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EMC - (EMC Corporation) VMW - (VMware)

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I've been trying to analyze EMC and VMWare (VMW)

there would seem to be a lot of maket speculation in those stocks,
so I'm trying to obtain an understanding of what's going on

first, from reading the SEC filings:
EMC spun off VMware in a quite successful IPO,
Intel purchased 9.5 million newly issued shares of VMware's Class A common stock at $23.00 per share, and
Cisco Systems purchased 6.0 million shares of VMware Class A common stock at $25.00 per share;

EMC still owns 26,500,000 shares of our Class A common stock
and all 300,000,000 shares of our Class B common stock,
representing approximately 86% of the total outstanding shares of common stock
or 98% of the voting power of outstanding common stock

trying to research the SEC filings gets quite interesting,
trying to follow the CISCO ownership for example, one encounters:
Cisco Systems International B.V. ("CSIBV") of The Netherlands
Cisco Systems Netherlands Holdings B.V. ("CSNHBV") of The Netherlands
Cisco Systems Luxembourg S.a.r.l. ("CSLS") of Luxembourg
Cisco Systems Luxembourg International S.a.r.l. ("CSLIS") of Luxembourg
Cisco Systems International S.a.r.l. ("CSIS") of Switzerland
Cisco Systems (Bermuda) Limited ("CSBL") of Bermuda
Cisco Systems International Holdings Limited ("CSIHL") of Bermuda
Cisco Technology, Inc. ("CTI"), I.R.S. Identification No. 77-0462351 of the State of California
Cisco Systems, Inc. ("Cisco"), I.R.S. Identification No. 77-0059951 of the State of California
which is quite an impressive network (hmmm, a CISCO network pun?),
and perhaps representive of trying to do SEC filing research,
but Cisco is still a rather minority owner,
considering that EMC itself still owns 86% of VMWare stock

when one tries to value the EMC holdings of VMWare
the first problem is that the most recent EMC SEC filing
is their 10Q dated for the quarterly period ending June 30, 2007;
which was prior to the August 2007 initial public offering ("IPO")
which spun off 37,950,000 shares of VMware

in their June 30, 2007 10Q EMC reports Total Stockholder Equity of $10,638,304,000
(there are 2,100,000,000 shares of EMC outstanding)

hmmm, that $10B EMC stockholder equity doe not seem to include
the $37.1B market cap of VMware
(which EMC owns 86% of)

however there is a discrepancy between the
$10B Stockholder Equity EMC reported to the SEC as of June 30, 2007
and the current $47B Market Cap of EMC

stock market speculators seem to be buying EMC
for the purpose of cashing in on EMC's holdings of 86% of VMware stock

which might be a good idea,
if VMware is actually worth its $37B maket cap

however VMware has actaul earnings of less then $1
per each share which is selling for around $100

but Intel and Cisco bought VMware IPO stock you say?
yeah, but at $25 per share, not the current $100,
much different Price/Earnings ratio

one other thing that I feel is worth noting is that
a significant portion VMware products/technologies
is based upon "open source" software,
(GNU General Public License, the GNU Lesser General Public License,
"Apache-style" licenses, "Berkeley Software Distribution," "BSD-style" licenses)

for years my personal computers are dual boot (Windows XP/Linux);
I believe that the free Linux Xen virtualization software
http://en.wikipedia.org/wiki/Xen
is very similar to VMwares core products

and, Microsoft also seems to be quite active in
developing competing Virtual Machine Operating Systems

well, the market momentum is currently tending to favor
speculation in EMC (and VMware)

I have a little invested in the current market frenzy,

based upon the John Maynard Keynes quote that SuziQuant.com noted
about the stock markets ability to stay irrational

although I am quite skeptical about any such tulip speculation

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NVEC - (NVE Corporation)

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this posting is an update to my July 2007 posting
about my holdings of NVEC - (NVE Corporation)
who develops and sells devices that use spintronics,
a nanotechnology that relies on electron spin rather than electron charge
to acquire, store and transmit information.

NVEC has been awarded numerous awards including
IBD 100: Investor's Business Daily list of "leading stocks trading in the U.S.,
showing superior earnings, strong price performance and leadership within their industry."

in addition to the other business awards to NVEC
http://www.nve.com/awards.php

I'm impressed by NVEC being awarded
a NASA Certificate of Appreciation

it seems that their new "spintronic" technology,
is more radiation hardy for space applications
being based upon electron spin (rather then electric charge)
it is inherently more impervious to cosmic ray damage in space
(electron spin is harder to disrupt then electric charge is)

NVEC was also awarded the 2007 Tibbetts Award
which is based upon "economic impact of technological innovation;
business achievement and effective collaborations;"

the Tibbitts Award is sponsored by
the National Science Foundation, NASA, and DARPA
http://www.zyn.com/tibbetts/about.htm

as far as financial aspects of NVEC's current business activities
the most recent NVEC form 10Q filed with the SEC yesterday (October 17, 2007) states:

Product sales for the recent quarter increased 14% compared to the prior-year quarter
Net income for the second quarter of fiscal 2008 increased 28% compared to the prior-year quarter.

the first six months of fiscal 2008, product sales increased 26% compared to last year

Net income for the first half of fiscal 2008 was $0.67 per diluted share
compared to $0.45 per diluted share, for the first half of fiscal 2007.

NVEC's business exhibits strong growth,
and NVEC has been granted numerous patents
indicating solid future prospects

NVEC is currently working to improve business even more
by developing new sensors for automotive applications

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VLO - (Valero) oil pricing contango

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VLO - (Valero Energy Corp's) core business is oil refining

65% of the oil that Valero processes
is purchased by Valero at prices determined by long term contracts
(35% is bought on the spot market)

such strategy reflects a "bet" placed on
continuing high future oil prices;
which reflects the current market contango conditions
WallStreetGecko.com

sort of like the recent real estate market
where expectations of future higher pricing
justified buying multiple houses
speculating that prices will continue to rise

problem is that if conditions,
such as an impending Turkisk invasion of Kurdish northern Irag,
dissapates, and thereby eases forward market pricing expectations,
well at such point in time the market might tend to become
flooded with product as current inventory gets sold off
in attempts to capture peak prices;

a market becoming "flooded" with product
would tend to result in a switch in future price expectations

Valero, which is contractually obligated to pay the prices
agreed to in their long term contracts,
might be adversely effected by a reduction of contango

I've reduced my exposure to Valero

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market characterized by uncertainty

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it would seem to me that the stock market is currently characterized by uncertainty;

in economic cycles: lowering interest rates tends to signal impending recession

"the fed" lowered interest rates again today, seeming to be quite careful
not to use the "housing recession" expression;
instead chosing to call it an
"intensification of the housing correction"

such "intensification" seems to even show up in
"intense" price movements in stocks such as MGI
which has a significant customer base of
illegal aliens who utilize their service to send money back home,
(bank transfers of money requires identification)

in a current environment of housing related (construction) jobs drying up ...

such future money transfer business expectations might tend to ...

well anyway, MGI seems to have managed to draw down just about all of their
revolving credit line because of "market losses" in their investment portfolio,
causing the credit ratings agencies to start to issue warnings

stock analysts have also mentioned mortgage exposure of MGI

back in July the Washington Post reported that Western Union expected
second-quarter results for their money transfer business to be hurt
by the immigration debate in the U.S. Congress as immigrants feared
that wiring money back to their home countries would attract government attention.

please note correction of prior posting:
Western Union and MoneyGram are seperate companies
Western Union was founded in 1851
whereas MoneyGram was founded in 1926

oil refining "crack spread" would also seem to be evaporating away,
making oil refining currently less profitable
WallStreetGecko.com

it would seem to be a market of speculative moves
in a market characterized by uncertainty

in my non-contest portfolios I'm betting on a few solid dividend type stocks,
however such relatively "safe" investment style would not seem to qualify
in such a high risk contest environment

in the stock market: high gains most usually require assuming a higher risk;
which I'm not that comfortable with in a market characterized by uncertainty.

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