agressive CEO.

I think its looking nice for a short-term run, but accumulation wise is a no-no as the dividend disgusts me.

[kerosam]

might retest $27.40 (23rd August high).

today's volume lower than average. so, maybe, chart might return to fill gap (or has it been filled?).

increment in RSI & flat in OBV.

newbie in reading charts & interpreting indicators. :p:

:2twocents

[Ken]

News Corp.

US dollar is going to really effect their margins.

If Aussie /US dollar comes to parity theres 10% off the bottom line of Newscorps profit.

They are a poor dividend paying stock.

I see know place to be there at present.

Anyone disagree?

Underpeformed the all ords and the capital structure is a concern.

[vishalt]

I urge any sensible shareholder NOT to play in newscorp D:,

5c dividend and it moves so painfully slow, media is NOT a growth sector - in comparison to resources/energy/tech anyway. I work in media, its immensely competitive and profits are just break even or only "decent".

[Ken]

Does newscorp have a monoply on the market?

Are they the BHP of media?

How is the dow jones takeover going to go?

They just seem to be gearing up...

I dont hold, they seem to be a stock with a heap of dare we say it.

Potential if the capital structure is unlocked.

[vishalt]

There are many powerful media companies. Bloomberg, Reuters, Thompson, News Corp, Fairfax, General Electric's CNBC, Washington Post etc etc.

News Corp is powerful but its not something that gets attention from big hedge fund managers or speculators, if anything on bad news it will be punished severely.

Media is just a random waste of time sector, its not aggressive, its not defensive, it doesn't play good dividends, there are so many better stocks to pay attention to.

[Ken]

My only thinking is that Myspace.com potentially could be spun out, and add shareholder value that way.

At the rate that myspace is growing, it could be spun out, and be similar to a google, or an ebay....

Just a thought.


Myspace is something that has changed the way people communicate and live, and newscorp owns it...

For me that is interesting.


I would buy shares in myspace if I could. Just my thinking...

I know theres more to newscorp than myspace, but surely the value can be unlocked.

[waz]

Thought Id bump this thread, especially with the large movements lately with MSFT, GOOG and faceboook.


Does anyone know how much NWS values Myspace on its books?
The last time I read their reports, which was only a brief skim, I dont think they value myspace on its own. But value it under the general banner of internet, which also includes its other websites both in Aus and abroad.

Even though Myspace has more users, it does not mean that those users are actively using their account, nor do we know how long they are spending on Myspace.

Whereas with facebook, the fewer users (which is growing at a faster rate) spend much more time on there and login on a regular basis. I would have to say that at least a 1/3 of facebook friends use it daily, and like me, a small percentage are logged into it for a few hours a day. I now send/receive more messages on there than what I get useful emails to my gmail account

So in other words, myspace is worth less than facebook, in the future I expect facebook to overtake myspace in every statistic, be it users, active users, page views, traffic, etc...

That said, myspace is still worth a few $bil, and will make up a fair bit of NWS enterprise value. If I had the time id make some calculations.

Its funny that after the MSFT facebook purchase, and googles phone talk that NWS has traded almost flat for the last 3-4 days.

PS. Googles Orkut social website is no match for facebook. It looks like a early 90's BBS. Instead of a wall you have a scrap. I dont see any facebook users ever wanting to use it. For starters you would have to re-upload your photos, and there is really no need to ever want to use 2 social websites.
Its like releasing a new web mail service to people who already have webmail accounts. The only ever time this was done successfully was with gmail. Thats because they offered 100+ (virtually unlimited) times more account space. Facebook is already unlimited. You cant beat that.


Also if your a first time user to the social web scene. Wouldnt you want to join the service that half your friends are on anyway????

Any other thoughts.

[Kelpie]

Interestingly, there is no thread on this yet......

It appears that NWS is just off its all time low of $19.70 back on October 2005. I am a holder and wonder if it is wise to increase my holding now...any suggestions on what I should be looking for before buying?

[Kelpie]

Can anyone help me with some T/A on this one. Inparticular, whether it might hold support ~@19.50.? Many thanks.

[rick62]

FNArena reports that there are 9 buy recommends on this stock and nothing below that level.
I am not a chartist but, from the little I do know, it appears there may be some promise here.
Anyone more experienced care to comment?
Thanks

[tulasi74]

I do have some info but pls note that this is not my own analysis but quoting from another source. I have access to Aegis technical newsletter and a couple of weeks back they recommended NWS as a buy with a technical target of at least $23.50. The at least is interesting because any close above the 30 week ma might see the stock break out. I think 30 week ma is now at 22.70.

Good luck.

Tulasi

[Kelpie]

Hello again, I'd appreciate any technical analysis on this one - it closed @$19.10 and I'm wondering whether it may have broken support. Many thanks, Kelpie.

[Kelpie]

After having bounced of support today, just wondering if there may be a tripple bottom forming. Any comments most welcome.

[tulasi74]

Looks like it might be heading for the high $18.00s. Good news though is that it might close at the bottom bollinger band on weekly charts and bollinger band theory would suggest that it should reverse from there. However the band is trending lower so it could go the low 18.00s. I am holding and I will hold for a price above $32 which might be 12 - 24 months away. Please DYOR.

[Kelpie]

Looks like it might be heading for the high $18.00s. Good news though is that it might close at the bottom bollinger band on weekly charts and bollinger band theory would suggest that it should reverse from there. However the band is trending lower so it could go the low 18.00s. I am holding and I will hold for a price above $32 which might be 12 - 24 months away. Please DYOR.

many thanks for your response tulasi. I was wondering if you might elaborate on your fundamental and technical thoughts as to why it might advance to over $30 in a year or two. thanks again.

[Kelpie]

seems to have broken support in the US at US$14.98. any ideas when next support might be?? many thanks.

[tulasi74]

I cannot figure this stock out. Someone on CNBC openly admitted to NWS being one of the hardest companies to value fundamentally.

I loaded up ahead of the report thinking it was oversold more than the worst case scenario would require.

Fundamentally, this company has been trading at very high PEs as its seen as a growth company. But at current prices it is trading like any other media company.

Huntley's on E-trade are recommending the stock with a price close to $30.00. I am merely quoting broker valuation and that is a sum of parts valuation.

I think this stock is due to bottom soon. Another retest of the $14.50 lows and a 20% rise from that price back up to $17.00 and break above that should see a trend reversal.

Good luck Kelpie. I am holding for 12 - 24 months. Became an involuntary investor in the stock at the $27.00 mark but have been trading it on the way down but still holding at high cost.

Tulasi

[Kelpie]

I cannot figure this stock out. Someone on CNBC openly admitted to NWS being one of the hardest companies to value fundamentally.

I loaded up ahead of the report thinking it was oversold more than the worst case scenario would require.

Fundamentally, this company has been trading at very high PEs as its seen as a growth company. But at current prices it is trading like any other media company.

Huntley's on E-trade are recommending the stock with a price close to $30.00. I am merely quoting broker valuation and that is a sum of parts valuation.

I think this stock is due to bottom soon. Another retest of the $14.50 lows and a 20% rise from that price back up to $17.00 and break above that should see a trend reversal.

Good luck Kelpie. I am holding for 12 - 24 months. Became an involuntary investor in the stock at the $27.00 mark but have been trading it on the way down but still holding at high cost.

Tulasi


many thanks for sharing your insights tulasi.

I got in soon afterwards at ~$25, and have also been trading it on the way down, thinking ....... it's gotta bottom out at any moment!

Kelpie

[shaunQ]

So has anyone got any comments on the outlook for this stock - a rebound coming from the recent massive drop or further declines to come?

[skc]

NWS released pretty solid results today and the market liked it. Dividend of 75c per share will be paid to both class A and B share.

Now, does anyone know why NWS and NWSLV should trade at difference price, given that they are receiving the same dividend?

Now I understand that NWSLV is non-voting. For the regular investor this may not be a big deal. For institutions this is probably somewhat important. For Murdoch this is obviously very important. But does that justify a 12% premium?

NWS tends to have better liquidity, but NWSLV are pretty much in tune with it, so it doesn't matter that much unless for short term traders.

Here's a chart of the relationship... NWSLV (Blue line) was actually priced higher than NWS in early 2009. It was only during the last 18 months that a gap has opened up. So some of the theories above may be incorret...

Explainations?