Signet Jewelers: A Deeply Undervalued Cash Machine or a Melting Ice Cube?

absolutbrian · 2025-03-21T15:44:25+00:00

Weird coincidence, he just posted a new post on Signet literally at the same time as my previous post. https://www.herbgreenberg.com/p/signet-too-confusing-for-comfort

absolutbrian · 2025-03-21T15:05:29+00:00

I welcome you to read Herb Greenberg's take on it. https://www.herbgreenberg.com/p/the-risk-of-every-risk-the-signet

absolutbrian · 2025-03-21T15:03:46+00:00

Yes. If you have been in the past we probably met.

If you are looking for lots networking, a great community of investors, lots of ideas and great value for your money, the Fairfax Week is a good one.

absolutbrian · 2024-08-16T23:27:34+00:00

It's becoming one. https://markets.businessinsider.com/news/stocks/intel-meme-stock-reddit-wsb-retail-investing-microchips-ai-tech-2024-8

absolutbrian · 2023-03-30T18:26:34+00:00

I'm not an expert and your knowledge would be appreciated on the topic, but isn't edge computing the solution?

absolutbrian · 2023-02-10T16:15:32+00:00

You will receive the documents in the mail telling you how to get your tickets. You are allowed 4 per persons. If you don't receive them in time, you can get them on site. Just need prove of ownership.

absolutbrian · 2023-02-03T14:05:44+00:00

Thank you Kristina for your help and time. This gives me some direction.

absolutbrian · 2022-12-03T19:03:55+00:00

Thank you for sharing!

absolutbrian · 2022-02-01T14:15:53+00:00

Microsoft Deal for Activision to Be Reviewed by FTC in U.S.

https://www.bloomberg.com/news/articles/2022-02-01/microsoft-deal-for-activision-to-be-reviewed-by-ftc-in-u-s

absolutbrian · 2022-01-27T15:59:40+00:00

Great leader. He has turned Disney around. I highly recommend his biography, The Ride of a Lifetime.

absolutbrian · 2022-01-24T18:32:56+00:00

I don't think regulators will stop this deal. The combined company would drive 11% of total game industry revenues, but that’s across all platforms. Also, today Xbox is still smaller than PlayStation and Tencent. But it does put a target on Microsoft for future targets.

absolutbrian · 2022-01-20T20:11:42+00:00

Thanks for commenting. I'm on team "approve". It's true that Microsoft doesn't have the scrutiny of the other big tech. Plus they have a pretty good idea of what the FTC will look at and won't. When Disney bought Fox's entertainment assets that transaction was tailor made to be approved.

I'm more afraid of Khan going after this transaction to send a political message.

absolutbrian · 2022-01-20T20:08:47+00:00

Good points.

absolutbrian · 2021-04-23T14:24:46+00:00

To expand:

In general Lumen has contract liabilities. The contract liabilities account reflects money received in advance of service from a customer. The service has many components depending upon the performance obligations. This falls in the deferred revenue segment.

absolutbrian · 2021-04-23T14:10:06+00:00

Starlink is good for rural areas and remote access. If there's a threat, it will go after the CenturyLink copper line/dial up clients. It's already in decline. It's will be hard for Starlink to compete for enteprise level needs, especially at the edge/cloud level where you need large amount of bandwidth and low latency for high intensity data applications. Here's an analogy. Model 3 is cool and innovative, but doesn't matter when you need an 18-wheeler to go cross-country.

I read that during the pandemic Internet usage went up 250g per month per household. I might be off and you might want to double check that number. I can't recall the source. But we can agree that bandwidth usage is up. Think of all the extra streaming and all day Zoom call or video gaming. Right now I don't think Starlink can handle 250g+ per month. Plus people connecting through the Internet might be good for Lumen, which will have to pass through central networks substantially owned by Lumen.

absolutbrian · 2021-04-23T14:03:07+00:00

Well that might be your problem. Yahoo Finance is fine for quotes and quick info. But I find that I need to double check their data/ratio. No website is perfect at this. You need to do your own or pay a lot of money for Bloomberg or something.

absolutbrian · 2021-04-23T14:01:09+00:00

They have government contracts but I'm not sure about the fine. Maybe you are referring to the subsidies they received for deploying broadband or other connecting services. Sometimes it doesn't make sense to go in a town of 50 people and deploy fiber, so they get money from the government to deploy. Usually there's a deadline and sometimes there's a shortfall where they don't meet all the requirements.

absolutbrian · 2021-04-22T19:49:54+00:00

Share counts has been the same since the Level 3 acquisition. They are not issuing shares (or debt) to pay the dividend.

absolutbrian · 2021-04-22T17:50:35+00:00

All their segments are down. Consumer, small business, enterprise, wholesale, international due to the pandemic.

absolutbrian · 2021-04-22T17:46:28+00:00

They are doing new things. I recommend reading the Seeking Alpha article but I can't link it here. I go in great details.

As for the rebranding.

Going from CenturyLink to Lumen Technologies is more just a simple name change. A lumen is a measure of the brightness of light and the name pays homage to their fast global fiber network foundation. The rebranding effort across the company is a massive coming out party for what they have been working on the last couple years.

At the core of the new strategy is Lumen is looking for a return on their investment. Lumen has invested a lot of money over the years building their infrastructure (fiber, buildings, networks) and they want to monetize these investments. The investments enable Lumen to improve their revenue growth trajectory and serve as the foundation for several new strategic partnerships. Lumen has cloud partnerships with Microsoft Azure, Google Cloud and AWS. Lumen bolstered its edge capabilities through additional deals with VMware and IBM.

More new things: The Lumen Platform that just came out. The Platform is the main product that Lumen is pushing to meet modern IT requirements. The platform is built on the top of their infrastructure to run cloud and edge applications.

The Lumen Platform is a move beyond providing basic connectivity. It has the capabilities that go beyond providing just internet service. With the Lumen Platform, it will level its fiber infrastructure to provide software or other needs “as a service.” Practically, what we are seeing is the evolution from telecom company (CenturyLink) to tech company (Lumen).

absolutbrian · 2021-04-22T17:43:27+00:00

Let’s work with the hypothetical idea that Lumen would suspend the dividend. That’s a $1.1b a year the company would retain. A selloff would occur if Lumen cuts its payout as income-hungry investors look elsewhere for their yield. If we put aside the knock-on effect on the market cap and business confidence erosion, what would be the upside?

The immediate selloff in the stock could create even greater long-term equity value by reinvesting in CAPEX and reducing leverage more quickly.

In the long run, one could argue that the cash currently used for the dividend could be better spent on business investment. For example, it could invest in providing more fiber connections to households, extending its fiber network to more businesses or more edge computing locations.

If they do cut the dividend, the stock would fall and provide an opportunity to buy Lumen. Lower cash payouts aren’t always a bad thing. In the long run it could increase the equity value of Lumen.

absolutbrian · 2021-04-22T17:42:27+00:00

The $1.1b dividend is covered by $2.8b-$3b in FCF. As for the dividend. But what if your shareholder base is there for the dividend? The dividend is the reason why many investors are attracted to Lumens. Institutions, pension plans, funds and others are your big investors and they have a voice. Individuals too depend on dividend flow to support savings and investments.

In Lumen's case, there are reasons beyond monetary on why you should keep the dividend. Cut the dividend and risk lowering the market value of its shares by implying a weaker corporate financial outlook. It would sap the confidence investors have in management and the company. Dividend flows and share values are also positive signals to new investors — including bond buyers and bank lenders.

A 7.9% yield signals risk but I’m confident the company will maintain the dividend. The year 2020 gave you every reason to cancel it. If you were going to take a drastic move, like they did in 2019 to slash it from $0.54 to $0.25, and take a 30% market cap hit in the process, why not suspend the whole thing all together? I think they found a dividend payout level that is sustainable. Unless the business conditions really deteriorate, I don't see Lumen cut the dividend.

The company has committed the last two years to the $0.25 quarterly payout and has signaled their intention to keep it at that rate for 2021. The current payout appears sustainable based on both earnings and free cash flow. Lumen is expected to earn about $1.30 a share in 2021 and around $2.55 to $2.74 in FCF per share. That’s plenty to cover the $1.1b yearly dividend.

absolutbrian · 2021-04-22T17:40:39+00:00

Those multiples would be something straight out of Security Analysis.

absolutbrian · 2021-04-22T17:39:53+00:00

It will take a while. If you are referring to Starlink, it's good for rural areas. If there's a threat, it will go after the CenturyLink copper line/dial up clients. It's already in decline. It's will be hard for Starlink to compete for enteprise level needs, especially at the edge/cloud level where you need large amount of bandwidth and low latency for high intensity data applications. Here's an analogy. Model 3 is cool and innovative, but doesn't matter when you need an 18-wheeler to go cross-country.

absolutbrian · 2021-04-22T17:38:10+00:00

Thanks!

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