Ed’s Daily Notes for October 24th (and sell Symantec)   6 comments

MarketWatch: Obamacare penalties may be delayed

The Obama administration will delay enforcement of the Affordable Care Act’s health insurance mandate, extending how long Americans may go uninsured before facing a penalty under the law, MarketWatch has learned.

The health care law requires most people to have health insurance by Jan. 1, 2014 or face a penalty, but the Administration may postpone when those penalties will go into effect. The law allows for “short coverage gaps” of up to three months before imposing the penalty, which is $95 or 1% of an individual’s income (whichever is greater) next year. Under the current rules, someone would have to be covered by March 31, an official with the Department of Health and Human Services confirmed, which is the final day that people will be able to purchase health insurance on the public exchanges, or marketplaces, created by the ACA.

But the Administration is currently working to revise its policy to ensure that people who wait till the last day in March to sign up will not face a penalty, the HHS official clarified.

It gets worse for Obama:

Breitbart: SENATE DEMS UP FOR RE-ELECTION IN 2014 TO BACK DELAY OF OBAMACARE ENROLLMENT DEADLINE

On Wednesday, CNN’s Dana Bash tweeted that all Senate Democrats up for re-election in 2014 will reportedly support a delay of Obamacare’s enrollment deadline.

Sen. Jeanne Shaheen (D-NH), who is up for re-election in 2014, wrote to Obama on Tuesday and asked him to delay the enrollment deadline for the individual mandate. “Given the existing problems with the website, I urge you to consider extending open enrollment beyond the current end date of March 31, 2014,” Shaheen wrote to the president. “Allowing extra time for consumers is critically important so they have the opportunity to become familiar with the website, survey their options and enroll.”

On Wednesday, Sen. Mark Pryor (D-AR), who is facing a tough challenge in his 2014 re-election against Rep. Tom Cotton (R-AR), came out in support of Shaheen’s call for a delay of the individual mandate’s enrollment deadline. Pryor had previously been on record as supportive of the mandate as is.

Now, according to CNN’s Bash, the Democratic Party is coordinating an effort to support a delay in the individual mandate.

In summary, the Republicans shut down the government trying to get a delay for the individual mandate, which the Democrats refused to do. Now, on their own, the Democrats are willing to delay the individual mandate? In the immortal words of Connie Francis, “Who’s sorry now?”

Only 1,184 days left…

Bloomberg: Why Obamacare Is Like Three Mile Island

I know I have been throwing up a lot of links to Meg McArdle’s editorials here, but she has been one of the few clear-thinking opinion writers on the whole Obamacare mess. In her latest post above, she actually presents a tremendous argument AGAINST delaying the individual mandate. Considering she has been against Obamacare from the start, I have to give her credit for objectivity.

Fox News: 46 percent say random people on street could do better than Congress

I found the results of this Fox News poll interesting:

Nearly half of voters (46 percent) think a random selection of everyday Americans could do a better job on the country’s problems than Congress.

A few months ago, I had the idea that it might be good to treat Congress like jury duty. Basically, randomly select a person from a list of voters in each district to serve for the next 2 years in Congress. While you may not get a “perfect” representative, you would at least be more likely to get someone who is familiar with the needs and views of your district, as opposed to the professional politicians we tend to get. It would also make gerrymandering less relevant, and campaign contributions completely irrelevant.

The Street: Symantec Shares Tank on Tepid Guidance

Bad news for me:

Symantec (SYMC) shares tanked after it reported its second-quarter results, weighed down by weaker-than-expected outlook as the software maker attempts to get back on track.

The Mountain View, Calif.-based firm, which announced a major restructuring effort earlier this year, reported revenue of $1.64 billion, down 4% from the prior year’s quarter, or 3% adjusted for currency. Analysts surveyed by Thomson Reuters had forecast sales of $1.685 billion.

Excluding items, Symantec earned 50 cents a share, up from 45 cents in the same period last year. Analysts surveyed by Thomson Reuters were looking for earnings of 44 cents a share.

Normally, I am not one to buy into the restructuring excuse. However, it is clear they were right about the impact on the bottom line, as they clearly beat the street on the earnings/share. But restructuring rarely has an impact on the top line, as shown by their disappointing revenue numbers.

But here is the big problem:

For the third quarter, Symantec expects sales between $1.63 billion and $1.67 billion and earnings between 41 cents and 43 cents a share. Wall Street expects sales of $1.79 billion and earnings of 51 cents a share.

For fiscal 2014, Symantec expects revenue to decline 3% to 4% in constant currency.

Ouch! This tells me to run screaming from this stock, unless you are planning to hold for the next 2 years and hope for the best. I sold it for $21.59 in the pre-market, and I would rate it a “sell”. That price may seem low, but consider this: This is a company that expects to have declining revenues over the next year, and their dividend isn’t enough to make it worth holding until they get a turnaround. Also, I bought the stock for potential growth, and that aspect no longer applies, which means it should be sold. At this point, the stock would have to be at $15 to be an attractive value buy, which means it has plenty of room to fall. I would even think twice at $15.

The final line on Symantec:

SYMC: -3.03 today, -3.13 overall to $21.59 (-12.31% today, -12.66% overall)–bought at $24.72

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6 responses to “Ed’s Daily Notes for October 24th (and sell Symantec)

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  1. ” the Republicans shut down the government trying to get a delay for the individual mandate”

    Please, that was not the Republican goal for shutting down the government. They shutdown the government by trying to completely defund Obamacare. It was try 40-something to kill the ACA. When the end of the ACA was not achievable they started looking at a multitude of other options in order to save face. One of which was to delay the individual mandate for a year.

    Your summary should have been something along the lines of : The Republicans needlessly shutdown the government causing hardship for hundreds of thousands of people when they would have gotten what they wanted simply by letting the ACA website fail on its own.

    As for McArdle’s “death spiral” argument that is a nice bit of conjecture but the problem with the doom and gloom projections is that they are almost always wrong. I find it hilarious that she seems to believe we could throw out ACA and replace it with something better. There is no chance in the current political climate that the ACA would be replaced if Republicans manage to kill it. If Republicans would devote 1/10 the energy to fixing the law that they have spent trying to repealing it we would all be in a better place. Unfortunately that is a pipe dream.

    Robb

    • Robb,
      Your summary works too. 🙂

      As for replacing the ACA, it would be hard to do much worse. Banning health insurance completely would be an improvement over both Obamacare and our previous system (I’m not saying it’s a good solution, only better than the two other alternatives). There is no “fixing the law”, because any system which involves 3rd party payer will be a disaster economically. The most politically palatable solution, and economically feasible, would be going to a socialized or private sector-based catastrophic health insurance system.

  2. Ed

    What about FTNT?

    • That train has already left the station, considering it is up over 8% in the pre-market. It would have been a good play prior to the earnings report.

      That said, if you are looking for a play in that industry, FTNT still has more potential than SYMC, but FTNT is already more than fairly priced for growth.

  3. Or CHKP

    • CHKP might be the play here. They aren’t quite as overpriced as FTNT, yet they still might have some room to run, and they had an earnings report almost as impressive as FTNT, although CHKP has higher revenues.

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