Delta Widget, Inc. has just made you a tender offer to buy back its shares of stock, which you bought from your broker a few years ago. The stock price hasn’t grown as expected and the tender offer is just slightly over market value. It’s tempting to take the offer. On the other hand, when Delta Widget buys its own stock back, there will be less stock outstanding, and that could help boost its price.

The dilemmas of investing - will they never cease?

To weave our way through this problem, let’s first examine the two ways a company can initiate a buyback program, or "stock repurchase agreement" as it’s often called. The first way is to make a tender offer to its shareholders. A "tender offer" is simply an offer to its current shareholders to "tender" (i.e., sell) some portion of their shares back to the company. The company states the number of shares it is willing to buy, at what price, and for what period of time. This is one way that is often used to buy back stock from smaller shareholders.

The second way is for the company to buy its own stock on the open market, at whatever market price the shares command. When the company announces this type of program, it will usually state the number of shares it offers to buy, and the length of time it will keep the offer open.

If Delta Widget, Inc. were to announce such a program, it might announce that it intends to buy back $50 million worth of its stock over a two-year period. Since the company doesn’t know what the price per share will be over the next two years, the repurchase program will be expressed as a dollar amount rather than a set number of shares.

Whatever method is used by a company, the real question is why the company wants to buy back its stock in the first place?

The answer to that question is rather simple. Let’s suppose that, before the buyback, Delta Widget had a market capitalization of $250 million, that it had 10 million shares outstanding, and that the market price per share was $25.00. Under this scenario, each share of stock would represent .0000001 of company ownership.

If the company spends $50 million to buy its shares back at $25 per share, it will be able to repurchase 2 million of its shares. That will leave 8 million shares outstanding. In that case, each outstanding share would then represent .000000125 of company ownership. Theoretically, the price per share would then be $31.25 (8 million x .000000125). Not a bad increase at all!

Naturally, not all companies are motivated to increase share value in this manner. Instead, a growing reason for repurchase plans is to reduce the number of shares outstanding, as opposed to increasing the price per share. Companies that have liberally doled out stock options to employees in the past, now find themselves offering buyback programs because the exercise of the stock options has increased the number of the company’s outstanding shares. An increased number of outstanding shares can adversely affect important ratios, like earnings per share and price/earnings (P/E), all of which can negatively impact share price.

A repurchase plan can also cause problems if a company overpays for its own stock. If natural market forces or a business downturn creates a decline in stock price, the company will not only have failed to increase stockholder value, but it also will have consumed much-needed capital, capital that could have been used for other business purposes.

In the final analysis, the evaluation of a stock buyback plan is nothing more than an evaluation of the company itself. If the company’s stock price is undervalued and buying back some stock will result in an overall reduction in the number of shares outstanding, then holding on to your shares could be a good bet. On the other hand, if it appears that company management is trying to manipulate the stock price to make the company appear better than it really is, then you should think about divorcing yourself from the company.

Glenn ("Chip") Dahlke, a senior contributor to the Living Trust Network, has 28 years in the investment business.

He is a Registered Representative of Linsco/Private Ledger and a principal with Dahlke Financial Group. He is licensed to transact securities with persons who are residents of the following states: CA. CT, FL, GA, IL. MA, MD. ME, MI. NC, NH, NJ, NY.OR, PA, RI, VA, VT, WY.

If you have any questions or comments, Chip would love to hear from you. You may contact him at dahlkefinancial@sbcglobal.net. You may also contact him at the Living Trust Network. Its web site is http://www.livingtrustnetwork.com.

Copyright 2006. Living Trust Network, LLC. All Rights Reserved

Dividend is a portion of the company’s earnings to be distributed to its shareholders, based board of directors’ decision. Dividends are quoted as Dividend Per Share (DPS) or dividend yield. Most companies having stable and secure growth offer dividends when their share prices become stagnant. However several companies do not offer dividends as all profits are reinvested to ensure faster, better-than-average growth.

The board of directors decides the percentage of the profit to be distributed as dividends. Dividends are issued quarterly or annually, and companies are not under any obligation to pay dividends every quarter and the company may stop paying dividends at any point of time. But if the company stops paying dividends its market value is affected, hence dividends are paid regularly and even if there is no increase in the dividend at least they will get dividends on a fairly regular basis.

Dividends are declared by the board of directors each time they are paid. There are three important dividend-related dates, declaration date, date of record and payment date. On the declaration date the company opens a book of liabilities in terms of the cash dividends it owes to the shareholders, and on this date both the other dates are decided and declared. Date of record indicates the dividends are only paid to shareholders who are the owners of the share on or before the date of record. Payment date is the date the dividend is paid out.

Kinds Of dividends

Companies offer three regular kinds of dividends.

Cash Dividends: This is the most common and popular method of sharing a company’s profits. A portion of the company’s profits is paid to shareholders as dollar per share. However cash dividends are subject to double taxation in the US. A reason used by many companies to justify not paying dividends. They are taxed at a maximum rate of 15%. The dividends are distributed after the company has paid income tax. The shareholders are also taxed once they received the dividends.

Stock Dividends: When dividends are given in the form of additional shares of the same company or its subsidiary corporation according to the proportion of the shares owned.

Property Dividends: Property dividends are paid out in the form of products or services provided by the corporation. They are paid in the form of assets such as gold, silver, cocoa beans etc. by companies.

Special Dividends Special Dividends are offered rarely, such as during times when the company wins litigation, when the company sells a business or liquidation of investments. Some companies also offer special dividends when they have high amount of excess cash, in order to boost the market value of their stocks. Some times these special dividends are documented as return of capital, meaning the company is returning a portion of the money invested by the shareholders and hence these dividends also called capital dividends, and are tax-free.

Dividends received can be partially or wholly reinvested in the company’s stock if the shareholder does not depend on the dividends to make ends meet. Shareholder accumulate wealth consistently and enrolling in a dividend reinvestment plan can make the whole process of reinvesting easier as everything is automated, thanks to the various software programs that have commendable features, making everything concerned with dividends just a mouse click away! From the convenience of one’s home one can find out the latest statistics about dividends and reinvestment options. One such program is the Corporate Manager Software.

David Gass is President of Business Credit Services, Inc., founder of http://www.SmallBusinessConsulting.com and co-developer of the Corporate Manager Software which manages the records of a Corporation or LLC. For a Free Trial of the software visit http://www.corporateforms.net

When you look at stocks trading at a P/E ratio of 15, you will think of stodgy food companies or steel companies at its peak, not the technology sector. The technology sector, used to be stocks with the highest valuation and growth rate. These days, you can find ample companies in the techland that fits the criteria of value play. This is defined as companies with slower growth and thus lower P/E ratio. Furthermore, they are solid companies with long history of profitability, not some funky google-style outfit.

Prepare your notepad and take note. This won’t take long.

Microsoft Corp. (MSFT). Microsoft is the stock investors love to own during the 1990s. Two Harvard school drop-out has built Microsoft into the world largest software company. In recent years, stock has languished between $ 24 - $ 30 range. Lately, it has done worse. Stocks fell sharply after Microsoft reports its third quarter earning on April 27th 2006. It reported so so earnings and plans to spend $ 2 Billion into its research and development to wage war against search engine giant, Google Inc. Subtracting its $ 4.29 of positive net cash, at recent price of $ 23.77, Microsoft is trading at 13.9 times fiscal 2007 earning estimate. ($ 1.40 earning per share estimate). Heck, that is considered cheap for any kind of companies. It is extremely cheap for companies having excellent balance sheet like Microsoft. This is definitely one stock that is worth researching for.

Long history of profitability? Yes, of course. Microsoft has poured in billions of dollars into its coffers as it has successfully sold PC with windows software as a ‘necessity’.

Intel Corporation. (INTC). Intel was synanomous with its pentium chips. It is installed in more than 80% of personal computers around the world. That doesn’t make it immune to setbacks. In the latest announcement, the company has decided to engage in belt tightening for the first time in Intel’s history. Intel is expected to eliminate 2 to 3 % of its workforce, mainly through attrition.

Balance sheet is solid at Intel as well. In the latest quarter, it shows a $ 2.61 positive net cash while earning for the year is expected to top $ 1.00. At recent price of $ 19, Intel is trading at 16.39 times future earnings. It is not exactly cheap but history shows that it can bounce back from short-term setbacks. Furthermore, it has long history of profitability, apparent from the $ 29.9 Billion of its retained earning on its balance sheet. This is not earned within one year, but rather through years of consistent profitability.

Dell Inc. (DELL). This is one more fallen angels that has traded cheapest in recent years. For starter, it spot a clean balance sheet with $ 4.58 of positive net cash. With expected earning estimate of $ 1.61 and recent share price of $ 24.89, Dell is trading at 12.6 times future earnings. While Dell may look cheap and you can start researching this company, it has been known to provide low cost reliable PC. Competition from other low cost providers seemed to have eaten into Dell’s growth and it may lose its edge as the provider of low cost PC.

Symantec Corp. (SYMC). The provider of security and anti virus software has fallen dramatically in recent months. Defections of key personnel and has brought its shares to the $ 17 level. Furthermore, Veritas acquisition is slower than expected and has yet to bear any fruit. However, with $ 2.68 of positive net cash and $ 0.99 of this year’s earning estimate, Symantec is only trading at 14.5 times EPS. This share is worth looking at despite its short-term setback.

Get your free investing idea at http://www.noviceinvesting.com.

Choosing a stock while taking an investment decision depends upon your financial goals. Corporations issue different types of stocks, the basic two types being common stock and preferred stock. Another type of classification which is commonly used is to classify stocks as growth, value or blue chip stocks, amongst others. It is important to understand the various terms clearly so that you can make a wise investment decision.

Common Stock

This is the basic stock issued by a corporation and represents the fraction of the company owned by you. Common stockholders bear the most risks associated with the company. Common stockholders get dividends only after preferred stockholders have got theirs. However, the investors holding common stocks have voting rights in the company, which enable them to influence corporate resolutions. Preferred stock holders do not have voting rights.

Preferred Stock

This is a form of equity, but has the characteristics of both bonds and common stock. As the name implies, preferred stock holders can claim the earnings and also the assets in the event of liquidation of the company, prior to common stock holders. However, the claims of preferred stock holders come after those of bondholders.

Additional Classifications

•Growth Stocks. Growth stocks are stocks of companies whose financial performance and earnings exceed the industry average and the economy in general. The profits are typically re-invested to expand the business and minimal dividends if any, are paid to stockholders. Stockholders gain because the share price goes up as the company grows.

•Value Stocks: These are stocks considered undervalued by investors. Typically, these may be stocks of companies going through a rough patch or whose growth potential has been underestimated by the market. These stocks attract those investors, who believe in long-term growth of the company. The second richest man in the world and great investor, Warren Buffet, has championed the art of value investing.

•Blue Chip Stocks: Blue Chip stocks are stocks of financially sound, well- established companies with managements having a well established track record of delivering earnings. Their stock price movements are less volatile and they pay regular dividends. Such companies have industry leadership.

•Defensive Stocks: These stocks provide stability in stock price during periods of recession, economic slowdowns or slow down in industries. Consumers continue to buy food, medicines, gas and electricity even during slowdowns and stocks of companies dealing with these sorts of goods do not lose much value during rough patches in the economy.

•Cyclical Stocks: Cyclical stocks are stocks of companies which perform along with business cycles. When the business cycle is in an upturn, the value of the stocks of companies related to the particular industry would appreciate rapidly, offering windfall gains. Commodities, airlines, durable goods manufacturers fall in this category. However, these stocks lose value during downturn in business cycles.

•Income Stocks: These are especially suited for investors looking for a greater proportion of current income of companies. Income stocks offer a higher dividend in relation to their market price. Blue-chip companies and utilities like banks fall in this category.

•Seasonal Stocks: Stocks of such companies fluctuate with seasons. Examples are stocks of retail companies, greeting card companies which have a greater proportion of sales during festive seasons.

•Penny Stocks: These are low value stocks, typically with a value in the range of $1 to $5 per share and are traded Over-The-Counter (OTC). They are highly speculative and high risk investments.

A thorough understanding of different types of stocks and the characteristics of each are very essential so that you can make informed decisions, and preserve or witness appreciation in the value of your costs.

David Gass is President of Business Credit Services, Inc., founder of http://www.SmallBusinessConsulting.com and co-developer of the Corporate Manager Software which manages the records of a Corporation or LLC. For a Free Trial of the software visit http://www.corporateforms.net

Each one of us does not have the expertise or the time to build and manage an investment portfolio. There is an excellent alternative available – mutual funds.

A mutual fund is an investment intermediary by which people can pool their money and invest it according to a predetermined objective.

Each investor of the mutual fund gets a share of the pool proportionate to the initial investment that he makes. The capital of the mutual fund is divided into shares or units and investors get a number of units proportionate to their investment.

The investment objective of the mutual fund is always decided beforehand. Mutual funds invest in bonds, stocks, money-market instruments, real estate, commodities or other investments or many times a combination of any of these.

The details regarding the funds’ policies, objectives, charges, services etc are all available in the fund’s prospectus and every investor should go through the prospectus before investing in a mutual fund.

The investment decisions for the pool capital are made by a fund manager (or managers). The fund manager decides what securities are to be bought and in what quantity.

The value of units changes with change in aggregate value of the investments made by the mutual fund.

The value of each share or unit of the mutual fund is called NAV (Net Asset Value).

Different funds have different risk – reward profile. A mutual fund that invests in stocks is a greater risk investment than a mutual fund that invests in government bonds. The value of stocks can go down resulting in a loss for the investor, but money invested in bonds is safe (unless the Government defaults – which is rare.) At the same time the greater risk in stocks also presents an opportunity for higher returns. Stocks can go up to any limit, but returns from government bonds are limited to the interest rate offered by the government.

History of Mutual Funds:

The first “pooling of money” for investments was done in 1774. After the 1772-1773 financial crisis, a Dutch merchant Adriaan van Ketwich invited investors to come together to form an investment trust. The goal of the trust was to lower risks involved in investing by providing diversification to the small investors. The funds invested in various European countries such as Austria, Denmark and Spain. The investments were mainly in bonds and equity formed a small portion. The trust was names Eendragt Maakt Magt, which meant “Unity Creates Strength”.

The fund had many features that attracted investors:

- It had an embedded lottery.
- There was an assured 4% dividend, which was slightly less than the average rates prevalent at that time. Thus the interest income exceeded the required payouts and the difference was converted to a cash reserve.
- The cash reserve was utilized to retire a few shares annually at 10% premium and hence the remaining shares earned a higher interest. Thus the cash reserve kept increasing over time – further accelerating share redemption.
- The trust was to be dissolved at the end of 25 years and the capital was to be divided among the remaining investors.

However a war with England led to many bonds defaulting. Due to the decrease in investment income, share redemption was suspended in 1782 and later the interest payments were lowered too. The fund was no longer attractive for investors and faded away.

After evolving in Europe for a few years, the idea of mutual funds reached the US at the end if nineteenth century. In the year 1893, the first closed-end fund was formed. It was named the “The Boston Personal Property Trust.”

The Alexander Fund in Philadelphia was the first step towards open-end funds. It was established in 1907 and had new issues every six months. Investors were allowed to make redemptions.

The first true open-end fund was the Massachusetts Investors’ Trust of Boston. Formed in the year 1924, it went public in 1928. 1928 also saw the emergence of first balanced fund – The Wellington Fund that invested in both stocks and bonds.

The concept of Index based funds was given by William Fouse and John McQuown of the Wells Fargo Bank in 1971. Based on their concept, John Bogle launched the first retail Index Fund in 1976. It was called the First Index Investment Trust. It is now known as the Vanguard 500 Index Fund. It crossed 100 billion dollars in assets in November 2000 and became the World’s largest fund.

Today mutual funds have come a long way. Nearly one in two households in the US invests in mutual funds. The popularity of mutual funds is also soaring in developing economies like India. They have become the preferred investment route for many investors, who value the unique combination of diversification, low costs and simplicity provided by the funds.

Know more about mutual funds at http://www.completeonlinetrading.com

The first chart is a NYSE Oscillator (NYMO) daily one-year chart (red line and right scale) with NYMO’s 50-day MA (blue line) and daily SPX (green line and left scale). On Fri, SPX closed above 1,325, while the daily NYMO rose above 30, and the NYMO 50-day MA closed at roughly negative nine. The daily indicators above and below the price chart show NYMO is short-term severely overbought, which indicate little SPX upside and a SPX pullback.

The second chart is an eight-year daily chart of the NYMO 20-day MA (gray line) and NYMO 50-day MA (red line), which includes all historical data. The chart shows each time the NYMO 50-day MA rose to or above 20, it fell to negative 20 or lower, and each time that took place, the NYMO 20-day MA rose to or above 30 and fell to or below negative 30. Currently, the NYMO 20-day MA is roughly negative 17, which also indicates an SPX pullback.

The third chart is an SPX weekly two-year chart. SPX generally traded in the upper weekly Bollinger Bands, since it began the rally in Oct, and closed slightly above the upper Bollinger Band Fri. The ADX line, above the price chart, remains bullish, since the green line is above the red line. However, the low red line suggests profit taking may take place soon. The MACD lines, below the price chart, had a bearish crossover last month and then reversed with a bullish crossover.

Also, the red zigzag lines of the third chart show SPX ralled from roughly 1,075 to 1,225 in Aug ‘04 to Mar ‘05, in seven months, and then fell over 75 points in six weeks. Over the recent rally, SPX rose from roughly 1,175 to 1,325 over the past seven months, since Oct. So, a pullback may take place over the next few weeks.

The three charts indicate little SPX upside and an SPX pullback within the next few weeks. However, if a short-squeeze takes place, it would need to happen next week, because of recent momentum. A short-squeeze may lead SPX to around 1,350 within a week. However, it’s more likely SPX resistance around 1,325 will hold and a pullback will begin next week. There are many major support levels between 1,275 and 1,315 with a key support zone between 1,275 and 1,290.

The FOMC is expected to tighten and change its statement Wed. The statement may clarify that future monetary policy is unclear, i.e. the FOMC will either pause or not pause, while remaining data dependent. Consequently, this statement will disappoint the stock market.

Charts available at http://www.peaktrader.com Forum Index Market Forecast section.

Arthur Albert Eckart is the founder and owner of PeakTrader. Arthur has worked for commercial banks, e.g. Wells Fargo, Banc One, and First Commerce Technologies, during the 1980s and 1990s. He has also worked for Janus Funds from 1999-00. Arthur Eckart has a BA & MA in Economics from the University of Colorado. He has worked on options portfolio optimization since 1998.

Mr Eckart has developed a comprehensive trading methodology using economics, portfolio optimization, and technical analysis to maximize return and minimize risk at the same time and over time. This methodology has resulted in excellent returns with low risk over the past four years.

Baby Boomers, those born between 1946 and 1964, now hold a large and growing percentage of wealth and savings in America. Equity valuations will continue to be heavily influenced by this 76 million strong generation who (along with others) hold an unprecedented $1.7 trillion in cash on the sidelines. This immense mountain of cash has mushroomed in tandem with investor anxieties over high energy prices, rising interest rates and, of course, terrorism. As anxieties slowly wane, this cash will begin to re-enter the market.

Although as a group boomers have not been frugal savers, they are beginning to inherit wealth from a much more conservative generation that did save. A greater percentage of this wealth is being transferred to heirs thanks to recent increases in the estate tax exemption, which will supposedly be eliminated altogether in 2010.

What are the investing patterns of the Baby Boom generation? Well, we know they were the vanguard of the great suburban migration. We know that this migration prompted a surge in single-family home values, strip malls and office parks across America. And, although there are signs that the red-hot real estate market is slowing, it is certainly not crashing at this point.

We know they were committed Internet and technology bulls in the 1990s. Boomers invested heavily in Nasdaq-type growth stocks, helping to create the notorious tech/dotcom bubble. We also know that boomer wealth was crushed when the bubble burst as many investors failed to allocate their portfolios among different asset classes and failed to diversify among various sectors of the economy.

We know that the leading edge of the group, who are reaching 60 this year, is just beginning to retire and that they expect their portfolios to supplement retirement income. They expect to continue living the same high-end lifestyle to which they have become accustomed. Few will be satisfied cutting back on the finer things. They will not crimp the household budget to fit a more modest, retired lifestyle.

Many of these former hyper-growth seekers are still holding on to loss positions from the 90s in hopes of recouping original cost. Others sold out and may never return to the growth side of the market.

But, as their fortunes are renewed with inheritance, they will come back to equities, this time looking for more certainty – mostly conservative large cap equities, paying dividends. They will not return to stocks with shallow promises of mega gain in the future.

Growth companies are picking up on this trend, declaring dividends for the first time or raising their dividends in an effort to hold on to existing shareholders while attracting new investors. In the meantime, dividend yields on major U.S. stocks average just 1.8%, far below the 80-year historic average of 3.9%. There is certainly plenty of room for dividend increases.

Stocks that heed the call for beefed-up dividends will enjoy higher prices as boomers trade in capital appreciation for increased dividend income. This is especially true now with the more favorable 15% tax rate on dividends - another strong impetus in the shift from growth to dividend stocks.

Despite high household debt, new inflationary concerns, slowing earnings growth and other factors, stock prices are still more reasonably priced than bonds, commodities or real estate. So, if you are evaluating whether to expand your stock portfolio, think of the impact of a boomer re-entry into the market. This time, however, boomers will be more conservative, driving the opportunity in higher income type equities rather than the 90s style, zero dividend growth stocks.

Ed Crooks, Chairman of Counsel Trust, Inc., a York, PA-based independent trust company managing $300 million, has 31 years of financial, trust, estate and investment consulting experience. Prior to establishing Counsel Trust, Ed was the Senior VP and Trust Officer for a regional Pennsylvania bank holding company. Ed graduated from Grove City College with a BA in History and Economics. He received an MBA in Finance and Security Analysis from Clarion University. He received the ABA National Graduate Trust degree in Trust Administration at Northwestern University. He also graduated from P.B.A. Trust School at Bucknell University and he holds NASD Series 7, 63 and 65 licenses.

RFID a great growth market

A new revolutionary technology is forming called RFID or Radio Frequency Identification. This technology greatly improved the ability to track items, any item. The current leading market solution uses a one way system where, for example, a simple “bar code” at your local grocery store where the grocery clerk has to run the bar code over a scanner. These readings are very man-hour intensive as each individual item must be scanned RFID is a two way system where a reader could scan every item at a Wal-Mart (WMT-48.14) store. Then each item with a RFID tag would respond or “chirp” back to the reader. Using the two way RFID system a single person could take complete inventory of a store almost eliminating all the man-hours of manual inventory. A reader mounted on a fork lift truck would track each item the hyster moves into the warehouse. The RFID will allow a single person the ability to inventory unlimited amounts of items.

Using our simple forecasting theorem which mathematically helps us forecasts how successful technologies will be; our approach signaled that RFID will be revolutionary.

Please refer to forecasting a revolution Multiplication of Moore’s law http://www.durig.com/duriglaw.html .

Here are some of the many uses of RFID. Tracking gamblers at a black jack table so the house knows who’s betting big, tracking prisoners in a jail to see who was involved in a scuffle, tracking prescription drugs for counterfeit, tracking cattle for mad cow disease, tracking cars so police could immediately identify a stolen car or a car with outstanding issues. More examples, tracking passports to see if the picture is correct, tracking products for Wal-Mart to almost any store and warehouse, tracking the Department of Defense inventories for most items, Boeing can track parts for building aircrafts and Ford tracking parts for it automobiles. It appears that both the scope and magnitude at this time is limitless.

Industries tracking consumer goods from shoes to cement blocks to frozen food to cars, including boats, planes, parts and supplies can utilize it in all aspects from manufacturing, inventory and shipping to retail outlets.

Judging from our theorems, RFID will see revolutionary growth to the likes of the cell phone, Personal Computer and the Internet that also at the beginning of their cycles scored extremely high.

IdtechEx forecast

From IdtechEx, the market for RFID is to grow from 2.7 billion in 2006 to 12.3 billion in 2010. The value is expected to be about 26.2 billion in 2016 or ten years to grow almost 10 times.

Selecting the company that could lead that market

Identify the correct market to invest is only part of the challenge. Possibly the bigger challenge is to identify the company that will lead this technology. This is where we have identified Intermec. Intermec is one of the leading companies in bar codes. Over the last few years Intermec has been focused on developing products that would comply with the new Gen 2 RFID standard rather than introduce products that supported the older Gen 1 Class and 0 Class protocols. This strategy has allowed Intermec to utilize its roughly 149 patents to allow Intermec to extract royalties from the entire RFID industry and appear to be essential when utilizing the Gen 2 RFID standard. The Gen 2 RFID standard and Intemec’s patents are very co-depended of each other. In my opinion Intermec is gaining an integration monopolistic position.

Why monopolies have great success

Past monopolies have had great success from controlling the market like Intermec integrating their solution into and then helped become part of the standard. Compared to war it is the equivalent of having the high ground in battles – this approach is extremely valuable. Control in new revolutionary technologies is very rare. Our studies shows that in the past when companies achieved control they are usually able to hold it for 1-2 business cycles or from 9 -19 years. Some past successes that have demonstrated integration and or control of revolutionary products were Microsoft (MSFT-27.13) and Intel (INTC-19.78) in the Personal Computer, Cisco (CSCO-21.44) for the Internet and Qualcomm (QCOM-49.87) currently for Cell Phones. When I was young child IBM (IBM-84.32) controlled the standard for Mainframe and AT&T (T-26.81) the phone business. You can often see companies that are monopolistic in a revolutionary industry have a probability of achieving super wealth. Several monopolies we listed achieved the world’s largest stock value.

Is Intermec a new monopoly?

Intermec or any company for that matter to have a chance to be great monopoly it must have a degree of control. The question is how much control does Intermec have over the RFID industry?

To answer this simple but very important question we devised an extremely effective test. Intermec claim’s to be an integral part of the Gen 2 standard. The definition of de facto standard is recognized by all its peers as the standard.

Does the RFID industry recognize Intermec as the standard?

Companies like Symbol Technology (SBL-10.64), Zebra Technology (ZBRA-45.45), Philips Electronics (PHG-32.38), Texas Instrument (TXN-30.59) are some of the leading companies in RFID space that also have the size, technical background, law staff and other resources to verify or reject Intermec’s claim. Accepting Intermec’s claim means paying royalties to Intermec for years, you must understand if possible all theses companies would NOT want to pay royalties so their preferences is to reject Intermec’s claim.

All the companies mentioned above and more have agreed that Intermec will receive royalties on every Gen 2 RFID product they make. No one wants to pay 2.5-7% royalty to Intermec to utilize the Gen 2 RFID standards. Especially leaders in RFID like Phillips, Texas Instrument and Symbol which all have a major leading position in the market, and their agreements with Intermec greatly validated Intermec’s claims.

It was when the largest company and Intermec’s closest competitor, Symbol Technologies, that created the biggest challenge to Intermec’s claims. Symbol Technologies not only refused to pay early in the process, but sued Intermec asking for Intermec to pay Symbol royalties for their many patents and Symbol wanted their own version of the standard.

Symbol gave up their court fight and agrees to join Intermec’s Rapid Start Licensing program. When your biggest competitor allows you to sign a controlling contract where Symbol has to pay royalties to Intermec every time Symbol sells a RFID hardware product. To me the Intermec/Symbol relationship Intermec has provided validation with a very high degree of control.

Many experts assign a similar agreement to the rise of Microsoft and the downfall of IBM when IBM accepted the Microsoft PC standard. I believe history will say the same thing when Nokia (NOK-20.52) then the largest cell phone company in the world signed and agreed to pay royalties to Qualcomm on all Nokia 3G phones.

It reminds me of a very old saying “the king is dead, long live the king” if you can dictate your will to the powerful companies your have a high degree of control.

Gutter vs. Shingles

Intermec is using their RFID control to establish what I call a gutter business. In Oregon it rains a lot and what we know are roofs. Water from shingles flow into a gutter. In some cases the gutter and shingles are co-dependent and need each other for the roof to work properly. First gutters have tremendous leverage. Second you could measure the number of shingles or measure the square footage of the roof to understand the amount of possible water flow or leverage the gutter might achieve We believe gutter based companies are far better companies to own. If you wanted fill a cup of water would you put your cup under a shingle or a gutter? It’s my believe that by far most companies are shingles business models, but the gutter business model have far great potential to grow profits utilizing and leveraging the shingles.

In a few situations all the shingles combined could flow into a single gutter. A roof with a single gutter or a monopoly has one of the best business models and has a chance to leverage the entire industry to enrich its profits.

Intermec is possibly building this type of business model and has awarded the premier client of Cisco, and IBM while having alliances with Microsoft, Oracle and SAP. Companies that joined Intermec’s Rapid Start Program and agreed to pay Intermec a royalty on every RFID hardware product they sell.

· Accu-Sort

· Avery Dennison

· AWID

· Datamax

· EM Micro

· Feig Electronics

· Hand Held Products

· LXE

· Metrologic

· Paxar

· PSC

· Psion Teklogix

· SAMSys

· Sato

· Symbol Technologies

· Texas Instruments

· ThingMagic

· Toppan Printing

· Zebra Technologies

All of these agreement occurred in 2005 after the new Gen 2 standards for RFID established in early 2005.

If we are right Intermec should have outstanding and accelerated growth for the duration of the Gen 2 RFID standard business cycle possible Gen 2 Standard last about 9 years based on many business cycles we followed.

Risk

Intermec’s placement and degree of control in the Gen 3 RFID standard is very unclear, and will take many years from now to achieve any clarity.

A company could challenge Intermec’s legal position. Even though Intermec has about 149 patents in the RFID industry the largest IP portfolio, a single company could sue making Intermec’s patent unenforceable. Knowing that Symbol Technologies is well funded and a leader in the RFID industry and has attempted this and failed, it makes the hurdle even higher for a smaller less funded company to attempt this knowing that it would be a very costly approach.

Intermec appears to limit the companies that license their technology especially during their Rapid Start Program. If in future years Intermec is found to be a monopolistic company this could be very damaging in a court system. Intermec should give every company an equal chance.

RFIG Gen 2 is still not Intermec’s core profit center and there are no guarantees that RFID will become revolutionary. Most all new technologies have gone through long incubation cycles before becoming mainstream which RFID Gen 2 will probably incur.

In my opinion the great appreciation will come when the royalties are the main profit center, and that may be many years if it ever occurs.

Conclusion

To summarize

1. The RFID appears to approaching a revolution growth cycle.

2. Intermec is the technology patent leader and has degrees of control over the Gen 2 RFID Standard.

3. Intermec is forming a gutter business model combined with a possible monopoly position giving Intermec the ability to have possible leverage over the entire RFID industry

If Intermec could achieve the three items above it has a chance to achieve

a: Modern Monopoly Effect.

A Modern Monopoly Effect is when a single monopolistic company achieves a stock market value roughly equal to all the companies’ market value that supports the standard. In Intermec’s case Intermec could achieve stock market values about equal to all RFID hardware partners businesses that supports Intermec Gen 2 Standard for RFID.

The water from all the shingles on a roof could roughly equals the water flowing into a gutter, a single monopolistic gutter named Intermec.

If Intermec becomes a Modern Monopoly Effect possibly it will become the fifth time we have identified and owned a Modern Monopoly Effect.

For future information about Monopoly investing please visit http://www.manage-money.us, For investment news, articles and forum go to http://www.durig.com,& http://www.investment-investment.us

Discount stock brokers are individuals offering services for a variety of trades at discounted prices. Their position permits them straight access to the share market. Discount stock brokers are ideal for those who know the trade industry well and do not need extensive information about the market. Since an investor can obtain high discounts, these brokering services are very significant.

Discount stock brokers do not provide any investment advice. They only arrange the stocks demanded at a discounted rate. The brokers take an order and do not make commission. In other words, discount stockbrokers earn money by selling massive amounts of stock. Their services also permit the shareholder to invest some savings back into the market for a return.

Technological advancement and the popularity of computers facilitate almost any business deal from home, via the Internet. Stock brokering is also pretty simple to do online. Several companies on the Internet allow users to sign up, complete the application process and start trading within a few days. The online stockbrokers are mainly discount online stockbrokers and full-service online stockbrokers.

Discount online stock brokers - licensed to trade in shares - are popular with today’s online investors. They offer an execution service for a variety of trades with lower fees than the full service agencies. Before making a decision about investments, it is wise to contact several agencies requesting information on fees, because all online stock brokers are highly competitive.

Full-service online stockbrokers can provide far more stocks and products compared to discount brokers. They also help in all share related activities, such as buying shares, creating a safe investment portfolio, and investment advice. These service providers are mostly paid by commission, hence they will work harder to satisfy the investor.

An investor opting for a discount broker has to know the market industry well, since the agent does not provide advice on what or when to buy sell, or trade. The person should ideally possess knowledge in the market. A stockholder can work with multiple discount brokers at the same time.

Discount Brokers provides detailed information on Discount Brokers, Discount Commodity Brokers, Discount Stock Brokers, Discount Real Estate Brokers and more. Discount Brokers is affiliated with Mortgage Brokers.

Switching your job? Retiring? Congratulations! A window of opportunity opens for you with the Rollover Individual Retirement Account or Rollover IRA.

In an era of corporate restructuring and outsourcing, Rollover IRA is among the most powerful means available for securing one’s retirement. Yet, its potential to enlarge one’s assets for the sunset years commonly remains under-appreciated.

The Rollover IRA dramatically increases the range of choices available to you for investing your retirement savings. By offering investment choices hitherto unavailable in employer-sponsored plans such as 401k, 403b, or Section 457 plans, Rollover IRA provides you the means to have direct control of and more aggressively grow your nest egg.

This article discusses the advantages of Rollover IRA over employer-sponsored retirement plans.

So, if you are leaving your job and have accumulated assets in the employer-sponsored retirement plan, continue reading this article to learn about your options and more.

Four Options

You have four options on what you can do with your savings in your employer-sponsored plan when you are switching jobs or retiring.

1) Cash your savings.

2) Continue with the retirement plan of your previous employer.

3) Switch to the retirement plan sponsored by your new employer.

4) Set up a Rollover IRA account with a mutual fund company and move your retirement savings into that account.

Unless you have a pressing need, it is best not to cash your retirement savings. First, cash withdrawals from the retirement plan will be subject to federal and state taxes. Second, your retirement savings diminish and you will have fewer assets to grow tax-deferred.

While the three other options will not erode your retirement savings and will allow it to grow tax-deferred, they are not equal in their ability to help you boost its growth rate.

Increased Investment Choices

Most employees earn meager returns on their employer-sponsored retirement plan savings. A Dalbar study reports that the average 401k plan investor achieved an annual return of just 3.5% during a 20-year period when the S&P 500 returned 13.0% per year.

Part of the problem stems from the fact that most retirement plans offer only a limited number of investment choices. A Columbia University study finds the median number of mutual fund choices in 401k plans to be just 13. The actual number of equity mutual fund investment choices however is less, since the median number includes money market funds, fixed income funds, and balanced funds.

With fewer investment choices, employer-sponsored plans limit your ability to take advantage of different market trends and to continually position your retirement savings in mutual funds with superior risk-reward profiles.

If you set up a Rollover IRA with a large mutual fund company such as Fidelity Investments, T. Rowe Price or Vanguard Group, you will break the shackles imposed by your employer-sponsored plan and dramatically increase the number of mutual funds available for investing your retirement savings. Fidelity, for example, provides access to several thousand mutual funds besides the more than 180 mutual funds it manages.

Setting up the Rollover IRA

Let’s say you decide to move your retirement savings to a Rollover account with a mutual fund company. How do you make it happen?

Contact the mutual fund company in which you wish to open an account and ask them to send you their Rollover IRA kit. Complete the form for opening the Rollover IRA account and mail it to the mutual fund company. Next, complete any forms required by the retirement plan administrator of your previous employer and request transfer of your assets into the Rollover IRA account.

You have two choices for moving your retirement savings to your Rollover IRA account. One is to elect to have the money transferred directly from the employer-sponsored plan to the Rollover IRA account. This is called direct rollover. With the indirect rollover alternative, you take the distribution from the retirement plan and then deposit it in the Rollover IRA account. Unless exceptions apply, you have 60 days to deposit the distribution and qualify for tax-free rollover.

Boosting Your Rollover IRA Performance

You need a well thought-out strategy to benefit from the wide range of investment choices available in the Rollover IRA. You can develop the strategy yourself or derive ideas from investment newsletters.

The investment strategy will enable you to maximize return and minimize risk by leveraging the potential of different investment vehicles within each asset class. For example, you can include sector funds among equity investments and international bond funds among fixed-income investments.

Adding to Your Rollover IRA

You can leverage the potential of your Rollover IRA further by adding to it each time you change jobs. With the Rollover IRA already set up, all you have to do is to instruct the retirement plan administrator of your last employer to transfer assets to the Rollover IRA. There is no limit on the amount of money you can transfer.

You may also add money to your Rollover IRA through regular annual contributions. They are however subject to the annual limit for IRA contributions.

Summary

When you are switching jobs or retiring, the Rollover IRA opens a window of opportunity for you, widening the range of investment choices for your retirement assets hitherto not available in the employer-sponsored plan. The self-directed Rollover IRA empowers you to construct and manage a mutual fund portfolio to boost the growth rate of your retirement savings.

Notes: This report is for information purposes only. Nothing herein should be construed as an offer to buy or sell securities or to give individual investment advice. This report does not have regard to the specific investment objectives, financial situation, and particular needs of any specific person who may receive this report. The information contained in this report is obtained from various sources believed to be accurate and is provided without warranties of any kind. AlphaProfit Investments, LLC does not represent that this information, including any third party information, is accurate or complete and it should not be relied upon as such. AlphaProfit Investments, LLC is not responsible for any errors or omissions herein.

Opinions expressed herein reflect the opinion of AlphaProfit Investments, LLC and are subject to change without notice. AlphaProfit Investments, LLC disclaims any liability for any direct or incidental loss incurred by applying any of the information in this report. The third-party trademarks or service marks appearing within this report are the property of their respective owners. All other trademarks appearing herein are the property of AlphaProfit Investments, LLC. Owners and employees of AlphaProfit Investments, LLC for their own accounts invest in the Fidelity Mutual Funds included in the AlphaProfit Core and Focus model portfolios. AlphaProfit Investments, LLC neither is associated with nor receives any compensation from Fidelity Investments or other mutual fund companies mentioned in this report. Past performance is neither an indication of nor a guarantee for future results. This document may be reproduced only in its entirety including the author’s bio and hyperlinks to AlphaProfit’s web site.

Copyright © 2006 AlphaProfit Investments, LLC. All rights reserved.

Sam Subramanian, PhD, MBA is Managing Principal of AlphaProfit Investments, LLC. He edits the AlphaProfit Sector Investors’ Newsletter™. The investment newsletter, ranked #1 by Hulbert Financial Digest, offers model portfolios that are popular with Fidelity 401k and Rollover IRA investors. To learn more about the investment newsletter, visit http://www.alphaprofit.com