Philip Morris International Spin-off – An Analysis.

Altria (MO), the world’s largest tobacco company is spinning off its international business. The table below lists some details of the PMI spin-off per their spin-off information sheet:

PMI share distribution date	March 28, 2008
Record date	March 19, 2008 5PM ET*
Tax treatment	Distribution is tax-free for US holders**
Ticker Symbols of Altria & PMI after spin-off	Altria - MO, Philip Morris International - PM
Distribution Ratio	1-1: one share of PM for each share of MO held
Market Share of PMI after spin-off	15.6% of International Cigarette market
Shares distributed	2.109B
Altria’s interest in PMI after spin-off	None
Planned PMI dividend	0.46c per quarter
Altria business structure after spin-off	100% of PM USA, Philip Morris Capital Corporation, John Middleton inc., and 28.6% of SABMiller plc

• * It is expected that the Distribution will be tax free in Canada and Sweden, but subject to tax in Denmark, France, Germany, Ireland, Japan, the Netherlands, Norway and Switzerland.
• ** “When issued” (MO-WI, PM-WI) trading on both shares have started already.

As of yesterday, the “When issued” shares were trading in the range of $23 and $51 for Altria (MO-WI) and Philip Morris International (PM-WI) respectively. The financials of the businesses from their latest 8-K filings is summarized below:

Metric	Combined	Altria (MO)	Philip Morris International (PM)
2007 Net Earnings per share	4.28	1.50*	2.78*
Price per share	74	23**	51**
P/E Ratio	17.29	15.33	18.35
Dividends per share	3.0	1.16	1.84
Current Yield	4.05%	5.04%	3.6%
Projected Earnings growth rate (2008)	NA	9-11%	12-14%
Projected Average Earnings per share (2008)	NA	1.65	3.14
Projected Forward P/E (2008)	NA	15	16.24

• *Illustrative.
• **”When Issued” basis as of yesterday.
• Actual spin-off allocation percentage is 30.5:69.5, when using the closing price following the day of the distribution as the calculation method (3/31/2008).
  

The shares are priced at the projected forward P/E ratios of 15 and b16.24 respectively for Altria (MO) and Philip Morris International (PM). The valuation is fair given the guided earnings growth rates stand at 9-11% and 12-14% respectively. Committed shareholder friendly management is an enormous strength for the company. This is amply demonstrated by the fact that despite total cigarette volumes going down over the years, the company has managed to increase earnings consistently.

For Philip Morris International (PM), the primary risks to the business are susceptibility to excise tax increases by foreign governments, price competition, and raw material cost increases. Opportunities for margin improvement, vast untapped potential markets of China and India, and growing through acquisitions are all promising. For Altria (MO), the primary operational risk is the regulatory environment. On the litigation side, one major risk remaining is supreme court’s decision on the Lights class-action: the supreme court is expected to rule on whether federal law preempts the claims in its entirety in 2009. Cost cutting measures, domestic acquisitions, improving regulatory and litigation environment are all positives for the company.

Management’s goal is to generate total shareholder returns in the 14% range (including dividends) for Altria and 16% range for Philip Morris International going forward. Those types of growth rates make it worthwhile for investors to consider allocating small portions of their portfolios to both these companies. Altria (MO) should be a good long-term defensive bet while Philip Morris International (PM) offers growth at a reasonable valuation.

Last Updated: 4/2008.

Kids Stuff – Shopping Without Breaking The Bank!

Choices abound when shopping for kid’s bits and pieces. Options are available at various price ranges depending on the type of merchandise, store, and quality. It is tempting to go with designer products, especially if pricing is not a concern, as they do offer rather exclusive and better quality products. For everyday items such as child’s clothing for home and school, we have long realized that such a strategy does not align with our money management style. Clothes in general fit well for only 4-6 months as kids outgrow them fast. Longevity of use has is a very good guideline to go by. When our kids were newborn, Costco and Oshkosh/Carter’s factory outlet stores played a big role. For items such as crib bedding that were for longer-term use, we went outside this norm. Kids bedding is another item were we splurged as we expect to use it for an extended period of time. As they grew, one item that constantly figured is kids gifts. Here again, choosing the store depending on the type of gift and the expected length of use is a good guideline. Recycling kid’s possessions is key to avoid clutter. For used clothes and toys, it usually meant donating outgrown ones every six months at a minimum – Salvation Army, Red Cross and others who would pick from the house. However, for items such as Car Seats, Baby Bjorn, etc, there is a very good online market in places such as Craigslist. Another thing to keep in mind is that items from specialized stores usually are better quality, although a lot more expensive, but the upside is obviously that it will last longer as well. So, if the item is something for which there is a market in the online space, it makes a lot of sense to spend the extra money, as a portion of it should come back to you when you resell it.

OPEN Event From American Express and SCORE – A Free Resource For Small Businesses!

As mentioned in our post funding your small businesses with other people’s money, grant money is generally hard to come by for small businesses. Services Corps Of Retired Executives (SCORE), a volunteer based non-profit organization on the other hand is a very good resource for small business owners who need mentoring. Mentoring is a necessity for most first-time business owners and SCORE offers business counseling for free through their nearly 400 offices spread throughout the country. A few critical items for success that are missing in that type of a setup is actual contact with other new business owners, the power of networking with new business owners, and awareness about the huge industry that is around that gears toward servicing small business owners.

The OPEN Event sponsored by American Express and SCORE is an ideal resource as it affords the chance to communicate with other people in the exact same situation as you are. Further, the American Express sponsor ship should help with providing exposure to the services that are available. The first such event was a sellout in Orlando, Florida in 2007. This year, there are three such events across the country, the first of which was a sellout out on March 6th 2008 in Atlanta, Georgia. The timings, locations and the agenda of the remaining events for this year follow:

March 26, 2008 - Chicago, Illinois
April 23, 2008 - Dallas/Ft. Worth, Texas

9:00 AM – 9:45 AM	Business owner check-in and assignments (Continental breakfast and networking)
9:45 AM – 9:55 AM	Welcome and opening remarks
10:00 AM – 10:30 AM	Speed Coaching Session #1, Workshops A, C
10:30 AM – 10:50 AM	Networking coffee break
10:50 AM – 11:20 AM	Speed Coaching Session #2, Workshops C, D
11:20 AM – 11:40 AM	Networking coffee break
11:40 AM – 12:10 PM	Speed Coaching Session #3, Workshops A, B
12:15 PM – 2:00 PM	Luncheon, keynote address and facilitated networking
2:15 PM – 2:45 PM	Speed Coaching Session #4, Workshops C, D
2:45 PM – 3:00 PM	Networking coffee break
3:00 PM – 3:30 PM	Speed Coaching Session #5, Workshops A, B
3:30 PM – 4:00 PM	Closing remarks, prize drawings and networking
4:00 PM	Event concludes

From the agenda, it looks like a fun event for business owners who are located near Chicago or Dallas.

Selling Merchandize Online – A Resource to Wet Your Feet!

Have you ever wondered why people get savvy selling online? We ourselves have sold a number of items online over the years and for us it as an alternative to holding garage sales periodically to recycle things that are no longer functional. This premise generally works very well for a lot of households. Compared to a garage sale, online sales usually realize better prices because you have suddenly managed to expand your market space. Most online sales ceases to be a reliable source of online income on a consistent basis – in our situation, our online sales peak around March-April timeframe (spring cleaning) and trickles down to full stop by Christmas time.

One strategy to make online sales income to be more consistent and profitable is to use Merchandize Liquidators as source of inventory. Specifically, buying designer clothing wholesale or in smaller quantities to start out a low-risk way of starting out in this area. While we have not really tried this strategy out to know first hand how profitable it is, the plan is very much in our radar and we believe it to be a good source of inventory.

The best outlets for us so far have been Craigslist, Ebay, and Amazon.com in that order. For inventory sourced from clothing wholesalers, the best bet is to use Ebay. Craigslist has the disadvantage that “customers” will have to drive all the way to your house to purchase a piece of clothing and there is a fair amount of setup involved to sell “new” items in Amazon. In Ebay, the default mode allows selling new items and so it is fairly easy.

Our LDK Solar (LDKCH) and Suntech Power (STPCI) Covered Call Options Expired Worthless

Both the LDK Solar and the Suntech covered call options we wrote in February 2008 and October 2007 respectively expired worthless today. The share price of both these stocks got decimated in the downdraft experienced by most solar outfits. The list of stock/options sold during the year and the gain/losses are listed below:

Stock	Buy Date	Buy Price	Sell Date	Sell Price	% Gain (Loss)	% Portfolio Return*
LDK Solar (LDK)	11/21/2007	30.30	01/08/2008	40.83	34.75	2.64
Fannie Mae (FNM)	02/15/2008	30.70	03/10/2008	19.82	(35.44)	(2.18)
Navteq Inc.(NVT)	03/11/2008	73.32	03/12/2008	72.15	(1.62)	(0.06)
Suntech March 45 Call (STPCI)	10/15/2007	NA	03/22/2008	NA	NA	0.50
LDK Solar March 40 Call (LDKCH)	02/13/2008	NA	03/22/2008	NA	NA	0.44
Realized Gain/(Loss) YTD	-	-	-	-	-	1.33

• % Gain/Loss Relative to Portfolio Value at Beginning of Year + Deposits
• The table assumes realization of profits associated with selling options only after the option is exercised or expiry.

Added To Kraft Foods Inc. (KFT) And Cash To Investment Portfolio

Kraft Foods Inc. (KFT) was bought yesterday at $30.72 to add about 50% more shares to our existing holdings. Consumer Staples should hold up well in an inflationary environment and Kraft is attempting a turnaround.

We also added about 20% more cash to our Investment portfolio yesterday. More opportunities for stock picking should materialize going forward as stocks become affordable in the current market correction. The cash was tapped by liquidating I Bonds held in a Treasury Direct account. With this change in allocation, the cash portion of our assets has dwindled to about 11% of our total assets. Individual stock portfolio allocation has gone up to about 12% of our total assets.

Below is our updated portfolio:

Stock	Buy Date	Buy Price	Current Price	Current % Of Portfolio	Unrealized % Return	Current Yield
Philip Morris (MO)	1/4/2005	46.54	70.78	10.48	52.08	3.90
Kraft Foods (KFT)	1/4/2005	21.11	30.17	4.47	25.53	3.30
Plum Creek Timber (PCL)	5/12/2005	35.5	40.31	8.96	13.54	3.60
Pfizer (PFE)	2/6/2006	25.15	20.61	6.11	(18.07)	5.60
ICICI Bank (IBN)	5/18/2006	27.57	35.52	7.89	28.82	0.80
Taiwan Semi (TSM)	7/27/2006	8.71	9.83	7.28	13.00	3.60
Advantage Energy Fund (AAV)	11/2/2006	11.22	10.77	5.18	(4.05)	16.80
SunTech Power (STP)	3/14/2007	36.73	32.67	4.35	(19.95)	None
Central Europe & Russia Fund (CEE)	6/28/2007	51.5	46.62	6.91	(8.65)	17.90
Patni Computers (PTI)	8/10/2007	20.85	10.94	4.05	(47.57)	0.80
Itron Inc. (ITRI)	11/07/2007	85.01	91.72	6.79	7.77	None
Anthracite (AHR)	11/09/2007	7.97	6.55	4.85	(17.82)	15.60
ClickSoftware (CKSW)	11/09/2007	4.61	2.66	1.97	(42.30)	None
Harvest Energy (HTE)	11/28/2007	21.01	23.07	6.83	9.78	16.30
iRobot (IRBT)	12/18/2007	18.65	19.18	4.62	2.84	None
MCG Capital (MCGC)	12/21/2007	11.86	9.52	4.23	(19.71)	15.00
LDK Solar (LDK)	01/22/2008	30.49	22.63	5.03	(25.79)	None
Cash				27.04
Total Portfolio					(2.78)

• For SunTech Power (STP), we wrote a covered call option for 2008 March 45 on 10/15/2007 at $5.
• For Taiwan Semiconductor (TSM), we wrote a covered call option for 2008 April 12.5 at $0.35 on 10/18/2007.
• For LDK Solar (LDK), we wrote a covered call option for 2008 March 40 at $3 on 2/13/2008.

SmartMoney Stock Picking Tournament – Our Selections

SmartMoney Market Madness 2008 Stock Picking Tournament debuts tomorrow. A valid email address is required to register and join. The selections have to be in by tomorrow, March 19, 2008, 9AM ET. The rules of the tournament make it highly unlikely that stock-picking talent counts for much on the ultimate winner. Even so, the organizers make it worthwhile, as the grand prize is $10,000. In a nutshell, the player predicts out-performance from a selection of 64 stocks while pitting two stocks against one another for a single day. The predicted stock winning selections advance to the subsequent round and the process continues until the final winning stock remains. There are points weighted to each round and the winner is whoever gets the highest points. There is also a mechanism to break any ties. Following are our selections:

Round	Date	Value	Growth	Income	International
Pool	-	COP, BA, TWX, AMGN, DELL, DD, NOC, S, ETN, PH, DGX, BSC, EDS, HSY, BDK, STZ	AAPL, RIMM, AMZN, NOV, WFR, MA, FSLR, ISRG, GME, FLIR, BEAV, JCG, CROX, UTHR, PRXL, SIGM	GE, T, BAC, MO, PFE, LLY, HD, DOW, KMB, SO, CCL, LNC, HNZ, SLE, HOG, MAT	CHL, HBC, RTP, NOK, TOT, SAP, CAJ, VIP, TEVA, INFY, TKC, WIT, AUO, RYAAY, BIDU, RDS.A
1st Round (1 point)	March 20th	COP, TWX, DELL, S, PH, DGX, EDS, STZ	AAPL, AMZN, MA, FSLR, FLIR, BEAV, CROX, SIGM	GE, BAC, PFE, HD, KMB, LNC, SLE, HOG	HBC, NOK, TOT, CAJ, TEVA, TKC, RYAAY, BIDU
2nd Round (2 points)	March 24th & 25th	COP, S, PH, EDS	AMZN, FSLR, BEAV, SIGM	BAC, HD, KMB, HOG	NOK, CAJ, TKC, RYAAY
3rd Round (5 points)	March 27th & 28th	S, EDS	AMZN, SIGM	BAC, HOG	CAJ, TKC
Quarter Finals (10 points)	March 31st & April 1	S	SIGM	HOG	CAJ
Semifinals (15 points)	April 3rd	None	SIGM	None	CAJ
Finals (25 points)	April 7th	-	SIGM

Predicting the value of Dow Jones Industrial Average (DJIA) on 04/07/2008 is the tie-breaking tactic. Our prediction was 12250. As with most stock contests, the skill involved is minimal if any. The entertainment value is the king.

LDK Solar (LDK) – Part 1 - Introduction

LDK Solar (LDK) a manufacturer of multi-crystalline solar wafers had its Initial Public Offering (IPO) on May 31, 2007 and 17.384M shares were offered at $27 per share. In the subsequent months the price elevated to peak at $73.95 on September 27, 2007 until allegations of an inventory discrepancy surfaced. Ever since then, the stock has experienced high volatility along with a seesaw ride.

The inventory allegation stems from the fact that the company considers scrap silicon lacking immediate use as part of its inventory. LDK’s contention is that the expectation is for the company to use its entire inventory, and deferred use as such does not call for a write off.

An independent audit cleared LDK off the allegations, but the issue resurfaced after LDK introduced a new classification for “inventory to be processed beyond one year” in its 4th quarter report. Several analysts sounded skeptical about this transformation in reporting during the conference call following the 4th quarter report.

LDK’s operating niche is right at the beginning of the photo-voltaic (PV) module supply chain. Currently, the company manufactures wafers from a raw material mix of virgin and recycled polysilicon. This setup is expected to switch to a structure where polysilicon is also manufactured internally. Gross margins are expected to soar as the production ramp-up bears fruition. Operating in the polysilicon and wafer production areas in the photo voltaic (PV) module supply chain translates to a higher margin and is a coveted position when compared to PV manufacturers operating in the cell and module businesses.

Despite the negative attention associated with the inventory issue, LDK has managed to snag numerous large long-term wafer supply contracts. LDK was able to include favorable terms as ‘10% prepayment’ and ‘fixed pricing’ in some of these contracts. Below is a summary of LDK Solar’s recently announced wafer supply contracts:

Announcement Date	Company	Term	Initial Shipment	Comments
02/22/2008	Hyundai	8 years	Late 2008	More than 450MW total with prepayment for a portion of contract value.
01/17/2008	Neo Solar Power (NSP)	10 years	2009	More than 500MW total with 10% contract value prepayment and fixed pricing.
12/10/2007	Q.Cells	10 years	NR	More than 6GW. 10% prepayment.
10/22/2007	Canadian Solar	3 years	50MW in 2008	Total Value of about $540M
10/16/2007	Solarfun	3 years	NR	Fixed pricing with a total value of about $270M
10/10/2007	ChinaLight	3 years	NR	Fixed pricing with a total value of about $135M

LDK has indicated that 80% of polysilicon requirements for 2008 have been secured. This projection includes 5% in-house production, which takes the output assumption to be around 175MT, and inline with its 2008 guidance of polysilicon production of 100MT-350MT. This is another area that has left various analysts unconvinced. Their argument is that buildup for polysilicon production has historically taken much longer and that these projections are overly optimistic.

To compensate for about 880MT of polysilicon, LDK’s plan is to employ framework contracts with fixed quantities, but at a discount to market prices. The company hopes to supplement this with spot market, auction, and recycled silicon purchases on an as-needed basis.

LDK Analysis:

1. LDK Solar (LDK) - Part 1 - Introduction.
2. LDK Solar (LDK) - Part 2 - Business Issues.
3. LDK Solar (LDK) - Part 3 - Outlook.

Related Posts:

1. Trina Solar (TSL) - Stock Analysis - 08/08.
2. LDK Solar (LDK) - Stock Analysis - 03/08.
3. Solar Manufacturer Comparison (STP, TSL, YGE, CSIQ) - 11/07.
4. Suntech Power Holdings (STP) - Stock Analysis - 09/07.

Online Tax Filing – TaxAct, TaxCut, Turbo Tax – User Experience Review

We decided to checkout the alternatives after realizing that the price of the Turbo Tax Online product has increased significantly over the years. We selected these three products to try out because they received very high ratings. Having gone through this exercise, it is clear that the products are very good but each has a set of quirks that needs getting used to. Below is a list of quirks we noticed with each product:

Turbo Tax Deluxe - $50.17 (after Fidelity click-through discount):

• Transferring info from previous year Turbo Tax was a breeze.
• Transferring W-2 info from ADP succeeded on the 2nd try - the example shows to put a ‘/’ between the number portion and the 3-letter alphabet portion of Box D, but supplying the info as is (with a space in between) succeeded.
  
• Trying to transfer another W-2 from Ceridian resulted in a page that asked for user name and password. But, it was not apparent how to get that info. Had to do that one manually.
• After confirming W2 info, it showed a screen about select ‘OTHERCOMP’ in box 14, but going back one screen and coming back resulted in another screen asking whether any of the items in the a list applies to the W2 – confusing…
  
• Many times, clicking continue button results in no action. Usually, another click got us to the next page. Similarly, when coming back from another tab in the browser, the cursor shows it is active within an single-line edit box, but typing results in nothing getting entered.
• Minor spelling in “wages and income” confirmation screen – “If you have no other information for import, selete Done”
  
• After entering W-2 income, Turbo Tax provided two choices – Select Specific Topics, or Guide Me Through Income. We chose the first choice.
• Transferring 1099-B from our TD Ameritrade succeeded. This is a very helpful feature. But, the information on equity option trades, margin interest, etc. did not get transferred over. These are classified "supplemental" information, but the info is needed to complete the tax return. This is an area were one could easily miss filing this information.
  
• The preview feature is very functional - this is a significant improvement compared to last year.
• HSA employer contribution was treated as taxable income and it did not prompt for input on 1099-SA. This resulted in a higher tax figure. We did not get to verify the functionality this year as our health plan this year was not HSA related.
  
• Charitable contributions allowed using a tool called ItsDeductible. This made determining the value of the articles contributed relatively painless and hopefully accurate. One minor nnuisance was having to enter address information twice if donations were made to the same charity more than once.
• Timeout at 20 minutes is better compared to TaxAct's 10 minutes. Providing this as a configurable option would have been better.
• hile trying to eFile, our CA SDI withholding figure was transferred over from W2 correctly as $693.60. But, since the max is $693.58, Turbo Tax said it was unable to eFile. Manually editing that entry to say $693.58 instead of the rounded value fixed the problem.
  

TaxAct Ultimate Online Bundle - $17.95:

• Signup was a breeze. But, it asks for the SSN the first time around. This was not required for other products.
• After sign-in, an info screen was sent by email – the recommendation was to print it out, scribble in the password & favorite pets name for future reference.
  
• Imported everything we entered last year for this evaluation even though we did not use them to file the return last year.
• Timeout is 10 minutes – a 2-minute warning appears after 8 minutes. This compares to the 20 minute timeout interval with Turbo Tax. Again, an easily configurable option would have been better.
  
• Estimated Tax Payments entering has improved and is now fully functional as compared to last year.
• Life Events – this is a complete list and is a really intuitive classification.
• W-2 entries had to be made manually.
  
• The preview features are simple and functional.
• HSA employer contribution was treated correctly and there was a step at which we could enter 1099-SA information. This resulted in the correct tax figure. We spent significant time in Turbo Tax to figure out this.
• Dependent Care Provider information entry screens are accessible - this is an improvement compared to last year. The form requires entry of the telephone number of the provider for California & Oregon tax filers. This was not required in the other products.

H&R Block At Home Deluxe (previously TaxCut) - $29.95:

• Signup was a breeze.
• Option to import tax file from previous year. Couldn’t use it as we could not find the .tax file it needs. Turbo Tax’s online product only allows getting the pdf file.
• Transferring W-2 information electronically was not offered.
• The ‘Delete’ button in the W-2 form box 12 overlapped the single-line edit field and this made the page look pretty unprofessional. Also Box 18 seemed to need some info although that field was blank in our W-2. Inputting $0 made it happy.
• 1099-R form entry was clumsy with certain fields requiring $0 even when they are not applicable.
• In many of the forms certain fields (example charity name, provider name, etc.) are getting cut off after a certain number of characters are typed.
• The automatic sign-off feature is not as good as the other two products. Specifically, after 5 minutes of inactivity, it comes up with a prompt about inactivity and forces the user to click a button to sign-off as opposed to automatically doing it.
• There was no obvious way for 1040 preview.

Summary:

Turbo Tax online product wins out overall. The pages load quickly, navigation is smooth, access to different parts is intuitive, and the separation of tools from the rest of the interface is a good touch. Further, electronic transfer feature from other financial institutions is a very good feature. Some of the features such as ItsDeductible are either missing or less functional in TaxAct and TaxCut. TaxAct gets the job done with a simpler interface. The compromise is that there are more manual entries when compared with Turbo Tax. H&R Block’s TaxCut on the other hand attempts to do more of a hand holding job but in the process ends up making the interface somewhat clumsy when compared to Turbo Tax and TaxCut. Further the need to enter $0 in many of the single-line edit fields made the interface less intuitive. It is a time-consuming process to enter 1099-B stock sales and dividend information in TaxAct and TaxCut while Turbo Tax allowed automatically getting the information from our broker. The Turbo Tax premium product may make this and even better experience, but for extra money.

We filed our taxes with Turbo Tax this year as well although the price difference with TaxAct made us consider switching. By not choosing the Premium product, the price difference with TaxAct comes down to $31.70. It was a tough choice, given our tax information from 2000 onwards is saved under our Turbo Tax account and moving away from Turbo Tax would mean we would have our historical information spread out between two products. Next year, we will revisit this and depending on the features and the price difference, we will consider switching out of Turbo Tax.

There are a few other options to keep your tax filing costs down:

1. Turbo Tax SnapTax for iPhone and Android can keep your cost to just $19.99 (increased from $14.99 last year). The caveat is that it is for 1040-EZ only. The pricing is about half when compared to the online product. 
2. Opt for Turbo Tax Desktop Edition. Going this route saves you around 35% compared to the discounted pricing for the Online Edition. You can choose between a DVD and Download. Download is slightly cheaper and you get it almost instantly (~5 minutes if you have broadband internet connection).
3. Get Turbo Tax Deluxe online edition for free by establishing a banking relationship with State Farm. 
4. Intuit increases the pricing of the software every year on March 22nd. So, you can save a bunch by filing before that date. 

Visit more options at Amazon.com Tax Preparation Software area.

2012 Tax Filing - TurboTax Usage Experience: The good news for us was that Turbo Tax now allows eFiling even if your address is outside the US. This was not the case last year and so we had to use our virtual address in Texas. The overall experience has again improved this year. There was a glitch with importing our 1099 info from TD Ameritrade which was resolved in our second try. Also, Turbo Tax failed to take a 1099-INT that was for a very small amount (<$10) and so we had to manually put it in from an imported form. One other thing that we noticed was that Turbo Tax reports they do not support importing ESPP sales from Quicken, or other online financial services. The interface performed faster than last year as well. The eFiling itself went very smooth - as with last year, Turbo Tax allows debiting directly from your bank account for payment of taxes although it does not allow that to pay for the product itself. So, we used a credit card for that.


Related Posts:

1. 2013 Tax Filing - TurboTax Usage Experience. 
2. Turbo Tax Online Price Increase Over The Years - A Comparison.
3. Online Tax Filing – TaxAct, TaxCut, Turbo Tax – User Experience Review.

Last Updated: 04/2013.

Sold Navteq (NVT) As Deepening Anti-Trust Probe Adds Risk

Navteq (NVT) that was bought at $73.33 Tuesday was sold yesterday at $72.14 for a short-term loss of 1.62%. The stock was bought as a low risk arbitration play as Nokia (NOK) is acquiring Navteq (NVT) at $78 per share cash. Yesterday, news of deepening EU anti-trust probe broke out. We no longer consider this a low risk opportunity. Below is our updated portfolio:

Stock	Buy Date	Buy Price	Current Price	Current % Of Portfolio	Unrealized % Return	Current Yield
Philip Morris (MO)	1/4/2005	46.54	73.66	10.73	58.27	3.90
Kraft Foods (KFT)	1/4/2005	21.11	30.95	3.11	47.17	3.30
Plum Creek Timber (PCL)	5/12/2005	35.5	39.48	8.63	11.20	3.60
Pfizer (PFE)	2/6/2006	25.15	21.28	6.20	(15.40)	5.60
ICICI Bank (IBN)	5/18/2006	27.57	43	9.40	55.95	0.80
Taiwan Semi (TSM)	7/27/2006	8.71	10.32	7.52	18.66	3.60
Advantage Energy Fund (AAV)	11/2/2006	11.22	11	5.21	(2)	16.80
SunTech Power (STP)	3/14/2007	36.73	32.67	4.76	(11.04)	None
Central Europe & Russia Fund (CEE)	6/28/2007	51.5	47.76	6.96	(6.41)	17.90
Patni Computers (PTI)	8/10/2007	20.85	10.65	3.88	(48.96)	0.80
Itron Inc. (ITRI)	11/07/2007	85.01	94.84	6.91	11.43	None
Anthracite (AHR)	11/09/2007	7.97	6.09	4.44	(23.59)	15.60
ClickSoftware (CKSW)	11/09/2007	4.61	2.69	1.96	(41.65)	None
Harvest Energy (HTE)	11/28/2007	21.01	23.38	6.81	11.26	16.30
iRobot (IRBT)	12/18/2007	18.65	18.94	4.48	1.55	None
MCG Capital (MCGC)	12/21/2007	11.86	10.41	4.55	(12.20)	15.00
LDK Solar (LDK)	01/22/2008	30.49	20.43	4.46	(33)	None
Cash				6.01
Total Portfolio					0.21

• For SunTech Power (STP), we wrote a covered call option for 2008 March 45 on 10/15/2007 at $5.
• For Taiwan Semiconductor (TSM), we wrote a covered call option for 2008 April 12.5 at $0.35 on 10/18/2007.
• For LDK Solar (LDK), we wrote a covered call option for 2008 March 40 at $3 on 2/13/2008.

Funding A Small Business With Other People’s Money

The Holy Grail for a small business startup is to be able to outsource the risk. The rational behind it is to avoid putting one’s personal savings on the line, and instead rely on funding the business with Small Business Grants, Personal Loans, etc. To achieve the zero risk status, funding would have to be achieved without submitting personal assets as collateral.

Business grants, in general are not easy to come by. This obstacle is an irony given the industries that have sprung up catering to entrepreneurs in need of such funds. US Business Grants are provided mostly to organizations that are planning projects that directly benefit the local community. Further a lot of such financial aid goes to organizations such as Small Business Administration (SBA), Small Business Development Centers (SBDC), and Service Corps Of Retired Executives (SCORE).

The SBA does not offer grants to start or expand small businesses. They offer a small business loan program structured such that SBA guarantees a loan offered by a 3rd party lender up to 85%. SBDC is an offshoot of the SBA. Its mission is to provide management assistance to current and prospective small business owners. As such, that office is helpful with regards to obtaining information and as a source of mentoring, but with regards to monetary aid the program comes up short. SCORE is yet another organization that is geared more toward mentoring as opposed to doling out money to small businesses. Given this situation, one of the best sources to acquire US Small Business Grants may be to align your business to the needs of the local community and to apply for a grant directly with the U.S. Small Business Administration.

Bought Navteq (NVT)

We purchased Navteq (NVT) at $73.33 yesterday. The stock is a low risk arbitration play as Nokia (NOK) is acquiring Navteq at $78 per share cash. The deal is awaiting European regulatory approval. To raise cash for this purchase, we sold Fannie Mae (FNM) at a large short-term loss. Fannie Mae and the rest of the financials with exposure to mortgages should rebound at some point but it is difficult to time the turnaround. We lost significant money last year on Bank of Ireland (IRE) and selected Fannie Mae at $40 for SINLetter’s stock contest. We failed to time the entry again with our purchase of Fannie Mae (FNM) at $30.70 on 2/15/2008. Below are our updated stock positions:

Stock	Buy Date	Buy Price	Current Price	Current % Of Portfolio	Unrealized % Return	Current Yield
Philip Morris (MO)	1/4/2005	46.54	74.74	10.59	60.59	3.90
Kraft Foods (KFT)	1/4/2005	21.11	30.71	3.00	46.02	3.30
Plum Creek Timber (PCL)	5/12/2005	35.5	38.47	8.18	8.36	3.60
Pfizer (PFE)	2/6/2006	25.15	21.15	5.99	(15.92)	5.60
ICICI Bank (IBN)	5/18/2006	27.57	41.23	8.76	49.53	0.80
Taiwan Semi (TSM)	7/27/2006	8.71	9.80	7.07	14.73	3.60
Advantage Energy Fund (AAV)	11/2/2006	11.22	10.77	4.96	(4.05)	16.80
SunTech Power (STP)	3/14/2007	36.73	45	4.54	(12.68)	None
Central Europe & Russia Fund (CEE)	6/28/2007	51.5	45.53	6.45	(10.78)	17.90
Patni Computers (PTI)	8/10/2007	20.85	10.74	3.80	(48.53)	0.80
Itron Inc. (ITRI)	11/07/2007	85.01	87.16	6.17	(2.41)	None
Anthracite (AHR)	11/09/2007	7.97	5.27	3.37	(33.88)	15.60
ClickSoftware (CKSW)	11/09/2007	4.61	2.55	1.81	(44.68)	None
Harvest Energy (HTE)	11/28/2007	21.01	22.83	6.47	8.62	16.30
iRobot (IRBT)	12/18/2007	18.65	19.03	4.38	2.03	None
MCG Capital (MCGC)	12/21/2007	11.86	10.20	4.34	(13.97)	14.00
LDK Solar (LDK)	01/22/2008	30.49	21.50	4.57	(29.49)	None
Navteq (NVT)	03/10/2008	73.33	73.09	5.18	(0.33)	4.76
Cash				0.73
Total Portfolio					(2.2)

• For SunTech Power (STP), we wrote a covered call option for 2008 March 45 on 10/15/2007 at $5.
• For Taiwan Semiconductor (TSM), we wrote a covered call option for 2008 April 12.5 at $0.35 on 10/18/2007.
• For LDK Solar (LDK), we wrote a covered call option for 2008 March 40 at $3 on 2/13/2008.

SCO Group’s Private Equity Plan – An Analysis

SCO Group is trying to enforce UNIX rights. The following lawsuit details summarize the issues:

1. SCO vs. IBM – The March 2003 lawsuit claims IBM devalued SCO’s version of the Unix operating system. The primary allegation is that IBM applied SCO’s intellectual property to the Linux operating system code base. The lawsuit stems from IBM’s admission of contributing AIX code to the Linux kernel. AIX is a derivative of Unix System V (SVRx) and SCO claims to have rights on SVRx. Most of SCO’s evidence was rejected by the judge in 2006.
2. SCO vs. Novell – The Jan 2004 lawsuit, in response to Novell registering certain Unix copyrights, was based on SCO’s assumption that they owned Unix. Novell rejected this claim publicly and stated they never sold Unix copyrights as part of a 1995 asset purchase agreement. On August 2007, Novell was ruled as the owner of Unix and UnixWare copyrights.
3. Red Hat vs. SCO – Red Hat’s August 2003 lawsuit pushed for a permanent injunction of SCO’s Linux campaign and a number of declaratory judgments that Red Hat was not in violation of SCO’s copyrights.
4. SCO vs. DaimlerChrysler and SCO vs. AutoZone – These two lawsuits filed on December 2003 and March 2004 respectively alleged their use of Linux violated SCO’s copyrights.

The present situation:

The down hill run started for SCO Group after a federal judge ruled Novell, Inc as the owner of UNIX and UnixWare copyrights in August 2007. The stock went down steadily from $1.56 per share to a low $0.05 per share on January 18 2008. The valuation highlights the fact that none of SCO’s lawsuits are relevant as long as they do not own Unix copyrights and it is all but certain that shareholders stand to gain nothing as bankruptcy proceedings get under way. The shares went up six times to $0.30 per share following a surprise announcement about a private equity investment of up to $100M on February 13, 2008.

Outlook:

One of the stated objectives of the private equity plan is to see the lawsuits ‘through to their full conclusion’. Translated, the idea is for the private company to pursue a payoff from IBM, Novell, and others in return for not pursuing the legal route any further. At the right price, this may prove to be an attractive prospect for these companies. A closure to this issue would be a welcome rain to the Linux community as well. Even though Novell has stated publicly that it has no intention to pursue Unix copyrights, it needs to be ascertained that Novell as the rightful owner of the Unix copyright will not trace SCO’s steps. IBM and others may have an interest in seeing the lawsuits through to closure with SCO only if they are spared of similar lawsuits with other firms in the future. An agreement with Novell and SCO group brokered by IBM where Novell and SCO group agree to waive copyrights on Unix is the most probable outcome.

Federal Credit Union Email Phishing Scam Experience – Reporting and Feedback Details!

Yesterday we received the following email from National Credit Union Association (NCUA):

Dear Credit Union member,

You have received this email because you or someone had used your account from different locations. For security purpose, we are required to open an investigation into this matter.

In order to safeguard your account, we require that you confirm your online banking details.

The help speeed up to this process, please access the following link so we can complete the verification of your Federal Credit Union Online Banking Account registration information.

http://65.112.203.172/icons/update/NCUAlogin/

If we do no receive the appropriate account verification within 48 hours, then we will assume this Federal Credit Union account is fraudulent and will be suspended.

The purpose of this verification is to ensure that your bank account has not been fraudulently used and to combat the fraud from our community.

We appreciate your support and understanding and thank you for your prompt attention to this matter.

Thank you,
NCUA® Security Department.

The wording of the email and the IP numbers in the URL alerted us to doubt the legitimacy of this email. The link directs you to a page that closely resembles the legitimate NCUA site (see picture below of the phishing site that was taken down later in the day). The launching page asks for the name, card number, pin, and email. The rest of the links in the page points to pages in the legitimate NCUA site.

Our decision was to react by reporting this to the authorities. This was more involved than anticipated. Searching for “report phishing” in Google gave a result set of 271,000 links. We used the following from the first page of results:

1. United States Computer Emergency Readiness Team (US-CERT) - A government agency responsible to protect the nation against cyber attacks among other things.
2. PhishTank – A community based anti-phishing service. The Opera web-browser and certain other popular internet applications like Yahoo Mail use data from PhishTank for their anti-phishing filters.
3. Anti-Phishing Working Group (APWG) – A volunteer organization that fights phishing.
4. CastleCops – PIRT (Phishing Incident Reporting and Termination Squad) – An organization run by CastleCops with support from the community.

Reporting was fairly painless with only PhishTank requiring a sign-up. As for acknowledgement, it was practically non-existent. The PhishTank user interface is superior with an immediate status on whether the site has already been submitted and whether it is already classified as a Phish. When we submitted the offending site, the feedback was that additional votes were required for it to be confirmed as a phishing site. Within two hours the site was established as a phishing site. The CastleCops and APWG launching pages provides information on the partners that use their feeds and that included US-CERT. PhishTank on the other hand publishes a free Application Program Interface (API) that anyone can use. A coordinated single point to report phishing and other cyber attacks is obviously a better alternative.

Within 30 minutes of our reporting the site, FireFox and Internet Exploer (IE) web-browsers both began flagging the launch point as a phishing site. The Opera web-browser on the other hand failed to flag the site even after an hour. Within about three hours, the site was brought down. We do not know the nitty-gritty behind this operation, but the end result was satisfactory. Even so, we are inclined to believe the criminals got away with a number of valid card details during the first hours - their window of opportunity

Tahoe Donner Skiing – Review

Based on our research Tahoe Donner offers one of the better deals for 2011-2012 ski season for families with children 6 years or younger:



Background:

Tahoe Donner has one quad chair, one double chair, and two conveyor lifts for the bunny hills. The whole mountain is centrally served by the single quad-chair lift. There is one green run served by the double chair lift. The lift operating hours are from 9-4 with ticket windows open from 8-3. Parking is off-site and a free shuttle service drops you at the ticket window. Pricing is as follows:

	Full-Day	Half-Day (starts at 12:15PM)	Unrestricted Season Pass	Mid-week non-holiday season pass	Morning-only Credit	Ski-Equipment
Adults 13-59	$41	$32	$289	$266	Yes	$36 and up
Child (7-12) or Senior (60-69)	$21	$14	$144	$117	Yes	$28 and up
Child 6 and under or Senior over 70	Free	Free	Free	Free	NA	$20
Parent Interchangeable	$41	NA	NA	NA	NA	NA

The beginner lessons are excellent for those who want to get started. Lesson options are as follows:

Program	Schedule	Cost	Ski Equipment Included?	Lift Ticket Included?
Snowflakes (3-6 years only)	Session1: 9:30-noon, Session2: 1:00-3:30	$75 per session	YES	YES
First-time ski and snowboard lesson package	10:00-1:30PM	Adults (13-59): $85, Others 7 and older: $75	YES	YES
Private Lessons	1-hour, Half-day, or Full-day	1-hour: $89, $20 each additional person, Half-day: $222 for up to 4 people, Full-day: $405 for up to 4 people	NO	NO

They also have a couple of season-long programs for kids who really want to take it to the next level.

The Best:

The facility is geared more towards kids making it very palatable to families with children. The lines at the quad chair were non existent especially in the morning hours. The deals get better if one can do mid-week trips. Every Tuesday (certain exclusions apply) is Parent's Day special and is a great deal (free lift ticket).

The Better:

The location is easily accessible from Bay Area. It is about 5-10 miles further than the closest resorts but the trade off is it is less crowded. It was good to see the bunny slopes being catered by conveyor belts an upgrade from T-bar lifts and rope pulls.

The Average:

The off-site parking is a disappointment as it invariably wastes about an hour, a minimum of 30 minutes one-way. Needless to say, you have to lug everything you need as accessing the car for short breaks is not an option as in other resorts. The green mile run has less slope in many areas making it hard and time-consuming for younger kids without poles.

Summary:

The mountain is on the smallish side with 120 acres of net ski-able acres with just 14 total runs. Our kids had a blast and were very proud to proclaim they could do the single-blacks “without falling down even once”.

Related Posts:

1. Introducing Kids to Snow Sports (Sledding/Skiing) in the Lake Tahoe Area.
2. Tahoe Donner Skiing – Family Experience/Review.
3. Frugal Living – Skiing Story.
4. Lake Tahoe Ski Areas (Granlibakken, Tahoe Donner, Boreal, Homewood, Kirkwood, Heavenly, Squaw) – A Comparative Review.


Last Updated: 03/2012.

A Look At Our Insurance Choices

Like most families, our insurance needs are also varied. We have an affordable life insurance, short-term disability insurance, and long-term disability insurance through our respective work places and have opted not to take life insurance for our children. Our work place also provides us with health and dental coverage. We also have high-deductible car insurance with 21st century insurance and our home is insured through Allied. Below is a summary of our insurance selections, summarized coverage information, and costs:

Type	Vendor	Cost	Coverage
Life Insurance	MetLife	Zero – Employer Benefit	$50000 basic life and basic accidental dealth & dismemberment coverage.
Short Term Disability (STD)	UnumProvident	Zero – Employer Benefit	6 weeks after 7-day waiting period at 100% with a maximum of about $1700 per week. From 7th week, benefits reduced to 60% to a maximum of 26 weeks.
Long Term Disability (LTD)	UnumProvident	Zero – Employer Benefit	After 6-months of STD, 40% of salary with a maximum of $10000 per month. Benefits to age 65 or 5 years whichever is higher.
Medical and Dental	Aetna Dental DMO and Aetna Choice POS II	About $2500 per year	$20 co-pay, and pretty high deductible and out-of-pocket maximums for medical. Dental is in-network only plan with pretty high deductibles for anything other than a routine visit.
Home	Allied	About $150 per year per $100K worth of coverage	Standard coverage with 125% extended replacement cost option.
Cars	21st century insurance	About $100 per month	$1K deductible. $250K/$500K BI, $100K/$300K UMBI, Two Cars – older Lexus LS400 and a newer Honda CRV.

Summary:

Our life insurance coverage through our employers provides only limited coverage. Affordable life insurance is an area we will be pursuing for opportunities to supplement our employer coverages as we are very much under-insured. An accidental Death and dismemberment coverage that supplements our basic employer coverage is a necessity.

The auto and home insurance expenses are reasonable even though the deductible is on the high side for both of them. We have been lucky to be spared of accidents due to our fault for a while and that might account for some of this. Even so, we are in the look out for opportunities that will provide us with a discount on both our car and home insurances when consolidating these to be serviced by a single vendor. Further, we do not have earthquake coverage. Allied has an insurance product that covers earthquake but is very expensive. Certain other insurance companies provide coverage in conjunction with California Earthquake Authority (CEA) but they usually necessitate that they also provide the fire coverage.

Medical and Dental insurance are expensive but the out-of-pocket maximums should shield us very well against heavy medical and dental bills. Alternatives are non-existent as costs will be prohibitively high for a comparable plan if we decide to venture beyond our employer plan.