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People who say it cannot be done should not interrupt those who are doing it. Welcome to From On High.

Friday, July 22, 2005

Roanoke 'Plans' On Being a Ghost Town

Roanoke, Virginia has the distinction of being ranked just above Gary, Indiana and Detroit, Michigan in terms of job growth potential and economic vitality, 181st out of 200 metropolitan areas in the USA (see Milken Institute report here). Which means if a business owner is looking to make a long-term investment in a community, he or she would be wise to look at any of 180 cities before choosing Roanoke.

Why?
Officials delay vote on store

Roanoke officials said they were uneasy about the proposal for a new Home Depot.
By Matt Chittum,The Roanoke Times

Home Depot is on its third attempt in seven years at building a second Roanoke-area store, and its second try on a site across from rival Lowe's on U.S. 220 near Tanglewood Mall.

After sending a clear message that a majority of the commission had serious concerns about the proposed development, ... the commission voted to put off a vote on a request to change development conditions for the land until 3 p.m. July 28.

Another seven days may not seem like much to the Atlanta-based home improvement giant, which first tried to build a store at Virginia 419 and Brambleton Avenue in Roanoke County in 1998. That development fell through, and Home Depot tried again at the U.S. 220 site in 2002. The company stopped that deal over the cost of developing the site. (link)
My suggestion to the Home Depot development department is to give it up. You're not wanted in Roanoke. And with the area's bleak economic outlook, you don't want Roanoke either.

"Planning Commission" indeed.

Google Has a Bad Quarter

When it comes to investing, I take the Warren Buffett approach. I don't get the sweats over hype and hoopla. I look at the fundamentals. I look for a company that can consistently produce earnings. Hundreds of thousands of players like to invest in stocks. I - and Warren Buffett - look at companies. Their soundness. Their strength. Their ownership of the marketplace. The products they produce. Consistency. Growth. And there are the intricacies relating to price/earnings ratios, bottom-line assets, revenue, ROE (return on equity), debt/equity ratios, and market capitalization, etc. (What? You don't spend your free time poring over annual reports?)

Which brings me to Google.

I wrote back in August of 2004 that there was no good reason for google.com to be trading (at the time) at $105 per share (And You Thought the Dot.com Crazies Were Dead). It fell to $299 a share last night.

The news from Business Week online.
Google Proves It's Mortal

Investors are disappointed by net profits -- a paltry 334% above last year's quarter -- as they are below Wall Street estimates After 11 blistering months as a public company, during which its stock climbed 269%, to $313 per share, Google (GOOG ) finally failed to live up to investors' sky-high expectations. The search leader on July 21 unveiled
second-quarter net profits of $343 million -- a 334% jump over last year's quarter, but slightly below analyst estimates. Investors trimmed Google's shares by 5%, to $299, in after-hours trading. (
link)
So my estimate was wrong. Right?

Google shares are still not worth $105. The stock's capital gain potential is worth $299 a share - probably - but the company is way overpriced.

Warren Buffett is famous for (among other things) having said the stock market in the short term is a popularity contest; in the long term it is a weighing machine.

So why has Google been so popular among investors? You won't find it in the fundamentals. It's in the hype.
The company's second-quarter net sales jumped 110%, to $890 million, as it continues to gain market share in search over competitors Yahoo and Microsoft's (MSFT ) MSN.

In addition, its search ads continue to outperform those of its rivals. According to comScore Media Metrix, the click-through rate on Google's search ads is 18%, vs. 11% for Yahoo and 12% for MSN. "It's inertia on the part of people searching," says Chris Sherman, editor of industry newsletter SearchDay. "Old habits are hard to break."
It boils down to this: Experts believe there is an 18% certainty that you click through to one of Google's ad customers when you come upon a page that includes Google's Adsense. Thus their advertising revenue has been astronomical.

But how often do you click through? Do you consider Chris Sherman's estimate probable? Remotely?

Many investors do.

Thus you have a stock with some outrageously screwy fundamentals but with the potential for an investor to realize some serious capital gain trading at $299.

If you want my opinion - and it's worth what you're paying for it - look at Wal-Mart.

A Vote of Confidence

Steve Minor over at SW Virginia Law Blog gives Supreme Court nominee John Roberts such a warm endorsement (here) that I don't know whether to simply support Roberts' candidacy or ask him out on a date (kidding).

But he had to go and link to an article written by Ann Coulter (here) in which she describes Roberts as another David Souter! Aauurrgghh!

Of course Coulter is known less for her legal acumen and more for her mud-wrestling skills. So I'll keep her opinion in perspective.

But today there's this troubling development:

Senator Byrd Praises Bush on Nominee
By Charles Hurt, The Washington Times

Sen. Robert C. Byrd, one of President Bush's harshest critics, has become an unlikely ally on the Supreme Court nomination of Judge John G. Roberts Jr.

"I said to him, 'I am shouting your name from the steeple tops for reaching out, reaching across the aisle,' " the West Virginia Democrat reported after taking a phone call from Mr. Bush to discuss a replacement for retiring Supreme Court Justice Sandra Day O'Connor. (link)
Robert Byrd (D-KKK) favors President Bush's nominee ...

If it weren't for the support offered Roberts' candidacy by Steve Minor (and John Behan over at Commonwealth Conservative), I might think we're being had.

'Grand Theft Auto' Intrigue

From the Roanoke Times editorial page:
Briefly put ...

Democratic Sen. Hillary Rodham Clinton was in a swivet [Don't be ashamed. I was stumped too. Noun: swivet - a state of agitation; a fluster] after video game players uncovered a sex-oriented mini-game hidden in the latest installment of the popular Grand Theft Auto series.

So the Entertainment Software Rating Board raised the rating on Grand Theft Auto: San Andreas to "Adults Only" from "Mature." (
link)
A "sex-oriented mini-game hidden" in the Grand Theft Auto video game? Hmm. I'm going to have to run out and buy it.

Then I read that the game "seems destined for cult status among the decidedly immature."

Oh. Uh. Never mind.